oversight

Medicaid Enrollment: Amid Declines, State Efforts to Ensure Coverage After Welfare Reform Vary

Published by the Government Accountability Office on 1999-09-10.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Report to Congressional Requesters




September 1999
                  MEDICAID
                  ENROLLMENT
                  Amid Declines, State
                  Efforts to Ensure
                  Coverage After Welfare
                  Reform Vary




GAO/HEHS-99-163
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Health, Education, and
      Human Services Division

      B-281152

      September 10, 1999

      The Honorable William J. Coyne
      Ranking Minority Member
      Subcommittee on Oversight
      Committee on Ways and Means
      House of Representatives

      The Honorable Sander M. Levin
      Ranking Minority Member
      Subcommittee on Trade
      Committee on Ways and Means
      House of Representatives

      Medicaid, a joint federal-state program, spent about $160 billion in federal
      fiscal year 1997 to finance health coverage for more than 40 million
      low-income individuals, including adults and children in families and aged,
      blind, and disabled people.1 States administer Medicaid within broad
      federal guidelines that specify which categories of individuals states must
      cover and which groups states have the option of covering. Before federal
      welfare reform, states were required to automatically provide Medicaid
      coverage to families enrolled in the Aid to Families With Dependent
      Children (AFDC) cash assistance program.

      When federal welfare reform was enacted in August 1996, automatic
      eligibility for Medicaid was uncoupled from eligibility for cash assistance,
      and states implemented a variety of initiatives intended to move families
      from welfare to the workforce.2 Some experts were concerned that,
      despite congressionally enacted protections for continued Medicaid
      coverage, about a third of the over 40 million low-income people who had
      been automatically eligible for Medicaid could lose coverage. Of particular
      concern was the possibility that children might unnecessarily lose
      coverage because, before welfare reform, more children gained access to
      Medicaid on the basis of family receipt of cash assistance than via other
      avenues of eligibility, such as disability or other special medical needs.
      Moreover, recent reports of welfare and Medicaid enrollment declines
      have raised questions about the unintended consequences of welfare
      reform for Medicaid and the viability of the federal and state protections to
      ensure continued Medicaid eligibility for low-income families and children.

      1
       Fiscal year 1998 expenditures were $177 billion; data on the number of beneficiaries for 1998 are not
      yet available.
      2
       The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193).



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                   Given your concerns about apparent declines in Medicaid enrollment after
                   welfare reform, you asked us to (1) analyze Medicaid enrollment changes
                   for families and children following welfare reform, as well as associated
                   key federal protections established for Medicaid, and (2) assess states’
                   welfare-related policies and practices that can influence Medicaid
                   enrollment. In conducting our work, we analyzed enrollment data from the
                   50 states and from the Health Care Financing Administration (HCFA) for
                   1995 and 1997.3 To assess the procedures and protections that states have
                   used to enroll Medicaid-eligible individuals since welfare reform, we also
                   contacted 21 states to review state policies and practices that influenced
                   enrollment. We performed our work between July 1998 and July 1999 in
                   accordance with generally accepted government auditing standards. (For
                   more detailed information on our study scope and methodology, see apps.
                   I and II.)


                   Between 1995 and 1997, Medicaid enrollment declined nationwide, but
Results in Brief   substantially less than welfare participation. Overall, Medicaid enrollment
                   among the nonelderly and nondisabled adults and children declined by
                   about 1.7 million, or 7 percent, compared with a 3.1 million, or 23-percent,
                   decline in welfare participation. Shifts in individual states’ Medicaid
                   enrollment for these adults and children during this period ranged from a
                   19-percent decline in Wisconsin to a 26-percent increase in Delaware.
                   While most states experienced declines in Medicaid enrollment,
                   enrollment increased in some states, in part as a result of individual state
                   program expansions. On the other hand, Medicaid and welfare enrollment
                   declines have been attributed to strong state economies, low
                   unemployment rates, and new state welfare-to-work initiatives. The
                   smaller declines in Medicaid enrollment may also be due to federal
                   eligibility protections built into welfare reform and ongoing expansions of
                   Medicaid coverage for low-income children that predate welfare reform.
                   One eligibility protection that predates welfare reform—transitional
                   Medicaid assistance—provides an additional year of Medicaid coverage
                   for individuals who lose Medicaid eligibility as a result of employment or
                   increased income. The extent to which transitional Medicaid has affected
                   national enrollment trends, however, is uncertain because of the lack of
                   uniform reporting and tracking of this entitlement.




                   3
                    1995 provided a baseline for enrollment before the 1996 enactment of welfare reform, and 1997 was
                   the most current year for which HCFA enrollment data were available when we initiated our work.



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    Our analysis also shows that changes in state-level welfare policies and
    practices can both positively and negatively influence Medicaid
    enrollment, as seen in the following examples.

•   States we contacted are increasingly implementing welfare reform-related
    policies and programs designed to divert families from enrolling in cash
    assistance programs. While a diversion strategy such as requiring a job
    search before providing cash assistance can affect the timing of Medicaid
    eligibility determinations, such a requirement does not appear to exceed
    the maximum time allowed by the Medicaid statute.
•   The length of time that states we contacted provide transitional Medicaid
    for newly working families varied, ranging from 1 to 3 years. Participation
    in transitional Medicaid ranged from about 4 percent to 94 percent of
    those leaving cash assistance in the several states that were able to
    provide such data. Additionally, adherence to beneficiary income
    reporting requirements can affect the extent to which families initially
    receive and then retain transitional Medicaid coverage for the full period
    for which they may be entitled. States taking advantage of the statutory
    authority to obtain HCFA waivers of these income reporting requirements
    reported higher participation rates than states that did not.
•   Some states have initiated outreach and education campaigns to counter
    confusion among beneficiaries regarding Medicaid eligibility. In concert
    with the State Children’s Health Insurance Program (SCHIP) authorized in
    1997, some states have simplified Medicaid application and eligibility
    determination processes to facilitate enrollment. Also, officials in some
    states have noted increased Medicaid enrollment stemming from eligibility
    screening for SCHIP.

    Recognizing that the income reporting requirements can limit
    beneficiaries’ access to the transitional Medicaid entitlement, HCFA has
    submitted a legislative proposal to eliminate these requirements for up to 1
    year. Our work shows that increased state flexibility to ease reporting
    requirements could facilitate the transition from welfare to work and make
    Medicaid more available to eligible individuals. Therefore, we are
    recommending that the Congress consider allowing states, as a feature of
    their Medicaid programs, to guarantee a full year of transitional Medicaid
    coverage to eligible beneficiaries without quarterly income reporting
    requirements. State options in this area would be similar to the flexibility
    granted under section 4731 of the Balanced Budget Act of 1997 (BBA),
    which allowed states to guarantee children a longer period of Medicaid
    coverage, regardless of changes in a family’s financial status or size. This
    report also recommends that the Administrator of HCFA (1) analyze states’



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             use of transitional Medicaid and (2) provide states with technical
             assistance regarding best approaches to implementing transitional
             Medicaid. In commenting on a draft of this report, HCFA concurred with
             these recommendations.


             The Personal Responsibility and Work Opportunity Reconciliation Act of
Background   1996 changed the relationship between receipt of cash assistance and
             Medicaid eligibility by delinking the two programs involved, potentially
             affecting about a third of the Medicaid population. The act replaced AFDC
             with fixed block grants to the states to provide Temporary Assistance for
             Needy Families (TANF) and ended the entitlement of families to cash
             assistance. Under TANF, states have the flexibility to design their own cash
             assistance programs, which may include developing strategies that may
             divert potential applicants from cash assistance entirely. In our 1998
             report on TANF implementation, we noted that many states had begun
             implementing diversion strategies, such as providing job search assistance
             or making one-time lump-sum payments, to divert potential applicants
             from cash assistance.4 The act also established a 5-year lifetime limit on
             receipt of TANF benefits.5 In an effort to safeguard access to health
             insurance for eligible low-income people, the welfare reform law also
             required that states implement a separate Medicaid eligibility category,
             which ensured that low-income families meeting a state’s July 16, 1996,
             AFDC eligibility criteria could qualify for Medicaid without also receiving
             cash assistance.

             The welfare reform law also provided states with new choices regarding
             how to administer Medicaid and determine applicants’ eligibility for
             coverage.6 Previously, states had been required to use a single state agency
             to administer both AFDC and Medicaid as well as a single application for
             use in determining eligibility for both programs. Now states have the
             option of using separate state agencies, applications, eligibility criteria,

             4
              TANF became effective on July 1, 1997, but states had the option of implementing their TANF
             programs as early as October 1996. TANF implementation dates varied among the 21 states we
             contacted from October 1996 in Connecticut, Florida, Utah, and Wisconsin to January 1998 in
             California. California’s TANF plan was approved in November 1996, and the state implemented its
             program in January 1998. For more information on TANF implementation, see Welfare Reform: States
             Are Restructuring Programs to Reduce Welfare Dependence (GAO/HEHS-98-109, June 17, 1998).
             5
              For information on the states’ efforts to track the impact of welfare reform on former cash assistance
             recipients, see Welfare Reform: Information on Former Recipients’ Status (GAO/HEHS-99-48, Apr. 28,
             1999).
             6
              See Medicaid: Early Implications of Welfare Reform for Beneficiaries and States (GAO/HEHS-98-62,
             Feb. 24, 1998) for additional information on states’ Medicaid-related choices following federal welfare
             reform.



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and application procedures for TANF and Medicaid. While welfare reform
required that states use the July 16, 1996, AFDC eligibility income and
resource (asset) criteria for determining Medicaid eligibility, states were
free to apply different criteria for TANF eligibility, including work and
preapplication requirements that had to be satisfied before TANF
applications were processed.

In addition, the welfare reform law extended the life of the transitional
Medicaid assistance program through the year 2001. The transitional
Medicaid assistance program, established in 1988 under section 1925 of
the Social Security Act, entitles certain families who are losing Medicaid as
a result of employment or increased income to an additional year of
Medicaid coverage. Families moving from welfare to work are entitled to
an initial 6 months of Medicaid coverage without regard to the amount of
their earned income as well as an additional 6 months of coverage if family
earnings, minus child care costs, do not exceed 185 percent of the federal
poverty level.7

The welfare reform law did not, however, change the time limits that
states must meet in processing Medicaid applications, nor did it change
federal oversight responsibility for Medicaid and cash assistance. States
are still required to provide Medicaid applications upon request and to
determine applicant eligibility for Medicaid coverage within 45 days of the
date of application.8 In addition, the Department of Health and Human
Services (HHS) continues to have oversight responsibility for both
HCFA—the federal agency that administers Medicaid—and the
Administration for Children and Families (ACF), which administered AFDC
and now oversees the TANF block grant program.

The federal welfare reform law also left unaltered Medicaid coverage for
the so-called “expansion population”—pregnant women as well as infants
and children under age 19 born after September 30, 1983, whose family
income falls below states’ poverty-level standards.9 The Medicaid statute
requires that states annually expand Medicaid coverage to children living
in low-income families until October 2002, when children through the age


7
 In 1999, the federal poverty level for a family of three was $13,880, or about $1,157 per month.
8
 States have 90 days to determine eligibility for disability-related coverage.
9
 The Omnibus Budget Reconciliation Act of 1989 (P.L. 101-239) required states to provide Medicaid
coverage for pregnant women and children up to age 6 with family incomes below 133 percent of the
federal poverty level. The act also froze eligibility standards at December 19, 1989, levels for 17 states
that had chosen to provide coverage for pregnant women and infants in families with incomes above
133 percent and up to 185 percent of the federal poverty level.



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                         of 18 will be eligible.10 Currently, the law requires that children only up to
                         age 15 be covered; however, over 20 states have accelerated the expansion
                         schedule and are allowing older children to qualify for Medicaid coverage
                         sooner than prescribed by the law. By August 1996 when the federal
                         welfare reform legislation was passed, 16 states, including 6 in our sample,
                         were already covering children up to age 19. 11

                         One year after passage of welfare reform, as part of the BBA, the Congress
                         established SCHIP, an optional health insurance program for children in
                         families with incomes up to 200 percent of the federal poverty level who
                         do not qualify for Medicaid.12 Beginning in October 1997, the Congress
                         authorized about $40 billion over 10 years in federal matching funds for
                         states’ SCHIP programs to expand health care coverage to uninsured
                         low-income children. States have the choice of (1) expanding Medicaid
                         coverage; (2) establishing a separate, stand-alone health insurance
                         program; or (3) combining these two approaches. Because the federal
                         contribution percentage is higher for SCHIP than for Medicaid, the Congress
                         was concerned that states would have some incentive to enroll
                         Medicaid-eligible children in SCHIP rather than in Medicaid. To ensure that
                         Medicaid-eligible children are not enrolled in SCHIP, HCFA requires that
                         states first screen all SCHIP applicants for Medicaid eligibility. Recently,
                         states have begun implementing welfare reform and SCHIP concurrently,
                         which has potential implications for Medicaid enrollment.


                         From 1995 to 1997, national enrollment in Medicaid among adults and
Medicaid Enrollment      children declined by about 1.7 million, or 7 percent, ranging from a
Decline Has Been         decrease of 19 percent in Wisconsin to an increase of 26 percent in
Influenced by Various    Delaware. In contrast, national welfare participation declined an average
                         of about 23 percent, or 3.1 million recipients, from 1995 to 1997; declines
Factors, Including Key   ranged from 7 percent in Alaska to nearly 56 percent in Wisconsin.13 (See
Federal Protections      app. II for an analysis of states’ Medicaid enrollment and welfare

                         10
                          Sec. 4601 of the Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508) mandated the annual
                         expansion of coverage for children living in families with incomes below 100 percent of the federal
                         poverty level.
                         11
                           In addition to expansions for older children, some states have continued to expand eligibility above
                         the required poverty level; by September 1997, 35 states provided Medicaid coverage for pregnant
                         women and infants with incomes of more than 133 percent of the federal poverty level, and 14 states
                         exceeded the 133-percent level for children up to age 6 as well.
                         12
                           SCHIP allows states with Medicaid income levels that already approach or exceed 200 percent of the
                         federal poverty level to expand eligibility up to 50 percentage points above their existing Medicaid
                         eligibility standards. For additional information on SCHIP, see Children’s Health Insurance Program:
                         State Implementation Approaches Are Evolving (GAO/HEHS-99-65, May 14, 1999).
                         13
                           Only one state—Hawaii—had an increase in welfare participation during this time.


