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Review of WIC Food Packages: Improving Balance and Choice: Final Report (2017)

Chapter:10 The Regulatory Impact Analysis (Abridged)

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Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
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10

The Regulatory Impact Analysis (Abridged)

This chapter presents an abridged regulatory impact analysis (RIA) for the proposed revisions to the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) food packages. The preceding chapters have explained the nature and need for the food package changes, have provided background on the WIC program, and have described the food package changes proposed and the rationale for each. For brevity, such discussions have been omitted from this chapter and the cost-estimate methodology provided herein is a broad overview. Expanded versions of these sections are provided in the complete RIA (see Appendix U).

An overview of the types of estimates in this RIA is presented in Box 10-1. Throughout this chapter, the committee compares the projected costs of the revised set of food packages (assuming all recommendations are fully implemented) to the projected costs of the status quo, namely the current set of food packages. Estimated costs are based on forecasted program participation levels, estimated redemption of each food package item, and inflated prices of each food package item. Unless otherwise noted, cost differences describe how much more the revised food packages would save or cost across the program, compared to the current food packages.

KEY CONSIDERATIONS

Assumptions underlie this analysis. Some—such as how program participation and prices are projected to change through fiscal year (FY) 2022—pertain to one specific component of the analysis and are described in detail in Appendix U. Other assumptions affect the interpretation of the estimated

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

costs and cost differences. Three such broad considerations are the representativeness of the available data, timing of implementation, and food package nomenclature.

Representativeness of the Available Data

A number of factors affect the total food costs to the WIC program, including interstate variation in food prices, caseload composition, and cost-containment practices (USDA/ERS, 2005). Accurate estimates of total food costs, therefore, should be based on data that capture this variability. To project the cost effects associated with specific changes to the food packages, data should provide insight into how each individual food item within

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

each specific food package contributes to the total food costs. At the present, this level of granularity does not exist in data sources representative of the entire WIC program.

The committee estimated total food costs and cost differences by integrating the various sources of WIC-specific data.1 Despite the fact that several of the data sources came from a limited number of state agencies, this analysis necessarily assumes that the data are representative of the WIC-participating population at large because no other data were available to the committee. The committee recognizes, however, that its cost estimates are not identical to costs derived from the U.S. Department of Agriculture’s Food and Nutrition Service (USDA-FNS) administrative data. For FY2015, the committee estimated the per-participant food cost to be $37.092 per month, based on assumptions about prices per unit, substitutions of allowable options, and redemption of each food package item. USDA-FNS, however, reported the FY2015 per-participant food costs to be $43.37 per month. The committee was unable to discern what component(s) of its analysis led to this difference, because some of the data available to the committee were de-identified and the majority of the data represented only a small portion of states and territories. The estimates presented in this RIA should be interpreted in context of these limitations.

Timing of Implementation

The magnitude of the cost effects and stability of the projections in this analysis are largely defined by the time frame evaluated. The committee assumes that the earliest implementation of the revised food packages could occur would be April 1, 2018, approximately 15 months after the release of this consensus report. Food-cost estimates for both the current and revised food packages are projected through FY2022. This RIA, therefore, encompasses a 54-month period.3

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1 WIC data sources used in this analysis include the participation data from the WIC Participant and Program Characteristics 2014: Food Package Report (USDA/FNS, 2016a), national participation levels presented on the USDA-FNS website (USDA/FNS, 2016b), redemption data from six de-identified state agencies provided to the committee by USDA-FNS (see Appendix U for additional details), redemption data provided to the committee from six individual state agencies, and a 2014 report detailing redemption in three states as they transitioned to electronic benefit transfer (EBT) food benefit issuance method (USDA/ERS, 2014).

2 A per-participant cost of $37.27 per month was presented previously in this report. This higher estimate reflects the $1 increase in women’s cash value voucher, which was implemented in FY2016 (from $10 to $11). The committee used this monthly per participant cost to assess the cost neutrality of the revised food packages, because it reflects current regulations. The $37.09 estimate, in contrast, reflects the regulations that existed in FY2015.

3 The fiscal year starts October 1. April 1, 2018, is halfway through FY2018.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

The committee assumes that, within each state agency, all proposed food package changes will be fully implemented at one time but that, across the WIC program, state agencies may begin offering the revised food packages at different times. As such, two sets of cost projections were generated: unadjusted and phased in. Unadjusted estimates assume that all agencies fully implement the revised food packages on April 1, 2018. Phased-in estimates, in contrast, account for states implementing the revised food packages at different times. The phased-in scenario assumes that states with electronic benefit transfer (EBT) systems operational as of the August 2016 EBT Detail Status Report (USDA/FNS, 2016c) would be early implementers of the proposed food package changes (i.e., those implementing the changes on April 1, 2018).4 The remaining state agencies would have up to 18 additional months to implement the proposed food package changes (i.e., implemented by October 1, 2019). As evidenced by the final implementation dates from the previous food package revision (USDA/FNS, 2012), most state agencies instituted changes on the regulatory deadline, rather than before or after. This analysis assumes the same will occur for these proposed revisions. Accordingly, the phased-in cost differences between the current food packages and proposed revised food packages are 33.3 percent of the unadjusted cost differences for FY2018 (6 months) and FY2019 (12 months), and 100 percent of the unadjusted differences thereafter. The dates and rates of implementation used in this RIA are not intended to be prescriptive or to be the committee’s recommended timeline for implementation, but rather they are the committee’s informed assumptions necessary for this analysis.

Food Package Nomenclature

The WIC food packages are specific to the age, life stage, physiological state, and, if applicable, breastfeeding status of the participant. Several of the broad food package categories (both current and revised) are actually composed of two or more specific food package types. Both the quantity of foods and the food items prescribed in each specific food package can differ within a broad food package category, and therefore have cost implications.

As Table 10-1 highlights, the proposed revisions largely leave the

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4 This estimate was calculated by identifying agencies that have implemented EBT statewide as of August 2016 (USDA/FNS, 2016c) and determining what proportion of participants are served by those agencies from total participation administrative data (USDA/FNS, 2016b). For FY2015, EBT states serve 34.3 percent of WIC participants. Given this, the assumption for the phased-in estimate is that one-third of participants would be served by an “early implementer” state agency. This assumption only affects the phased-in estimates, not the unadjusted estimates.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

current structure of the food packages unchanged. There are, however, three important considerations:

  1. Food package V is currently a single food package prescribed to both pregnant women and partially (mostly) breastfeeding women, up to 1 year postpartum. Under the proposed revisions, it would be split into two distinct food packages, V-A for pregnant women and V-B for partially (mostly) breastfeeding women.
  2. Revised food package I-BF/FF-A (partially [mostly] breastfed infant, age 0 to less than 1 month) is retained as its own food package in this analysis, as the committee expects that recipients of this food package would continue to be prescribed only small quantities of infant formula. Upon implementation of the proposed revisions, however, it may be decided to consolidate this food package with food package I-BF/FF-B (partially [mostly] breastfed infant, age 1 to less than 4 months), because both would have the same maximum prescription (“up to”) amount for infant formula.
  3. Food package “N/A” is listed as a food package because it is included in an assumption about how participation is expected to change with the revised food packages. Women who are minimally breastfeeding and with infants more than 6 months of age that receive more formula than is allowed for a partially breastfeeding infant do not receive a food benefit (referred to herein as “food package N/A”), but are still eligible to continue to receive breastfeeding support, nutrition education, health and social services referrals, and other program benefits (USDA/FNS, 2013). These program participants do not contribute to the total food costs of the program.

SUMMARY OF PROPOSED CHANGES

The food package revisions recommended in this report reflect the consensus of an expert committee and account for the nutritional intake, health status, and cultural needs of the program participant population, while simultaneously considering the efficiency and efficacy of program operations and administration. The proposed changes to the food packages affect a broad range of individuals and entities associated with the WIC program, including, but not limited to, USDA-FNS; the 90 agencies that administer WIC and their associated staff; authorized vendors; food producers, manufacturers, and distributors; and program participants. As summarized in Table 10-2, the committee considered the effect of each key food package revision on these stakeholder groups.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

TABLE 10-1 Current and Revised Food Packages and Corresponding Participant Categories

Food Package Abbreviation of Specific Food Package Applicable Version of the Food Packages Participant Category
I I-BF-A Current, revised Fully breastfed infants, ages 0 to less than 4 months
I-BF-B Current, revised Fully breastfed infants, ages 4 to less than 6 months
I-BF/FF-A Current, reviseda Partially (mostly) breastfed infants,b ages 0 to less than 1 month
I-BF/FF-B Current, revised Partially (mostly) breastfed infants,b ages 1 to less than 4 months
I-BF/FF-C Current, revised Partially (mostly) breastfed infants,b ages 4 to less than 6 months
I-FF-A Current, revised Fully formula-fed infants, ages 0 to less than 4 months
I-FF-B Current, revised Fully formula-fed infants, ages 4 to less than 6 months
II II-BF Current, revised Fully breastfed infants, ages 6 to less than 12 months
II-BF/FF Current, revised Partially breastfed infants, ages 6 to less than 12 months
II-FF Current, revised Fully formula-fed infants, ages 6 to less than 12 months
III IIIc Current, revised Infants, children, and women with a qualifying conditiond
IV IV-A Current, revised Children, ages 1 to less than 2 years
IV-B Current, revised Children, ages 2 to less than 5 years
V V Current Pregnant women
Partially (mostly) breastfeeding women,b up to 1 year postpartum
V-A V-A Revised Pregnant women
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
V-B V-B Revised Partially (mostly) breastfeeding women,b up to 1 year postpartum
VI VI Current, revised Nonbreastfeeding postpartum women, up to 6 months postpartum
Partially (minimally) breastfeeding women,e up to 6 months postpartum
VII VII Current, revised Fully breastfeeding women, up to 1 year postpartum
N/A N/A Current, revised Partially (minimally) breastfeeding women, more than 6 months postpartume

a Despite revised food packages I-BF/FF-A and I-BF/FF-B having the same maximum (“up to”) amount for infant formula, the two food packages remain separate in this analysis. The committee supports issuance of infant formula to food package I-FF/BF-A recipients only on a case-by-case basis after a breastfeeding assessment. Accordingly, the committee assumes the average quantity of infant formula prescribed in food package I-BF/FF-A to be less than the average amount prescribed to I-BF/FF-B recipients. Food package I-BF/FF-A may not ultimately be operationalized as separate from food package I-BF/FF-B for partially (mostly) breastfed infants, ages 1 month to less than 4 months.

b The parenthetical “mostly” is determined by the amount of formula provided to the infant through the WIC program. Women and their infants are classified as partially (mostly) breastfeeding if the infant’s formula prescription does not exceed the monthly maximum allowance for the age-specific BF/FF food packages.

