Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Green Book)

[WPRT 105-7]
[From the U.S. Government Publishing Office]

[Ways and Means Committee Print WMCP:105-7]
[1998 Green Book]
[From the U.S. Government Printing Office Online via GPO Access]

SECTION 15. OTHER PROGRAMS

CONTENTS

Overview
Food Stamp Program
Administration, Program Variations, and Funding
Eligibility
Benefits
Quality Control (QC)
Interaction with Cash Assistance Programs
Recipiency Rates
Legislative History
Medicaid
Eligibility
Categorically Needy
Aged and Disabled Persons
The Medically Needy
Medicaid and the Poor
Services
Financing
Reimbursement Policy
Administration
Medicaid and Managed Care
Legislative History
Program Data
Federal Housing Assistance
Types of Assistance
Trends in Commitments and Payments
School Lunch and Breakfast Programs
Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC)
Job Training Partnership Act
Head Start
Low-Income Home Energy Assistance Program (LIHEAP)
Background
Program Components
Allotments to States
Eligibility and Types of Assistance
Planning and Administration
Veterans Benefits and Services
Workers' Compensation
Overview Through 1993
Recent Developments in Employers' Costs and Benefit Payments
References

OVERVIEW

A wide variety of Federal programs outside the jurisdiction
of the Committee on Ways and Means provide benefits to
individuals and families that also receive assistance from
programs within the Committee's jurisdiction (see appendix K).
This section describes several such programs: food stamps;
Medicaid; housing assistance; School Lunch and Breakfast
Programs; the Special Supplemental Food Program for Women,
Infants, and Children (WIC); the Job Training Partnership Act;
Head Start; the Low-Income Home Energy Assistance Program
(LIHEAP); veterans benefits and services; and workers'
compensation.
Most families receiving Aid to Families with Dependent
Children \1\ (AFDC) or Supplemental Security Income (SSI) would
have incomes low enough to qualify them--or particular members
of their families--for assistance under these programs. Unlike
the principal assistance programs under the jurisdiction of the
Committee on Ways and Means, participation in Head Start,
LIHEAP, and other programs is limited by appropriations. Income
received from AFDC is counted in determining eligibility and
benefit levels for these programs. However, because these
programs provide in-kind rather than cash assistance, benefits
are not counted in determining eligibility for AFDC.
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\1\ AFDC was replaced by the Temporary Assistance for Needy
Families Program by Public Law 104-193 in 1996 (see section 7).
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Tables 15-1 and 15-2 describe the overlap in recipients
between programs within the jurisdiction of the Committee on
Ways and Means and other major Federal assistance programs.
Table 15-1 illustrates that 87.2 percent of AFDC recipient
households also received food stamps during the first quarter
of 1995; 24.7 percent received WIC; 97.2 percent received
Medicaid; 63.1 percent received free or reduced-price school
meals; and 31.1 percent received housing assistance.
Table 15-2 presents the percentage of recipients of other
means-tested programs who are participating in programs under
Ways and Means jurisdiction. For example, 48.9 percent of food
stamp households received AFDC benefits at some time during the
first quarter of 1995; 27.6 percent received SSI; 25.6 percent
received Social Security; 2.5 percent received unemployment
benefits; and 22.5 percent received Medicare.
Table 15-3 shows the percentage of households receiving
AFDC or SSI and also receiving assistance from other programs
for selected time periods. The figures at the bottom of the
AFDC and SSI portions of the table show that the number of
households receiving AFDC increased rapidly between 1990 and
1994 and then declined somewhat in 1995. The AFDC rolls
increased by nearly one-third over the entire period. The
number of households receiving SSI declined slightly in 1990
and 1993, but otherwise increased throughout the period between
1984 and 1995. The rolls increased by more than 50 percent over
this period.

TABLE 15-1.--PERCENT OF RECIPIENTS IN PROGRAMS WITHIN THE JURISDICTION OF THE COMMITTEE ON WAYS AND MEANS
RECEIVING ASSISTANCE FROM OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS, 1995
----------------------------------------------------------------------------------------------------------------
Ways and Means assistance program
-----------------------------------------------------
Other assistance program Social Unemployment
AFDC SSI Security compensation Medicare
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Food stamps............................................... 87.2 50.0 7.7 9.1 7.4
WIC....................................................... 24.7 5.6 1.0 4.4 0.6
Medicaid.................................................. 97.2 100.0 14.0 16.2 14.3
Free or reduced-price school meals........................ 63.1 25.2 4.0 16.5 2.6
Public or subsidized rental housing....................... 31.1 24.1 6.8 4.1 7.2
VA compensation or pensions............................... 0.8 3.6 5.3 1.7 5.6
Number of households receiving benefits (in thousands) 4,652 4,580 27,654 2,246 25,271
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Note.--Table shows number of households in the first quarter of 1995. Table reads that 87.2 percent of AFDC
households also receive food stamps. SSI recipients living in California receive a higher SSI payment in lieu
of food stamps, and thus are not included in the food stamp percentages.

Source: U.S. Bureau of the Census.

TABLE 15-2.--PERCENT OF RECIPIENTS IN OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS RECEIVING ASSISTANCE UNDER
PROGRAMS WITHIN THE JURISDICTION OF THE COMMITTEE ON WAYS AND MEANS, 1995
----------------------------------------------------------------------------------------------------------------
Other assistance program
-------------------------------------------------------------
Free or Public or
Ways and Means assistance program Food reduced subsidized VA
stamps WIC school rental Medicaid compensation
meals housing or pensions
----------------------------------------------------------------------------------------------------------------
AFDC.............................................. 48.9 41.7 30.3 28.7 35.6 1.6
SSI............................................... 27.6 9.3 11.9 22.0 36.1 6.7
Social Security................................... 25.6 9.9 11.4 37.6 30.6 59.3
Unemployment compensation......................... 2.5 3.6 3.8 1.8 2.9 1.6
Medicare.......................................... 22.5 5.8 6.8 36.2 28.4 57.7
Number of households receiving benefits (in
thousands)................................... 8,298 2,757 9,681 5,031 12,685 2,465
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Note.--Table shows households in the first quarter of 1995. Table reads that 48.9 percent of food stamp
recipient households receive AFDC. SSI recipients living in California receive a higher SSI payment in lieu of
food stamps, and thus are not included in the food stamp percentages.

Source: U.S. Bureau of the Census.

The percentage of AFDC and SSI households receiving other
benefits fluctuated somewhat over the period, but the general
trend was toward increased coverage for all benefits except VA
compensation or pensions. The percentage of AFDC households
receiving food stamps, for example, increased from 81 percent
in 1984 to 87 percent in 1995; receipt of Medicaid over the
same period increased from 93 to 97 percent of households.
Similarly, the percentage of SSI households receiving food
stamps increased from 46 to 50 percent while Medicaid coverage
held at or very near 100 percent over the period. The
percentage of AFDC and SSI households receiving WIC, school
meals, and housing also increased over the period 1984-95.

TABLE 15-3.--PERCENT OF HOUSEHOLDS RECEIVING AFDC OR SSI AND ALSO RECEIVING ASSISTANCE FROM OTHER PROGRAMS FOR
SELECTED TIME PERIODS
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Year
Assistance program -------------------------------------------------------
1984 1987 1990 1992 1993 1994 1995
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AFDC:
Food stamps......................................... 81.4 81.7 82.7 86.2 88.9 88.3 87.2
WIC................................................. 15.3 18.6 18.7 21.5 18.5 21.4 24.7
Free or reduced-price school meals.................. 49.2 55.6 52.7 55.5 56.9 57.5 63.1
Public or subsidized rental housing................. 23.0 19.4 34.7 29.5 33.1 30.3 31.1
Medicaid............................................ 93.2 95.5 97.6 96.2 97.6 96.4 97.2
VA compensation or pensions......................... 2.8 1.9 1.3 1.9 1.1 1.1 0.8
Number of households receiving benefits (in
thousands)..................................... 3,585 3,527 3,434 4,057 4,831 4,906 4,652
SSI:
Food stamps......................................... 46.5 39.7 41.3 46.2 48.0 50.1 50.0
WIC................................................. 2.5 2.5 3.0 4.3 3.7 5.4 5.6
Free or reduced-price school meals.................. 12.7 11.9 15.3 18.2 21.3 23.8 25.2
Public or subsidized rental housing................. 21.6 20.0 21.4 23.8 23.9 24.9 24.1
Medicaid............................................ 100.0 99.6 99.7 99.8 99.5 100.0 100.0
VA compensation or pensions......................... 4.7 7.7 5.7 4.0 4.5 3.9 3.6
Number of households receiving benefits (in
thousands)..................................... 3,008 3,341 3,037 3,957 3,861 4,223 4,580
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Note.--SSI recipients living in California receive a higher SSI payment in lieu of food stamps, and thus are not
included in the food stamp percentages.

Source: U.S. Bureau of the Census.