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                        participation data.) In several states for which data were available, child
                        enrollment for Medicaid showed a much smaller decline than that of
                        adults.

                        Factors that states cited as affecting declines in Medicaid and welfare
                        enrollment—a strong economy, low unemployment rates, and new
                        welfare-to-work initiatives—may have had a more limited effect on
                        Medicaid than on welfare enrollment. In particular, employment in
                        lower-wage positions, many of which do not offer health insurance
                        coverage, is not likely to cause families losing cash assistance to become
                        ineligible for Medicaid. Families may continue to be eligible for Medicaid
                        because of federal requirements to disregard certain types of income in
                        calculating Medicaid eligibility. Additionally, differences between the rates
                        of decline of welfare and Medicaid enrollment may also be due to federal
                        health coverage protections for low-income families and Medicaid
                        eligibility expansions for low-income children. However, data on
                        transitional Medicaid—designed to preserve coverage for families on a
                        temporary basis—are not available nationwide, and the effect of
                        transitional Medicaid on Medicaid enrollment remains uncertain.


Welfare Declines Have   Nationally, welfare participation declined three times as much as Medicaid
Outpaced Medicaid       enrollment from 1995 to 1997: 23 percent compared with about 7 percent.
Declines                As table 1 shows, for our sample of 21 states, welfare participation
                        consistently declined more than Medicaid enrollment.




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Table 1: Percentage Changes in
Medicaid Enrollment and Welfare                                              Percentage change
Participation in Our State Sample,                                                  in Medicaid                Percentage change in
1995-97                                                                              enrollment                 welfare participation
                                     Nationala                                                 –7.4                               –23.4
                                                  b
                                     Our sample                                                –8.9                               –23.4
                                     Individual statesc
                                     California                                                –7.6                               –13.5
                                     Colorado                                                  –9.6                               –32.2
                                     Connecticut                                               –1.0                               –11.5
                                     Delaware                                                 +26.2                               –15.8
                                     Florida                                                  –13.4                               –35.2
                                     Georgia                                                   –4.6                               –30.4
                                     Idaho                                                    –10.8                               –49.0
                                     Indiana                                                   –9.0                               –36.8
                                     Kansas                                                   –10.5                               –37.0
                                     Kentucky                                                 –10.1                               –20.3
                                     Maryland                                                  –7.2                               –31.2
                                     Michigan                                                  –8.9                               –26.9
                                     Nevada                                                   –11.5                               –29.3
                                     North Dakota                                              –8.0                               –27.0
                                     Ohio                                                     –15.9                               –23.5
                                     Oklahoma                                                  –9.3                               –34.0
                                     Oregon                                                   –13.0                               –42.2
                                     South Carolina                                            +2.4                               –32.9
                                     Utah                                                      –5.0                               –26.2
                                     Vermont                                                   +2.6                               –16.8
                                     Wisconsin                                                –19.0                               –55.6
                                     a
                                      We were unable to obtain comparable enrollment data for the District of Columbia, Rhode Island,
                                     and West Virginia.
                                     b
                                      We over-sampled states with Medicaid declines in order to focus our analysis on state policy and
                                     practices that can contribute to declines in enrollment.
                                     c
                                      States had varying amounts of Medicaid enrollment data available for analysis. For a
                                     state-by-state discussion of available data, see app. II, table II.1.

                                     Source: GAO analysis of the states’ Medicaid monthly enrollment data and of welfare data from
                                     HHS’ ACF.



                                     On the national level, the declines in welfare participation did not explain
                                     the changes in Medicaid enrollment; moreover, the ratios of declines for
                                     both programs were not closely related. Differences in state policy and



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                             practices may also help explain some of the variation. For example, South
                             Carolina’s Medicaid enrollment increased 2.4 percent, in part because of
                             state expansions of eligibility for Medicaid and significant outreach efforts;
                             during this same period, welfare participation dropped 32.9 percent.
                             Delaware’s nearly 94-percent increase in adult enrollment occurred after
                             the state implemented a Medicaid waiver expanding eligibility to adults
                             with incomes up to the federal poverty level. During the same period,
                             welfare enrollment dropped 15.8 percent. Ohio and Wisconsin had the
                             largest declines in Medicaid enrollment among the states we
                             contacted—about 16 percent and 19 percent, respectively—but very
                             different declines in welfare. Ohio’s decline in welfare participation was
                             less than twice its decline in Medicaid enrollment, while Wisconsin’s
                             decline in welfare participation was almost three times as great as its
                             Medicaid enrollment decline. Both states reported that an improved
                             economy and successful welfare-to-work strategies might have accounted
                             for some of the declines in Medicaid enrollment. However, they also
                             expressed concern that beneficiaries and state caseworkers were
                             confused about the change in the relationship between welfare and
                             Medicaid.


Magnitude of Medicaid        Within the overall 7-percent decline in Medicaid enrollment nationally,
Declines Varied Across the   there was considerable variation among the states. As illustrated by figure
States                       1, 12 states experienced declines of 10 percent or more, while 4 states saw
                             Medicaid enrollment increase by 5 percent or more. Twelve states had
                             relatively stable enrollment with changes of less than 3 percent. (See app.
                             II for more detail.)




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Figure 1: Changes in States’ Medicaid Enrollment, 1995-97




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                             Note: We were unable to obtain comparable Medicaid enrollment data for the District of
                             Columbia, Rhode Island, and West Virginia.

                             Source: GAO analysis of the states’ monthly Medicaid enrollment data.


                             These data indicate the change in Medicaid enrollment at one given point
                             in time. In commenting on this report, officials in five states—Connecticut,
                             Florida, Indiana, Michigan, and Oklahoma—reported that since 1997,
                             Medicaid enrollment has stabilized or begun to increase. For example,
                             Connecticut officials noted that in contrast to their 1-percent decline
                             between 1995 and 1997, the state has experienced a net increase of nearly
                             9,000 children enrolled in Medicaid between June 1998 and January 1999.
                             While Florida officials reported similar increases in enrollment among
                             children, officials in Indiana indicated that adult enrollment has also
                             increased. According to Michigan officials, the state’s enrollment has
                             stabilized as a result of efforts to identify and reenroll eligible individuals
                             who lost Medicaid coverage between 1995 and 1997. Oklahoma officials
                             reported that since December 1997, when the state expanded Medicaid
                             eligibility for pregnant women, infants, and children, enrollment has risen
                             to approximately 224,000—a 14-percent increase since federal fiscal year
                             1995, which contrasts with the 9-percent decline reflected by our analysis.
                             Additionally, Maryland officials commented that the state has made efforts
                             to ensure enrollment in Medicaid for eligible individuals after reviewing its
                             post-welfare-reform Medicaid and SCHIP policies and practices. In
                             particular, Maryland has implemented such improvements as enhancing
                             automated systems, training caseworkers statewide, and conducting
                             outreach to the general public.


For Families Leaving Cash    While a strong economy helps explain the decreases in welfare
Assistance, Medicaid         participation, it may have had a more limited effect on Medicaid
Eligibility Remains Likely   enrollment. Officials in most of the 21 states we contacted attributed their
                             declines in welfare and Medicaid enrollment to successful welfare-to-work
Despite Strong State         strategies and strong state economies. These officials said that low
Economies                    unemployment rates have aided their efforts to help welfare recipients
                             quickly find jobs. Nationally, the unemployment rate averaged about 4.9
                             percent in 1997, down from about 5.6 percent in 1995, and almost all the
                             states in our sample experienced declines in their unemployment rates
                             between 1995 and 1997. In comparison, in 1994 when welfare participation
                             was at its peak (14.2 million), the unemployment rate was 6.1 percent. The
                             federal minimum wage increased from $4.25 in 1995 to $4.75 in 1997.14

                             14
                              The national unemployment rate for the first 4 months of 1999 was 4.5 percent, with a $5.15 minimum
                             wage.



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Despite strong state economies, families may continue to be eligible for
Medicaid while working because of federal requirements and state
flexibility to disregard certain types of income in calculating Medicaid
eligibility. For example, states are required to exclude or “disregard” the
first $30 of monthly family earnings for 1 year as well as one-third of the
remaining income for the first 4 months of employment.15 Additional
income disregards include $90 per month for work-related expenses, such
as clothing and transportation, and $175 to $200 per child, based on age,
for monthly child care expenses. Eight of our sample states—California,
Connecticut, Delaware, Maryland, Ohio, South Carolina, Utah, and
Vermont—had federal waivers in place or made changes to state Medicaid
policy that allowed them to continue to use more generous income
disregards in determining eligibility for Medicaid.16

The option available under federal welfare reform to continue waiver
criteria, as well as the income disregards noted above, enables many
former cash recipients working in minimum wage jobs to remain eligible
for Medicaid, at least for the first 4 months of employment.17 Data on
former cash recipients in California, Indiana, Maryland, and Wisconsin
showed former welfare recipients generally held low-wage jobs—such as
in retail stores, hotels, restaurants, and health care establishments—and
worked less than full-time. For example, out of nearly 1,600 former welfare
recipients surveyed in Indiana, 514 current and former cash recipients
were working in low-wage jobs. In addition, 43 percent of the heads of
households worked fewer than 32 hours per week and did not have health
insurance. Over half of those surveyed had been offered
employer-provided health insurance; of these, about 60 percent had
declined coverage because it was too expensive or for other reasons. Only
8 percent of those declining coverage were enrolled in Medicaid.18
Although state monthly income eligibility standards varied greatly—from

15
  After 4 months, states must still disregard the first $30 of earnings for 1-year but may alter any other
income disregards.
16
  Before the 1996 enactment of the welfare reform law, many states had received waivers from the
federal rules applicable to the AFDC program. These waivers allowed states to experiment with
various welfare polices, including the use of more generous income disregards for working families.
Federal welfare law allowed the states to continue applying welfare waiver provisions to Medicaid
eligibility when such provisions involved income and resource methodologies and certain other
criteria involving family composition. However, provisions such as time limits, sanctions (withholding
coverage), and more restrictive eligibility criteria cannot now be continued beyond the expiration of
the waiver. Under TANF, states determine their own eligibility criteria, including any amounts of
income to be disregarded.
17
  See app. I for additional information on our methodology for this analysis.
18
 See Abt Associates, Inc., and The Urban Institute, The Indiana Welfare Reform Evaluation: Program
Implementation and Economic Impacts After Two Years (Nov. 1998).



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                           $200 in South Carolina to $663 in California—it appears that in every
                           state in our sample except Colorado, heads of three-member households
                           could have worked full-time at the 1997 minimum wage and remained
                           Medicaid-eligible. In Colorado, heads of three-member households could
                           have worked up to 36 hours per week at the 1997 minimum wage and
                           retained Medicaid eligibility.

                           Additionally, a 1999 analysis by the Center on Budget and Policy Priorities
                           showed that in 6 of the 21 states in our sample—California, Connecticut,
                           Delaware, Ohio, Oregon, and Vermont—heads of three-member
                           households could have worked full-time, earning as much as $5.15 per
                           hour, and still have continued their Medicaid eligibility.19 Among the
                           remaining 15 states, the number of hours per week that heads of
                           three-member households could have worked and still have continued to
                           be income-eligible for Medicaid ranged from 17 in Indiana to 36 in
                           Florida.20


Federal Protections for    Federal health coverage protections for adults in low-income families,
Low-Income Families May    protections and expansions of coverage for low-income children, and the
Have Tempered              availability of transitional Medicaid coverage for families moving from
                           welfare to work may have also prevented greater declines in Medicaid
Welfare-Related Medicaid   enrollment. These protections, however, often appeared to have different
Declines                   outcomes for children and adults. Of the 11 states in our sample that were
                           able to readily provide separate Medicaid enrollment data for children and
                           for adults, declines in child enrollment were significantly less than among
                           adults in 10 states, as shown in table 2. Delaware was an exception to this
                           trend; its nearly 94-percent increase in adult enrollment occurred after the
                           state implemented a Medicaid waiver expanding eligibility to adults with
                           incomes up to the federal poverty level.




                           19
                             Center on Budget and Policy Priorities, Employed But Not Insured (Washington, D.C.: Mar. 1, 1999).
                           20
                             Our previous work found that in four states in our sample—Indiana, Oklahoma, South Carolina, and
                           Wisconsin—former cash assistance recipients were likely to earn an average hourly wage above the
                           federal minimum wage. See GAO/HEHS-99-48, Apr. 28, 1999.