c Food package III recipients are prescribed food packages appropriate to their age and physiological state. There are specific food packages for women, infants, and children within food package III that correspond to specific food packages I, II, IV, V, VI, and VII.

d Participants prescribed food package III have one or more medically documented qualifying conditions. Recipients are eligible to receive WIC formula (i.e., infant formula, exempt infant formula, and WIC-eligible nutritionals) and supplementary foods.

e The parenthetical “minimally” is determined by the amount of formula provided to the infant through the WIC program. Women and infants are classified as partially (minimally) breastfeeding if the infant’s formula prescription exceeds the monthly maximum allowance for the age-specific BF/FF food packages but does not exceed the full amount allowed in the age-specific fully formula-fed food packages. Women who are minimally breastfeeding less than 6 months postpartum receive food package VI, along with breastfeeding support. Women who are minimally breastfeeding and with infants more than 6 months of age that receive more formula than is allowed for a partially breastfeeding infant do not receive a food benefit. These women, however, are eligible to continue to receive other benefits through WIC, such as breastfeeding support, nutrition education, and health and social services referrals (USDA/FNS, 2013). This group of participants is included in one of the committee’s assumption regarding the revised food package cost estimates, and is therefore included in the above table.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

TABLE 10-2 Summary of Key WIC Food Package Revisions

Current Rules, Proposed Revisions, and Projected Net Cost Differencesa Effect of the Proposed Revision
USDA/Federal Government State/Local Agencies Vendors/Industry WIC Participants
Current rule:
State agencies have the option to prescribe breastfed infants up to 104 fl oz of infant formula (not more than one can of powdered infant formula) during the first 30 days of life, on a case-by-case basis.
Proposed revision:
Breastfed infants can be prescribed up to 364 fl oz of infant formula during the first 30 days of life, on a case-by-case basis after a breastfeeding assessment by a competent professional authority, and remain categorically classified as a partially breastfed infant.
(Net cost effect: savings)
The cost of food package I-BF/FF-A itself may slightly increase, depending on how frequently competent professional authorities identify need for issuance of formula beyond 104 fl oz. The anticipated shift in fully formula fed dyads toward the partial (mostly) breastfeeding food packages is expected to largely offset additional costs of the infant formula. At the staff and clinic level, the proposed revision is expected to provide greater flexibility in tailoring the partially (mostly) breastfed infant’s food package and create opportunities to support partial breastfeeding in dyads who would otherwise be considered fully formula-fed. Management Information Systems will need to be updated. State and local agencies will encounter a short-term burden of retraining staff. The effect on vendors or industry is anticipated to be minimal. The anticipated shift in fully formula-fed dyads to the partial (mostly) breastfeeding food packages may slightly reduce the amount of infant formula purchased by WIC participants with their food benefit. The revision is intended to prevent women and infants from being categorized as postpartum (nonbreastfeeding or minimally breastfeeding) and fully formula fed, respectively, in the first month or soon thereafter. The proposed revision is intended to provide security for women who may try to breastfeed in the immediate postpartum period but are not yet certain they can succeed.
Current rule:
The maximum monthly allowance of formula
The cost effect of the proposed revision will depend on the extent to At the staff and clinic level, the proposed revision is expected to The effect on the vendors will depend on the amount of infant formula Participants would still have access to the quantities of infant
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
should not be used as the standard for issuance unless the mother is not breastfeeding the infant at all.
Proposed revision:
The quantity of infant formula prescribed to infants should be tailored based on needs. All maximum monthly allowances for infant formula should be considered “up to” amounts.
(Net cost effect: minimal)
which infant formula tailoring occurs. If minimal tailoring occurs, the cost effects would be minimal. If it is fully executed, the proposed revision would result in a cost savings. provide greater flexibility in tailoring the amount of formula provided to infants. Management Information Systems will need to be updated. State and local agencies will encounter a short-term burden of retraining staff. tailoring that occurs. If minimal tailoring occurs, the effect on infant formula sales would be minimal. Full execution is likely to result in a decrease of infant formula sales to WIC participants using their food benefit. formula currently being offered by WIC. The proposed revision, however, would help participants receive the amount of infant formula needed to meet their infants’ needs.
Current rule:
All food package II recipients are prescribed 24 oz of infant cereal per month
Proposed revision:
Food package II-BF recipients are prescribed 16 oz of infant cereal per month; II-FF and II-BF/FF recipients are prescribed 8 oz per month
(Net cost effect: savings)
The proposed revision would reduce the cost of food package II. This reduction helps offset costs elsewhere in the food packages. Administrative burden is expected to be minimal. State agencies currently authorize 8 oz infant cereal containers; some state agencies also authorize 16 oz containers. Management Information Systems will need to be updated. State and local agencies will encounter a short-term burden of retraining staff and communicating the change to participants when the revisions are initially implemented. The proposed revision may result in reduced infant cereal sales to WIC participants. It is not anticipated to affect stocking requirements. Although infants will receive less infant cereal under the revised food package, the amount provided is more consistent with current complementary feeding recommendations.
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
Current Rules, Proposed Revisions, and Projected Net Cost Differencesa Effect of the Proposed Revision
USDA/Federal Government State/Local Agencies Vendors/Industry WIC Participants
Current rule:
Food package II-BF recipients are prescribed 256 oz of jarred infant food vegetables and fruits per month. All other food package II recipients receive 128 oz of jarred infant food vegetables and fruits. Up to 16 oz of jarred infant food fruits can be substituted with fresh bananas, 1 banana per 4 oz jar.
Proposed revision:
All infants receiving food package II are prescribed 128 oz of jarred infant food vegetables and fruits. A CVV can be prescribed for partial substitution ($10 for 64 oz jarred infant food vegetables and fruits) or complete substitution ($20 for the 128 oz). The CVV can be used to purchased
Despite the decrease in jarred infant vegetable and fruit issuance to fully breastfed infants, the option for CVV substitution are expected to lead to an increase in redemption, thereby increasing costs to the program. Administrative burden is expected to be minimal. Management Information Systems will need to be updated, but overall it will improve Management Information Systems efficiency by authorizing the same vegetable and fruit varieties for all CVVs. State and local agencies will encounter a short-term burden of retraining staff and communicating the change to participants when the revisions are initially implemented. State and local agencies will also face an administrative burden developing educational messages and materials related to selecting and preparing vegetables and fruits appropriate for complementary feeding. The proposed revision may result in slight reductions in jarred infant food vegetable and fruit sales to WIC participants, but it may increase fresh, frozen, and/or canned vegetables and fruits via the CVV. This is not anticipated to affect stocking requirements. The proposed revision is intended to provide fully breastfed infants with a supplemental quantity of infant food vegetables and fruits, in the absence of definitive guidance on recommended intake. The CVV substitution option provides participants the opportunity to prepare their own infant food vegetables and fruits, which can be used to better meet diverse cultural needs, personal preferences, and the infant’s developmental stage. Participants may be able to buy more servings of vegetables or fruit using the CVV compared to the jarred varieties.
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
vegetables and fruits in all forms authorized by the state agency (i.e., fresh, frozen, canned) except dried.
(Net cost effect: increase)
Current rule:
Food package II-BF recipients are prescribed 77.5 oz of infant food meat per month.
Proposed revision:
Food package II-BF recipients are prescribed 40 oz of infant food meat per month. Ten oz of canned fish can be substituted for 4 jars (10 oz) of infant food meat per month.
(Net cost effect: savings)
Because redemption of infant food meat is low, reducing the amount prescribed is expected to result in slight cost savings. The option for substitution of canned fish may slightly increase redemption in this category. Given that canned fish is currently less expensive per oz than jarred infant food meat, increase in redemption may be offset by the slightly lower price. Implementation of the proposed revision will require training WIC staff and participants of the change and new substitution option. Management Information Systems will need to be updated. The revision may reduce the amount of infant food meat purchased by WIC participants. The substitution option may slightly increase the amount of canned fish purchased by WIC participants. The proposed revision addresses participants’ feedback about the quantity and preference in the infant food meat category, while still providing key nutrients to fully breastfed infants. The substitution option provides participants with greater flexibility in this food category.
Current rule:
Food package III is reserved for participants who have one or more qualifying conditions that
Clarifies that WIC formula is not an absolute requirement of food package III. The cost effects of the proposed Administrative burden increases in the short term. Management Information Systems will need to be updated. No impact. Some participants receiving food package III may be prescribed a package that is more appropriate for their needs.
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
Current Rules, Proposed Revisions, and Projected Net Cost Differencesa Effect of the Proposed Revision
USDA/Federal Government State/Local Agencies Vendors/Industry WIC Participants
require an exempt infant formula or WIC-eligible nutritional (formerly WIC-eligible medical food) to supplement their nutrition needs, as determined by the participant’s health care professional.
Proposed revision:
Participants with a qualifying condition in which a WIC formula is not medically necessary are still eligible to receive appropriate supplementary foods through food package III.
(Net cost effect: minimal)
revision will be minimal, as the number of applicable participants is expected to be extremely small.
Current rule:
Children are prescribed 128 fl oz of juice per month; pregnant, partially (mostly) breastfeeding, and fully breastfeeding
The reduction in juice prescribed would reduce the costs of the food packages. This reduction helps offset costs elsewhere in the food packages. Implementation of the proposed revision will require training WIC staff and participants of the change and new substitution option. Less juice would be purchased with the WIC food benefits. The minimum stocking requirements for juice would be simplified, as The proposed revision provides a supplemental amount of juice, which can help participants meet their daily fruit intake goals. The CVV
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
women are prescribed 144 fl oz of juice per month; postpartum and partially (minimally) breastfeeding women are prescribed 96 fl oz of juice per month.
Proposed revision:
Children, pregnant women, partially (mostly) breastfeeding women, and fully breastfeeding women are prescribed 64 fl oz of juice per month. Recipients may opt to substitute a $3 CVV for the 64 fl oz of juice. Postpartum and partially (minimally) breastfeeding women no longer receive juice.
(Net cost effect: savings)
Management Information Systems will need to be updated. all participants prescribed juice would receive 64 fl oz (or frozen equivalent). substitution option allows participants greater flexibility to tailor their food package for personal preferences. The reduction and eliminations (food package VI) of juice from the food packages also allowed for larger CVVs across all food packages provided to children and women.
Current rule:
Food package IV and VI recipients are prescribed 16 qt of milk per month. Food package V recipients are prescribed 22 qt of milk per month. Food package VII recipients are
The proposed revisions would reduce the costs of the food packages. This reduction helps offset costs elsewhere in the food packages. The administrative burden is expected to be short term, as the revision changes quantities, rather than adding new items. It will require training WIC staff and participants of the changes and revised The total amount of milk purchased by WIC participants with their food benefit is expected to decrease. The revised quantities and substitution options eliminate participants’ need for The proposed revisions provide supplemental quantities of milk across the food packages. The substitution structure eliminates the possibility of a dangling quart and may be more compatible
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
Current Rules, Proposed Revisions, and Projected Net Cost Differencesa Effect of the Proposed Revision
USDA/Federal Government State/Local Agencies Vendors/Industry WIC Participants
prescribed 24 qt of milk per month. Three qt of milk can be substituted for 1 lb of cheese, with the maximum amount of cheese being 1 lb for food packages IV, V, and VI and 2 lb for food package VII. Food package VII recipients are also prescribed 1 lb of cheese as a separate food package category. At state agency option, 1 qt of yogurt may be substituted for 1 qt of milk for women and children in food packages III–VII. No more than 1 qt of yogurt is authorized per participant. No more than a total of 4 qt of milk may be substituted for a combination of cheese, yogurt or tofu for children and women in food packages IV–VI. No substitution options. Management Information Systems will need to be updated. milk in a quart-sized container. More yogurt may be purchased by WIC participants under the revised substitution options, as 1 and 2 qt substitution options are allowed. The state agency option of a range of yogurt container sizes (30 to 32 oz) may also lead to increased redemption. Stocking requirements are not expected to substantially expand or change. with cultural needs or preferences.
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
more than a total of 6 qt of milk may be substituted for a combination of cheese, yogurt or tofu for women in food package VII.
Proposed revision:
Food package IV-A recipients are prescribed 12 qt of milk per month. Food package IV-B recipients are prescribed 14 qt of milk per month. All women are prescribed 16 qt of milk per month. Cheese is no longer offered as a separate food package item. Children and women can substitute up to 4 qt of milk per month, choosing either to substitute 2 qt of yogurt for 2 qt for milk or to substitute 1 lb of cheese and 1 qt of yogurt for 4 qt of milk. Fully breastfeeding women can choose from a third substitution option of 2 lb of cheese for 6 qt of milk.
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
Current Rules, Proposed Revisions, and Projected Net Cost Differencesa Effect of the Proposed Revision
USDA/Federal Government State/Local Agencies Vendors/Industry WIC Participants
Only one substitution option can be selected per month. At the discretion of the state agency, yogurt may be prescribed as a range of 30 to 32 oz, to accommodate different container sizes available on the market.
(Net cost effect: savings)
Current rule:
Food packages V and VII recipients are prescribed 1 lb of whole wheat bread or other authorized options. Food package IV recipients are prescribed 2 lb of whole wheat bread or other authorized options. Authorized whole grain options include brown rice, bulgur, oats, whole grain barley, tortillas, and macaroni (pasta).
The proposed revisions are expected to decrease food package costs. The expanded list of whole grain options is available at the discretion of state agencies, within cost-containment parameters. The expanded list of whole grain options that states can authorize is intended to better meet the cultural and personal preferences of the participants they serve, within cost containment parameters. The expansion of whole grain sizes will require the Management Information Systems to be updated. WIC staff, vendors, and The range of whole wheat bread sizes may lead to the elimination of the 16 oz bread size in the market, which was principally created for the WIC population. The proposed revision is likely to lead to stocking requirements that better reflect widely available sizes. Vendors will need to train personnel to identify WIC-eligible breads and grains. WIC participants will benefit by allowing whole wheat breads that are readily available in the market. The expanded state options for substitutions may allow options that better meet diverse cultural needs and personal preferences.
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
Proposed revision:
Food packages IV, V, and VII recipients are prescribed one 16 to 24 oz 100% whole wheat bread or other authorized whole grain option. Allowable whole grain options include brown rice, bulgur, oats, whole grain barley, tortillas, macaroni (pasta), corn masa flour (non-whole grain), cornmeal, teff, and buckwheat.
(Net cost effect: savings)
participants will need to be trained on new sizes and options.
Current rule:
Food package VII recipients are prescribed 30 oz of canned fish per month. May be packed in water or oil. Pack may include bones or skin. May be regular or lower in sodium content. At the state agency’s option, added sauces and flavorings are allowable.
Addition of fish across the food packages will increase food packages costs. The additional costs are offset by other changes across food packages. Implementing the proposed change will increase the short-term administrative burden. Management Information Systems will need to be revised. WIC staff, vendors, and participants will need to be trained on new quantities and rotation pattern for food packages IV, V-A, and VI. The proposed revision is expected to increase the amount of water-packed canned fish purchased by WIC participants with their food benefit. The revision may increase minimum stocking requirements for small vendors. Vendors will need to train personnel to identify authorized canned fish products. Provision of water-packed canned fish provides a high nutrient-density source of nonperishable seafood, and better aligns the food packages with DGA recommendations.
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
Current Rules, Proposed Revisions, and Projected Net Cost Differencesa Effect of the Proposed Revision
USDA/Federal Government State/Local Agencies Vendors/Industry WIC Participants
Proposed revision:
Food packages IV, V-A, and VI recipients are prescribed 10 oz of fish once every 3 months. Food package V-B recipients are prescribed 10 oz of fish every month and food package VII recipients are prescribed 20 oz per month. May be packed in water, but may not be packed in oil. All other specifications remain the same.
(Net cost effect: increase)
The burden is expected to be relatively minor, as all food packages would be authorized the same canned fish.
Current rule:
Food packages IV and VI recipients have the option of being prescribed 1 lb dried legumes (or 64 oz of canned legumes) or 16 to 18 oz of peanut butter per month. Food
Reduction of the amount of legumes and peanut butter prescribed in food packages IV through VII will result in a cost savings. States and local agencies will need to educate participants about the legume and peanut butter rotation patterns for children and women. States that do not currently authorize Sales of legumes and peanut butter to WIC participants using their food instrument will decrease. Market effect is expected to be minimal. This change brings children’s and women’s food packages in better alignment with the concept of supplemental and the recommendations of the DGA. Cost savings help offset costs of
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
packages V and VII are prescribed 1 lb legumes (or 64 oz of canned legumes) and 16 to 18 oz of peanut butter per month.
Proposed revision:
Food package IV recipients receive peanut butter, legumes, and canned fish in rotation over 3 months. All women receive legumes and peanut butter once each in a quarter. Both canned and dried legumes must be allowed by all state agencies.
(Net cost effect: savings)
canned legumes will incur a short-term administrative burden of expanding to include the canned option. Management Information Systems will need to be revised. revisions throughout the food packages.
Current rule:
Children are prescribed an $8 CVV per month. Women are prescribed an $11 CVV per month.
Proposed revision:
The monthly CVVs for food packages IV, V-A, V-B, VI, and VII are $12,
Increasing the CVV across the food packages will increase food package costs. The additional costs are offset by other changes across food packages. The infrastructure already exists to provide the CVV through the program, which greatly reduces the administrative burden associated with the proposed changes. Management Information Systems will need to be Sales of vegetables and fruits will increase through WIC participants using their food benefit. Minimum stocking requirements will slightly increase for vendors that meet the current federal minimum stocking Increasing the CVV expands the amount of vegetables and fruits participants are able to buy with their food instrument. Provision of a dollar amount, allows participants flexibility and choice to meet cultural
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
Current Rules, Proposed Revisions, and Projected Net Cost Differencesa Effect of the Proposed Revision
USDA/Federal Government State/Local Agencies Vendors/Industry WIC Participants
$15, $25, $15, and $35, respectively.
(Net cost effect: increase)
updated. States and local agencies will need to develop ways to communicate the change in the short term, and encourage use of the CVV for vegetables, to align use with the DGA. requirement vegetables. Vendors in states that currently only allow fresh fruits may experience additional stocking requirements, as frozen, canned, and/or dried options are authorized. needs and personal preferences. Larger CVV values in food packages V-B and VII are intended as incentives to partial (mostly) and full breastfeeding.