FOOD STAMP PROGRAM

Food stamps are designed primarily to increase the food
purchasing power of eligible low-income households to a point
where they can buy a nutritionally adequate low-cost diet.
Participating households are expected to be able to devote 30
percent of their counted monthly cash income to food
purchases.\2\ Food stamp benefits then make up the difference
between the household's expected contribution to its food costs
and an amount judged to be sufficient to buy an adequate low-
cost diet. This amount, the maximum food stamp benefit, is set
at the level of the U.S. Department of Agriculture's lowest
cost food plan (the Thrifty Food Plan), varied by household
size, and adjusted annually for inflation. Thus, a
participating household with no counted cash income receives
the maximum monthly allotment for its household size while a
household with some counted income receives a lesser allotment,
normally reduced from the maximum at the rate of 30 cents for
each dollar of counted income.
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\2\ Because not all of a household's income is actually counted
when determining its food stamp benefits, the program, in effect,
assumes that most participants are able to spend about 20-25 percent of
their total cash monthly income on food.
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Benefits are available to most households that meet
Federal eligibility tests for limited monthly income and liquid
assets. But household members must fulfill requirements related
to work effort and, in general, must be U.S. citizens.
Recipients in the two primary cash welfare programs (TANF and
SSI) generally are automatically eligible for food stamps, as
are recipients of State general assistance payments, if the
household is composed entirely of TANF, SSI, or general
assistance beneficiaries.\3\
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\3\ Except for (1) SSI recipients in California, where a State-
financed adjustment to SSI benefits has replaced food stamp assistance;
and (2) general assistance programs that do not meet minimum Federal
standards.
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Administration, Program Variations, and Funding

The regular Food Stamp Program operates in all 50 States,
the District of Columbia, Guam, and the Virgin Islands. The
Federal Government is responsible for most of the rules that
govern the program, and, with limited variations for Alaska,
Hawaii, and the territories, these rules are nationally
uniform. However, major 1996 revisions to the Food Stamp Act
grant States a number of significant options to vary from
Federal administrative and benefit calculation rules,
especially for those who also are recipients of their State's
cash welfare programs, and a number of waivers from regular
rules and procedures have been (and continue to be) granted.
Sales taxes on food stamp purchases may not be charged, and
food stamp benefits do not affect other assistance available to
low-income households, nor are they taxed as income.
Alternative programs are offered in Puerto Rico, the
Northern Mariana Islands, and American Samoa, and program
variations occur in a number of demonstration projects and in
those jurisdictions that have elected to exercise the limited
number of program options allowed.
Funding is overwhelmingly Federal, although the States and
other jurisdictions have financial responsibility for
significant administrative costs, as well as liability for
erroneous benefit determinations (as assessed under the food
stamp ``quality control'' system, discussed later).
Federal administrative responsibilities
At the Federal level, the program is administered by the
Agriculture Department's Food and Consumer Service (FCS). The
FCS gives direction to welfare agencies through Federal
regulations that define eligibility requirements, benefit
levels, and administrative rules. It is also responsible for
arranging for printing food stamp coupons and distributing them
to welfare agencies, for overseeing State programs for the
electronic issuance of food stamp benefits, and for approving
and overseeing participation by retail food stores and other
outlets that may accept food stamps. Other Federal agencies
that have administrative roles to play include: the Federal
Reserve System (through which food stamp benefits are redeemed
for cash, and which has some jurisdiction over ``electronic
benefit transfer'' methods for issuing food stamp benefits),
the Social Security Administration (responsible for providing
the Social Security numbers recipients must have, for providing
limited application ``intake'' services, and for providing
information to verify recipients' income), the Internal Revenue
Service (providing assistance in verifying recipients' income
and assets), the Immigration and Naturalization Service
(helping welfare offices confirm alien applicants' status), and
the Secret Service and the Agriculture Department's Inspector
General (responsible for counterfeiting and trafficking
investigations).
State and local administrative responsibilities
States, the District of Columbia, Guam, and the Virgin
Islands, through their local welfare offices, have primary
responsibility for the day-to-day administration of the Food
Stamp Program. They determine eligibility, calculate benefits,
and issue food stamp allotments (using coupons or electronic
benefit transfers) following Federal rules. They also have a
significant voice in carrying out employment and training
programs and in determining some administrative features of the
program (e.g., the extent to which verification of household
circumstances is pursued, the length of eligibility
certification periods, the structure of electronic benefit
transfer systems). Most often, the Food Stamp Program is
operated through the same welfare agency and staff that runs
the Federal/State TANF and Medicaid Programs.
Puerto Rico, the Northern Mariana Islands, and American Samoa
In addition to the regular Food Stamp Program, the Food
Stamp Act directs funding for a Nutrition Assistance Program in
the Commonwealth of Puerto Rico and another in American Samoa.
Separate legislation authorizes a variant of the Food Stamp
Program in the Commonwealth of the Northern Mariana Islands.
Since July 1982, Puerto Rico has operated a Nutrition
Assistance Program of its own design, funded by an annual
Federal ``block grant.'' \4\ The Commonwealth's Nutrition
Assistance Program differs from the regular Food Stamp Program
primarily in that: (1) funding is limited to an annual amount
specified by law \5\; (2) the Food Stamp Act allows the
Commonwealth a great deal of flexibility in program design, as
opposed to the regular program's extensive Federal rules (e.g.,
benefits are paid in cash (checks) rather than food stamp
coupons); (3) income and liquid assets eligibility limits are
about half those used in the regular Food Stamp Program; (4)
maximum benefit levels are about one-quarter less than in the
48 contiguous States and the District of Columbia; and (5)
different rules are used in counting income for eligibility and
benefit purposes. In fiscal year 1996, Puerto Rico's Nutrition
Assistance Program aided approximately 1.3 million persons each
month with monthly benefits averaging $67 a person ($186 a
household).
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\4\ Prior to July 1982, the regular Food Stamp Program operated in
Puerto Rico, although with slightly different eligibility and benefit
rules.
\5\ For fiscal years 1997 and 1998, $1.174 billion and $1.204
billion are earmarked. The block grant funds the full cost of benefits
and half the cost of administration.
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Under the terms of the 1976 Covenant with the Commonwealth
of the Northern Mariana Islands and implementing legislation
(Public Law 96-597), a variant of the Food Stamp Program was
negotiated with the Commonwealth and began operations in July
1982. The program in the Northern Marianas differs primarily in
that: (1) it is funded entirely by Federal money, up to a
maximum grant of $5.1 million a year; (2) a portion of each
household's food stamp benefit must be used to purchase locally
produced food; (3) maximum allotments are about 20 percent
higher than in the 48 contiguous States and the District of
Columbia; and (4) income eligibility limits are about half
those in the regular program. As of the end of fiscal year
1996, the Northern Marianas' program assisted almost 4,000
people each month with monthly benefits averaging $75 a person
(also see chapter 12).
As with the Northern Marianas, American Samoa operates a
variant of the regular Food Stamp Program. Under the Secretary
of Agriculture's authority to extend Agriculture Department
programs to American Samoa (Public Law 96-597) and a 1996
amendment to the Food Stamp Act made by the Federal Agriculture
Improvement and Reform Act (Public Law 104-127), American Samoa
receives an annual grant of up to $5.3 million to operate a
Food Stamp Program limited to low-income elderly and disabled
persons. As of the end of fiscal year 1996, the program aided
about 3,000 persons a month with average monthly benefits of
just over $100 a person (also see chapter 12).
Program options
The Food Stamp Act authorizes demonstration projects to
test program variations that might improve operations. At
present, three major types of demonstration projects are
underway: (1) a limited number of projects that ``cash out''
food stamp benefits (these projects cash out food stamps for
the elderly and SSI recipients, very poor households that are
eligible for expedited service, and some households that are
part of State welfare reform efforts); (2) welfare reform
demonstrations in which food stamp rules are changed to support
TANF reform efforts (e.g., food stamps are used as a wage
supplement or cashed out; food stamps are consolidated with
TANF benefits; food stamp income and asset rules are changed to
encourage employment); and (3) a project granting quarterly
(instead of monthly) benefit payments to SSI recipients
eligible for very small benefits.
In addition to demonstration projects, States are allowed
to implement some optional aspects of the Food Stamp Program.
States may require ``monthly reporting'' and ``retrospective
budgeting'' for parts of their food stamp caseload. They may
issue benefits (at their own cost) to ineligible noncitizens
and those ineligible under the new work rule for able-bodied
adults without children (discussed later). With 50-percent
Federal cost sharing, they can operate ``outreach'' programs to
inform low-income persons about food stamps and support
nutrition education efforts. They may choose to issue food
stamp benefits through electronic benefit transfer systems.
They may choose to operate a ``simplified'' program under which
they can use many of their TANF rules and procedures when
determining food stamp benefits for TANF recipients. They
largely determine the length of eligibility certification
periods. They may sanction food stamp recipients failing to
meet other public asssistance program rules or failing to
cooperate in child support enforcement. They may, to a certain
extent, waive the application of the new work rule for able-
bodied adults without dependents (discussed later); and they
may choose to disqualify an entire household if the head of
household fails to fulfill work-related requirements. They may
include the cash value of food stamp benefits when using
welfare to subsidize some recipients' wages and can pay food
stamp benefits in cash to other working households getting off
cash welfare. Finally, States and localities may opt to run
``workfare'' programs, and States determine the type(s) of
employment or training programs in which recipients must
participate.
Funding
The Food Stamp Act provides 100 percent Federal funding of
food stamp benefits, except where States choose to ``buy into''
the program and pay for issuing food stamp benefits to
ineligible noncitizens or those made ineligible by the new work
rule for able-bodied adults without dependents (discussed
later). The Federal Government also is responsible for its own
administrative costs: overseeing program operations (including
oversight of participating food establishments), printing and
distributing food stamp coupons to welfare agencies, redeeming
food stamp benefits through the Federal Reserve, and paying the
Social Security Administration for certain intake services.
In most instances, the Federal Government provides half
the cost of State welfare agency administration.\6\ However,
the 50-percent Federal share can be increased to as much as 60
percent if the State has a very low rate of erroneous benefit
determinations. In addition, the Federal Government shares the
cost of carrying out employment and training programs for food
stamp recipients: (1) each State receives a Federal grant for
basic operating costs (a formula share of $79 million in fiscal
year 1997, rising to $212 in fiscal year 1998, and slightly
larger amounts in later years); and (2) additional operating
costs, as well as expenses for support services to participants
(e.g., transportation, child care) are eligible for a 50-
percent Federal match.\7\ Finally, States are allowed to retain
a portion of improperly issued benefits they recover (other
than those caused by welfare agency error): 35 percent of
recoveries in fraud cases and 20 percent in other
circumstances. The growth in Federal and State Food Stamp Act
spending since 1979 is shown in table 15-4.
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\6\ Until April 1994, the cost of certain activities was matched at
more than the 50-percent rate: costs associated with the development of
computer capability and fraud control activities were eligible for 63
and 75 percent Federal sharing, respectively; costs for implementing
the Systematic Alien Verification for Entitlements (SAVE) Program were
fully reimbursed by the Federal Government.
\7\ The overwhelming majority (80 percent) of the formula grant
funds must be spent on services to those covered by a new work
requirement for able-bodied adults without dependents (see later
discussion of work requirements).