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Table 2: Percentage Changes in Child
and Adult Medicaid Enrollment in Our                                Percentage                                                 Percentage
State Sample, 1995-97                                            change in total          Percentage          Percentage         decline in
                                                                      Medicaid            change for          change for            welfare
                                       Statea                       enrollment              childrenb              adults     participation
                                       California                             –7.6                 –6.5              –10.5               –13.5
                                       Colorado                               –9.6                 –5.0              –21.9               –32.2
                                       Connecticut                            –1.0                 –0.2               –2.8               –11.5
                                       Delawarec                            +26.2                 +3.7               +93.8d              –15.8
                                       Georgia                                –4.6                +0.1               –18.7               –30.4
                                       Idaho                                –10.8                  –6.5              –24.7               –49.0
                                       Kentucky                             –10.1                  –7.2              –17.2               –20.3
                                       Maryland                               –7.2                 –4.6              –14.2               –31.2
                                       Nevada                               –11.5                  –5.2              –30.2               –29.3
                                       North Dakota                           –8.0                 –5.0              –15.8               –27.0
                                       Utah                                   –5.0                 –4.8               –5.3               –26.2
                                       a
                                        We were unable to readily obtain separate enrollment data for children and adults from Florida,
                                       Indiana, Kansas, Michigan, Ohio, Oklahoma, Oregon, South Carolina, Vermont, and Wisconsin.
                                       b
                                           The upper age limit states use to define children varies from 18 to 21.
                                       c
                                        In calculating the percentage of change for children and adults in Delaware, we excluded less
                                       than 5 percent of total adult/child enrollment because state officials were unable to determine in
                                       which of the two categories the data belonged.
                                       d
                                        In 1995, Delaware expanded adult eligibility to those with incomes of up to 100 percent of the
                                       federal poverty level. The state reported that this expansion caused 16,000 more adults to
                                       become eligible for Medicaid.

                                       Source: GAO analysis of states’ Medicaid monthly enrollment data.




Protections for Adults in              The welfare reform act provided a mandatory Medicaid coverage
Low-Income Families                    protection for adults in low-income families and also allowed states to
                                       apply additional protections on a voluntary basis. In the absence of these
                                       protections, even larger declines in adult Medicaid enrollment could have
                                       resulted as welfare recipients moved into the workforce. As part of
                                       welfare reform, section 1931 was added to the Social Security Act. Section
                                       1931 established a separate Medicaid eligibility category to protect
                                       adults—primarily women and their older teenaged children—who were
                                       previously eligible under their states’ AFDC programs. Specifically, the law
                                       requires that states use standards no more stringent than the AFDC
                                       standards in effect on July 16, 1996, as the criteria for determining
                                       Medicaid eligibility. All of the 21 states we contacted had either




                                       Page 14                                           GAO/HEHS-99-163 Medicaid After Welfare Reform
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established a section 1931 eligibility category or had submitted a state plan
amendment to do so.21

Welfare reform also included several exceptions to the July 16, 1996,
standards—two that allowed states to voluntarily expand Medicaid
eligibility and one that allowed states to impose more restrictive
standards.22 Of the 21 states in our sample, 10—California, Colorado,
Delaware, Florida, Kansas, Nevada, North Dakota, Ohio, South Carolina,
and Vermont—expanded Medicaid eligibility by increasing their resource
and income standards or liberalizing their determination methodologies.
None of the 21 states applied more restrictive eligibility policies to
Medicaid.23

Other health coverage protections for adults include provisions of the
Medicaid statute that predated federal welfare reform and allow states to
use higher income standards and more liberal methodologies for
determining Medicaid eligibility than used for determining applicant
eligibility for cash assistance. For example, section 1902(r)(2) of the Social
Security Act permits states to reduce (or even eliminate) income and
resource standards for many categories of prospective Medicaid
beneficiaries, including, for example, pregnant women, children, and
certain blind or disabled people.24 States such as California, Colorado,
Connecticut, Delaware, Kansas, and Vermont expanded Medicaid
eligibility for adults in low-income families by disregarding more than the
standard amounts for resources.25 California, Colorado, Connecticut, and
Kansas allow families to have more than the former AFDC standard amount

21
  In commenting on a draft copy of this report, Maryland officials noted that they have submitted a
state plan amendment and taken steps to delink their cash assistance and Medicaid programs.
22
  Under sec. 1931(b)(2), states were permitted to expand Medicaid eligibility by (1) using less
restrictive methodologies for calculating family income and resources than used on July 16, 1996, or
(2) increasing their AFDC July 16, 1996, income and resource standards by as much as the year’s
consumer price index. States were also allowed to restrict eligibility by lowering their AFDC July 16,
1996, income standards, but not below May 1, 1988, levels.
23
  States could not impose additional restrictions on Medicaid eligibility without jeopardizing access to
SCHIP funds. In particular, the BBA stipulated that states participating in SCHIP could not use more
restrictive income or resource standards than the standards used for Medicaid on June 1, 1997.
24
  Before welfare reform, when cash assistance and Medicaid eligibility were still linked, states
disregarded additional amounts of earned income as an incentive to encourage cash assistance
recipients to work.
25
  Under the former AFDC program, cash recipients were limited to $1,000 in total resources (assets).
However, in calculating family assets, states were required to disregard (not include in the calculation)
certain assets, such as a personal residence and its contents, burial plots, and education grants and
scholarships, and to discount the value of other assets. For example, in calculating total resources,
states were required to discount vehicle equity by $1,500 and prepaid funeral or burial arrangements
by $1,500 per person.



Page 15                                         GAO/HEHS-99-163 Medicaid After Welfare Reform
                                     B-281152




                                     of $1,000 in liquid assets, while both Delaware and Vermont have
                                     eliminated asset tests for families applying only for Medicaid coverage.

Protections and Mandated             Smaller declines in Medicaid enrollment for children can also be attributed
Program Expansions for               to program expansions for children mandated by the Medicaid statute. As
Children in Low-Income               table 3 shows, as of September 30, 1997, 11 of the 21 states we contacted
Families                             provided Medicaid coverage to children older than 14 years of age, with
                                     family incomes at or above the federal poverty level. Such coverage will
                                     soon become a legal requirement for all low-income children up to age 19.26


Table 3: Medicaid Coverage of
Pregnant Women, Infants, and                                                        Poverty level percentages for
Children in Our State Sample as of                                                      Medicaid coverage                      Upper age
September 30, 1997                                                                Pregnant        Children                       limit for
                                                                                    women           under       Children 6      defining
                                                                                and infants          age 6       and older        “child”
                                     Federal minimum mandatory
                                     coverage                                            133a            133            100              14
                                     State
                                     California                                          200             133            100              14
                                     Colorado                                            133             133            100              14
                                     Connecticut                                         185             185            185              16b
                                     Delaware                                            185             133            100              18
                                     Florida                                             185             133            100              14
                                     Georgia                                             185             133            100              19
                                     Idaho                                               133             133            100              14
                                     Indiana                                             150             133            100              18
                                     Kansas                                              150             133            100              17
                                     Kentucky                                            185             133            100              14
                                     Maryland                                            185             185            185              14
                                                c
                                     Michigan                                            185             150            150              16
                                     Nevada                                              133             133            100              14
                                     North Dakota                                        133             133            100              18
                                     Ohio                                                133             133            100              14
                                                    c
                                     Oklahoma                                            150             133            100              14
                                     Oregon                                              133             133            100              19
                                     South Carolina                                      185             150            150              18
                                                                                                                               (continued)

                                     26
                                       The Omnibus Budget Reconciliation Act of 1989 requires states to annually phase in Medicaid
                                     eligibility to children born after September 30, 1983, until all children up to age 19 in families with
                                     incomes below 100 percent of the federal poverty level are covered. By October 1, 1999, all children up
                                     to age 16 will be covered.



                                     Page 16                                        GAO/HEHS-99-163 Medicaid After Welfare Reform
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                                                                                 Poverty level percentages for
                                                                                     Medicaid coverage                    Upper age
                                                                               Pregnant        Children                     limit for
                                                                                 women           under      Children 6     defining
                                                                             and infants          age 6      and older       “child”
                                 Utah                                                 133            133            100               18
                                                                                          d
                                 Vermont                                         200/225             225            225               17
                                 Wisconsin                                            185            185            100               14

                                 a
                                  The minimum mandatory income requirement for pregnant women and infants may be higher
                                 than 133 percent of the federal poverty level for states that, as of December 19, 1989, had opted
                                 to set eligibility for this category between 133 percent and 185 percent of the federal poverty
                                 level.
                                 b
                                  Beginning January 1, 1998, Connecticut expanded coverage to include children up to age 19.
                                 c
                                  After the BBA of 1997, Michigan expanded Medicaid eligibility to include children up to age 19 in
                                 families with incomes below 200 percent of the federal poverty level, and Oklahoma expanded
                                 program coverage to include children in families with incomes of up to 185 percent of the federal
                                 poverty level.
                                 d
                                  Vermont provides Medicaid coverage for pregnant women with family incomes up to 200 percent
                                 of the federal poverty level and coverage for infants with family incomes of up to 225 percent of
                                 the poverty level.

                                 Source: National Governors’ Association.



                                 Since 1990, children have been able to qualify for Medicaid when living in
                                 families with substantially higher incomes than those of cash assistance
                                 recipients. States’ cash assistance programs typically limited eligibility to
                                 families with incomes well below the federal poverty level—ranging from
                                 a high of about 81 percent of the federal poverty level in Connecticut to a
                                 low of 15 percent in Alabama. In 1997, five of the states in our
                                 study—Connecticut, Maryland, Michigan, South Carolina, and
                                 Vermont—covered children between ages 6 and 14 in families with
                                 incomes of 150 percent or more of the federal poverty level. Four of these
                                 five states—Connecticut, Michigan, South Carolina, and Vermont—also
                                 covered older children in families with incomes of 150 percent or more of
                                 the poverty level. The remaining states are still phasing in coverage for
                                 older children or are using SCHIP funds to accelerate coverage.27

Transitional Medicaid            In addition to the protections in the welfare law and state efforts to
Assistance Designed to Protect   expand coverage, transitional Medicaid assistance is another avenue for
Families Moving From Welfare     preventing the immediate loss of Medicaid coverage for families who
to Work                          transition from welfare to work. Section 1925 of the Social Security Act
                                 requires that states provide transitional Medicaid coverage to families

                                 27
                                     Florida and Wisconsin are using SCHIP funds to extend coverage to older children.



                                 Page 17                                         GAO/HEHS-99-163 Medicaid After Welfare Reform
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                       losing Medicaid eligibility as a result of employment or other financial
                       circumstances.28 Under this provision, states are specifically required to
                       provide two sequential 6-month periods of transitional Medicaid to
                       families when certain conditions are met.29 Nationwide, the extent to
                       which eligible families obtain and keep coverage under transitional
                       Medicaid is unknown. HCFA does not require state reporting or otherwise
                       monitor state compliance with the requirement to provide this program
                       benefit. Further, states do not separately identify families receiving
                       transitional Medicaid when reporting enrollment data to HCFA.

                       HCFA  proposed a regulation for transitional Medicaid on December 14,
                       1993, but did not finalize it because of staffing constraints.30 The proposed
                       regulation essentially reiterated the statute but did not provide states with
                       additional structure or guidance regarding implementation or ways to
                       consistently monitor that beneficiaries receive and retain coverage under
                       this benefit. On March 22, 1999, however, the agency sent guidance to TANF
                       administrators and state Medicaid and SCHIP directors on expanding health
                       coverage to families making the transition from cash assistance to work.
                       While the March 1999 guidance provides that states must not deny or
                       terminate Medicaid eligibility unless all possible avenues to such eligibility
                       have been exhausted, HCFA does not address transitional Medicaid in any
                       detail.


                       Changes in state welfare policies and practices have had both positive and
Changes in State       negative influences on Medicaid enrollment. We identified four
Welfare Policies and   approaches of states’ welfare reform programs that may influence
Practices Have Had     Medicaid enrollment: (1) diversionary programs, which are intended to
                       help families avoid the need to enroll in TANF; (2) eligibility policies and
Mixed Influences on    procedures, which states use to determine who is qualified for coverage;
Medicaid Enrollment    (3) transitional Medicaid assistance, which helps families moving from
                       welfare to work; and (4) education and outreach efforts, which are aimed

                       28
                        Other circumstances include increased hours of work or changes in income disregards, which states
                       can choose to disallow after 4 months of employment. Families who lose Medicaid eligibility on the
                       basis of the former AFDC standards because of increased child or spousal support are entitled to 4
                       months of transitional coverage.
                       29
                         For instance, in order to qualify for transitional Medicaid, a family must have received Medicaid
                       under the former AFDC standards in 3 of the 6 months immediately before becoming ineligible as a
                       result of increased income. No limit on income is imposed during the initial 6-month period of
                       transitional Medicaid. During the second 6-month period, however, a family’s gross monthly earnings,
                       less child care expenses, cannot exceed 185 percent of the federal poverty level.
                       30
                         58 Fed. Reg. 65,312. Currently, HCFA officials are working on an updated version of the proposal,
                       linking transitional Medicaid to enrollment in the new section 1931 Medicaid eligibility category
                       instead of receipt of AFDC. The states did not strongly oppose the proposed regulation, and HCFA
                       received only six comments on it.


                       Page 18                                        GAO/HEHS-99-163 Medicaid After Welfare Reform
                            B-281152




                            at minimizing confusion about Medicaid eligibility following welfare
                            reform. These program approaches vary by state and can affect Medicaid
                            enrollment levels. Finally, our contacts with states showed that SCHIP
                            outreach efforts have had a positive impact on Medicaid enrollment,
                            particularly for children.


States’ Welfare Diversion   States are increasingly implementing policies and programs—such as
Policies Can Influence      mandatory, up-front job searches and offers of a one-time lump-sum
Medicaid Enrollment         payment—that are designed to divert families from enrolling in welfare. As
                            table 4 shows, 18 of the 21 states in our sample (1) require that applicants
                            search for employment before obtaining welfare assistance, (2) offer
                            welfare-eligible applicants one-time payments in lieu of ongoing cash
                            assistance, or (3) both. Although state officials told us that their diversion
                            policies do not apply to Medicaid applicants, the imposition of these TANF
                            requirements may confuse Medicaid applicants about eligibility
                            requirements or dissuade them from completing a separate Medicaid
                            application. In the states we contacted, up-front job searches may cause
                            more confusion for Medicaid applicants than lump-sum payments, which,
                            in any event, are not often chosen by beneficiaries.