NOTES: BF = breastfeeding; CVV = cash value voucher; DGA = Dietary Guidelines for Americans; fl oz = fluid ounce(s); lb = pound(s); oz = ounce(s).

a The projected net cost differences described in this table are contingent on the committee’s assumptions, which are detailed in the “Cost” section of this chapter and in Appendix U. The magnitude and even the direction of some of the cost differences can change with different assumptions that would still be considered reasonable. The cost effects of various different assumptions are evaluated in the “Uncertainties” section of this chapter and in Appendix U.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

COST

Proposed Revisions to the Benefit

Unadjusted Estimates of Food Costs and Total Cost Differences

Table 10-3 presents unadjusted food cost estimates for the current and revised food packages. The total unadjusted food costs from FY2018 through FY2022 are estimated to be $17.7 billion (averaging $3.93 billion per year) for the current food packages and $17.4 billion (averaging $3.87 billion per year) for the revised food packages. Over the course of FY2018 through FY2022, the proposed revisions are projected to lead to a total unadjusted cost savings of $263 million, compared to the current food packages.

Phased-in Cost Differences

Table 10-4 presents the phased-in cost differences between the current and revised food packages, from FY2018 through FY2022. Assuming phased-in implementation across the WIC program inherently decreases the projected total cost savings because, overall, the revised food packages result in a long-term cost savings. The total phased-in cost savings for FY2018 through FY2022 are approximately $42 million less than the total unadjusted cost savings ($220.4 million versus $262.8 million). The estimated cost differences not only reflect changes to the type and quantity of items in the specific food packages, but also the proportion of participants who are prescribed each food package. The cost savings in food package I in FY2021 and FY2022, for example, is driven by the anticipated 5 percent shift of mother–infant dyads from fully formula-fed to the partially (mostly) breastfeeding categories, as a result of the incentives included in the revised food packages (see the “Participation” subsection in the section titled “Cost Estimate Methodology” for additional details about this assumption).