TABLE 15-4.--RECENT FOOD STAMP ACT EXPENDITURES
[In millions of dollars]
------------------------------------------------------------------------
Administration \2\
--------------------
Fiscal year Benefits \1\ State Total
(Federal) Federal and
local
------------------------------------------------------------------------
1979......................... $6,480 $515 $388 $7,383
1980......................... 8,685 503 375 9,563
1981......................... 10,630 678 504 11,812
1982......................... 10,408 709 557 11,674
1983......................... 11,955 778 612 13,345
1984......................... 11,499 971 805 13,275
1985......................... 11,556 1,043 871 13,470
1986......................... 11,415 1,113 935 13,463
1987......................... 11,344 1,195 996 13,535
1988......................... 11,999 1,290 1,080 14,369
1989......................... 12,483 1,332 1,101 14,916
1990......................... 15,090 1,422 1,174 17,686
1991......................... 18,249 1,516 1,247 21,012
1992......................... 21,883 1,656 1,375 24,914
1993......................... 23,033 1,716 1,572 26,321
1994......................... 23,736 1,789 1,643 27,168
1995......................... 23,759 1,917 1,748 27,424
1996......................... 23,510 1,984 1,842 27,336
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\1\ All benefit costs associated with the Food Stamp Program and Puerto
Rico's block grant are included. The benefit amounts shown in the
table reflect small downward adjustments for overpayments collected
from recipients and, beginning in 1989, issued but unredeemed
benefits. Over time, the figures reflect both changes in benefit
levels and numbers of recipients.
\2\ All Federal administrative costs associated with the Food Stamp
Program and Puerto Rico's block grant are included: Federal matching
for the various administrative and employment and training expenses of
States and other jurisdictions, and direct Federal administrative
costs. Figures for Federal administrative costs beginning with fiscal
year 1989 include only those paid out of food stamp appropriation and
the food stamp portion of the general appropriation for food program
administration. Figures for earlier years include estimates of food
stamp related Federal administrative expenses paid out of other
Agriculture Department accounts. State and local costs are estimated
based on the known Federal shares and represent an estimate of all
administrative expenses of participating States and other
jurisdictions (including Puerto Rico).

Source: U.S Department of Agriculture budget justification materials
for fiscal years 1981-98. Compiled by the Congressional Research
Service.

Eligibility

The Food Stamp Program has financial, employment/training-
related, and ``categorical'' tests for eligibility. Its
financial tests require that most of those eligible have
monthly income and liquid assets below limits set by food stamp
law. Under the employment/training-related tests, certain
household members must register for work, accept suitable job
offers, and fulfill work or training requirements (such as
looking or training for a job) established by State welfare
agencies. And, under a new work requirement established in 1996
law, food stamp eligibility for able-bodied adults without
dependents is limited to 3-6 months in any 36-month period
unless they are working at least half time or in a work or
training activity. Categorical eligibility rules make some
automatically eligible for food stamps (many TANF, SSI, and
general assistance recipients), and categorically deny
eligibility to others (e.g., strikers and most noncitizens,
postsecondary students, and people living in institutional
settings). Applications cannot be denied because of the length
of a household's residence in a welfare agency's jurisdiction
or because the household has no fixed mailing address or does
not reside in a permanent dwelling.
The food stamp household
The basic food stamp beneficiary unit is the
``household.'' A food stamp household can be either a person
living alone or a group of individuals living together; there
is no requirement for cooking facilities. The food stamp
household is unrelated to recipient units in other welfare
programs (e.g., TANF families with dependent children, elderly
or disabled individuals or couples in the SSI Program).
Generally speaking, individuals living together constitute
a single food stamp household if they customarily purchase food
and prepare meals in common. Members of the same household must
apply together, and their income, expenses, and assets normally
are aggregated in determining food stamp eligibility and
benefits. However, persons who live together can sometimes be
considered separate ``households'' for food stamp purposes,
related coresidents generally are required to apply together,
and special rules apply to those living in institutional
settings. Most often, persons living together receive larger
aggregate benefits if they are treated as more than one food
stamp household.
Persons who live together, but purchase food and prepare
meals separately, may apply for food stamps separately, except
for: (1) spouses; (2) parents and their children (21 years or
younger), and (3) minors 18 years or younger (excluding foster
children, who may be treated separately) who live under the
parental control of a caretaker. In addition, persons 60 years
or older who live with others and cannot purchase food and
prepare meals separately because of a substantial disability
may apply separately from their coresidents as long as their
coresidents' income is below prescribed limits.
Although those living in institutional settings generally
are barred from food stamps, individuals in certain types of
group living arrangements may be eligible and are automatically
treated as separate households, regardless of how food is
purchased and meals are prepared. These arrangements must be
approved by State or local agencies and include: residential
drug addict or alcoholic treatment programs, small group homes
for the disabled, shelters for battered women and children, and
shelters for the homeless.
Thus, different food stamp households can live together,
food stamp recipients can reside with nonrecipients, and food
stamp households themselves may be ``mixed'' (include
recipients and nonrecipients of other welfare benefits).
Income eligibility
Except for households composed entirely of TANF, SSI, or
general assistance recipients (who generally are automatically
eligible for food stamps), monthly cash income is the primary
food stamp eligibility determinant.\8\ In establishing
eligibility for households without an elderly or disabled
member,\9\ the Food Stamp Program uses both the household's
basic (or ``gross'') monthly income and its counted (or
``net'') monthly income. When judging eligibility for
households with elderly or disabled members, only the
household's counted monthly income is considered; in effect,
this procedure applies a more liberal income test to elderly
and disabled households.
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\8\ Although they do not have to meet food stamp income and assets
tests, TANF, SSI, and general assistance households must still have
their income calculated under food stamp rules to determine their food
stamp benefits.
\9\ In the Food Stamp Program, ``elderly'' persons are those 60
years or older. The ``disabled'' generally are beneficiaries of
governmental disability-based payments (e.g., Social Security or SSI
disability recipients, disabled veterans, certain disability retirement
annuitants, and recipients of disability-based Medicaid or general
assistance).
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Basic (or gross) monthly income includes all of a
household's cash income except the following ``exclusions''
(disregards): (1) most payments made to third parties (rather
than directly to the household); (2) unanticipated, irregular,
or infrequent income, up to $30 a quarter; (3) loans (deferred
repayment student loans are treated as student aid, see below);
(4) income received for the care of someone outside the
household; (5) nonrecurring lump-sum payments such as income
tax refunds and retroactive lump-sum Social Security payments
(these are instead counted as liquid assets); (6) Federal
energy assistance; (7) expense reimbursements that are not a
``gain or benefit'' to the household; (8) income earned by
schoolchildren 17 or younger; (9) the cost of producing self-
employment income; (10) Federal postsecondary student aid
(e.g., Pell grants, student loans); (11) advance payments of
Federal earned income credits; (12) ``on-the-job'' training
earnings of dependent children under 19 in Job Training
Partnership Act (JTPA) Programs, as well as JTPA monthly
``allowances''; (13) income set aside by disabled SSI
recipients under an approved ``plan to achieve self-
sufficiency'' (PASS); and (14) payments required to be
disregarded by provisions of Federal law outside the Food Stamp
Act (e.g., various payments under laws relating to Indians,
payments under the Older Americans Act Employment Program for
the Elderly).
Counted (or net) monthly income is computed by subtracting
certain ``deductions'' from a household's basic (or gross)
monthly income. This procedure is based on the recognition that
not all of a household's income is equally available for food
purchases. Thus, a standard portion of income, plus amounts
representing work expenses or excessively high nonfood living
expenses, are disregarded.
For households without an elderly or disabled member,
counted monthly income equals their gross monthly income less
the following deductions:
--A standard deduction set at $134 a month, regardless of
household size; different standard deductions are used
for Alaska ($229), Hawaii ($189), Guam ($269), and the
Virgin Islands ($118).
--Any amounts paid as legally obligated child support;
--Twenty percent of any earned income, in recognition of
taxes and work expenses;
--Out-of-pocket dependent care expenses, when related to work
or training, up to $175 a month per dependent, $200 a
month for children under age 2;
--Shelter expenses that exceed 50 percent of counted income
after all other deductions, up to a periodically
adjusted ceiling now standing at $250 a month.
Different ceilings prevail in Alaska, Hawaii, Guam, and
the Virgin Islands: $434, $357, $304, and $184,
respectively.
For households with an elderly or disabled member, counted
monthly income equals gross monthly income less the following
deductions:
--The same standard, child support, earned income, and
dependent care deductions noted above;
--Any shelter expenses, to the extent they exceed 50 percent
of counted income after all other deductions, with no
limit; and
--Any out-of-pocket medical expenses (other than those for
special diets) that are incurred by an elderly or
disabled household member, to the extent they exceed a
``threshold'' of $35 a month.
Except for those households comprised entirely of TANF,
SSI, or general assistance recipients, in which case food stamp
eligibility generally is automatic, all households must have
net monthly income that does not exceed the Federal poverty
guidelines, as adjusted for inflation each October. Households
without an elderly or disabled member also must have gross
monthly income that does not exceed 130 percent of the
inflation-adjusted Federal poverty guidelines. Both these
income eligibility limits are uniform for the 48 contiguous
States, the District of Columbia, Guam, and the Virgin Islands;
somewhat higher limits (based on higher poverty guidelines) are
applied in Alaska and Hawaii. The net and gross eligibility
limits on income are summarized in table 15-5.
Allowable assets
Except for households automatically eligible for food
stamps because they are composed entirely of TANF, SSI, or
general assistance recipients, eligible households must have
counted or liquid assets that do not exceed federally
prescribed limits. Households without an elderly member cannot
have counted liquid assets above $2,000. Households with an
elderly member cannot have counted liquid assets above $3,000.