                            Page 19                            GAO/HEHS-99-163 Medicaid After Welfare Reform
                                    B-281152




Table 4: Comparison of 21 States’
Welfare Diversion Policies as of                                        Up-front job search              Lump-sum payment
April 1999                          State                               required                         offered
                                    Californiaa                                                          X
                                    Coloradoa                                                            X
                                    Connecticut                                                          X
                                    Delawareb                                                            X
                                    Florida                                                              X
                                    Georgia                             X
                                    Idaho                               X                                X
                                    Indianab                            X                                X
                                    Kansas                              X
                                    Kentuckyc                                                            X
                                                 a
                                    Maryland                            X                                X
                                    Michigan
                                    Nevadab                             X                                X
                                    North Dakota
                                    Ohioa                               X                                X
                                    Oklahoma                            X
                                    Oregon                              X
                                    South Carolina                      X
                                    Utah                                                                 X
                                    Vermontd
                                    Wisconsine                          X
                                    Total                               11                               12
                                    a
                                    Lump-sum payments and job search requirements may differ by county in these states.
                                    b
                                        States have not yet fully implemented mandatory job search or lump-sum payment programs.
                                    c
                                     Although Kentucky requires cash assistance applicants to join a job registry, it does not deny
                                    cash benefits to families that do not comply. As a result, we did not consider Kentucky to have a
                                    mandatory up-front job search requirement.
                                    d
                                     Vermont requires principal wage-earners in two-parent families—10 percent of the state’s
                                    June 1999 TANF caseload—to register with the state’s Department of Employment and Training
                                    and begin job search as a condition for cash assistance.
                                    e
                                     Although Wisconsin has a job access loan program for its cash assistance clients, we did not
                                    consider it a diversion strategy; unlike lump-sum payments offered in other states, clients must
                                    repay job access loans in cash or in-kind.



Mandatory Up-Front Job              To encourage work over welfare, 11 of the states in our sample have
Search Policies                     established mandatory, up-front job search requirements that families
                                    must satisfy to be eligible for cash assistance. States’ requirements vary




                                    Page 20                                        GAO/HEHS-99-163 Medicaid After Welfare Reform
                    B-281152




                    greatly—from joining a job registry, as in Utah and Wisconsin, to spending
                    time (ranging from 2 weeks in Maryland to 45 days in Oregon) pursuing
                    various state-provided job leads.

                    In states that have combined welfare and Medicaid applications—such as
                    Maryland, Oklahoma, Oregon, and South Carolina—mandatory job search
                    policies can delay determination of Medicaid eligibility until job search
                    requirements are satisfied. For example, South Carolina officials told us
                    that they hold combined applications until the job search
                    requirements—10 verified employer contacts—are satisfied. After 30 days,
                    if a job search is not completed, the welfare portion of the application is
                    denied while the Medicaid portion is forwarded to a separate unit for an
                    eligibility determination. Approved Medicaid applications are retroactive
                    to the initial date of application. Maryland officials similarly explained that
                    they have a 14-day hold on cash assistance applications; after that period,
                    the state will determine family eligibility for cash assistance and
                    Medicaid.31 Officials in the other two states did not indicate that the
                    Medicaid portions of the combined applications are held pending a job
                    search; however, we did not independently verify this.

Lump-Sum Payments   Officials in nine states reported offering welfare applicants one-time
                    lump-sum diversion assistance, and officials in three other states indicated
                    that they will soon implement such programs statewide.32 Of the nine
                    states with operational programs, Utah’s and Maryland’s programs appear
                    somewhat more active than those in the other seven states, where
                    relatively few families have accepted lump-sum payments. According to
                    Utah officials, between 190 and 200 families applying for cash assistance
                    each month—less than 1 percent of the state’s 1997 average monthly
                    welfare participation—accept lump-sum diversion payments in lieu of
                    ongoing assistance. Utah began offering diversion assistance statewide in
                    July 1996 under a welfare waiver that was approved before the federal
                    reform law was enacted. State officials explained that families accepting
                    diversion payments must be eligible for ongoing cash assistance;
                    furthermore, the state enrolls these families in Medicaid and offers them
                    child care and job placement assistance. Families can receive the

                    31
                      Since states are required to determine applicant eligibility for Medicaid coverage within 45 days of
                    the date of application (90 days when a disability determination is involved), states do not appear to be
                    exceeding the maximum amount of time allowed by the Medicaid statute.
                    32
                      For example, Delaware plans to implement its lump-sum payment program in October 1999. Indiana
                    is piloting both a lump-sum payment program and up-front job search requirements in several of its
                    counties. Indiana officials indicated that if the pilots were successful, they would be implemented in
                    additional counties during the year. Nevada officials said that their legislature has approved a
                    lump-sum payment program, and state officials are considering the software and eligibility system
                    changes needed before implementing the program.



                    Page 21                                         GAO/HEHS-99-163 Medicaid After Welfare Reform
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lump-sum equivalent of 3 months of cash assistance—$1,353 for a family
of three—and 3 months of Medicaid coverage. Utah allocates its diversion
payments over a 3-month period so that the payment does not make
recipients automatically ineligible for Medicaid.33 At the end of the
3-month period, eligibility workers determine whether the families are
eligible for any additional months of Medicaid coverage.

In Maryland, as is the case in California, Colorado, and Ohio, counties
have broad authority to implement state programs on the basis of their
own priorities. Thus, welfare avoidance grants are optional benefits that
caseworkers may offer welfare-eligible families. Maryland welfare officials
told us that about 1,600 welfare avoidance grants—for items such as car
repair and dental services—have been awarded statewide over the first 2
years of welfare reform. Baltimore city welfare officials, who manage over
50 percent of the state’s welfare caseload, have defined welfare avoidance
grants as one-time payments, the equivalent of up to 3 months of cash
assistance (ranging from $1,050 to $1,197 for a three-member household)
that caseworkers may offer welfare-eligible families so that the head of a
household can continue working or accept a bona fide job offer. However,
Baltimore city officials said that because very few of their cash assistance
applicants have jobs or genuine job offers, very few have met the local
criteria for caseworkers to offer these welfare avoidance grants. In fact,
few welfare avoidance grants have been given to families in Maryland’s
large urban areas. One point of difference between Baltimore city and
Maryland’s counties has to do with car repairs. Baltimore city officials do
not consider the need for car repairs as a valid reason for offering
avoidance grants because the area has a public transportation system,
while other areas in the state do include car repair as an acceptable need.

Officials in the remaining seven states attributed low participation in their
voluntary diversion programs both to the small amounts of money that
families are offered and to other benefits they might forgo in accepting the
lump-sum payment. For example, only 12 families in Florida have
accepted lump-sum payments since the state implemented the program in
November 1997. Florida officials hypothesized that more families have not
found the program an acceptable alternative to cash assistance because
the payment is small in comparison with the benefits they could receive as
cash assistance recipients. A family of three, for instance, is limited to a
single payment of $606—the equivalent of 2 months of cash assistance. To
receive that payment, the family must prove eligibility by completing the
standard welfare application and, possibly, forgo food stamps and

33
  Under the AFDC program, qualifying families had generally been limited to $1,000 in liquid assets.



Page 22                                         GAO/HEHS-99-163 Medicaid After Welfare Reform
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                            Medicaid coverage if the payment raises family resources above the state’s
                            $2,000 cash limit; the family must also agree not to apply for more cash
                            assistance for 3 months.


States’ Eligibility         States must annually redetermine whether individuals remain eligible for
Redetermination Processes   Medicaid. As part of the redetermination process, eligibility workers verify
Have Added Complexities     that family incomes are still within state standards and that families
                            continue to meet any other criteria, such as family composition and
for Workers                 resource limits, applicable to their particular Medicaid eligibility category.
                            Welfare reform and state welfare-to-work strategies have introduced
                            added complexities to the Medicaid redetermination process that appear
                            to have affected workers and, as a result, have the potential to affect
                            beneficiaries.

                            State and local welfare officials reported three ways in which welfare
                            reform has made the redetermination process more burdensome for
                            eligibility workers. First, eligibility workloads per worker have increased
                            in three of the four states we visited—California, Florida, and
                            Maryland—since welfare reform.34 Second, in those states in which TANF
                            and Medicaid redeterminations are still linked, workers often reported
                            added complexities, such as having to monitor beneficiary compliance
                            with state job search, work, and vocational training requirements. Third,
                            because families can now apply for Medicaid separately from cash
                            assistance, workers need to become more familiar with Medicaid eligibility
                            rules, since many states’ eligibility systems are not fully automated.
                            Officials in California, Colorado, Florida, Maryland, and Ohio told us that
                            they are seeing an increase in the number of Medicaid-only cases relative
                            to the number of cash assistance cases.

                            Beneficiary advocates we spoke with in Florida, Maryland, and California
                            indicated that the added pressures on eligibility workers can strain
                            worker-beneficiary relations and, in some cases, make communication
                            between the parties so difficult that eligible families do not get the
                            information they need to apply for or retain Medicaid coverage. The
                            growing number of Medicaid-only cases concerns eligibility workers, who
                            previously handled very few of these cases and consider Medicaid too

                            34
                              Although Medicaid enrollment had declined in these states, it does not appear that the declines
                            occurred in the major urban areas that we visited. For example, workers in Los Angeles County
                            attributed their increased per-worker caseload to the rising numbers of mixed-status households,
                            stating that a single family may have as many as four separate cases representing different categories
                            of Medicaid eligibility, such as those based on citizenship status (citizens and noncitizens), income,
                            and medical need. Florida workers attributed their increased caseloads to staff reductions and
                            turnover.



                            Page 23                                        GAO/HEHS-99-163 Medicaid After Welfare Reform
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                            complex given its many eligibility categories for differing income,
                            resource, and family composition criteria. The addition of the section 1931
                            eligibility category has added to this problem. Officials in the 21 states we
                            contacted reported numbers of welfare-related Medicaid eligibility
                            categories that ranged from almost 30 to over 100. According to state
                            officials and workers, the proliferation of eligibility categories is
                            challenging for workers in most states and is particularly troublesome for
                            workers in states with computer systems that have not kept up with
                            welfare policy changes. For example, we were told that workers in Florida
                            must either manually determine Medicaid eligibility or understand the
                            policies well enough to verify the accuracy of the state’s computerized
                            eligibility determinations. California officials told us that workers must
                            manually determine Medicaid eligibility for the section 1931 eligibility
                            category. They also said that most of California’s programming expertise
                            has been devoted to ensuring that more vital state systems are year 2000
                            compliant.


Wide Variation in           Although the Medicaid statute entitles families moving from welfare to
Beneficiary Access to       work to as much as 12 months of transitional Medicaid coverage, the
Transitional Medicaid       extent to which families receive the benefit and the length of coverage
                            vary considerably by state. Among the states with data that we contacted,
Exists Across States        transitional Medicaid participation rates ranged from about 4 percent of
                            the families losing cash assistance in Idaho to 94 percent of such cases in
                            Connecticut. Within our 21-state sample, 6 states—California, Connecticut,
                            Delaware, South Carolina, Vermont, and Utah—have pre-welfare-reform
                            waivers to provide 24 months or more of coverage.35 Officials from some
                            states identified several barriers to full beneficiary use of transitional
                            Medicaid benefits, such as periodic income reporting requirements for
                            beneficiaries and a lack of program knowledge among eligibility workers.
                            Several states have found ways to overcome these barriers and make
                            enhanced use of the benefits afforded by transitional Medicaid. Moreover,
                            HCFA has recommended via a legislative proposal that beneficiary income
                            reporting requirements be eliminated from transitional Medicaid.

Transitional Medicaid Use   Receipt of transitional Medicaid varied considerably among the states we
Varies by State             contacted, and we were unable to obtain consistent data on program



                            35
                              California has a waiver to provide 12 months of transitional Medicaid to people losing eligibility
                            because of marriage or reunification of spouses. Additionally, California provides 12 months of
                            state-funded coverage to adults 19 years and older who have exhausted the 12 months of
                            federal/state-funded coverage.



                            Page 24                                         GAO/HEHS-99-163 Medicaid After Welfare Reform
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                         participation for all 21 states in our sample.36 Furthermore, among the 16
                         states that could provide us information on transitional Medicaid, there
                         was little consistency in tracking and interpreting data on program
                         participation. For example, an Idaho survey of 14,772 cash assistance
                         cases closed during state fiscal year 1998 showed that 636 families
                         (4 percent) received transitional Medicaid. Idaho officials said they were
                         not alarmed by this low participation rate because, in their estimation,
                         most of the families losing cash assistance were still enrolled in Medicaid
                         either under the new section 1931 eligibility category for low-income
                         families or as children in the state’s Medicaid expansion program.37 A
                         Connecticut survey of the 2,190 families leaving cash assistance and
                         scheduled for exit interviews in January 1998 showed that 2,050 families
                         (94 percent) received transitional Medicaid. Maryland officials reported
                         that in federal fiscal year 1998, 7,206 individuals received transitional
                         Medicaid and in 1997, 7,227 did so; these figures represent about
                         21 percent and 18 percent of those losing cash assistance in federal fiscal
                         years 1998 and 1997, respectively.38

                         Although officials in Delaware and Vermont did not provide specific
                         information on transitional Medicaid participation rates, they surmised
                         that most families that lose cash assistance in their states receive the
                         additional months of coverage. Both states received waivers to provide
                         more than 12 months of transitional Medicaid even before federal welfare
                         reform. Delaware provides 24 months of transitional Medicaid coverage,
                         and the state’s eligibility determination system showed that 80 percent of
                         the families enrolled in transitional Medicaid kept coverage for the full
                         24-month period. Vermont officials similarly believe that participation in
                         their state’s 36-month transitional Medicaid program is high. In addition to
                         an almost 3-percent increase in adult and child Medicaid enrollment
                         between 1995 and 1997, Vermont officials estimated that about 18 percent
                         of the state’s population received some form of publicly subsidized health
                         insurance coverage.