Sources of Cost Differences

Cost Difference of Each Food Package Item

To determine the source(s) of the projected cost savings of the revised food package, the committee evaluated the total costs of each food package item category within the current and revised food packages. The total costs of each of the food items presented in Table 10-5 include assumptions about substitutions and allowable options within each category and assumptions about changes in redemption rates (see “Cost Estimate Methodology” for

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

TABLE 10-3 Estimated Unadjusted Food Costs of the Current and Proposed Food Packages, FY2018 Through FY2022

Food Package Version Food Package Unadjusted Food Costs ($, millions)
FY2018a FY2019 FY2020 FY2021b FY2022 Total, FY2018 Through FY2022
Current I 213.5 441.3 451.0 461.8 472.9 2,040.6
II 300.3 620.5 634.2 649.4 665.0 2,869.4
IIIc 45.2 93.4 95.3 97.5 99.7 431.2
IV-A 277.7 571.7 582.1 593.7 605.5 2,630.7
IV-B 616.5 1,268.9 1,291.9 1,317.4 1,343.6 5,838.3
V 202.4 416.3 423.5 431.6 448.1 1,922.0
VI 128.2 263.5 267.8 272.7 284.0 1,216.3
VII 76.9 158.3 161.2 164.5 170.2 731.1
Total food costs 1,860.7 3,833.9 3,907.1 3,988.7 4,089.2 17,679.6
Revised I 213.5 441.3 451.0 450.7 461.5 2,018.1
II 297.5 614.7 628.3 634.0 649.2 2,823.7
IIIc 45.4 93.7 95.7 97.8 100.0 432.6
IV-A 264.8 544.5 553.7 563.9 574.3 2,501.2
IV-B 602.2 1,237.9 1,258.7 1,281.9 1,305.6 5,686.4
V-A 166.0 340.9 346.3 352.3 358.4 1,563.9
V-B 35.4 72.4 73.4 97.6 99.1 377.9
VI 129.0 264.5 268.4 259.0 263.2 1,184.1
VII 87.6 179.4 184.0 186.5 191.3 828.8
Total food costs 1,841.4 3,789.5 3,859.4 3,923.7 4,002.7 17,416.7
Total unadjusted cost differencesd −19.2 −44.4 −47.7 −65.0 −86.6 −262.8

NOTES: Unadjusted costs and cost differences assume full implementation of the proposed revisions in all state agencies as of April 1, 2018. Column and row totals may not be exact owing to independent rounding.

a This analysis assumes the earliest date of implementation of the proposed changes would be April 1, 2018. Accordingly all estimates for FY2018 only encompass a 6-month period.

b This analysis assumes the proposed revisions will incentivize partially (mostly) breastfeeding food packages for the dyads. The cost estimates for the revised food package anticipates a 5 percent shift of fully formula-fed dyads to the partially (mostly) breastfed participant categories in the year after full implementation of the food package revisions under the phased-in implementation assumption. Difference in food package costs in FY2021 and FY2022 are due, in part, to this anticipated shift in participants.

c Estimated costs for food package III only include standard issuance food package items, and does not account for exempt infant formula or WIC-eligible nutritionals.

d Calculated by subtracting the current food package costs from the revised food package costs. Negative values (−) indicate that the revised food packages result in cost savings compared to the current food packages. Positive values (+) indicate that the revised food packages result in cost increases compared to the current food packages.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

TABLE 10-4 Estimated Phased-in Cost Differences of the Proposed Revised Food Packages Compared to the Current Food Packages, FY2018 Through FY2022

Food Package Phased-in Cost Differences of the Revised Food Packages Compared to Current Food Packages ($, millions)a
FY2018b,c FY2019c FY2020 FY2021d FY2022d Total, FY2018 Through FY2022
I 0.0 0.0 0.0 −11.1 −11.4 −22.5
II −0.9 −1.9 −5.9 −15.4 −15.8 −40.0
IIIe +0.1 +0.1 +0.3 +0.3 +0.3 +1.1
IV-A −4.3 −9.1 −28.4 −29.8 −31.2 −102.8
IV-B −4.8 −10.3 −33.1 −35.6 −38.0 −121.8
V-Af −2.1 −4.6 −14.7 −15.6 −23.5 −60.5
V-Bf +1.8 +3.6 +10.8 +33.9 +32.9 +83.0
VI +0.2 +0.3 +0.5 −13.6 −20.8 −33.4
VII +3.6 +7.0 +22.8 +22.0 +21.1 +76.5
Total phased-in cost differences −6.4 −14.8 −47.7 −65.0 −86.6 −220.4

NOTES: Phased-in estimates assume full implementation of the proposed revisions in state agencies serving one-third of all WIC participants as of April 1, 2018. All other state agencies are assumed to implement the proposed revisions as of FY2020. FY = fiscal year.

a Cost differences were calculated by subtracting the estimated food costs for the current food packages from the estimated food costs for the revised food packages. Negative values (−) indicate that the revised food packages result in cost savings compared to the current food packages. Positive values (+) indicate that the revised food packages result in cost increases compared to the current food packages. Column and row totals may not be exact owing to independent rounding.

b This analysis assumes the earliest date of implementation of the proposed changes would be April 1, 2018. Accordingly all estimates for FY2018 only encompass 6 months.

c Phased-in cost differences in FY2018 and FY2019 are 33.3 percent of the unadjusted cost differences.

d This analysis assumes the proposed revisions will incentivize partially (mostly) breastfeeding food packages for the dyads. Accordingly, the cost estimates for the revised food package anticipates a 5 percent shift of fully formula-fed dyads to the partially (mostly) breastfed participant categories in the year after full implementation of the food package revisions. The participant shift is assumed to take place in FY2021. The shift is expected to be sustained, but to not recur in FY2022. The difference in food package costs for both FY2021 and FY2022 is due, in part, to the participant shift assumptions.

e Estimates for food package III only include standard issuance food package items for both the current and revised food packages. Costs and cost differences do not account for exempt infant formula or WIC-eligible nutritionals.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

f Currently, food package V is issued to both pregnant and partially (mostly) breastfeeding women. To arrive at cost differences, the proportion of food package V recipients categorized as pregnant and partially (mostly) breastfeeding were applied to the estimated costs of food package V for the current food packages to create estimates that could be compared to revised food package V-A and V-B, respectively.

additional details). Across the food package items, the total cost savings are larger than the total added costs, which results in estimated total cost savings of the revised food packages compared to the current food packages. Two major sources of cost differences between the current and revised food packages are juice and the cash value voucher (CVV). In the current food packages, all women and children are prescribed juice. The reduction of total juice in the revised food packages results in a total phased-in cost savings of approximately $627 million over the course of FY2018 through FY2022 compared to the current food packages. In contrast, increasing the value of the CVV for all women and children in the revised food package leads to an estimated total phased-in cost increase of approximately $780 million over the course of FY2018 through FY2022.

Major Cost Differences of Food Package Items Within Each Food Package

To explore the sources of the cost differences further, the committee evaluated the total phased-in cost differences of each food package item within each food package. Table 10-6 presents each food package item revision that resulted in a total phased-in cost difference of at least $25 million in cost saving or cost increases from FY2018 through FY2022 compared to the total cost of the corresponding item in the current food packages. The major total cost differences summarized in the table not only reflect the specific revisions to the items and the quantity prescribed, but also the distribution of participants across the different food packages. Inasmuch as food package IV-B comprises the largest participant group (approximately 36 percent of food package recipients), relatively small changes lead to more substantial cost differences. For example, the CVV in the revised food package IV-B would increase by $3 per month compared to the current food package,5 leading to an estimated $246-million increase in estimated total

__________________

5 Participants do not receive adjustments in the CVV until the inflated value crosses a $1 increment. The CVV for food package IV is currently $8 per month. By 2018, it is expected to cross the next $1 increment and be adjusted to $9 per month. The proposed revisions would increase the CVV for children to $12 per month.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

TABLE 10-5 Phased-in Total Food Cost and Cost Differences (FY2018 Through FY2022) Between the Current and Revised Food Packages by Food Package Item Category, in Descending Order of Additional Costs

Food Package Itema Total Phased-in Food Costs, FY2018 Through FY2022 ($, millions)b Total Phased-in Cost Difference, FY2018 Through FY2022 ($, millions)c
Current Food Packages Revised Food Packages
Cash value voucher 1,886.9 2,666.4 +779.5
Canned fish 51.9 165.5 +113.5
Jarred infant vegetables and fruits 578 659.4 +81.4
Eggs 513.5 513.6 +0.2d
Infant food meat 52.1 32.6 −19.4
Breakfast cereal 1,321.8 1,300.0 −21.7
Infant formula, postrebate 3,321.2 3,279.8 −41.5d
Cheesee 45.9 0 −45.9
Infant cereal 142.6 64.4 −78.1
Milk 3,747.7 3,662.2 −85.5
Legumes and peanut butter 410.4 286.9 −123.6
Whole wheat bread 559.5 406.9 −152.6
Juice 1,251.6 625.0 −626.6

NOTES: Phased-in estimates assume full implementation of the proposed revisions in state agencies serving one-third of all WIC participants as of April 1, 2018. All other state agencies are assumed to implement the proposed revisions as of FY2020. FY = fiscal year.

a Broadly describes the food package item category. Cost differences include assumptions about substitutions and selection of allowable options within each category.

b Calculated by summing the food cost of each specific food package item from FY2018 through FY2022. To account for the phased-in implementation, the food costs for FY2018 and FY2019 are one-third the estimated unadjusted food costs. Phased-in and unadjusted food costs are identical for FY2020 through FY2022. The estimated phased-in total food costs reflect assumptions about redemption, substitutions, prices, and program participation.

c Cost differences were calculated by subtracting the estimated phased-in food costs for the current food packages from the estimated food costs for the revised food packages. Negative values (−) indicate that the revised food packages result in cost savings compared to the current food packages. Positive values (+) indicate that the revised food packages result in cost increases compared to the current food packages. Row totals may not be exact owing to independent rounding.

d This analysis assumes the proposed revisions will incentivize partially (mostly) breastfeeding food packages for the mother–infant dyads. Accordingly, the cost estimates for the revised food package anticipates a 5 percent shift of fully formula fed dyads to the partially (mostly) breastfed participant categories in the year after full implementation of the food package revisions. The participant shift is assumed to take place in FY2021. The shift is expected to be sustained, but to not recur in FY2022. The projected cost difference is attributed solely to this shift, rather than revisions to the food item in the food package.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

e Describes the total food cost and cost difference of cheese as a separate food package category for food package VII. The costs associated with cheese as a substitution option for fluid milk is incorporated into the estimates for the milk category.

phased-in costs compared to the current food package. In contrast, the CVV for fully breastfeeding women (food package VII)—who comprise approximately 3 percent of food package recipients—would increase by $24 per month in the revised food packages, and would only lead to an estimated $200 million increase in estimated phased-in costs.

Cost Differences of Food Package Items Over Time

The preceding sections evaluate the cost implications of each food package item, summed across all projected years. As presented in Table 10-7, the phased-in costs differences during FY2018 through FY2022 reflect the assumptions of the analysis. Cost differences in FY2018 and FY2019 are markedly lower than in subsequent years, for example, because they reflect the phased-in implementation of the revised food package. The values for these 2 years are one-third of the unadjusted value. The cost differences for FY2018 are even less, because the values only encompass a 6-month period.