TABLE 15-5.--COUNTED (NET) AND BASIC (GROSS) MONTHLY INCOME ELIGIBILITY
LIMITS FOR THE FOOD STAMP PROGRAM, FISCAL YEAR 1998
------------------------------------------------------------------------
48 States, the
District of
Household size Columbia, and Alaska Hawaii
the
territories
------------------------------------------------------------------------
Counted (net) monthly income
eligibility limits \1\:
1 person...................... $658 $823 $756
2 persons..................... 885 1,106 1,017
3 persons..................... 1,111 1,390 1,278
4 persons..................... 1,338 1,673 1,539
5 persons..................... 1,565 1,956 1,800
6 persons..................... 1,791 2,240 2,060
7 persons..................... 2,018 2,523 2,321
8 persons..................... 2,245 2,806 2,582
Each additional person........ +227 +284 +261
Basic (gross) monthly income
eligibility limits \2\:
1 person...................... 855 1,070 983
2 persons..................... 1,150 1,438 1,322
3 persons..................... 1,445 1,806 1,661
4 persons..................... 1,739 2,175 2,000
5 persons..................... 2,034 2,543 2,339
6 persons..................... 2,329 2,911 2,678
7 persons..................... 2,623 3,280 3,018
8 persons.................... 2,918 3,648 3,357
Each additional person....... +295 +369 +340
------------------------------------------------------------------------
\1\ Set at the applicable Federal poverty guidelines, updated for
inflation through calendar 1996.
\2\ Set at 130 percent of the applicable Federal poverty guidelines,
updated for inflation through calendar 1996.

Source: U.S. Department of Agriculture, Food and Consumer Service.

Counted liquid assets include cash on hand, checking and
savings accounts, savings certificates, stocks and bonds,
individual retirement accounts (IRAs) and ``Keogh'' plans (less
any early withdrawal penalties), and nonrecurring lump-sum
payments such as insurance settlements. Certain ``less liquid''
assets are also counted: a portion of the value of vehicles
(generally, the fair market value in excess of $4,650) and the
equity value of property not producing income consistent with
its value (e.g., recreational property).
Counted assets do not include the value of the household's
residence (home and surrounding property), business assets,
personal property (household goods and personal effects), lump-
sum earned income tax credit payments, burial plots, the cash
value of life insurance policies and pension plans (other than
Keogh plans and IRAs), and certain other resources whose value
is not accessible to the household or are required to be
disregarded by other Federal laws.
Work-related requirements
Unless exempt, most able-bodied adults must (to gain or
retain eligibility) (1) register for work (typically with the
welfare agency or a State employment service office), (2)
accept a suitable job if offered one, (3) fulfill any work, job
search, or training requirements established by administering
welfare agencies, (4) provide the administering welfare agency
with sufficient information to allow a determination with
respect to their job availability, and (5) not voluntarily quit
a job without good cause or reduce work effort below 30 hours a
week. If the household head fails to fulfill any of these
requirements, the entire household may, at State option, be
disqualified for up to 180 days. Individual disqualification
periods differ according to whether the violation is the first,
second, or third; minimum periods (which may be increased by
the State welfare agency) range from 1 to 6 months.
Those who are exempt by law from these basic work
requirements include: persons physically or mentally unfit for
work, those under age 16 or over age 59, and individuals
between 16 and 18 if they are not head of household or are
attending school or a training program; persons working at
least 30 hours a week or earning the minimum wage equivalent;
persons caring for dependents who are disabled or under age 6,
and those caring for children between ages 6 and 12 if adequate
child care is not available (this second exemption is limited
to allowing these persons to refuse a job offer if care is not
available); individuals already subject to and complying with
another assistance program's work, training, or job search
requirements; otherwise eligible postsecondary students; and
residents of drug addiction and alcoholic treatment programs.
Those not exempted by one of the above-listed rules must,
at least, register for work and accept suitable job offers.
However, their State welfare agency may require them to fulfill
some type of work, job search, or training obligation. Welfare
agencies must operate an employment and training program of
their own design for work registrants whom they designate.
Welfare agencies may require all work registrants to
participate in one or more components of their program, or
limit participation by further exempting additional categories
and individuals for whom participation is judged impracticable
or not cost effective. Program components can include any or
all of the following activities: supervised job search or
training for job search, workfare, work experience or training
programs, education programs to improve basic skills, or any
other employment or training activity approved by the
Agriculture Department. However, at least 80 percent of
unmatched Federal money provided for States' employment and
training programs must be spent on services to those covered by
the new work rule for able-bodied adults without dependents
(see below).
In fiscal year 1996, there were some 5.5 million work
registrants, of whom 40 percent were exempted from employment
and training program participation requirements. Of the
remainder, about 1.5 million persons participated in some
employment activity and almost 600,000 received ``notices of
adverse action'' because they failed to meet participation
requirements. The overwhelming majority of those fulfilling an
employment activity requirement participated in work or job
search or job search training (as opposed to education or other
training).
Recipients who take part in an employment or training
activity beyond work registration cannot be required to work
more than the minimum wage equivalent of their household's
benefit, and total hours of participation (including both work
and any other required activity) cannot exceed 120 hours a
month. Welfare agencies also must provide participants support
for costs directly related to participation (e.g.,
transportation and child care). Agencies may limit this support
to $25 per participant per month for all support costs other
than dependent care, and to local market rates for necessary
dependent care.
In addition to the above-noted work-related requirements
(e.g., work registration, participation in an employment and
training program if called on, a ban on voluntarily quitting a
job), the 1996 welfare reform law (the Personal Responsibility
and Work Opportunity Reconciliation Act) added a new work
requirement for most able-bodied adults (between 18 and 50)
without dependents. They are ineligible for food stamps if,
during the prior 36 months, they received food stamps for 3
months while not working at least 20 hours a week or
participating in an approved work/training activity (including
workfare). Those disqualified under this rule are able to
reenter the Food Stamp Program if, during a 30-day period, they
work 80 hours or more or participate in a work/training
activity. If they then become unemployed or leave work/
training, they are eligible for an additional 3-month period on
food stamps without working at least 20 hours a week or
participating in a work/training activity. But they are allowed
only one of these added 3-month eligibility periods in any 36
months for a potential total of 6 months on food stamps in any
36 months without half-time work or enrollment in a work/
training program.
At State request, this rule can be waived for areas with
very high unemployment (over 10 percent) or lack of available
jobs. Moreover, States may, on their own initiative, exempt up
to 15 percent of those covered under the new work rule.
Categorical eligibility rules and other limitations
Some rules deny food stamp eligibility for reasons other
than financial need or compliance with work-related
requirements. Most noncitizens are barred (other than refugees
and asylees for a limited period of time, veterans, and those
with a substantial history of work covered under the Social
Security system). Households with members on strike are denied
benefits unless eligible prior to the strike. With some
exceptions, postsecondary students (in school half time or
more) who are fit for work and between ages 18 and 50 are
ineligible. Persons living in institutional settings are denied
eligibility, except those in special SSI-approved small group
homes for the disabled, persons living in drug addiction or
alcohol treatment programs, and persons in shelters for
battered women and children or shelters for the homeless.
Boarders cannot receive food stamps unless they apply together
with the household in which they are boarding. Those who
transfer assets for the purpose of qualifying for food stamps
are barred. Persons who fail to provide Social Security numbers
or cooperate in providing information needed to verify
eligibility or benefit determinations are ineligible. Food
stamps are denied those who intentionally violate program
rules, for specific time periods ranging from 1 year (on a
first violation) to permanently (on a third violation or other
serious infraction); and States may impose food stamp
disqualification when an individual is disqualified from
another public assistance program. Automatic disqualification
is required for those applying in multiple jurisdictions,
fleeing arrest, or convicted of a drug-related felony. And
States may disqualify individuals not cooperating with child
support enforcement authorities or in arrears on their child
support obligations.