Income Reporting         HCFA and state officials noted that quarterly beneficiary income reporting
Requirements Can Limit   requirements can pose barriers to family receipt of transitional Medicaid
Transitional Medicaid    benefits. Transitional Medicaid entitles certain families who are losing
Participation            Medicaid as a result of employment or increased income to an additional

                         36
                          Lack of data has been a consistent problem in understanding the availability and use of transitional
                         Medicaid. See Welfare to Work: Implementation and Evaluation of Transitional Benefits Need HHS
                         Action (GAO/HRD-92-118, Sept. 29, 1992).
                         37
                          As shown in table 1, between 1995 and 1997, Idaho’s Medicaid enrollment decline was 10.8 percent,
                         compared with 49.0 percent for welfare.
                         38
                          According to data from ACF, 61,096 individuals lost cash assistance in Maryland between
                         January 1997 and September 1998.
                         Page 25                                        GAO/HEHS-99-163 Medicaid After Welfare Reform
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    year of Medicaid coverage. Reporting requirements can pose barriers for
    families leaving cash assistance at two points: (1) entering transitional
    Medicaid and (2) maintaining this entitlement for the full period of
    eligibility. In the first case, the failure to notify eligibility workers of
    employment can prevent families from being enrolled in transitional
    Medicaid. Theoretically, a head of household would report increased
    earnings, be removed from cash assistance, and be placed on transitional
    Medicaid. However, many heads of households do not notify their
    eligibility workers that they have obtained employment; thus, once
    disqualified from cash assistance, these heads of households are not
    automatically rolled over into transitional Medicaid eligibility. Thus, the
    eligible family never receives transitional Medicaid.

    In the second case, families participating in transitional Medicaid can have
    their benefits terminated if they fail to meet statutory reporting
    requirements established under section 1925 of the Social Security Act.
    Although the Medicaid statute entitles families to 12 months of transitional
    Medicaid assistance—in two 6-month segments—each 6-month period of
    coverage has its own eligibility criteria and income reporting
    requirements. In all but 3 of the 21 states we contacted, beneficiaries must
    comply with the following statutory requirements to obtain and maintain a
    full year of transitional Medicaid coverage.39

•   To receive the first 6 months of transitional Medicaid, families must notify
    the state—typically through the family’s eligibility worker—of their
    employment and income status. Although there is no income eligibility
    limit during this period, families must also submit an income report to the
    state by the 21st day of the 4th month of transitional Medicaid coverage.
•   To receive the second 6 months of transitional Medicaid coverage, family
    income minus child care expenses may not exceed 185 percent of the
    federal poverty level. Families also must submit quarterly income reports
    by the 21st day of the 1st and 4th months of the second 6-month period.
    During this period, families may also be required to pay premiums for
    Medicaid coverage, and the state can reduce the level of Medicaid benefits
    and services to which they are entitled.


    39
      Before welfare reform, Connecticut, Delaware, Maryland, and Oregon obtained welfare and Medicaid
    waivers to eliminate the requirement for quarterly income reporting, thus ensuring an uninterrupted
    period of transitional Medicaid coverage. The BBA also permits states, as part of their HCFA-approved
    state Medicaid or SCHIP plan, to guarantee 12 months of continuous Medicaid/SCHIP eligibility for
    low-income children, without additional family income reporting requirements. A Connecticut official
    informed us that the state’s waiver of transitional Medicaid reporting requirements will expire in
    October 2001, and, unless the state is granted an extension of the waiver, the state will have to comply
    with what it terms a burdensome requirement.



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In both instances, failure to report beneficiary income status can result in
the termination of transitional Medicaid benefits, unless the family can
show good cause for its failure to report on a timely basis.

Our review of states showed that beneficiary income reporting
requirements can affect whether families receive transitional Medicaid
coverage for the full period for which they may be entitled. Some state
officials said that although eligibility workers explain the availability of
and conditions for receiving transitional Medicaid and provide new
beneficiaries with program information, few families comply with the
reporting requirements, and many do not respond to termination notices
alerting them to loss of coverage. For example, Colorado, Florida, and
Oklahoma officials told us that families typically receive only 6 months of
transitional Medicaid, generally because of families’ failure to submit the
required quarterly income reports.

A study of Maryland cash assistance cases closed between October 1996
and September 1997 showed that 19 percent of the cases were closed
because of increased income, making the families eligible for transitional
Medicaid. Over 50 percent of the closed cases were coded by eligibility
workers as administrative closures—for example, closures resulting from
failure to submit required reports or to complete the redetermination
process. Wisconsin beneficiary advocates became similarly concerned that
the state’s automated eligibility determination system was not
appropriately shifting closed cash assistance cases into transitional
Medicaid following increased complaints from beneficiaries that their
cases had been improperly terminated. In previous work, we noted that 14
states did not have policies for informing families about transitional
Medicaid at the time of either application for or redetermination of cash
assistance.40 Advocates also noted that state cash assistance termination
notices can be difficult to understand, and beneficiaries may fail to see
how such notices affect their Medicaid eligibility. In commenting on a
draft copy of this report, Maryland and Wisconsin officials informed us
that they had begun taking steps to reduce the number of administrative
closures of cash assistance cases, including creating outreach posters and
flyers and carrying out mass mailings to alert beneficiaries of the
importance of reporting earnings information. In addition, Wisconsin
reported having simplified the text of its cash assistance termination
notices and has begun a longer-term effort to overhaul all of its
system-generated notices.


40
  See GAO/HRD-92-118, Sept. 29, 1992.



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                                 B-281152




                                 Our contacts with the states indicated that while many states expect
                                 eligibility workers to provide beneficiaries with information on
                                 transitional Medicaid, only nine states—California, Georgia, Florida,
                                 Indiana, Maryland, Nevada, South Carolina, Vermont, and
                                 Wisconsin—reported having developed specific materials in
                                 easy-to-understand language for workers and beneficiaries. Four of these
                                 nine states—Georgia, Florida, Maryland, and South Carolina—use
                                 consistent materials developed by the Southern Institute on Children and
                                 Families, while the others developed worker training or educational
                                 materials in response to perceived local needs.41

Several States Have Strategies   Several states have initiatives in place to facilitate beneficiaries’ eligibility
and Incentives to Increase Use   for transitional Medicaid. As we have previously reported, difficult
of Transitional Medicaid         trade-offs exist between the need for program integrity and ease of
                                 enrollment for beneficiaries.42 In this regard, states—and HCFA in its
                                 oversight capacity—must balance efforts to simplify and streamline
                                 eligibility processes with efforts to ensure that benefits go only to qualified
                                 individuals.

                                 Transitional Medicaid, which is available for a limited time after an
                                 individual moves from welfare to work, has been the focus of some states’
                                 strategies to increase family receipt of Medicaid. Connecticut, which has
                                 an approved waiver from HCFA to provide 24 months of transitional
                                 Medicaid, also has waiver authority to eliminate quarterly income
                                 reporting.43 At the end of the time limit for cash benefits, the recipient is
                                 asked to participate in an interview, at which time eligibility for ongoing
                                 Medicaid is explored. State officials indicated that if the person does not
                                 attend the exit interview, they rely on their own records to determine if
                                 the family currently has earned income and grants transitional Medicaid
                                 coverage if this is the case. If the family does not have earned income,
                                 however, or does not provide other information needed to determine
                                 ongoing eligibility, the case is closed. If the family subsequently reports
                                 earned income or other information indicating ongoing eligibility within 6
                                 months of the case closure, Connecticut initiates transitional Medicaid
                                 coverage.


                                 41
                                   The Southern Institute on Children and Families is an independent, nonprofit public policy
                                 organization founded in 1990 that tries to improve opportunities for disadvantaged children and
                                 families in the South.
                                 42
                                  See Medicaid: Demographics of Nonenrolled Children Suggest State Outreach Strategies,
                                 (GAO/HEHS-98-93, Mar. 20, 1998).
                                 43
                                  Oregon provides the required 12 months of transitional Medicaid coverage and also obtained a waiver
                                 before welfare reform to eliminate quarterly income reporting for transitional Medicaid beneficiaries.



                                 Page 28                                        GAO/HEHS-99-163 Medicaid After Welfare Reform
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Kansas revised its computer systems so that eligible families leaving cash
assistance or Medicaid are automatically transferred to an alternative
health program, such as transitional Medicaid, one of the expansion
categories for children, or the state’s SCHIP program. In addition, Kansas
workers randomly contact families who are leaving cash assistance to
determine their health insurance status and to ensure that they obtain the
additional months of Medicaid coverage for which they are eligible. As a
result, Kansas officials estimated that about 70 percent of the families
leaving cash assistance or Medicaid receive transitional coverage.

Indiana and Michigan officials informed us that they, too, have taken steps
to improve participation in transitional Medicaid. Indiana instituted a
statewide campaign to train eligibility workers about the importance of
entering earnings information in the state’s eligibility system. As of
November 1998, Indiana officials reported that 13,126 families were
receiving transitional Medicaid—an increase of 117 percent since
May 1998. Michigan officials also reported a significant improvement.
Between October 1992, when the state began its present welfare reform
initiative, and November 1998, participation in transitional Medicaid
increased more than fourfold—from 28,301 to 125,493 individuals. In
Michigan, eligibility workers trigger transitional coverage for families
whose earnings are likely to make them ineligible for Medicaid in the
upcoming quarter.

Officials in South Carolina, Utah, and North Dakota encourage increased
participation in transitional Medicaid by contacting families with closed
cash assistance cases to determine whether these families have obtained
the additional months of Medicaid coverage they may be entitled to
receive. Both South Carolina and Utah have pre-welfare-reform waivers to
provide 24 months of transitional Medicaid. South Carolina officials told
us that they have used county-level goal setting and surveys of closed cash
assistance cases to increase enrollment in their state’s transitional
Medicaid program. The results of a February 1999 survey showed that the
percentage of families receiving transitional Medicaid had increased from
about 75 percent between October and December 1996 to about 77 percent
between October and December 1997. As a quality control measure, Utah
officials use system-generated monthly lists of closed Medicaid cases to
contact families to determine whether they have received their 24 months
of coverage. North Dakota eligibility workers report preferring that
families leaving cash assistance receive transitional Medicaid because, if
those families leave Medicaid and reapply, they are likely to be placed in




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                               B-281152




                               an eligibility category that requires more burdensome monthly income
                               reporting and monitoring.

HCFA Initiative Seeks to       In view of concerns that beneficiary reporting requirements are limiting
Eliminate Beneficiary Income   the use of the transitional Medicaid benefit, HCFA has proposed legislation
Reporting Requirements for     aimed at simplifying transitional Medicaid. In particular, this proposal
Transitional Medicaid          would eliminate beneficiary reporting requirements for transitional
                               Medicaid benefits for the full period of required eligibility (up to 1 year).
                               Essentially, the failure to report income on a quarterly basis would no
                               longer result in a beneficiary’s removal from Medicaid enrollment. To date,
                               no action has been taken on this proposal, which has been submitted as a
                               part of the President’s fiscal year 2000 budget.


Some States Have Initiated     Six states we contacted—California, Florida, Georgia, South Carolina,
Medicaid Outreach and          Utah, and Wisconsin—have initiated or adapted their Medicaid outreach
Beneficiary Education          and education programs to specifically address any confusion among
                               beneficiaries following welfare reform. Aside from eligibility-related issues
Campaigns to Lessen            involving noncitizens, confusion about whether receiving Medicaid counts
Confusion Over Welfare         against the 5-year limit for welfare benefits, and uncertainty about the
Reform                         impact of TANF sanctions on Medicaid, beneficiary advocates were
                               concerned that welfare reform would deter eligible low-income families
                               from seeking Medicaid coverage. To address these issues, the welfare
                               reform law set aside $500 million in Medicaid funds that states could use
                               for a variety of Medicaid-related administrative costs following welfare
                               reform. The law also offered an enhanced Medicaid matching rate for
                               outreach and beneficiary education activities. However, as of
                               December 31, 1998—the date of the most recent available data—HCFA
                               documents showed that the states had claimed only $25.4 million from the
                               fund; the 21 states we contacted accounted for $7.4 million of the
                               expenditures.44

                               Individually, some states have initiated efforts to counter any confusion
                               that may have resulted from welfare reform. For instance, South Carolina
                               contracted with the Southern Institute for Children and Families to
                               produce education and outreach materials for distribution to beneficiaries
                               and employers on post-welfare-reform benefits, such as Medicaid, that
                               low-income working families might be eligible to receive. This effort was
                               the result of an outreach project involving several of the state’s larger
                               counties. In addition, South Carolina randomly surveys 500 families

                               44
                                According to HCFA officials, the agency does not track the states’ specific uses of the set-aside funds
                               because a variety of administrative and outreach purposes are permissible.



                               Page 30                                         GAO/HEHS-99-163 Medicaid After Welfare Reform
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quarterly after their welfare cases have closed to determine, among other
things, if the families have health insurance or are Medicaid-eligible. State
officials use the survey results to provide feedback to the counties. South
Carolina officials believe that performance goals related to job placements
have had the effect of an added incentive to counties to follow up with
families to ensure that eligible families do not lose Medicaid coverage.