Some of the variations in cost differences over time result from assumptions about participation. In FY2021 and FY2022, infant formula is projected to cost less and eggs are projected to cost slightly more in the revised food packages compared to the current food packages. The analysis does not assume changes in quantities or the rate of redemption between the current and revised food packages for either food package item. Instead, the cost differences result from the 5-percent shift in fully formula fed mother–infant dyads to partially (mostly) breastfeeding dyads that the committee projects to take place in FY2020 for the revised food packages. The slight increase in egg costs in the revised food packages is attributed to the women shifting from being classified as partially (minimally) breastfeeding at more than 6 months postpartum (i.e., receiving food package N/A) to partially (mostly) breastfeeding (i.e., receiving the revised food package V-B). Partially (mostly) breastfeeding women may receive food package benefits for up to 1 year postpartum.

Most of the projected variations in cost differences over time are the result of a complex interplay among several factors. The CVV serves as a prime example. The proposed revisions add value to the CVV across all food packages for women and children. In FY2020 and FY2022, the CVV for women in the revised food package VII is projected to be adjusted for inflation by $1, increasing to $36 and $37 per month, respectively.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

TABLE 10-6 Revisions to Food Package Items That Lead to Major Total Phased-in Cost Differences from FY2018 Through FY2022, by Food Package

Food Package Food Package Revision Total Phased-in Cost Difference, FY2018 Through FY2022 ($, millions)a
I
  • No revision leading to a major cost differenceb
II
  • Infant vegetable and fruit redemption is projected to increase with the addition of the CVV substitution option
+69
  • Infant cereal is reduced
−71
III
  • No revision leading to a major cost differencec
IV-A
  • CVV is increased
+107
  • Canned fish is added to the food package
+27
  • Milkd is reduced
−45
  • Whole wheat breade is reduced
−52
  • Juice is reduced
−116
IV-B
  • CVV is increased
  • Canned fish is added to the food package
  • Legumes and peanut butter are reduced
  • Whole wheat breade is reduced
  • Juice is reduced
+246
+62
−47
−119
−264
V-A
  • CVV is increased
  • Milkd is reduced
  • Legumes and peanut butter are reduced
  • Juice is reduced
+129
−29
−37
−84
V-B
  • CVV is increased
+26
VI
  • CVV is increased
  • Juice is reduced
+65
−109
VII
  • CVV is increased
  • Cheesef is eliminated as its own food package item
+200
−46

NOTES: The committee defined a major total cost difference as a revision within a specific food package resulting in a total phased-in cost difference of at least $25 million over the course of FY2018 through FY2022. The major total cost differences not only reflect the specific revisions to the items and the quantity prescribed, but also the distribution of participants across the different food packages. Food packages that represent a smaller proportion of WIC participants generally have fewer major cost differences. Not all savings and costs are reflected in the table. CVV = cash value voucher; FY = fiscal year.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

a Phased-in estimates assume full implementation of the proposed revisions in state agencies serving one-third of all WIC participants as of April 1, 2018. All other state agencies are assumed to implement the proposed revisions as of FY2020. Cost differences were calculated by subtracting the estimated cost for the current food package item from the estimated costs corresponding to the food item in the revised food package. Negative values (−) indicate that the revised food packages result in cost savings compared to the current food packages. Positive values (+) indicate that the revised food packages result in cost increases compared to the current food packages.

b This analysis assumes the incentives in the proposed revisions will result in a 5 percent shift of fully formula fed mother–infant dyads to the partially (mostly) breastfed participant categories in the year after full implementation of the food package revisions across the entire WIC program under the phased-in assumption. The total amount of formula prescribed in the revised food packages I and II is expected to decrease because of this shift in participants. For food package I, the total cost difference for FY2018 through FY2022 is expected to result in $22.5 million in savings.

c Because food package III recipients comprise a small proportion of food package recipients, all food package revisions resulted in total phased-in cost differences of less than $25 million over the course of FY2018 through FY2022.

d The estimated cost differences for milk includes assumptions about the proportion of participants purchasing fluid milk (e.g., whole milk, 2%), milk alternatives (e.g., lactose-free milk, soy-based beverage), and substitutions (e.g., cheese, yogurt).

e The estimated cost difference for whole wheat bread includes assumptions about the proportion of participants purchasing options available under the current food packages and proposed revisions (e.g., corn tortillas, instant oatmeal).

f The proposed revisions removes cheese as a separate food package category prescribed to food package VII participants. Cheese remains a substitution option for milk across all children’s and women’s food packages.

Similarly, an inflation adjustment of $1 is projected for the revised food package V-B (for partially [mostly] breastfeeding women), increasing the CVV to $26 per month. Also during FY2021, the committee anticipates a 5 percent shift of fully formula fed dyads to partially (mostly) breastfed dyads, which would shift a portion of postpartum women to the larger CVV in the revised food package V-B (compared to the revised food package VI CVV). These adjustments and assumptions in the revised food packages do not have a dramatic effect on total cost differences because participants in food packages VII and V-B are only a small proportion of the total WIC-participating population. In FY2022, however, the trajectory of the cost difference for the CVV changes, decreasing from +$230 million in FY2021 to +$215 million in FY2022. This is the result of a $1 inflation adjustment that is projected to affect all food packages for women in the current food packages. Although the revised CVV values result in positive cost differences (i.e., cost increases) compared to the CVV values in the current food packages for each fiscal year assessed, the difference across the years is not consistent. Assumptions regarding the CVV are described

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

TABLE 10-7 Phased-in Cost Differences Between the Current and Revised Food Packages by Food Package Item Category, by Fiscal Year (FY)

Food Package Itema Phased-in Cost Differences of the Revised Food Packages Compared to Current Food Packages ($, millions)b
FY2018c,d FY2019d FY2020 FY2021 FY2022
Cash value voucher +36.5 +73.9 +224.1 +229.7 +215.2
Canned fish +5.0 +10.3 +31.6 +32.9 +33.7
Jarred infant vegetables and fruits +3.6 +7.5 +22.9 +23.4 +24
Eggs 0 0 0 +0.1 +0.1
Infant food meat −0.9 −1.8 −5.5 −5.6 −5.7
Breakfast cereal −1.0 −2.0 −6.2 −6.2 −6.3
Infant formula, postrebate 0 0 0 −20.5 −21.0
Cheesee −2.0 −4.2 −12.9 −13.2 −13.5
Infant cereal −3.5 −7.2 −22.0 −22.5 −23.0
Milk −3.9 −8.1 −24.7 −24.1 −24.7
Legumes and peanut butter −5.5 −11.3 −34.8 −35.6 −36.4
Whole wheat bread −6.8 −14.1 −43.4 −43.6 −44.6
Juice −27.9 −57.7 −176.9 −179.9 −184.2

NOTES: Phased-in estimates assume full implementation of the proposed revisions in state agencies serving one-third of all WIC participants as of April 1, 2018. All other state agencies are assumed to implement the proposed revisions as of FY2020. FY = fiscal year.

a Broadly describes the food package item category. Cost differences include assumptions about substitutions and selection of allowable options within each category.

b Cost differences were calculated by subtracting the estimated phased-in food cost for each item in the current food packages from the estimated food costs of the corresponding item in the revised food packages. Negative values (−) indicate that the revised food packages result in cost savings compared to the current food packages. Positive values (+) indicate that the revised food packages result in cost increases compared to the current food packages.

c This analysis assumes the earliest date of implementation of the proposed changes would be April 1, 2018. Accordingly all estimates for FY2018 only encompass a 6-month period.

d Phased-in cost differences in FY2018 and FY2019 are 33.3 percent of the unadjusted cost differences.

e Describes the cost difference of cheese as a separate food package category for food package VII. The costs associated with cheese as a substitution option for fluid milk is incorporated into the estimates for the milk category.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

in the “Cost Effect Methodology” section that follows and in Appendix U. Alternative assumptions and their effects on total cost differences are tested in the “Uncertainty” section later in this chapter.

Cost-Estimate Methodology

This analysis projects costs of each food package in the current and revised sets of food packages through FY2022. The committee estimated the monthly costs of a food package by multiplying the projected number of recipients of the package, the average proportion of each food package item projected to be redeemed, and the estimated prices of each item in the food package and then summing these values within the food package. This process was repeated for each specific food package. Monthly costs were multiplied by 12 to arrive at annual estimates for each fiscal year in the analysis (FY20186 through FY2022). The sections that follow provide a brief overview of how the committee projected participation, redemption, and prices. Details of the methodology are presented in Appendix U.

Participation

The committee used two data sources to estimate program participation, as described previously in Chapter 7. The 2014 Food Package Report (USDA/FNS, 2016a) was used to determine the distribution of participants across the specific food packages. To estimate the average numbers of participants that are issued each specific food package in a month, the distributions in the Food Package Report were applied to the administrative data posted on FNS’s website7 (USDA/FNS, 2016d). The participation estimates the committee derived from these data sources served as the basis for both the current and revised food package cost estimates that were used for the cost analysis presented in Chapter 7 and this chapter. The complete regulatory impact analysis (see Appendix U) includes a detailed explanation of how participation for each food package was determined.

Estimating participation for FY2018 through FY2022 To forecast participation through FY2022, the committee extrapolated the FY2015 WIC participation levels based on the relationship between WIC participation and the general economy (unemployment rates and the forecast of the civilian labor force). During and following the economic recession

__________________

6 FY2018 in this analysis only encompasses 6 months. As such, monthly estimates were multiplied by 6 rather than 12.

7 Administrative data includes all state agencies, Indian Tribal Organizations, and territories.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

of 2008–2009, WIC participation grew. As that recession waned, WIC participation declined. With the general economy forecasted to improve moderately and then stabilize, the committee expects that WIC participation levels will decrease initially, then increase slightly and stabilize. The committee forecasts WIC participation to decline by 2.2 percent between FY2015 and FY2018. From FY2018 to FY2022, the committee forecasts WIC participation to increase by 1.5 percent. As a result, the committee forecasts that the FY2022 participation levels will be 0.7 percent lower than the FY2015 levels.

Anticipating a shift in fully formula fed mother–infant dyads under the proposed revisions Participation projections are identical between the current and proposed revised food packages, with one exception. As described in Chapter 7 (and in more detail in Appendix U), the committee incorporated a 5 percent shift of participants from the fully formula-feeding to the partially breastfeeding dyad. The committee anticipates that the 5 percent shift will take place after all the revisions have been implemented in all states and will be sustained over time. Accordingly, the shift has been incorporated in FY2021 participation estimates, which corresponds to the year after full implementation under the phased-in assumption.

