Honestly, I don't really know. I'd want to do some more studying of exactly what goes on under the current system before making any radical changes.
I do have an idea that might replace it - Government work camps:
Under this system, there are no direct transfer payments of any kind. Instead, anybody who feels that they are unable to cope with getting and keeping a job and home in the real world can voluntarily go to a Government work camp. Once you are admitted there, you get your basic needs taken care of - decent shelter, 3 meals a day, medical care, etc. In return, you are required to do whatever type of work they assign you to. You can get various types of basic education in your free time there. You can leave anytime you want, with some limitation to keep people from stopping by for a few hours for a meal or anything like that. Keep the sexes separated - don't want people establishing families in there. If they want to start a family, they have to leave and establish themselves in the real world.
May not be practical, and there's lots of tricky details, but it's at least worth talking about IMHO.