Education and outreach efforts pose additional challenges for states with
large immigrant populations, such as California and Florida. State and
local officials in California told us that citizenship and residency concerns
within the state’s immigrant communities have had a significant chilling
effect on new applications. For example, in February 1998, Los Angeles
County initiated a project to enroll 100,000 of the area’s estimated 300,000
uninsured low-income children in Medicaid by September 1999. By
December 1998, only 35,000 to 40,000 additional children had been
enrolled, despite expanded community-based outreach. Both beneficiary
advocates and county officials attributed the low enrollment to the
immigrant communities’ concerns that receiving Medicaid, even for
children who are citizens, might jeopardize relatives’ pending applications
for citizenship or changes in residence status. Florida officials noted a
similar effect in their state, where immigrant families decline to apply for
Medicaid because of concerns about jeopardizing their immigration status.
Florida officials have been working with numerous community-based
organizations and housing projects to counteract the misunderstanding or
mistrust that remains within immigrant communities.

In light of the fears and confusion among immigrants regarding this issue,
the administration has recently published a proposed rule to clarify the
circumstances in which individuals can accept certain public benefits
without fear of negative immigration consequences.45 The proposed rule
specifies a list of benefits, prepared by HHS, the Immigration and
Naturalization Service (INS), and the State Department, that immigrants
can receive without affecting their admission to the United States or their
resident status. Under current law, before admitting someone as a legal
permanent resident, the INS or State Department must conclude that the
individual is not likely to become a “public charge”—that is, a person
whose main source of support is from government programs. Medicaid
and SCHIP are among the benefits specified in the proposed rule that would




45
  64 Fed. Reg. 28,675 (May 26, 1999).



Page 31                                 GAO/HEHS-99-163 Medicaid After Welfare Reform
                              B-281152




                              be exempt from the “public charge” test for immigrant admission,
                              adjustment, or deportation.46

                              Some states have put a significant amount of effort into developing
                              enrollment outreach programs, as well as increasing the number of
                              locations at which eligibility to facilitate enrollment and workers are
                              available to inform beneficiaries and providers that Medicaid eligibility is
                              no longer tied to cash assistance. Several examples follow.

                          •   Georgia is using nearly 150 “Right From the Start” Medicaid outreach
                              eligibility workers to enroll Medicaid-eligible children and to act as
                              intermediaries for families who are seeking only Medicaid coverage and
                              do not wish to go to a local welfare office to apply.
                          •   Utah has been able to reach beyond the traditional “outstation” locations
                              by placing additional workers in schools, Indian reservations, and large
                              medical clinics.47 The state has also allowed families to apply for Medicaid
                              by telephone and through the mail. Additionally, Utah’s Department of
                              Workforce Services, which oversees the TANF program, also accepts
                              Medicaid applications by telephone.
                          •   In Wisconsin, where the welfare and Medicaid programs are separately
                              administered, officials were particularly concerned about the confusion
                              this separation could cause beneficiaries and providers. In an effort to
                              avoid such confusion, Wisconsin has increased the number of outstationed
                              locations in Milwaukee—one of the state’s larger urban areas—and
                              contracted with advocates to assist beneficiaries in navigating the new
                              system.


SCHIP Outreach and            While officials in most of the 21 states we contacted reported that
Related Simplifications       outreach for SCHIP has had a positive spillover effect on Medicaid
May Increase Future           enrollment among children, officials in 6 states specifically suggested that
                              such efforts may have directly contributed to enrollment increases or
Medicaid Enrollment           stabilization in their Medicaid programs. Although firm data are not yet
                              available, officials from the states in our sample estimated that perhaps as

                              46
                                While Medicaid would not be considered in public charge determinations, the proposed rule specifies
                              an exception: Medicaid or similar state programs would be considered in limited circumstances if they
                              were needed to pay for long-term care, in the form of nursing home or institutionalized care for the
                              individual. The proposed rule provides, however, that the need for long-term care alone would not
                              automatically result in a public charge determination. INS and State Department officials would need
                              to consider other factors required by law (such as age, health, family status, and assets), and
                              determinations would be made on a case-by-case basis.
                              47
                                Section 4602 of the Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508) added the requirement
                              that states “outstation” eligibility workers at locations other than local welfare offices, allowing
                              mothers and children to apply for Medicaid at the sites where they receive health care.



                              Page 32                                       GAO/HEHS-99-163 Medicaid After Welfare Reform
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                  many as an additional 135,000 children have recently been enrolled in
                  Medicaid as a result of SCHIP outreach and the requirement that states
                  screen all SCHIP applicants for Medicaid eligibility and enroll those who
                  qualify. For instance, Michigan officials reported that they enrolled two
                  children in Medicaid for each SCHIP enrollee. However, since SCHIP was
                  enacted in 1997 and program implementation was just getting under way
                  in 1998 and 1999 in most states, these spillover enrollment effects are not
                  reflected in our 1997 Medicaid data.

                  While state officials did not report a similar spillover effect on adult
                  enrollment, SCHIP has resulted in simplified Medicaid applications and
                  redetermination processes for children that may also facilitate enrollment
                  among adults. For instance, states such as California, Kansas, Utah, and
                  Vermont have begun to simplify their Medicaid enrollment and application
                  processes in the following ways:

              •   California has shortened its 28-page joint Medicaid/SCHIP booklet on child
                  eligibility to a 4-page application.
              •   In Kansas, since January 1999, low-income families have been able to
                  submit Medicaid redetermination information by mail and are no longer
                  required to meet personally with an eligibility worker.
              •   Utah had instituted several innovative procedures even before SCHIP,
                  including allowing application by mail or telephone and redetermination
                  by mail, telephone, or facsimile.
              •   Vermont has created a centralized Health Access and Eligibility Unit to
                  receive and process mailed applications for those applying only for state
                  medical assistance.

                  SCHIP has also sparked certain states to consider and implement a variety
                  of ways to make their enrollment and application processes less
                  burdensome, including providing applications at alternative locations such
                  as schools, Head Start centers, and community action agencies. Other
                  states have adopted mail-in applications and community-based worker
                  assistance, and one state is considering the feasibility of accepting
                  applications over the Internet.


                  Despite federal protections to ensure that low-income families retain
Conclusions       health insurance regardless of whether they are receiving cash assistance,
                  it has become more complicated for eligible low-income families to
                  establish and keep Medicaid coverage with the advent of welfare reform.
                  States are challenged with identifying and enrolling families that no longer



                  Page 33                            GAO/HEHS-99-163 Medicaid After Welfare Reform
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qualify for cash assistance yet continue to retain Medicaid eligibility. Some
states have taken advantage of the flexibility under welfare reform by
using protections provided by the law to ensure that Medicaid coverage is
sustained for low-income families that are transitioning to work. Other
states have found it increasingly difficult to communicate to both
beneficiaries and workers that Medicaid coverage can be maintained even
though changes in welfare policies may limit or deny cash assistance.
National declines in Medicaid enrollment raise questions about whether
states have been able to “de-link” welfare and Medicaid policies in a
manner that consistently ensures Medicaid coverage for eligible
individuals.

Transitional Medicaid is a protection offered to families at a critical
juncture in their efforts to move from welfare to work. Employment in
low-wage positions frequently does not provide adequate access to
affordable health insurance, making Medicaid coverage an important
benefit. However, there are indications that procedural difficulties with
income reporting—coupled with a lack of national data and the apparently
disparate use of this benefit by the states—are limiting the extent to which
beneficiaries are receiving transitional Medicaid and maintaining their
eligibility for it. Before welfare reform, states were able to obtain authority
from HCFA to waive certain beneficiary reporting requirements. Presently,
however, states without waivers must comply with section 1925 of the
Social Security Act, which requires beneficiary income reporting even
though income level does not affect eligibility for the first 6 months of
transitional Medicaid. As a result, families that do not comply with this
requirement can be terminated from transitional Medicaid, despite their
income eligibility for this entitlement.

There is precedent for a less burdensome approach, by which states could
be allowed to lessen or eliminate beneficiary income reporting
requirements. For example, the BBA allowed states to guarantee a longer
period of Medicaid coverage for children, regardless of changes in a
family’s financial status or size. Similarly, HCFA has proposed eliminating
beneficiary income reporting requirements. Our work suggests that
removing reporting requirements would be beneficial to increasing the use
of transitional Medicaid, provided that sufficient safeguards remained in
place to ensure that only those who are qualified receive the benefits.

Information on the extent to which transitional Medicaid is implemented
across the states is scarce. HCFA is responsible for overseeing the states’
implementation of this entitlement and is in the position to serve as a



Page 34                             GAO/HEHS-99-163 Medicaid After Welfare Reform
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                           conduit of technical assistance and dissemination of states’ best practices
                           in implementing transitional Medicaid. Doing so could heighten
                           understanding of systemic barriers and provide states with strategies to
                           foster and maintain transitional Medicaid coverage for eligible families.


                           To further facilitate families’ making the transition from welfare to work
Recommendation to          and to prevent income-eligible families from being terminated from
the Congress               Medicaid for procedural reasons, we recommend that the Congress
                           consider revising section 1925 of the Social Security Act. Specifically, the
                           Congress may wish to allow states to lessen or eliminate periodic income
                           reporting requirements for families receiving transitional Medicaid
                           coverage, provided that states offer adequate assurances that the benefits
                           are reserved for those who are eligible. Actions in this regard could
                           facilitate uninterrupted health insurance coverage for families that are
                           moving from cash assistance to the workforce.


                           In order to ensure that eligible individuals leaving cash assistance do not
Recommendations to         lose Medicaid coverage, we recommend that the Administrator of HCFA
the Administrator of
HCFA                   •   determine the extent to which transitional Medicaid is reaching the
                           eligible population and
                       •   provide states with guidance or other appropriate technical assistance
                           regarding best approaches for implementing transitional Medicaid in a
                           manner that facilitates the full and appropriate use of this entitlement for
                           eligible beneficiaries.


                           We provided ACF, HCFA, and officials from the 21 states in our sample an
Agency and Other           opportunity to review a draft of this report. While ACF reviewed the report,
Comments                   it did not suggest any changes to its content.

                           HCFA  concurred with our conclusions and recommendations and
                           highlighted steps it has taken to ensure that states understand Medicaid
                           eligibility and the enrollment options families have following welfare
                           reform. HCFA also noted a number of studies it is sponsoring, along with
                           HHS and the Office of the Assistant Secretary for Planning and Evaluation,
                           to better understand the factors contributing to declining enrollment. In
                           particular, HCFA plans to use the results of a 6-state study performed by an
                           independent contractor as the basis for a more extensive longitudinal
                           analysis of individual Medicaid eligibility in 8 to 10 states. Additional



                           Page 35                            GAO/HEHS-99-163 Medicaid After Welfare Reform
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studies, which are planned or under way, include comparisons of national
trends in pre- and post-welfare-reform Medicaid enrollment and
expenditures. HCFA also commented that it plans to issue additional
guidance on transitional Medicaid, conduct outreach to beneficiaries, and
propose legislative changes to make access to transitional Medicaid less
burdensome. Finally, HCFA cited plans to provide on-site technical
assistance to the states to further assist in the coordination between TANF
and Medicaid. Specifically, HCFA officials intend to visit every state to
ensure that states are taking full advantage of their opportunities and that
states are meeting the challenges posed by changes in the BBA and welfare
reform.

We agree that the unique character of each state’s welfare and Medicaid
programs warrants an individualized review of state-level activities. We
believe that efforts in this regard should be based on a comprehensive
analysis of state-level activities, including an evaluation of the experiences
and barriers particular to individual states. Further, we caution HCFA about
relying on 2082 data as the primary indicator of Medicaid enrollment,
given the data limitations we found.48 (See app. I.) HCFA’s written
comments are provided appendix III.

In addition to the problematic transitional Medicaid reporting
requirements, some responding states also identified other barriers or
challenges to transitional coverage and Medicaid, in general.49 Several
states cited as barriers the requirement that beneficiaries must have
received Medicaid coverage on the basis of AFDC-related criteria in 3 of the
previous 6 months to be eligible for transitional Medicaid. According to
officials in Florida, because the median length of time that families stay on
TANF is 3 months, about half of the state’s recipients leave TANF before
meeting the 3-month criteria. Another barrier or challenge to Medicaid
enrollment, as noted by one state’s official, is the “disconnect” between
cash assistance and Medicaid—two programs that once worked in tandem
now, at times, appear to have competing goals. While the TANF program
emphasizes self-sufficiency and employment, Medicaid encourages
coverage for all eligible individuals. According to this official, reconciling
the two programs’ goals poses a continuing challenge for states
implementing welfare reform.



48
  “2082” is an annual state-submitted report designed to collect statistical data on Medicaid.
49
 We sent a draft of this report to officials in all 21 states in our sample: 17 responded; Delaware,
Georgia, Idaho, and North Dakota did not.



Page 36                                          GAO/HEHS-99-163 Medicaid After Welfare Reform
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Several states also expressed the concern that our 1995 to 1997 enrollment
data do not reflect the effects of policy changes and program expansions
implemented since 1997. We agree that the time frame for this analysis
represents a “snapshot” of state experience and may not reflect the
evolving nature of Medicaid enrollment in individual states. As enrollment
begins to stabilize or to reverse previous declines in some states and more
current data become available, further analysis to determine the status of
Medicaid enrollment as it relates to welfare reform would be warranted.

Several states provided technical comments, which we incorporated as
appropriate.


As arranged with your offices, unless you announce its contents earlier,
we plan no further distribution of this report until 14 days after its
issuance date. At that time, we will send copies to the Honorable Donna
Shalala, Secretary of HHS; the Honorable Nancy-Ann Min DeParle,
Administrator of HCFA; the Honorable Olivia Golden, Administrator of ACF;
directors of the programs in the 21 states we contacted; and interested
congressional committees. Copies of this report will also be made
available to others upon request.