Redemption

As described in Chapter 7, USDA-FNS provided the committee with 12 months (August 2013 through July 2014) of price and redemption data from a convenience sample of six WIC state agencies, representing five of the seven regions of the country (hereafter referred to as the FNS redemption dataset). Additional details related to this data source, and the methods applied to calculate redemption rates for the current and revised food packages using this and other sources are presented in Chapter 7 and further detailed in Appendix R. The calculated redemption rates for each food package item served as the quantity multipliers used in the estimation of total food package costs.

Prices

Prices for each food package item were primarily estimated from the FNS redemption dataset, supplemented by data from the 2014 Information Resources, Inc. (IRI) Consumer Network Database as described in Chapter 7 and in Appendix U. Chapter 7 and Appendix U also describe the development of composite prices for certain WIC food categories and the inflation of prices to the base of FY2015.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

Projecting prices after FY2015 For years after FY2015, prices for items that are prescribed as a fixed quantity (e.g., 16 quarts of milk) were inflated using the Congressional Budget Office’s March 2015 Baseline Thrifty Food Plan estimates (CBO, 2015). The inflation assumptions are presented in Table 10-8.

Inflating the cash value voucher The CVV does not inflate the same way as items prescribed as a fixed quantity. Instead, its inflation depends on an annual average of the Consumer Price Index (CPI) for fresh fruits and vegetables (7 C.F.R. § 246.16). Under the current rule, the average CPI for fresh fruits and vegetables from April 2006 through March 2007 is assigned to FY2008 and considered the baseline CPI. Each subsequent year follows the same pattern (e.g., FY2009 value is the average CPI from April 2007 through March 2008). To inflate the CVV, the average CPI for the fiscal year being considered is divided by the baseline CPI value and multiplied by the base values of each CVV ($8 for children, $10 for women). Participants only receive an increase in value when the inflated CVV crosses a $1 increment. This inflation adjustment recently occurred in the food packages for women, with the $10 CVV increased to $11 beginning in FY2016. Provision of the CVV in dollar increments, rather than prescribing the exact inflated value, is easier from an administrative perspective, as adjustments only have to be made periodically. It also decreases participant burden, as the benefit is provided in a round number and a consistent value

TABLE 10-8 Inflation Assumption for Food Package Items Prescribed as a Fixed Quantity, FY2016–FY2022

Year Thrifty Food Plan (inflation rate)a
FY2016b 1.026
FY2017b 1.020
FY2018 1.020
FY2019 1.021
FY2020 1.021
FY2021 1.023
FY2022 1.023

NOTES: The base year of this analysis is FY2015. FY = fiscal year.

a The percent change is relative to the fiscal year preceding it. Prices for FY2016, for example, were projected to be 2.6 percent higher than in FY2015.

b Year not included in the cost estimates presented in this regulatory impact analysis, but was necessary to arrive at price estimates for FY2018 through FY2022.

SOURCE: CBO, 2015.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

month-to-month. This inflation approach was used for estimating the costs of the current food packages in this analysis.

Under the proposed revisions, all women and children receive a CVV of higher value. Had the committee kept FY2008 as the baseline CPI value under the proposed revisions, in FY2018 the $12, $15, $25, and $35 CVVs would already have been inflated to $13, $17, $28, and $39, respectively, because of the inflation that has taken place in the decade between FY2008 and FY2018. Accordingly, the CVV under the proposed revision required a new inflation baseline, which was assumed to be the first year of implementation (FY2018).

The CPI values used in the inflation of the CVV encompass the 6 to 18 months prior to the fiscal year they describe. Accordingly, actual CPI values were used through FY2017 of this analysis. The committee could not identify forecasts for the retail price of fresh vegetables and fruits that extended to FY2022. A forecast for 2017 projected a 1 to 2 percent relative change in price from FY2016 (USDA/ERS, 2016). Therefore, a relative change in average CPI of 1.5 percent was used for FY2018 through FY2022. The cost effect of using alternate baseline years for the CPI inflation values for the revised food packages are tested in the “Uncertainties” section.

UNCERTAINTIES

The estimated costs of the current food packages and proposed revised food packages are sensitive to key assumptions made in the preceding sections. The cost implications of several of these assumptions are tested below. The uncertainty scenarios specifically evaluate changing one or multiple assumptions about the revised food package and evaluating the cost effects. The “primary analysis” refers to the assumptions, food costs, and cost differences presented in the preceding sections of this chapter. “Base assumption” refers to the specific assumption(s) used in the primary analysis.

For each uncertainty scenario tested, the phased-in cost differences are presented. The phased-in cost differences presented for each assumption scenario (i.e., base assumption, each uncertainty scenario) indicate the cost effect as it compares to the current food packages. Negative values (−) indicate that the specific scenario costs less than the current food packages, whereas a positive value (+) indicates that the specific scenario costs more than the current food packages. The cost differences between the base assumption and each uncertainty scenario are also presented. These describe how much the base assumption costs or saves, compared to the tested uncertainty scenario. For these differences, a negative value (−) indicates that the base assumption used in the primary analysis costs less than the uncertainty scenario; a positive value (+) indicates that the base

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

assumption costs more than the uncertainty scenario. This section presents select uncertainties tested by the committee. A broader range of uncertainties is explored in the complete RIA (see Appendix U).

The cost differences presented in this section must be considered in context of estimated overall food costs of the current and revised food packages. Over the course of FY2018 through FY2022, the food packages in this analysis are projected to cost approximately $17 billion, averaging to approximately $3.9 billion per year, both under the current and revised food packages.

Assumptions About the CVV

The CVVs are estimated to cost approximately $780 million more in the revised food packages compared to the CVVs in the current food packages. The proposed revisions allow for a CVV to be a substitution option for juice and jarred infant food vegetables and fruits. Given the CVV’s increased prominence in the revised food packages, it is essential to evaluate different aspects of the assumptions underlying the primary cost analysis.

Different CVV Redemption Projections Under the Proposed Revisions

In the primary analysis, CVV redemption was estimated to be 77.2 percent in the current food packages and 75.0 percent in the revised food packages (rationale presented in Appendix U). The cost implications of two alternative redemption scenarios are presented in Table 10-9. Scenario 1 shows that increasing the redemption assumption to 85 percent for the revised food packages would result in the estimated $220.4 million savings projected in the primary analysis becoming $135.1 million in additional costs compared to the current food packages ($355.5 million in additional costs compared to the base assumption). Similarly, scenario 2 shows that lower redemption of the revised CVV (65 percent redemption) results in an additional $355.5 million savings from FY2018 through FY2022, compared to the base assumptions in the primary analysis. This lower redemption assumption for the CVVs in the revised food packages results in a total cost savings of approximately $580 million over the course of FY2018 through FY2022, compared to the current food packages.

Different CPI Base Year for the Revised Food Packages

In the revised food packages, FY2018 serves as the base year to which subsequent years are compared for CVV inflation. Table 10-10 explores the cost differences associated with different CPI base years for the revised food packages. In scenario 1, changing the base year to inflate the revised

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

TABLE 10-9 Projected Phased-in Cost Difference of WIC Food Package Revisions, Increase or Decrease in Redemption Assumption of Cash Value Voucher

Scenario CVV Assumption, Percent Redeemed Phased-in Cost Differences of the Revised Food Packages Compared to Current Food Packages ($, millions)a
FY2018 FY2019 FY2020 FY2021 FY2022 Total Cost Difference, FY2018 Through FY2022
Base assumptionb 75 −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Uncertainty scenario 1b 85 +10.2 +18.8 +53.4 +37.0 +15.8 +135.1
Cost difference of base assumption compared to uncertainty scenario 1c −16.6 −33.6 −101.1 −101.9 −102.3 −355.5
Base assumptionb 75 −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Uncertainty scenario 2b 65 −23.0 −48.4 −148.8 −166.9 −188.9 −575.9
Cost difference of base assumption compared to uncertainty scenario 2c +16.6 +33.6 +101.1 +101.9 +102.3 +355.5

NOTES: This table shows the phased-in cost difference between the revised and current food packages, along with the cost differences between different redemption assumptions for the revised CVV (85 and 65 percent redemption) and the current food packages. The primary analysis of the regulatory impact analysis assumes 75 percent redemption of the revised CVVs. All other assumptions in the primary analysis remain constant. Column and row totals may not be exact owing to independent rounding. CVV = cash value voucher; FY = fiscal year.

a Phased-in estimates assume full implementation of the proposed revisions in state agencies serving one-third of all WIC participants as of April 1, 2018. All other state agencies are assumed to implement the proposed revisions as of FY2020.

b Describes the increases or savings of the base assumption or uncertainty scenario (“assumption scenario”) compared to the current food packages. Negative values (−) indicate that the assumption scenario costs less than the current food packages. Positive values (+) indicate that the assumption scenario costs more than the current food packages.

c Describes the increases or savings of the base assumption compared to the uncertainty scenario. Negative values (−) indicate that the base assumption costs less than the uncertainty assumption. Positive values (+) indicate that the base assumption costs more than the uncertainty scenario.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

TABLE 10-10 Projected Phased-in Cost Difference of WIC Food Package Revisions, Changing the Base Comparison Year for CVV Inflation

Scenario Base Year for CVV Inflation in the Revised Food Packages Phased-in Cost Differences of the Revised Food Packages Compared to Current Food Packages ($, millions)a
FY2018 FY2019 FY2020 FY2021 FY2022 Total Cost Difference, FY2018 Through FY2022
Base assumptionb FY2018 −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Uncertainty scenario 1b FY2015 −5.8 −13.6 −31.1 −8.6 −32.4 −91.6
Cost difference of base assumption compared to uncertainty scenario 1c −0.6 −1.2 −16.6 −56.4 −54.1 −128.8
Base assumptionb FY2018 −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Uncertainty scenario 2b FY2016 −6.4 −14.0 −46.5 −62.6 −72.3 −201.8
Cost difference of base assumption compared to uncertainty scenario 2c 0.0 −0.8 −1.2 −2.3 −14.3 −18.6
Base assumptionb FY2018 −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Uncertainty scenario 3b FY2017 −6.4 −14.0 −46.5 −62.6 −73.8 −203.4
Cost difference of base assumption compared to uncertainty scenario 3c 0.0 −0.8 −1.2 −2.3 −12.8 −17.1

NOTES: This table shows the phased-in cost difference between the revised and current food packages, along with the cost differences between different base years for CVV inflation and the current food packages. The primary analysis of the RIA assumes that the base year of the CVV inflation is FY2018. All other assumptions in the primary analysis remain constant. Column and row totals may not be exact owing to independent rounding. CVV = cash value voucher; FY = fiscal year.

a Phased-in estimates assume full implementation of the proposed revisions in state agencies serving one-third of all WIC participants as of April 1, 2018. All other state agencies are assumed to implement the proposed revisions as of FY2020.

b Describes the increases or savings of the base assumption or uncertainty scenario (“assumption scenario”) compared to the current food packages. Negative values (−) indicate that the assumption scenario costs less than the current food packages. Positive values (+) indicate that the assumption scenario costs more than the current food packages.

c Describes the increases or savings of the base assumption compared to the uncertainty scenario. Negative values (−) indicate that the base assumption costs less than the uncertainty assumption. Positive values (+) indicate that the base assumption costs more than the uncertainty scenario.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

CVV to FY2015 would cost an additional $128 million over the FY2018 through FY2022, compared to using FY2018 as the base year. Both scenarios 2 and 3 demonstrate that there are relatively small costs effects of selecting either FY2016 or FY2017 as the base year for CVV inflation in the revised food packages.