Benefits

Food stamp benefits are a function of a household's size,
its net monthly income, and maximum monthly benefit levels (in
some cases, adjusted for geographic location). An eligible
household's net income is determined (i.e., deductions are
subtracted from gross income), its maximum benefit level is
established, and a benefit is calculated by subtracting its
expected contribution (30 percent of its counted net income)
from its maximum allotment. Thus, a 3-person household with
$400 in counted net income (after deductions) would receive a
monthly allotment of $201 (the maximum 3-person benefit in the
48 States, $321, less 30 percent of net income, $120).
Allotments are not taxable and food stamp purchases may
not be charged sales taxes. Receipt of food stamps does not
affect eligibility for or benefits provided by other welfare
programs, although some programs use food stamp participation
as a ``trigger'' for eligibility and others take into account
the general availability of food stamps in deciding what level
of benefits to provide. In fiscal year 1996, monthly benefits
averaged $73 a person and about $183 a household.
Maximum monthly allotments
Maximum monthly food stamp allotments are tied to the cost
of purchasing a nutritionally adequate low-cost diet, as
measured by the Agriculture Department's Thrifty Food Plan
(TFP). Maximum allotments are set at: the monthly cost of the
TFP for a four-person family consisting of a couple between
ages 20 and 50 and two school-age children, adjusted for family
size (using a formula reflecting economies of scale developed
by the Human Nutrition Information Service), and rounded down
to the nearest whole dollar. Allotments are adjusted for food
price inflation annually, each October, to reflect the cost of
the TFP in the immediately previous June.
Maximum allotments are standard in the 48 contiguous
States and the District of Columbia; they are higher,
reflecting substantially different food costs, in Alaska,
Hawaii, Guam, and the Virgin Islands (table 15-6).
Minimum and prorated benefits
Eligible one- and two-person households are guaranteed a
minimum monthly food stamp allotment of $10. Minimum monthly
benefits for other household sizes vary from year to year,
depending on the relationship between changes in the income
eligibility limits and the adjustments to the cost of the TFP.
In a few cases, benefits can be reduced to zero before income
eligibility limits are exceeded. At present, minimum monthly
allotments for households of three or more persons range from
$2 to over $80.
In addition, a household's calculated monthly allotment
can be prorated (reduced) for 1 month. On application, a
household's first month's benefit is reduced to reflect the
date of application. If a previously participating household
does not meet eligibility recertification requirements in a
timely fashion, but does become certified for eligibility
subsequently, benefits for the first month of its new
certification period normally are prorated to reflect the date
when recertification requirements were met.

TABLE 15-6.--MAXIMUM MONTHLY FOOD STAMP ALLOTMENTS, FISCAL YEAR 1998
----------------------------------------------------------------------------------------------------------------
48
States
and the Virgin
Household size District Alaska \1\ Hawaii Guam Islands
of
Columbia
----------------------------------------------------------------------------------------------------------------
1 person....................................................... $122 $154 $197 $180 $157
2 persons...................................................... 224 283 361 331 288
3 persons...................................................... 321 405 517 474 413
4 persons...................................................... 408 514 657 602 525
5 persons...................................................... 485 611 780 715 623
6 persons...................................................... 582 733 936 858 748
7 persons...................................................... 643 810 1,035 948 827
8 persons...................................................... 735 926 1,183 1,083 945
Each additional person........................................ +92 +116 +148 +135 +118
----------------------------------------------------------------------------------------------------------------
\1\ Maximum monthly allotments for designated urban areas of Alaska. Two separate higher allotment levels are
applied in remote rural areas of Alaska. They are 28 and 55 percent higher than the urban allotments shown
here.

Source: U.S. Department of Agriculture.

Application, processing, and issuing food stamps
Food stamp benefits normally are issued monthly. The local
welfare agency must either deny eligibility or make food stamps
available within 30 days of initial application and must
provide food stamps without interruption if an eligible
household reapplies and fulfills recertification requirements
in a timely manner. Households in immediate need because of
little or no income and very limited cash assets, as well as
the homeless and those with extraordinarily high shelter
expenses, must be given expedited service (provision of
benefits within 7 days of initial application).
Food stamp issuance is a welfare agency responsibility,
and issuance practices differ among welfare agencies. Most food
stamp coupons are issued by: (1) providing (usually mailing)
recipients an authorization-to-participate (ATP) card that is
then turned in at a local issuance point (e.g., a bank or post
office) when picking up their monthly allotment; or (2) mailing
food stamp coupon allotments directly to recipients. However,
in a growing number of States, electronic benefit transfer
(EBT) systems are used. EBT systems replace coupons with an
ATM-like card used to make food purchases at the point of sale
by deducting the purchase amount from the recipient's food
stamp benefit account. EBT issuance is used (either statewide
or in part of the State) in over a dozen States (reaching more
than 20 percent of food stamp recipients). All remaining States
are well along in the process of converting to EBT issuance.
Using food stamps
Food stamp benefits are usually issued in the form of
booklets of coupons. The smallest coupon denomination is $1; if
change of less than $1 is due on a food stamp purchase, it is
returned in cash. Typically, participating households use their
food stamps in approved grocery stores to buy food items for
home preparation and consumption; food stamp purchases are not
taxable. However, the actual list of approved uses for food
stamps is more extensive, and includes: (1) food for home
preparation and consumption, not including alcohol, tobacco, or
hot foods intended for immediate consumption; (2) seeds and
plants for use in gardens to produce food for personal
consumption; (3) in the case of the elderly and SSI recipients
and their spouses, meals prepared and served through approved
communal dining programs; (4) in the case of the elderly and
those who are disabled to an extent that they cannot prepare
all of their meals, home-delivered meals provided by programs
for the homebound; (5) meals prepared and served to residents
of drug addiction and alcoholic treatment programs, small group
homes for the disabled, shelters for battered women and
children, and shelters or other establishments serving the
homeless; and (6) where the household lives in certain remote
areas of Alaska, equipment for procuring food by hunting and
fishing (e.g., nets, hooks, fishing rods, and knives). As noted
earlier, food stamp benefits also can be used through EBT
cards. In this case, the card is swiped through an approved
retailer's point-of-sale device, automatically debiting the
recipient's food stamp account and crediting the retailer's
bank account; unlike coupon transactions, recipients receive no
cash change.

Quality Control (QC)

Since the early 1970s, the Food Stamp Program, like other
welfare programs, has had a quality control system to monitor
the degree to which erroneous eligibility and benefit
determinations are made by State welfare agencies. The system
was established by regulation in the 1970s as an administrative
tool to enable welfare officials to identify problems and take
corrective actions. Today, by legislative directive, the QC
system also is used to calculate and impose fiscal sanctions on
States that have very high rates of erroneous benefit and
eligibility decisions.
Under the quality control system, welfare agencies, with
Federal oversight, continuously sample their active food stamp
caseloads, as well as their decisions to deny or end benefits.
The agencies perform indepth investigations of the eligibility
and benefit status of the randomly chosen cases looking for
errors in applying Federal rules and otherwise erroneous
benefit and eligibility outcomes. Over 90,000 cases are
reviewed each year, and each State's sample is designed to
provide a statistically valid picture of erroneous decisions
and, in most instances, their dollar value in benefits. The
resulting error rate information is used by program managers to
chart needed changes in administrative practices, and by the
Federal Government to assess fiscal sanctions on States with
error rates above certain tolerance levels. This information
also is used to reward States with error rates below a separate
lower tolerance level, and to review welfare agency plans for
action to correct procedures to control errors. Both error rate
findings and any assessed sanctions are subject to appeal
through administrative law judges and the Federal courts.
Sanctions may be reduced or waived if the State shows good
cause or if it is determined that the sanction amounts should
be invested in improved State administration. Interest may be
charged on outstanding sanction liabilities if the
administrative appeals process takes more than 1 year.
Quality control reviews generate annual estimates of the
proportion of cases in which administrators or recipients make
an ``error'' and the dollar value of those errors. Caseload and
dollar error rates are calculated for overpayments (including
incorrect payments to eligible and ineligible households) and
underpayments. The accuracy of welfare agency decisions denying
or terminating assistance also is measured, with an error rate
reflecting the proportion of denials and terminations that were
improper; no dollar value is calculated. The national weighted
average for the dollar value of overpayments was estimated at
6.9 percent in fiscal year 1996 (table 15-7). This was just
under the all-time low of 7 percent in 1991. Error rates for
underpayments have been relatively unchanged over time. In
fiscal year 1996, the national weighted average underpayment
dollar error rate was estimated at 2.3 percent. Finally, the
rate of denials and terminations found improper in the most
recent estimate (1994) was 3.8 percent.

TABLE 15-7.--FOOD STAMP QUALITY CONTROL ERROR RATES, FISCAL YEAR 1996
[Percent of benefits paid or not paid in error]
------------------------------------------------------------------------
Overpayment Underpayment Combined
State error rate error rate error rate
------------------------------------------------------------------------
Alabama......................... 4.87 0.93 5.80
Alaska.......................... 5.22 2.27 7.50
Arizona......................... 6.99 1.45 8.44
Arkansas........................ 3.64 0.90 4.54
California..................... 5.65 3.73 9.32
Colorado........................ 6.04 1.70 7.74
Connecticut.................... 8.92 1.74 10.65
Delaware........................ 6.90 1.79 8.68
District of Columbia............ 4.72 2.05 6.77
Florida......................... 7.43 2.27 9.70
Georgia......................... 7.20 3.06 10.26
Guam............................ 7.11 2.51 9.62
Hawaii.......................... 2.46 1.53 3.99
Idaho.......................... 3.89 2.39 6.28
Illinois....................... 10.24 2.19 12.43
Indiana........................ 7.07 2.61 9.68
Iowa........................... 9.40 2.80 12.20
Kansas......................... 5.60 1.89 7.49
Kentucky........................ 3.70 1.63 5.33
Louisiana...................... 4.48 1.49 5.97
Maine.......................... 5.98 1.39 7.37
Maryland....................... 8.83 2.43 11.26
Massachusetts................... 3.40 1.29 4.69
Michigan....................... 9.56 1.67 11.23
Minnesota...................... 5.51 1.44 6.95
Mississippi.................... 8.21 1.80 10.01
Missouri....................... 9.91 3.47 13.38
Montana........................ 5.85 2.88 8.73
Nebraska........................ 6.76 3.78 10.54
Nevada......................... 7.79 2.84 10.63
New Hampshire.................. 7.19 2.17 9.37
New Jersey..................... 6.22 2.48 8.70
New Mexico..................... 5.94 2.02 7.96
New York........................ 6.11 2.77 8.88
North Carolina................. 7.73 2.27 10.00
North Dakota................... 4.44 1.66 6.10
Ohio........................... 9.31 3.32 12.63
Oklahoma....................... 7.16 3.03 10.19
Oregon......................... 9.03 2.14 11.17
Pennsylvania.................... 6.99 2.22 9.21
Rhode Island.................... 4.83 1.83 6.66
South Carolina................. 4.32 2.00 6.32
South Dakota................... 2.40 1.11 3.50
Tennessee....................... 7.14 1.84 8.99
Texas........................... 5.50 0.95 6.45
Utah........................... 7.23 2.40 9.63
Vermont........................ 9.28 1.59 10.87
Virginia........................ 10.92 3.03 13.95
Virgin Islands................. 6.92 1.84 8.76
Washington...................... 9.50 1.83 11.34
West Virginia.................. 9.05 3.35 12.40
Wisconsin...................... 9.27 2.13 11.40
Wyoming........................ 5.34 2.04 7.37
---------------------------------------
U.S. average................ 6.92 2.31 9.22
------------------------------------------------------------------------
Note.--Underpayment and overpayment rates may not add to combined rates
due to rounding.