If you have any questions about this report, please contact me at
(202) 512-7114. Other GAO contacts and staff acknowledgments are in
appendix IV.




Kathryn G. Allen
Associate Director, Health Financing
  and Public Health Issues




Page 37                           GAO/HEHS-99-163 Medicaid After Welfare Reform
Contents



Letter                                                                                               1


Appendix I                                                                                          40
                        Limitations of HCFA Enrollment Data                                         42
Scope and
Methodology
Appendix II                                                                                         44

Analysis of States’
Medicaid Enrollment
and Welfare
Participation Data
Appendix III                                                                                        51

Comments From the
Health Care Financing
Administration
Appendix IV                                                                                         58

GAO Contact and Staff
Acknowledgments
Related GAO Products                                                                                60


Tables                  Table 1: Percentage Changes in Medicaid Enrollment and Welfare               8
                          Participation in Our State Sample, 1995-97
                        Table 2: Percentage Changes in Child and Adult Medicaid                     14
                          Enrollment in Our State Sample, 1995-97
                        Table 3: Medicaid Coverage of Pregnant Women, Infants, and                  16
                          Children in Our State Sample as of September 30, 1997
                        Table 4: Comparison of 21 States’ Welfare Diversion Policies as of          20
                          April 1999
                        Table II.1: Changes in Adult/Child Medicaid Enrollment Between              44
                          1995 and 1997
                        Table II.2: Changes in Welfare Participation Between 1995 and               46
                          1997




                        Page 38                           GAO/HEHS-99-163 Medicaid After Welfare Reform
         Contents




         Table II.3: Comparison of Changes in Medicaid and Welfare                  49
           Enrollment Between 1995 and 1997

Figure   Figure 1: Changes in States’ Medicaid Enrollment, 1995-97                  10




         Abbreviations

         ACF        Administration for Children and Families
         AFDC       Aid to Families With Dependent Children
         BBA        Balanced Budget Act of 1997
         HCFA       Health Care Financing Administration
         HHS        Department of Health and Human Services
         INS        Immigration and Naturalization Service
         SCHIP      State Children’s Health Insurance Program
         TANF       Temporary Assistance for Needy Families


         Page 39                          GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix I

Scope and Methodology


             To analyze Medicaid enrollment for families and children following
             welfare reform, we examined state-level data from two sources:
             (1) state-provided monthly Medicaid enrollment data and (2) the Health
             Care Financing Administration’s (HCFA) federal fiscal year data on the
             states’ annual enrollment.50 We chose 1995 and 1997 for our analysis
             because 1995 provided a baseline for enrollment before the 1996
             enactment of welfare reform, and 1997 was the most current year for
             which HCFA enrollment data were available when we initiated our work.
             We limited our analysis to nonelderly and nondisabled adult and child
             enrollment because this segment of the Medicaid population was the most
             likely to have been enrolled in the states’ cash assistance programs that
             were affected by welfare reform.

             To report the change in Medicaid enrollment between 1995 and 1997, we
             used state-provided data because average monthly data provided a better
             indicator of changes in states’ Medicaid enrollment than the cumulative,
             annual count of enrollees that HCFA reports. Moreover, we found
             significant inconsistencies in the HCFA data for federal fiscal years 1995
             and 1997, which are described in greater detail at the end of this appendix.
             We analyzed average monthly enrollment data for calendar years 1995 and
             1997 that we collected by contacting the 50 states and the District of
             Columbia.51 When states did not provide 12 months of data for each year,
             we extrapolated the data provided to derive annual averages. Finally, we
             obtained state-specific welfare participation data from the Administration
             for Children and Families (ACF).

             To review the effects of minimum wage employment on Medicaid
             eligibility, we used the Department of Labor’s 1997 minimum wage data
             and the minimum income disregards required by the former AFDC program
             that applied to the first 4 months of employment. This approach enabled
             us to determine the extent to which heads of three-member households
             might work and continue to qualify for Medicaid coverage. We estimated
             that family income from working 52 weeks at 40 hours per week, at the
             1997 minimum wage of $4.75 per hour, would be approximately $823 per
             month. After deducting the standard disregards required by the former Aid
             to Families With Dependent Children (AFDC) program and still applicable
             in determining Medicaid eligibility ($30 plus one-third of $793), we
             calculated that family income would be approximately $529. If states also

             50
              HCFA collects and publishes annual Medicaid enrollment on a state-by-state basis as part of the
             agency’s 2082 reporting format.
             51
              We were unable to obtain comparable monthly data for the District of Columbia, Rhode Island, and
             West Virginia.



             Page 40                                       GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix I
Scope and Methodology




exercised their option to disregard a portion of work- and child
care-related expenses, family income could be even less. According to the
most recent data available on the optional disregards, states disregarded
an average of $102 per month for work-related expenses and $137 for child
care expenses in 1995. Applying these averages to $529 results in a net
income of $290 per month.

With countable family income of $290 per month, in all but 4 of the 21
states included in our sample, heads of three-member households can
work full-time at the minimum wage and continue to qualify for Medicaid
coverage. In three of the four states—South Carolina, Indiana, and
Kentucky—families can be considered Medicaid-eligible even if their
income is above the standard used to determine eligibility for cash
assistance. In Colorado, gross income for a three-member family must be
below $778 per month for the state to apply the income disregards, and net
income must be below $421 per month. As a result, three-member
households in Colorado can work only 36 hours per week at the 1997
minimum wage if they are to remain Medicaid-eligible. Under the former
AFDC program, states determined the amount of income families of varying
sizes needed for a minimal standard of living—the “need standard”—and
set payment standards that represented the maximum AFDC cash
assistance payment families were entitled to receive. Nationally, most
states’ AFDC payments were below the states’ need standards.52

To identify the procedures and protections states are using to enroll
Medicaid-eligibles, we judgmentally selected 21 states to contact for
additional review, over-sampling for states with declines in Medicaid
enrollment to focus our analysis on those policies and practices that may
have contributed to declines in enrollment. We initially selected the 15
states with the largest declines in Medicaid enrollment, based on a
preliminary analysis of HCFA data, and subsequently expanded the sample
by adding states with relatively stable or increased enrollment. The 21
states represented about 46 percent and 45 percent of Medicaid enrollment
in 1995 and 1997, respectively, as well as approximately 39 percent of total
program expenditures for fiscal year 1997. In addition to geographic
diversity, the states had varying degrees of experiences with and
approaches to welfare reform. We visited four states and several locales
within the states—California (Sacramento and Los Angeles), Florida
(Tallahassee and Miami), Maryland (Baltimore and Prince George’s
County), and Wisconsin (Madison and Milwaukee). We interviewed by

52
  Under welfare reform, a South Carolina family of three, for example, may have monthly “countable”
income of up to $667 and remain Medicaid-eligible because the state’s need standard is $668.



Page 41                                       GAO/HEHS-99-163 Medicaid After Welfare Reform
                      Appendix I
                      Scope and Methodology




                      telephone, collecting and analyzing documentation on Medicaid eligibility
                      and application processes from officials in the 17 remaining
                      states—Colorado, Connecticut, Delaware, Georgia, Idaho, Indiana, Kansas,
                      Kentucky, Michigan, Nevada, North Dakota, Ohio, Oklahoma, Oregon,
                      South Carolina, Utah, and Vermont.

                      Using structured interview protocols in each of the four site-visit states,
                      we interviewed knowledgeable state and local Medicaid and welfare
                      officials, beneficiary advocates, and eligibility workers. From state-level
                      officials, we obtained and analyzed information and documentation on
                      state preapplication policies, such as diversion assistance and up-front job
                      search requirements, Medicaid application procedures and locations,
                      eligibility determination policies, transitional Medicaid and former welfare
                      recipients’ health insurance status, TANF sanctions that can affect Medicaid
                      coverage, and state outreach strategies. Our local welfare office interview
                      protocol covered office organization and eligibility worker training,
                      outreach, initial applicant contact, preapplication activities (diversion
                      assistance and up-front job search requirements), and Medicaid
                      application procedures and eligibility determination policies.

                      For the other 17 states, we obtained information on state Medicaid
                      eligibility criteria, eligibility determination processes and computer
                      systems, transitional Medicaid, outreach strategies, preapplication
                      activities (diversion and up-front job search requirements), application
                      procedures, and health insurance status of former welfare recipients.

                      Also, we obtained and reviewed various reports and studies and
                      interviewed officials representing organizations including the American
                      Public Human Services Association (formerly known as the American
                      Public Welfare Association), the Center on Budget and Policy Priorities,
                      the Children’s Defense Fund, the George Washington University’s Center
                      for Health Policy Research, the National Eligibility Workers Association,
                      the National Governors’ Association, the National Health Law Program,
                      the Southern Institute on Children and Families, and The Urban Institute.


                      HCFA’s enrollment data represent an attempt to provide an unduplicated
Limitations of HCFA   annual count of Medicaid enrollees, whereas state monthly enrollment
Enrollment Data       data show the number of individuals enrolled in the program each month.
                      For our analysis of changes in Medicaid enrollment, we relied primarily on
                      the average monthly Medicaid enrollment data that we obtained directly
                      from the states because of significant inconsistencies that we found in



                      Page 42                            GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix I
Scope and Methodology




HCFA’s  enrollment data for federal fiscal years 1995 and 1997. For example,
we found duplicate counts in some of HCFA’s state data as well as
inconsistencies in HCFA’s use of reporting categories. West Virginia
reported that HCFA may have double-counted adult and child enrollees for
fiscal year 1995, thus substantially overstating the extent of Medicaid
declines between 1995 and 1997. Similarly, HCFA’s data for Oregon showed
about an 18-percent increase in adult and child enrollment due to HCFA’s
overcounting the number of infants and children in 1997, while Oregon’s
monthly data reflected a 13-percent decline. Oregon’s Medicaid director
confirmed that enrollment had indeed declined between 1995 and 1997.
Louisiana officials told us that HCFA’s 1997 data inappropriately
categorized most of the state’s adult and child enrollees as aged, resulting
in HCFA’s reporting a nearly 50-percent decline in adult and child
enrollment, rather than the 7-percent decline reflected by the state’s
average monthly enrollment data for the same period. HCFA officials
acknowledged that comparing the 2 years’ data could have been
problematic because in fiscal year 1997 the agency changed its reporting
format and categories.

HCFA  officials noted that steps were being taken to improve the overall
reliability of future years’ enrollment data. HCFA officials believe that the
Balanced Budget Act requirement that states use the Medicaid Statistical
Information System reporting format to electronically submit all Medicaid
claims and enrollment information as of January 1999 will improve
categorical consistency among the states. They believe outside contractor
assistance in screening state data will be helpful as well.




Page 43                            GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix II

Analysis of States’ Medicaid Enrollment and
Welfare Participation Data

                                     Using 1995 and 1997 data to compute states’ average annual monthly
                                     enrollment, the aggregate national decline for the adult and child portion
                                     of Medicaid enrollment was 7.4 percent. The median decline was about
                                     7 percent. Medicaid enrollment among the nonelderly and nondisabled
                                     adults and children ranged from a 19-percent decline in Wisconsin to an
                                     approximately 26-percent increase in Delaware. Enrollment declined by
                                     10 percent or more in 12 states, declined between 3 and 10 percent in 20
                                     states, declined or increased 3 percent or less in 12 other states, and
                                     increased 5 percent or more in 4 states. See table II.1.

Table II.1: Changes in Adult/Child
Medicaid Enrollment Between 1995                                                Percentage
                                                                                enrollment      Average monthly
and 1997
                                                                                   change,        enrollment
                                     State                                         1995-97         1995          1997
                                     Alabama                                           –4.2     289,333       277,041
                                     Alaska                                            +0.2       52,197       52,306
                                     Arizonaa                                          +2.8     322,904       331,908
                                     Arkansasa                                         –0.5     139,175       138,472
                                     California                                         -7.6   4,189,509    3,869,454
                                     Colorado                                           -9.6    169,957       153,592
                                     Connecticut                                        -1.0    224,128       221,935
                                     Delaware                                         +26.2       49,085       61,953
                                     District of Columbiab
                                     Floridac                                          -13.4    988,805       855,888
                                     Georgiaa                                           -4.6    674,374       643,301
                                                c
                                     Hawaii                                           –13.9     153,103       131,834
                                     Idahoa                                           –10.8       55,746       49,745
                                     Illinois                                          –6.8    1,083,802    1,010,397
                                     Indianaa                                          –9.0     337,791       307,429
                                     Iowa                                              –5.8     230,139       216,742
                                     Kansas                                           –10.5     133,295       119,265
                                                        a
                                     Kentucky                                         –10.1     828,403       744,418
                                     Louisianad                                        –7.1     499,265       463,999
                                             d
                                     Maine                                             –4.2     107,791       103,297
                                     Maryland                                          –7.2     319,799       296,843
                                     Massachusetts                                     +1.2     409,713       414,639
                                     Michigane                                         –8.9     688,646       627,561
                                     Minnesota                                         –0.8     340,330       337,529
                                     Mississippi                                      –13.4     254,801       220,536
                                                    a
                                     Missouri                                          –5.2     436,945       414,276
                                                                                                           (continued)



                                     Page 44                            GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix II
Analysis of States’ Medicaid Enrollment and
Welfare Participation Data