Assumptions About Use of “Up to” Amounts

The primary analysis assumes that infant formula prescription practices will not change between the current and revised food packages. Table 10-11 projects the cost effects of different formula prescription practices for the revised food packages. In scenario 1, prescribing all infants in food package I-BF/FF-A the maximum “up to” amount of infant formula would result in approximately $20 million in additional costs in the revised food packages over the course of FY2018 through FY2022, compared to the base assumption used in the primary analysis. The revised food packages would still be projected to cost approximately $201 million less than the current food packages, over the course of FY2018 through FY2022. In contrast, if the average amount of infant formula prescribed across all food packages was 95 percent of the maximum “up to” amount for each food package (scenario 2), the total cost savings of the revised food packages would increase by $145 million over the course of the FY2018 through FY2022, compared to the base assumption used in the primary analysis. This would result in an estimated $366 million in total savings compared to the current food packages.

Assumptions About Shifts in Fully Formula-Fed Dyads

A key assumption of the primary analysis is that, under the proposed revisions, 5 percent of fully formula fed mother–infant dyads will shift to corresponding fully (mostly) breastfeeding food packages. The committee considered the 5 percent shift conservative, given evidence that the 2009 food package, which allowed women to choose between formula-feeding or fully breastfeeding in the infant’s first month of life, resulted in an approximately 7 to 11 percent shift of dyads from breastfeeding to formula-feeding (USDA/FNS, 2011).

Table 10-12 presents the cost effect of this assumption. The cost differences only affect FY2021 and FY2022, because the base assumption is that the shift would occur 1 year after full implementation in all state agencies under the phased-in implementation assumption. Assuming no shift in participants in the revised food packages (scenario 1) would cost approximately $25 million more over the course of FY2018 through FY2022, compared to the assumption of a 5 percent shift. A 3 percent shift of

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

TABLE 10-11 Projected Phased-in Cost Difference of WIC Food Package Revisions, Changing the Maximum Amount of Formula in Food Packages I and II

Scenario Maximum Formula Assumption, Amount Change Phased-in Cost Differences of the Revised Food Packages Compared to Current Rule ($, millions)a
FY2018 FY2019 FY2020 FY2021 FY2022 Total Cost Difference, FY2018 Through FY2022
Base assumptionc Identical to current food packageb −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Uncertainty scenario 1c All I-BF/FF-A recipients prescribed maximum “up to” amount −5.6 −13.1 −42.6 −58.8 −80.3 −200.5
Cost difference of base assumption compared to uncertainty scenario 1d −0.8 −1.6 −5.1 −6.1 −6.3 −19.9
Base assumptionc Identical to current food packageb −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Uncertainty scenario 2c 95 percent of maximum “up to” amounts −13.0 −28.5 −89.6 −105.9 −128.5 −365.5
Cost difference of base assumption compared to uncertainty scenario 2d +6.6 +13.7 +41.9 +41.0 +41.9 +145.1
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

NOTES: This table shows the phased-in cost difference between the proposed revisions and the current rule, along with the cost differences of different assumptions regarding the maximum amount of formula in food packages I and II. All other assumptions in the primary analysis remain constant. Column and row totals may not be exact owing to independent rounding. FY = fiscal year.

a Phased-in estimates assume full implementation of the proposed revisions in state agencies serving one-third of all WIC participants as of April 1, 2018. All other state agencies are assumed to implement the proposed revisions as of FY2020.

b Base assumptions for maximum formula under the proposed revisions are as follows: I-BF/FF-A (104 fluid ounces), I-BF/FF-B (424 fluid ounces), I-BF/FF-C (510 fluid ounces), I -FF-A (861 fluid ounces), I -FF-B (948 fluid ounces), II-BF/FF (371 fluid ounces), II-FF (683 fluid ounces). The formula amounts are the weighted average of the monthly maximum allowances across the different forms of infant formula. The base assumption is that the quantity of formula prescribed will remain unchanged.

c Describes the increases or savings of the base assumption or uncertainty scenario (“assumption scenario”) compared to the current food packages. Negative values (−) indicate that the assumption scenario costs less than the current food packages. Positive values (+) indicate that the assumption scenario costs more than the current food packages.

d Describes the increases or savings of the base assumption compared to the uncertainty scenario. Negative values (−) indicate that the base assumption costs less (provides more savings) than the uncertainty assumption. Positive values (+) indicate that the base assumption costs more than the uncertainty scenario.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

TABLE 10-12 Projected Phased-in Cost Difference of WIC Food Package Revisions, Changing Assumptions About Percent of Fully Formula-Fed Dyads Shift to Partially (mostly) Breastfed Food Packages

Scenario Dyadic Shift Assumption, Percent of Fully Formula Fed Projected to Shifta Phased-in Cost Differences of the Revised Food Packages Compared to Current Food Packages ($, millions)b
FY2018 FY2019 FY2020 FY2021 FY2022 Total Cost Difference, FY2018 Through FY2022
Base assumptionc 5 −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Uncertainty scenario 1c 0 −6.4 −14.8 −47.7 −52.8 −74.0 −195.7
Cost difference of base assumption compared to uncertainty scenario 1d 0.0 0.0 0.0 −12.1 −12.5 −24.7
Base assumptionc 5 −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Uncertainty scenario 2c 3 −6.4 −14.8 −47.7 −60.1 −81.5 −210.6
Cost difference of base assumption compared to uncertainty scenario 2d 0.0 0.0 0.0 −4.9 −5.0 −9.9
Base assumptionc 5 −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Uncertainty scenario 3c 8 −6.4 −14.8 −47.7 −72.2 −94.1 −235.2
Cost difference of base assumption compared to uncertainty scenario 3d 0.0 0.0 0.0 +7.3 +-7.5 +14.8
Base assumptionc 5 −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Uncertainty scenario 4c 5 (only dyads <6 months postpartum)d −6.4 −14.8 −47.7 −57.5 −78.9 −205.30
Cost difference of base assumption compared to uncertainty scenario 4d 0.0 0.0 0.0 −7.5 −7.7 −15.1
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

NOTES: This table shows the phased-in cost difference between the revised and current food packages, along with the cost differences of different assumptions regarding the percent of fully formula-fed mother–infant dyads shifting to partially (mostly) breastfeeding food packages. All other assumptions in the primary analysis remain constant. Column and row totals may not be exact owing to independent rounding. FY = fiscal year.

a The shift describes the percent of participants prescribed food package I-FF-A, I-FF-B, II-FF, VI, and N/A shifting to corresponding partially (mostly) breastfeeding food packages. Approximately 21 and 79 percent of participants shifting from food package I-FF-A were assigned to food packages I-BF/FF-A and I-BF/FF-B, respectively. All women shifting from being classified as more than 6 months postpartum (i.e., food package N/A) were assigned to food package V-B. The shift is projected to occur in the year after full implementation of the proposed revisions (FY2021). The effect on participation is expected to be sustained but additional shifts are not projected in subsequent years.

b Phased-in estimates assume full implementation of the proposed revisions in state agencies serving one-third of all WIC participants as of April 1, 2018. All other state agencies are assumed to implement the proposed revisions as of FY2020.

c Describes the increases or savings of the base assumption or uncertainty scenario (“assumption scenario”) compared to the current food packages. Negative values (−) indicate that the assumption scenario costs less than the current food packages. Positive values (+) indicate that the assumption scenario costs more than the current food packages.

d Describes the increases or savings of the base assumption compared to the uncertainty scenario. Negative values (−) indicate that the base assumption costs less (provides more savings) than the uncertainty assumption. Positive values (+) indicate that the base assumption costs more than the uncertainty scenario.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

participants would decrease estimated total cost savings by $9.9 million (Scenario 2), whereas an 8 percent shift would increase estimated total cost savings by $14.8 million (Scenario 3), compared to the base assumption in the primary analysis. If the shift only occurs for infants less than 6 months old and women less than 6 months postpartum, the estimated total cost savings of the revised food packages would decrease by $15.1 million over the course of FY2018 through FY2022, compared to the base assumption.

ALTERNATIVES

The committee considered several alternatives to current food package items and amounts that were ultimately rejected. Some of these alternatives and the committee’s rationale for not including them in the revised food packages are outlined in the sections that follow. As with the uncertainty scenarios, the “primary analysis” refers to the set of base assumptions that led to a total phased-in cost savings of $220 million for the revised food packages compared to the current food packages, over the course of FY2018 through FY2022.

For each alternative tested, the phased-in cost differences are presented. They indicate the cost effect as it relates to the current food packages. Negative values (−) indicate that the specific scenario costs less than the current food packages, whereas a positive value (+) indicates that the specific scenario costs more than the current food packages. The cost difference between the base assumption and the alternative are also presented. These describe how much the base assumption costs or saves, compared to the tested alternative. For these differences, a negative value (−) indicates the base assumption used in the primary analysis costs less than the alternative; a positive value (+) indicates the base assumption costs more than the alternative. This section presents select alternatives tested by the committee. Additional alternatives are explored in the complete RIA (see Appendix U).