Source: Food and Consumer Service (1997).

The dollar error rates reported through the food stamp
quality control system are used as the basis for assessing the
financial liability of States for overpaid and underpaid
benefits. Although over $1 billion in sanctions have been
assessed since the early 1980s, less than $10 million has been
collected. The appeals process has delayed collection, and
sanctions have been forgiven or waived both by Congress and the
administration. In amending the rules governing sanctions in
1988 and 1990, Congress forgave accumulated sanctions, and, in
late 1992, the administration waived sanctions by allowing
States to invest the amounts in improved administration.
Permission for States to invest sanction amounts in improved
program administration has now become the rule, and States
regularly apply and agree to invest sanction amounts under
Federal guidelines rather than pay the Federal Government.
Rules governing fiscal sanctions have changed a number of
times. Under the most recent revision (1993), sanctions are
assessed States with combined (overpayment and underpayment)
dollar error rates above the national weighted average combined
error rate for the year in question (9.2 percent in 1996). Each
State's sanction amount is determined by using a ``sliding
scale'' so that its penalty assessment equals an amount
reflecting the degree to which the State's combined error rate
exceeds the national average (the ``tolerance level''). For
example, if the tolerance level is 10 percent and a State's
error rate is 12 percent, the State would be assessed a
sanction of 0.4 percent of benefits paid in the State that year
(the State's error rate is 2 percentage points, or 20 percent,
above the tolerance level, and it is assessed a sanction
representing 20 percent of the amount by which it exceeds the
tolerance level; 2 percentage points 0.2 = 0.4). A
State with a combined error rate of 14 percent would owe a
penalty of 1.6 percent of benefits, or 40 percent of the amount
by which it exceeds the 10-percent tolerance level (4
percentage points 0.4 = 1.6). Thus, the degree to
which a State is assessed sanctions increases as its error rate
rises, rather than having sanctions assessed equally on each
dollar above the tolerance level. In fiscal year 1996, 24
States and Guam had combined error rates above the 9.2 percent
tolerance level and were assessed some $60 million.
States also can receive increased Federal funding for
administration if their error rates are below a second, much
lower threshold. States with a combined error rate below 6
percent are entitled to a larger-than-normal Federal share of
their administrative costs. The regular 50-percent Federal
match is, depending on the degree to which the State's error
rate is below 6 percent, raised to a maximum of 60 percent, as
long as the State's rate of improper denials and terminations
is below the national average. This ``enhanced'' administrative
funding has typically totaled $10-$20 million a year; in fiscal
year 1996, six States had combined error rates below 6 percent
and received $15 million in enhanced funding.
Finally, the quality control system identifies the various
sources of error and requires that States develop and carry out
corrective action plans to improve payment accuracy. These
reviews generally show that the primary responsibility for
overpayment errors is almost evenly split between welfare
agencies and clients. The most common errors are related to
establishing food stamp expense deductions and households'
income.
Intentional program violations (e.g., fraud) can occur in
a number of ways; the most common are intentionally
misrepresenting household circumstances in order to obtain food
stamps or increase benefits and trafficking in food stamp
coupons. About one-quarter of the dollar value of erroneous
benefit and eligibility determinations identified through
quality control reviews are fraudulent--under 2 percent of all
benefits issued in 1996. The most recent Agriculture Department
study on the extent of food stamp coupon trafficking estimated
it at some $800 million in 1993--3.7 percent of all benefits
issued that year.

Interaction With Cash Assistance Programs

The Food Stamp Program is intertwined with cash assistance
in two ways: it is administratively linked to cash welfare aid
at the State and local levels, and its recipient population is
made up largely of recipients of other government benefits.
At the State and local levels, the Food Stamp Program is
administered by the same welfare offices and personnel that
administer cash assistance such as TANF and general assistance.
Joint food stamp and cash welfare application and interview
procedures are the general rule. This coadministration does not
apply for most elderly or disabled persons, whose cash
assistance from the Supplemental Security Income Program (SSI)
is administered through Social Security Administration offices,
although these offices do provide limited intake services for
the Food Stamp Program.
For most persons participating in the Food Stamp Program,
food stamp aid represents a second or third form of government
payment. Fewer than 20 percent of food stamp households rely
solely on nongovernmental sources for their cash income,
although over 25 percent have some income from these sources
(e.g., earnings, private retirement income). According to
quality control data, the AFDC Program (the predecessor to
TANF) contributed to the income of nearly 40 percent of food
stamp households, and for almost all of them AFDC is their only
cash income. SSI benefits go to some 23 percent of food stamp
households, and almost one-third of these have no other income.
About 20 percent of food stamp households receive Social
Security or veterans benefits; over 10 percent are paid general
assistance, unemployment insurance, or workers' compensation
benefits.

Recipiency Rates

Table 15-8 shows food stamp participation rates from 1975
to 1996 using three different measures. Food stamp enrollment
has fluctuated widely over the last 20 years, reaching its peak
in fiscal year 1994; in that year, it averaged 27.5 million
persons a month, with an all-time high of 28 million in the
spring of 1994 (not including 1.4 million persons receiving aid
in Puerto Rico).
A recent (October 1994) report from the U.S. Department of
Agriculture provides a more refined analysis of participation
rates and the extent to which the program is serving its target
population. The report estimates that 74 percent of persons
eligible participated (69 percent of eligible households).
These participants received 82 percent of benefits payable if
all eligibles had been enrolled. However, subgroups of the
food-stamp-eligible population participated at very diferent
rates: (1) most eligible children were enrolled (86 percent);
(2) only one-third of eligible elderly persons participated,
and the majority of those not participating lived alone; (3)
virtually all eligible single-parent households were enrolled,
while only 78 percent of eligible households with children and
two or more adults participated; (4) eligible households headed
by African-Americans participated at a greater rate (92
percent) than households headed by Hispanics (61 percent) or
white non-Hispanics (59 percent); and (5) virtually all
eligible households with income below half the Federal poverty
guidelines were enrolled, but the participation rate fell for
eligible households with larger incomes (e.g., the
participation rate for those with income between half the
poverty guidelines and the guidelines themselves was 76
percent). Finally, another (December 1995) report from the
Agriculture Department notes that about half of the major
increase in food stamp enrollment from 1988 to 1993 (a rise of
over 40 percent) was a result of a higher participation rate
among eligibles--as opposed to an increased number of eligible
persons.

TABLE 15-8.--FOOD STAMP PARTICIPATION RATES IN THE UNITED STATES, 1975-96
----------------------------------------------------------------------------------------------------------------
Food stamp participation as a percent
Number of of--
food stamp ----------------------------------------
Year participants Pretransfer
(in Total Poor poor
millions) population \1\ population population
----------------------------------------------------------------------------------------------------------------
1975..................................................... 16.3 7.6 63.0 NA
1976..................................................... 17.0 7.9 68.1 NA
1977..................................................... 15.6 7.2 63.1 NA
1978..................................................... 14.4 6.5 58.8 NA
1979..................................................... 15.9 7.1 61.0 57.1
1980..................................................... 19.2 8.4 65.6 60.7
1981..................................................... 20.6 9.0 64.7 60.8
1982..................................................... 20.4 8.8 59.3 56.3
1983..................................................... 21.6 9.2 61.2 58.5
1984..................................................... 20.9 8.8 62.0 58.5
1985..................................................... 19.9 8.3 60.2 56.6
1986..................................................... 19.4 8.0 59.9 56.2
1987..................................................... 19.1 7.8 59.1 55.6
1988..................................................... 18.7 7.6 58.9 55.2
1989..................................................... 18.8 7.6 59.6 55.6
1990..................................................... 20.0 8.0 59.6 55.7
1991..................................................... 22.6 9.0 63.3 59.3
1992..................................................... 25.4 10.0 68.9 64.0
1993..................................................... 27.0 10.4 68.7 NA
1994..................................................... 27.5 10.5 72.1 NA
1995..................................................... 26.6 10.1 73.0 NA
1996..................................................... 25.5 9.6 69.8 NA
----------------------------------------------------------------------------------------------------------------
\1\ Calculated as a percent of total U.S. resident population at the end of the fiscal year. Total U.S. resident
population was 266.22 million persons at the end of fiscal year 1996.