                                                 Percentage
                                                 enrollment      Average monthly
                                                    change,        enrollment
State                                               1995-97          1995          1997
           a
Montana                                                 –8.6       76,518        69,947
Nebraska                                                +5.1       99,977       105,047
Nevada                                                 –11.5       65,480        57,943
New Hampshiree                                          +1.2       60,296        61,034
New Jersey                                              –4.9     489,753        465,959
New Mexico                                             +13.7     182,543        207,507
New York                                                –9.4    2,248,274     2,037,802
North Carolina                                          –1.5     526,780        518,650
North Dakota                                            –8.0       31,110        28,628
Ohio                                                   –15.9     900,347        756,916
Oklahoma                                                –9.3     199,383        180,838
Oregon                                                 –13.0     329,786        286,779
Pennsylvania                                           –17.4    1,253,478     1,035,142
Rhode Islandb
South Carolina                                          +2.4     231,882        237,338
South Dakota                                            –0.5       39,264        39,081
               a
Tennessee                                               –0.3     910,494        907,485
Texas                                                   –8.6    1,592,553     1,455,059
Utaha                                                   –5.0       97,733        92,881
Vermont                                                 +2.6       61,950        63,548
Virginia                                                –8.1     362,383        333,092
Washington                                             +13.2     489,427        554,030
                   b
West Virginia
Wisconsin                                              –19.0     316,419        256,449
Wyoming                                                –14.5       29,694        25,400
Total for all states                                    –7.4 23,574,557 21,840,914
Total for our sample states                             –8.9 10,893,628       9,912,703

                                                               (Table notes on next page)




Page 45                                  GAO/HEHS-99-163 Medicaid After Welfare Reform
                                      Appendix II
                                      Analysis of States’ Medicaid Enrollment and
                                      Welfare Participation Data




                                      Note: States in boldface were part of our sample.
                                      a
                                       The average monthly enrollment for these states was calculated using less than a full year of
                                      monthly data.
                                      b
                                       We were unable to obtain comparable monthly enrollment data for the District of Columbia,
                                      Rhode Island, and West Virginia.
                                      c
                                       Data for Florida and Hawaii may reflect only a portion—approximately 70 percent and
                                      80 percent, respectively—of the state’s nonelderly, nondisabled adult/child enrollment.
                                      d
                                       Louisiana and Maine officials were unable to provide separate monthly enrollment data for their
                                      welfare-related populations. As a result, we arrived at these figures by using each state’s 2082
                                      data submission to HCFA.
                                      e
                                       Michigan and New Hampshire provided a yearly enrollment figure that reflected their states’
                                      fiscal years—October 1st to September 30th and July 1st to June 30th, respectively. As a result, the
                                      monthly enrollment data calculations for Michigan are for October 1994 through September 1995
                                      and October 1996 through September 1997; for New Hampshire, the calculations are for July
                                      1994 through June 1995 and July 1996 through June 1997.

                                      Source: GAO analysis of state monthly enrollment data.



                                      We calculated changes in welfare participation by using the average of
                                      January 1995 and January 1996 recipient data to arrive at the figure for
                                      1995 and the average of January 1997 and January 1998 recipient data for
                                      the 1997 figure. Over this period, welfare participation declined on average
                                      by about 23 percent, ranging from as much as nearly 56 percent in
                                      Wisconsin to less than 7 percent in Alaska. Hawaii was the only state to
                                      experience an increase in welfare participation between 1995 and 1997.
                                      See table II.2.

Table II.2: Changes in Welfare
Participation Between 1995 and 1997                                                             Percentage
                                                                                                  decline in Average annual welfare
                                                                                                     welfare      participation
                                      State                                                    participation       1995         1997
                                      Alabama                                                           –33.3       115,053            76,766
                                      Alaska                                                             –6.6         36,348           33,939
                                      Arizona                                                           –27.8       183,350         132,368
                                      Arkansas                                                          –26.5         62,274           45,792
                                      California                                                        –13.5     2,670,487       2,310,530
                                      Colorado                                                          –32.2       105,241            71,393
                                      Connecticut                                                       –11.5       166,228         147,184
                                      Delaware                                                          –15.8         24,734           20,823
                                      District of Columbia                                              –12.9         71,206           62,000
                                      Florida                                                           –35.2       616,433         399,608
                                      Georgia                                                           –30.4       378,285         263,348
                                                                                                                                (continued)



                                      Page 46                                        GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix II
Analysis of States’ Medicaid Enrollment and
Welfare Participation Data




                                                 Percentage
                                                   decline in Average annual welfare
                                                      welfare      participation
State                                           participation       1995         1997
Hawaii                                                  +7.0       65,949       70,565
Idaho                                                  –49.0       23,799       12,129
Illinois                                               –17.8     686,622       564,353
Indiana                                                –36.8     172,154       108,820
Iowa                                                   –24.2       97,418       73,890
Kansas                                                 –37.0       76,131       47,995
Kentucky                                               –20.3     185,162       147,559
Louisiana                                              –34.7     248,714       162,493
Maine                                                  –21.2       58,646       46,222
Maryland                                               –31.2     217,844       149,960
Massachusetts                                          –25.2     264,374       197,872
Michigan                                               –26.9     573,964       419,638
Minnesota                                              –14.5     176,203       150,616
Mississippi                                            –37.3     139,674        87,564
Missouri                                               –25.4     248,824       185,541
Montana                                                –27.8       33,435       24,138
Nebraska                                                –7.5       40,346       37,313
Nevada                                                 –29.3       41,169       29,118
New Hampshire                                          –31.2       26,595       18,287
New Jersey                                             –23.0     307,492       236,692
New Mexico                                             –25.6     103,881        77,287
New York                                               –18.3    1,233,599    1,007,952
North Carolina                                         –25.7     299,961       222,729
North Dakota                                           –27.0       14,286       10,424
Ohio                                                   –23.5     591,012       452,417
Oklahoma                                               –34.0     118,917        78,471
Oregon                                                 –42.2       99,896       57,740
Pennsylvania                                           –24.5     582,182       439,714
Rhode Island                                           –11.1       61,531       54,673
South Carolina                                         –32.9     127,635        85,628
South Dakota                                           –28.6       17,237       12,303
Tennessee                                              –38.8     273,651       167,457
Texas                                                  –27.9     739,992       533,221
Utah                                                   –26.2       44,309       32,681
Vermont                                                –16.8       26,791       22,292
Virginia                                               –31.6     177,753       121,623
                                                                            (continued)



Page 47                                  GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix II
Analysis of States’ Medicaid Enrollment and
Welfare Participation Data




                                                      Percentage
                                                        decline in Average annual welfare
                                                           welfare      participation
State                                                participation       1995         1997
Washington                                                  –13.1     283,479      246,258
West Virginia                                               –27.2     103,054       75,019
Wisconsin                                                   –55.6     199,307       88,507
Wyoming                                                     –54.3       14,483       6,613
Total for all states                                        –23.4 13,227,097 10,127,510
Total for our sample states                                 –23.4    6,473,778   4,956,260

Note: States in boldface were part of our sample.

Source: ACF’s AFDC/TANF recipient data.



Analyzing state-provided monthly Medicaid enrollment data for the
nonelderly and nondisabled adults and children between January 1995 and
December 1997 and comparable years’ welfare data from ACF, we found
that welfare participation declined nationally 1.2 times more than
Medicaid enrollment. State-by-state analysis showed some variance in the
states’ experiences, as shown in table II.3. State ratios ranged from 1.9 in
Wyoming—where welfare participation declined by over 54 percent and
Medicaid declined by 14.5 percent—to a ratio of .8 in Hawaii—where
welfare participation increased 7 percent while Medicaid declined by
nearly 14 percent. However, 38 states were within (+/-) .2 of the national
ratio. In addition, a correlation analysis of the data showed a statistically
significant relationship between changes in welfare participation and
changes in Medicaid enrollment between the 2 years (r = .39, p < .01). In
general, states that experienced a decline in welfare participation also had
a decline in Medicaid enrollment. While the correlation is statistically
significant, only 15 percent of the change in Medicaid enrollment may be
explained by its relationship to the change in welfare participation (r2 =
.15). Consequently, there are factors in addition to welfare reform that
influenced Medicaid enrollment between 1995 and 1997.




Page 48                                       GAO/HEHS-99-163 Medicaid After Welfare Reform
                                       Appendix II
                                       Analysis of States’ Medicaid Enrollment and
                                       Welfare Participation Data




Table II.3: Comparison of Changes in
Medicaid and Welfare Enrollment                                                           1997 enrollment as a
Between 1995 and 1997                                                                      proportion of 1995    Ratio of
                                                                                              enrollment       welfare-to-
                                                                                          Medicaid     Welfare  Medicaid
                                       State                                             enrollment enrollment   changea
                                       Alabama                                                 0.96         0.67           1.4
                                       Alaska                                                  1.00         0.93           1.1
                                       Arizona                                                 1.03         0.72           1.4
                                       Arkansas                                                0.99         0.74           1.4
                                       California                                              0.92         0.74           1.4
                                       Colorado                                                0.90         0.68           1.3
                                       Connecticut                                             0.99         0.89           1.1
                                       Delaware                                                1.26         0.84           1.5
                                       District of Columbiab
                                       Florida                                                 0.87         0.65           1.3
                                       Georgia                                                 0.95         0.70           1.4
                                       Hawaii                                                  0.86         1.07           0.8
                                       Idaho                                                   0.89         0.51           1.8
                                       Illinois                                                0.93         0.82           1.1
                                       Indiana                                                 0.91         0.63           1.4
                                       Iowa                                                    0.94         0.76           1.2
                                       Kansas                                                  0.89         0.63           1.4
                                       Kentucky                                                0.90         0.80           1.1
                                       Louisiana                                               0.93         0.65           1.4
                                       Maine                                                   0.96         0.79           1.2
                                       Maryland                                                0.93         0.69           1.3
                                       Massachusetts                                           1.01         0.75           1.4
                                       Michigan                                                0.91         0.73           1.2
                                       Minnesota                                               0.99         0.85           1.2
                                       Mississippi                                             0.87         0.63           1.4
                                       Missouri                                                0.95         0.75           1.3
                                       Montana                                                 0.91         0.72           1.3
                                       Nebraska                                                1.05         0.92           1.1
                                       Nevada                                                  0.88         0.71           1.3
                                       New Hampshire                                           1.01         0.69           1.5
                                       New Jersey                                              0.95         0.77           1.2
                                       New Mexico                                              1.14         0.74           1.5
                                       New York                                                0.91         0.82           1.1
                                       North Carolina                                          0.98         0.74           1.3
                                       North Dakota                                            0.92         0.73           1.3
                                                                                                                   (continued)


                                       Page 49                                  GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix II
Analysis of States’ Medicaid Enrollment and
Welfare Participation Data




                                                         1997 enrollment as a
                                                          proportion of 1995    Ratio of
                                                             enrollment       welfare-to-
                                                         Medicaid     Welfare  Medicaid
State                                                   enrollment enrollment   changea
Ohio                                                            0.84           0.77            1.1
Oklahoma                                                        0.91           0.66            1.4
Oregon                                                          0.87           0.58            1.5
Pennsylvania                                                    0.83           0.76            1.1
Rhode Islandb
South Carolina                                                  1.02           0.67            1.5
South Dakota                                                    1.00           0.71            1.4
Tennessee                                                       1.00           0.61            1.6
Texas                                                           0.91           0.72            1.3
Utah                                                            0.95           0.74            1.3
Vermont                                                         1.03           0.83            1.2
Virginia                                                        0.92           0.68            1.3
Washington                                                      1.13           0.87            1.3
              b
West Virginia
Wisconsin                                                       0.81           0.44            1.8
Wyoming                                                         0.86           0.46            1.9
National ratiosb                                                0.93           0.77            1.2
Our sample                                                      0.91           0.77            1.2

Note: States in boldface were part of our sample.
a
 We derived these ratios by dividing 1997 average monthly Medicaid and welfare participation by
1995 average monthly Medicaid and welfare participation.
b
 We were unable to obtain comparable enrollment data for the District of Columbia, Rhode Island,
and West Virginia.




Page 50                                       GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix III

Comments From the Health Care Financing
Administration




               Page 51    GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix III
Comments From the Health Care Financing
Administration




Page 52                               GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix III
Comments From the Health Care Financing
Administration




Page 53                               GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix III
Comments From the Health Care Financing
Administration




Page 54                               GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix III
Comments From the Health Care Financing
Administration




Page 55                               GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix III
Comments From the Health Care Financing
Administration




Page 56                               GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix III
Comments From the Health Care Financing
Administration




Page 57                               GAO/HEHS-99-163 Medicaid After Welfare Reform
Appendix IV

GAO Contact and Staff Acknowledgments


                  Carolyn Yocom, (202) 512-4931
GAO Contact
                  In addition, Carol Carter, Enchelle Bolden, Christine DeMars, JoAnn
Staff             Martinez, and Craig Winslow made key contributions to this report.
Acknowledgments




                  Page 58                          GAO/HEHS-99-163 Medicaid After Welfare Reform
Page 59   GAO/HEHS-99-163 Medicaid After Welfare Reform
Related GAO Products


              Food Stamp Program: Various Factors Have Led to Declining Participation
              (GAO/RCED-99-185, July 2, 1999).

              Welfare Reform: Public Assistance Benefits Provided to Recently
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              Children’s Health Insurance Program: State Implementation Approaches
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              Welfare Reform: Information on Former Recipients’ Status (GAO/HEHS-99-48,
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              Welfare Reform: States’ Experiences in Providing Employment Assistance
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              Year 2000 Computing Crisis: Readiness of State Automated Systems to
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              Welfare Reform: Early Fiscal Effects of the TANF Block Grant
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              Welfare Reform: Child Support an Uncertain Income Supplement for
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              Welfare Reform: Many States Continue Some Federal or State Benefits for
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              Welfare Reform: States Are Restructuring Programs to Reduce Welfare
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              Medicaid: Early Implications of Welfare Reform for Beneficiaries and
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(101762)      Page 60                           GAO/HEHS-99-163 Medicaid After Welfare Reform
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