More Canned Fish

To support the Dietary Guidelines for Americans (DGA) recommendation to increase seafood intake, the committee proposes adding canned fish to all children’s and women’s food packages and offering it as a substitution option for jarred infant-food meat. To maintain cost neutrality and create incentives for partially (mostly) and fully breastfeeding women, different quantities and rotation patterns were created for canned fish. The amount prescribed in food packages IV-A, IV-B, V-A, and VI are relatively low compared to the DGA recommended intake. Table 10-13 shows the cost effects of prescribing additional canned fish to these food packages. Increasing the prescribed amount to 20 ounces every 3 months for

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

TABLE 10-13 Projected Phased-in Cost Difference of WIC Food Package Revisions, Prescribing Additional Fish to Food Packages IV-A, IV-B, V-A, and VI

Scenario Quantity of Fish Prescribed to Food Packages IV-A, IV-B, V-A, and VI Phased-in Cost Differences of the Revised Food Packages Compared to Current Food Packages ($, millions)a
FY2018 FY2019 FY2020 FY2021 FY2022 Total Cost Difference, FY2018 Through FY2022
Base assumptionb 10 oz once every 3 months −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Alternative 1b 20 oz once every 3 months −1.0 −3.6 −13.4 −30.0 −50.8 −98.8
Cost difference of base assumption compared to alternative 1c −5.4 −11.2 −34.3 −35.0 −35.8 −121.6
Base assumptionb 10 oz once every 3 months −6.4 −14.8 −47.7 −65.0 −86.6 −220.4
Alternative 2b 10 oz per month 4.4 7.6 20.9 4.9 −15.0 22.8
Cost difference of base assumption compared to alternative 2c −10.8 −22.4 −68.6 −69.9 −71.6 −243.2

NOTES: This table shows the phased-in cost difference between the revised and current food packages, along with the cost differences of alternative quantities of canned fish prescribed to participants receiving food packages IV-A, IV-B, V-A, and VI. All other assumptions in the primary analysis remain constant. Column and row totals may not be exact owing to independent rounding. FY = fiscal year.

a Phased-in estimates assume full implementation of the proposed revisions in state agencies serving one-third of all WIC participants as of April 1, 2018. All other state agencies are assumed to implement the proposed revisions as of FY2020.

b Describes the increases or savings of the base assumption or alternative compared to the current food packages. Negative values (−) indicate that the base assumption or alternative costs less than the current food packages. Positive values (+) indicate that the base assumption or alternative costs more than the current food packages.

c Describes the increases or savings of the base assumption compared to the alternative. Negative values (−) indicate that the base assumption costs less (provides more savings) than the uncertainty assumption. Positive values (+) indicate that the base assumption costs more than the uncertainty scenario.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

these food packages (alternative 1) costs approximately $122 million more than the base assumption. Alternative 1 would be considered cost neutral from FY2018 through FY2022, as the total food package costs would be approximately $99 million less than the projected costs for the current food packages (from FY2018 through FY2022). However, the parameter of cost neutrality the committee was operating under was +/−$0.10 per-participant cost per month, based on FY2015 prices. When 20 ounces of canned fish every 3 months is used in this pricing scenario, the revised food packages would cost $0.37 more per-participant per month than the current food packages. Alternative 2 shows that 10 ounces per month in the food packages would cost approximately $23 million more than the current food packages.

MARKET ANALYSIS

The food package revisions will result in changes in the quantities and types of foods that WIC participants buy with their WIC food benefit. Although the market effects of the changes are difficult to quantify accurately, the committee expects them to be minor.

images
FIGURE 10-1 Estimated annual cost of food package item categories, current and revised food packages, FY2015.
NOTES: The food package item categories encompass substitutions and allowable options. Estimates for the revised food packages includes the 5 percent participant shift from the fully formula-feeding mother–infant dyads to partially (mostly) breastfeeding food packages. Vegetables and fruits (CVV) estimates for the current food packages use $11 for all women’s food packages. CVV = cash value voucher.
Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×
images
FIGURE 10-2 Estimated annual cost of infant formula, current and revised food packages, FY2015.
NOTES: Estimates for the revised food packages includes the 5 percent participant shift from the fully formula-feeding mother–infant dyads to partially (mostly) breastfeeding food packages.

Based on the assumptions in the primary analysis, the committee estimated the total value of WIC sales for each food item using the quantities in the current and revised food packages for FY2015.8Figure 10-1 shows the estimated sales for each category prescribed in the current food package side-by-side with estimates for the revised package. Each food item represents the food-item category, which encompasses assumptions about substitutions and allowable options within that category (e.g., yogurt and cheese substitution are included in the milk category). Estimated sales of infant formula using retail prices are presented in Figure 10-2.

Changes in total sales are estimated to be relatively small for most food categories, with the possible exception of juice, vegetables and fruits, and

__________________

8 To reflect current regulations, women’s CVV in this portion of the analysis is $11 for the current food package. The committee acknowledges that this inflation-based increase in CVV was not effective until FY2016. Using a $10 CVV for women in this portion of the analysis would result in the estimated annual cost of fruits and vegetables to be approximately $483 million for the current food package.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

milk. However, WIC sales of each of these categories are a small portion of the total retail market. The committee did not have access to data that would permit it to estimate the total retail sales of WIC food categories. Instead, the analysis is based on the committee’s assessment of likely market effects using aggregate retail data available from the RIA conducted for the Interim Rule (USDA/FNS, 2007). The estimates presented in that RIA are summarized in Table 10-14. WIC sales of juice were estimated to be 2 percent of the total retail juice market in the interim rule. WIC sales of vegetables and fruits were estimated to be 2.7 percent of the retail vegetable and fruit market. In the Interim Rule RIA, sales of milk were estimated to be 4.4 percent of the retail milk market, and cheese sales were estimated to be 2 percent of the retail cheese market. Although it is difficult to gauge accurately how sales of any individual product within that composite will be affected, data for the dairy products examined in the Interim Rule suggest that effects of the proposed revisions will be small. The categories estimated to experience the largest changes in sales under the revised packages represent small shares of their respective total retail markets, and the committee expects minimal market impacts as a consequence of the revision to the food package.

TABLE 10-14 Estimated Percent of the Market Attributed to WIC Sales, as Presented in the Interim Rule Regulatory Impact Analysis

WIC Food Item Estimated WIC Percent of the Market of the Interim Rule Food Packages Calendar Year 2005
Assuming No Substitutions Assuming Full Substitution
Formula 65.5 56.3
Beans 8.9 9.5
Peanut Butter 4.8 4.8
Milk 4.5 4.4
Adult Cereal 4.1 4.1
Juice 2.0 2.0
Vegetables and Fruits 2.7 2.7
Eggs 2.3 2.3
Cheese 2.0 2.0
Bread 0.5 0.6
Canned Fish 0.6 0.6

SOURCE: USDA/FNS, 2007.

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

SUMMARY

The proposed revisions to the WIC food packages are anticipated to have largely beneficial effects across a wide range of stakeholders, including the USDA-FNS, state and local WIC agencies, vendors, industry, and program participants. The committee estimates that the revised food packages save approximately $220 million program-wide over the course of FY2018 through FY2022, compared to the current food packages. Revisions to juice in the food packages are projected to lead to substantial cost savings, allowing for other changes in the food packages, such as increasing the value of the CVV. The projected cost effects of the revised food packages, compared to the current food packages, are contingent on the assumptions made in the analysis. Many of the key assumptions the committee tested maintained or increased the costs savings of the revised food packages. The committee expects the market effects of the revised food packages to be relatively minimal.

REFERENCES

CBO (Congressional Budget Office). 2015. Supplemental Nutrition Assistance Program—CBO’s March 2015 baseline. https://www.cbo.gov/sites/default/files/51312-2015-03-SNAP.pdf (accessed October 3, 2016).

USDA/ERS (U.S. Department of Agriculture/Economic Research Service). 2005. Interstate variation in WIC food package costs: The role of food prices, caseload composition, and cost-containment practices. Washington, DC: USDA/ERS. http://ageconsearch.umn.edu/bitstream/33811/1/fa050041.pdf?origin=publication_detail (accessed October 3, 2016).

USDA/ERS. 2014. Transition to EBT in WIC: Review of impact and examination of participant redemption patterns: Final report. Washington, DC: Altarum Institute. http://altarum.org/sites/default/files/uploaded-publication-files/Altarum_Transition%20to%20WIC%20EBT_Final%20Report_071614.pdf (accessed March 2, 2016).

USDA/ERS. 2016. Food price outlook—Consumer Price Index, changes in food price indexes, 2014 through 2017. Washington, DC: USDA/ERS. http://www.ers.usda.gov/data-products/food-price-outlook.aspx (accessed October 3, 2016).

USDA/FNS (U.S. Department of Agriculture/Food and Nutrition Service). 2007. Special Supplemental Nutrition Program for Women, Infants and Children (WIC): Revisions in the WIC food packages; interim rule, 7 C.F.R. § 246.

USDA/FNS. 2011. Evaluation of the birth month breastfeeding changes to the WIC food packages. Alexandria, VA: USDA/FNS. http://www.fns.usda.gov/sites/default/files/BirthMonth.pdf (accessed March 9, 2016).

USDA/FNS. 2012. Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) erroneous payments to vendors: Annual estimates for FY2011. Alexandria, VA: USDA/FNS. http://www.fns.usda.gov/sites/default/files/WICErroneousPayment_2011.pdf (accessed October 3, 2016).

USDA/FNS. 2013. Breastfeeding promotion in WIC: Current federal requirements. Alexandria, VA: USDA/FNS. http://www.fns.usda.gov/wic/breastfeeding-promotion-wic-current-federal-requirements (accessed October 3, 2016).

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
×

USDA/FNS. 2016a. WIC participant and program characteristics 2014: Food package report. Alexandria, VA: USDA/FNS. http://www.fns.usda.gov/wic-participant-and-program-characteristics-2014-food-package-report (accessed August 30, 2016).

USDA/FNS. 2016b. WIC program, state-level participation. http://www.fns.usda.gov/pd/wic-program Alexandria, VA: USDA/FNS. (accessed October 3, 2016).

USDA/FNS. 2016c. August 2016 EBT detail status report. Alexandria, VA: USDA/FNS. http://www.fns.usda.gov/sites/default/files/wic/August2016EBTDetailStatusReport.pdf (accessed October 3, 2016).

USDA/FNS. 2016d. Monthly data—state level participation by category and program costs. Alexandria, VA: USDA/FNS. http://www.fns.usda.gov/pd/wic-program (accessed October 3, 2016).

Suggested Citation:"10 The Regulatory Impact Analysis (Abridged)." National Academies of Sciences, Engineering, and Medicine. 2017. Review of WIC Food Packages: Improving Balance and Choice: Final Report. Washington, DC: The National Academies Press. doi: 10.17226/23655.
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The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) began 40 years ago as a pilot program and has since grown to serve over 8 million pregnant women, and mothers of and their infants and young children. Today the program serves more than a quarter of the pregnant women and half of the infants in the United States, at an annual cost of about $6.2 billion. Through its contribution to the nutritional needs of pregnant, breastfeeding, and post-partum women; infants; and children under 5 years of age; this federally supported nutrition assistance program is integral to meeting national nutrition policy goals for a significant portion of the U.S. population.

To assure the continued success of the WIC, Congress mandated that the Food and Nutrition Service of the U.S. Department of Agriculture (USDA) reevaluate the program's food packages every 10 years. In 2014, the USDA asked the Institute of Medicine to undertake this reevaluation to ensure continued alignment with the goals of the Dietary Guidelines for Americans. In this third report, the committee provides its final analyses, recommendations, and the supporting rationale.

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