NA--Not available.

Note.--Participants in Puerto Rico are not included in this table.

Source: U.S. Bureau of the Census.

Table 15-9 shows the average monthly number of people (in
thousands) who received food stamp benefits in each State, the
District of Columbia, and the participating Commonwealths and
territories for selected years between 1975 (when the Food
Stamp Program became nationally available) and 1996. There has
been a general increase in food stamp participants since 1975,
with enrollment peaking in 1994. The number of recipients has
declined significantly since its height in the spring of 1994.

Legislative History

In the early 1980s, Congress enacted major revisions to
the Food Stamp Program to hold down costs and tighten
administrative rules. The Omnibus Budget Reconciliation Act of
1981, the Agriculture and Food Act of 1981, and the Omnibus
Budget Reconciliation Act of 1982 all contained amendments that
the Congressional Budget Office has estimated held food stamp
spending for fiscal years 1982 through 1985 nearly $7 billion
(13 percent) below what would have been spent under pre-1981
law. These laws delayed various inflation indexing adjustments,
reduced the maximum benefit guarantee by 1 percent (restored in
1984), established income eligibility ceilings at 130 percent
of the Federal poverty levels, initiated prorating of first-
month benefits, replaced the Food Stamp Program in Puerto Rico
with a nutrition assistance block grant, reduced benefits for
those with earnings and high shelter expenses, ended
eligibility for most postsecondary students and strikers, and
raised fiscal penalties for States with high rates of erroneous
benefit and eligibility determinations.
In 1985, the Food Security Act (Public Law 99-198)
reauthorized food stamp appropriations through fiscal year 1990
and reversed the earlier trend, significantly liberalizing food
stamp rules. Major new initiatives included: a requirement for
States to implement employment and training programs for food
stamp recipients, automatic food stamp eligibility for AFDC and
SSI recipients, and a prohibition on collection of sales taxes
on food stamp purchases. Benefits were raised for some disabled
and those with earnings, high shelter costs, and dependent care
costs. Puerto Rico's nutrition assistance block grant was
increased. Eligibility standards were liberalized, primarily by
increasing and easing limits on assets. This was followed by
several laws in 1986 and 1987 that opened up access to and
increased benefits for the homeless, liberalized treatment of
student aid, energy assistance, and income received from
employment programs for the elderly and charitable
organizations, further added to benefits for those with high
shelter costs, and allowed Washington State to operate a
special AFDC/food stamp demonstration project (followed by
similar authorization for Minnesota in 1989).

TABLE 15-9.--FOOD STAMP RECIPIENTS BY STATE, SELECTED FISCAL YEARS 1975-96
[Thousands of persons]
--------------------------------------------------------------------------------------------------------------------------------------------------------
State 1975 \1\ 1979 \2\ 1985 \3\ 1990 \3\ 1991 \3\ 1992 \3\ 1993 \3\ 1994 \3\ 1995 \3\ 1996 \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama............................................. 393 525 588 449 504 550 560 551 525 509
Alaska.............................................. 12 25 22 25 30 38 43 46 45 46
Arizona............................................. 166 129 206 317 388 457 489 512 480 427
Arkansas............................................ 268 277 253 235 258 277 285 283 272 274
California.......................................... 1,517 1,334 1,615 1,936 2,212 2,558 2,866 3,155 3,175 3,143
Colorado............................................ 162 145 170 221 241 260 273 268 252 244
Connecticut......................................... 189 155 145 133 171 202 215 223 227 223
Delaware............................................ 39 45 40 33 41 51 58 59 57 58
District of Columbia................................ 112 100 72 62 72 82 87 91 94 93
Florida............................................. 767 828 630 781 1,021 1,404 1,500 1,474 1,395 1,371
Georgia............................................. 569 559 567 536 648 751 807 830 816 793
Hawaii.............................................. 84 96 99 77 83 94 103 115 125 130
Idaho............................................... 39 47 59 59 65 72 79 82 80 80
Illinois............................................ 948 837 1,110 1,013 1,096 1,156 1,178 1,189 1,151 1,105
Indiana............................................. 255 275 406 311 375 448 497 521 470 390
Iowa................................................ 118 117 203 170 180 192 196 196 184 177
Kansas.............................................. 63 73 119 142 156 175 188 192 184 172
Kentucky............................................ 449 405 560 458 496 529 530 522 520 478
Louisiana........................................... 502 523 644 727 742 779 779 756 711 670
Maine............................................... 151 121 114 94 116 133 138 136 132 131
Maryland............................................ 273 299 291 254 304 343 375 387 399 375
Massachusetts....................................... 560 429 337 347 397 429 443 442 410 374
Michigan............................................ 685 706 985 917 978 994 1,022 1,031 971 935
Minnesota........................................... 191 143 228 263 286 309 317 316 308 295
Mississippi......................................... 390 452 495 499 520 536 537 511 480 457
Missouri............................................ 299 280 362 431 490 549 591 593 576 554
Montana............................................. 38 33 58 57 61 66 70 71 71 71
Nebraska............................................ 50 55 94 95 99 107 113 111 105 102
Nevada.............................................. 34 27 32 50 63 80 93 97 99 97
New Hampshire....................................... 66 44 28 31 47 58 60 62 58 53
New Jersey.......................................... 565 524 464 381 441 495 531 545 540 541
New Mexico.......................................... 154 159 157 157 188 221 244 244 239 235
New York............................................ 1,398 1,704 1,834 1,546 1,717 1,885 2,045 2,154 2,183 2,099
North Carolina...................................... 537 517 474 419 517 597 627 630 614 631
North Dakota........................................ 19 20 33 39 41 46 48 45 41 40
Ohio................................................ 924 760 1,133 1,078 1,171 1,251 1,269 1,245 1,155 1,045
Oklahoma............................................ 184 184 263 267 296 346 370 376 375 354
Oregon.............................................. 208 160 228 216 240 265 283 286 289 288
Pennsylvania........................................ 893 923 1,032 954 1,052 1,137 1,186 1,208 1,173 1,124
Rhode Island........................................ 104 80 69 64 78 87 92 93 100 91
South Carolina...................................... 421 369 373 299 329 369 394 385 364 358
South Dakota........................................ 31 37 48 50 52 55 56 53 50 49
Tennessee........................................... 435 531 518 527 608 702 774 735 662 638
Texas............................................... 1,085 1,027 1,263 1,880 2,155 2,454 2,659 2,730 2,564 2,372
Utah................................................ 50 44 75 99 110 123 133 128 119 110
Vermont............................................. 46 40 44 38 47 54 58 65 59 56
Virginia............................................ 293 320 360 346 414 495 535 547 546 538
Washington.......................................... 239 205 281 337 385 432 462 468 476 476
West Virginia....................................... 204 182 278 262 281 310 322 321 329 300
Wisconsin........................................... 163 171 363 286 294 334 337 330 320 283
Wyoming............................................. 11 11 27 28 31 33 34 34 34 33
American Samoa...................................... NA NA NA NA NA NA NA 2 3 3
Guam................................................ 21 18 20 12 11 20 13 15 16 18
Northern Marianas................................... NA NA 4 4 2 2 3 4 4 4
Puerto Rico......................................... 1,800 1,822 1,480 1,480 1,490 1,480 1,440 1,410 1,370 1,330
Virgin Islands...................................... 25 34 32 18 15 16 18 20 23 31
---------------------------------------------------------------------------------------------------
Total......................................... 19,199 18,926 21,385 21,510 24,105 26,888 28,426 28,888 27,995 26,871
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Year end participation, July 1975. Total does not match totals in other tables, which are annual average participation.
\2\ Year end participation, September 1979. Total does not match totals in other tables, which are annual average participation. During fiscal year
1979, and into 1980, participation increases were largely due to the elimination of the food stamp purchase requirement. Figures for Alabama and
Mississippi are estimates.
\3\ Annual average monthly participation.

NA--Not available.

Source: U.S. Department of Agriculture, Food and Consumer Service. Compiled by the Congressional Research Service.

Legislation expanding eligibility and benefits continued
into 1988 and 1989. The Hunger Prevention Act of 1988 (Public
Law 100-435) increased food stamp benefits across the board,
liberalized several eligibility and benefit rules, eased
program access and administrative rules, and restructured the
employment and training program and quality control system. The
across-the-board benefit increase in maximum benefits (above
normal inflation adjustments) called for by the act was 0.65
percent in fiscal year 1989, 2.05 percent in fiscal year 1990,
and 3 percent in later years. Eligibility and benefit
liberalizations included higher benefits for those with
dependent care expenses, extension of liberal treatment for
disabled applicants and recipients to new categories of
disability, addition of a new income disregard for earned
income tax credits, and liberalized treatment for farm
households. Major provisions pertaining to program access and
administration authorized 50-percent Federal cost sharing for
State-option outreach activities, required coordination with
cash welfare program application procedures, loosened rules
governing monthly reporting and retrospective budgeting,
allowed training of community volunteers to help screen
applicants, and required, in some instances, issuance of the
first 2 months' worth of benefits in a single allotment.
Employment and training rules were revised by allowing some
expansion in the types of activities supported (e.g., basic
skills education), requiring increased support for
participants' dependent care expenses, and mandating new
performance standards for States. Finally, the food stamp
quality control system was completely revamped to substantially
reduce fiscal sanctions on States for erroneous benefit
determinations, retroactive to fiscal year 1986.
The 1990 Food, Agriculture, Conservation, and Trade Act
(Public Law 101-624) reauthorized food stamp appropriations
through fiscal year 1995. Although early versions of this act
would have significantly liberalized food stamp eligibility and
benefit rules, budget constraints dictated minimal expansions.
The changes included: limited revisions for postsecondary
students, forgiveness of most pre-1986 quality control
sanctions on States, a few changes in administrative rules to
open up program access and strengthen penalties for
trafficking, and new pilot projects and study commissions for
welfare program coordination. In addition, other laws
eliminated a special requirement for single food stamp/SSI
applications for those about to be discharged from institutions
and barred the Food Stamp Program from counting (as a liquid
asset) lump-sum earned income tax credit payments.
The Mickey Leland Childhood Hunger Relief Act (incorporated
in the 1993 Omnibus Budget Reconciliation Act, Public Law 103-
66) increased food stamp benefits and eased eligibility rules
by: increasing and then removing the limit on special benefit
adjustments (deductions) for households with very high shelter
expenses, ending a practice of reducing benefits when there are
short ``procedural'' breaks in enrollment, disregarding child
support payments as income to the payor, increasing the degree
to which vehicles are disregarded as assets in judging
eligibility, revising the definition of a food stamp household
to allow more persons who live together to apply separately,
increasing the degree to which dependent care expense
deductions can be claimed, expanding the degree to which earned
income credits are disregarded as assets and State/local
general assistance is disregarded as income, and boosting
Puerto Rico's block grant. The act also lowered the Federal
share of some State administrative expenses (to 50 percent),
reduced quality control fiscal penalties on States with high
rates of erroneous benefit and eligibility determinations, and
liberalized the appeals process for those penalties. Finally,
it expanded support for employment and training programs for
food stamp recipients, added a new method for collecting claims
against recipients, and increased penalties for trafficking in
food stamps. The net cost of the 1993 amendments was estimated
at $2.5 billion over fiscal years 1994-98.
The 1996 Omnibus ``farm bill'' (the Federal Agriculture
Improvement and Reform Act; Public Law 104-127) extended the
Food Stamp Act's overall authorization for appropriations
through fiscal year 1997, with no specific dollar limits. It
also: (1) continued the requirement for nutrition assistance
grants to Puerto Rico and American Samoa, and for employment
and training programs, through fiscal year 2002; (2) revised
rules for penalizing food stores in trafficking cases involving
management; and (3) extended authority for several pilot
projects.
Most recently table 15-10 provides an overview of the
characteristics of food stamp households for selected years
since 1980; table 15-11 summarizes annual vital statistics
about the program since 1972.

TABLE 15-10.--CHARACTERISTICS OF FOOD STAMP HOUSEHOLDS, SELECTED YEARS 1980-95
[In percent]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Year and month survey was conducted
-----------------------------------------------------------------------------------------------------------
Food stamp recipient households 1980 1985 1987 1988 1989 1990 1991 1992 1993 1994 1995
(Aug.) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Annual)
--------------------------------------------------------------------------------------------------------------------------------------------------------
With gross monthly income:
Below the Federal poverty levels........ 87 94 94 92 92 92 91 92 91 90 92
Between the poverty levels and 130
percent of the poverty levels.......... 10 6 6 8 8 8 9 8 8 9 8
Above 130 percent of the poverty levels. 2 (\3\) (\3\) (\3\) (\3\) (\3\) (\3\) (\3\) 1 1 (\3\)
With earnings............................... 19 20 21 20 20 19 20 21 21 21 21
With public assistance income \1\........... 65 68 74 72 73 73 70 66 68 69 68
With AFDC income........................ NA 39 41 42 42 43 41 40 40 38 38
With SSI income......................... 18 19 21 20 21 19 19 19 20 23 23
With children............................... 60 59 61 61 60 61 61 62 60 61 60
And female heads of household........... NA 46 50 50 50 51 51 51 52 51 50
With elderly members \2\.................... 23 21 21 19 20 18 17 15 16 16 16
With elderly female heads of household
\2\.................................... NA 16 15 14 14 11 10 9 NA 11 NA
-----------------------------------------------------------------------------------------------------------
Average household size...................... 2.8 2.7 2.7 2.6 2.6 2.6 2.6 2.5 2.6 2.5 2.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Public assistance income includes Aid to Families with Dependent Children, Supplemental Security Income, and general assistance.
\2\ Elderly members and heads of household include those age 60 or older.
\3\ Percentage equals 0.5 or less.

NA--Not available.

Note.--The proportion of households with public assistance income shown in this table is an estimate that generally overcounts them because it is not
corrected for households with multiple sources of public assistance income. The proportion of households with elderly female heads shown in this table
for years prior to 1994 is an estimate that generally undercounts them because it counts only single-person female households. The 1995 figures
represent characteristics over the full course of fiscal year 1995.

Source: U.S. Department of Agriculture, Food and Consumer Service surveys of the characteristics of food stamp households. Compiled by the
Congressional Research Service.

TABLE 15-11.--HISTORICAL FOOD STAMP STATISTICS, 1972-96
----------------------------------------------------------------------------------------------------------------
Total Federal spending Average monthly
(in millions) \1\ Average benefits (per person) Four-person
------------------------ monthly ------------------------ maximum
Fiscal year Constant participation Constant monthly
Current (1996) (in millions Current (1996) allotment \2\
dollars dollars \3\ of persons) dollars dollars \3\
----------------------------------------------------------------------------------------------------------------
1972 \4\.......................... $1,871 $7,072 11.1 $13.50 $49.30 $108
1973.............................. 2,211 8,048 12.2 14.60 49.20 112
1974.............................. 2,843 9,496 12.9 17.60 49.60 116
1975 \5\.......................... 4,624 13,872 17.1 21.40 55.00 150
1976.............................. 5,692 15,995 18.5 23.90 57.80 162
Transition quarter \6\............ 1,367 3,705 17.3 24.40 58.60 166
1977.............................. 5,469 14,274 17.1 24.70 57.30 166
1978.............................. 5,573 13,598 16.0 26.80 56.80 170
1979 \7\.......................... 6,995 15,459 17.7 30.60 58.10 182
1980.............................. 9,188 17,917 21.1 34.40 60.90 204
1981.............................. 11,308 19,789 22.4 39.50 64.00 209
1982 \8\.......................... 11,117 18,121 22.0 39.20 61.20 233
1983 \8\.......................... 12,733 20,118 23.2 43.00 66.20 253
1984 \8\.......................... 12,470 18,830 22.4 42.70 64.10 253
1985 \8\.......................... 12,599 18,395 21.4 45.00 66.20 264
1986 \8\.......................... 12,528 17,790 20.9 45.50 65.50 268
1987 \8\.......................... 12,539 17,304 20.6 45.80 62.70 271
1988 \8\.......................... 13,289 17,674 20.1 49.80 66.20 290
1989 \8\.......................... 13,815 17,545 20.2 51.90 64.40 300
1990 \8\.......................... 16,512 19,980 21.5 59.00 69.00 331
1991 \8\.......................... 19,765 22,730 24.1 63.90 71.60 352
1992 \8\.......................... 23,539 26,364 26.9 68.50 76.70 370
1993 \8\.......................... 24,749 26,729 28.4 68.00 74.80 375
1994.............................. 25,525 27,057 28.9 69.00 73.80 375
1995.............................. 25,676 26,446 28.0 71.30 73.40 386
1996.............................. 25,494 25,494 26.9 73.30 73.30 397
----------------------------------------------------------------------------------------------------------------
\1\ Spending for benefits and administration, including Puerto Rico.
\2\ For the 48 contiguous States and the District of Columbia, as in effect at the beginning of the fiscal year
in current dollars.
\3\ Constant dollar adjustments were made using the overall Consumer Price Index for Urban Consumers (CPI-U) for
spending and the CPI-U ``food at home'' component for benefits.
\4\ The first fiscal year in which benefit and eligibility rules were, by law, nationally uniform and indexed
for inflation.
\5\ The first fiscal year in which food stamps were available nationwide.
\6\ July through September 1976.
\7\ The fiscal year in which the food stamp purchase requirement was eliminated, on a phased in basis.
\8\ Includes funding for Puerto Rico's nutrition assistance grant; earlier years include funding for Puerto Rico
under the regular Food Stamp Program. Participation figures include enrollment in Puerto Rico (averaging 1.3
to 1.5 million persons a month under the nutrition assistance grant and higher figures in earlier years).
Average benefit figures do not reflect somewhat lower benefits in Puerto Rico under its nutrition assistance
grant.

Note.--Figures in this table have been revised from similar tables presented in earlier versions of the Green
Book to reflect more recent spending information and more precise inflation adjustments for constant dollar
amounts.

Source: Compiled by the Congressional Research Service.

MEDICAID

Medicaid, authorized under title XIX of the Social
Security Act, is a Federal-State matching entitlement program
providing medical assistance to low-income persons who are
aged, blind, disabled, members of families with dependent
children, and certain other pregnant women and children. Within
Federal guidelines, each State designs and administers its own
program. Thus, there is substantial variation among States in
coverage, types and scope of benefits offered, and amounts of
payments for services. Recent legislation has expanded the
authority of States to decide who should be eligible for
Medicaid, changed the rules governing Medicaid reimbursement to
hospitals and community health centers, and increased States'
flexibility to enroll Medicaid recipients into managed care
programs.

Eligibility

Medicaid does not provide medical assistance to all poor
persons. States are required to serve some population groups
and are permitted to serve others. In general, eligibility for
Medicaid is limited to low-income children and pregnant women,
adults in families with dependent children, low-income persons
with disabilities, and low-income elderly persons. Applicants'
income and assets must be within program financial standards.
For some population groups, these standards vary among States.
For others, standards are set by Federal law. Medicaid is
available to two broad classes of eligible persons: the
``categorically needy'' and the ``medically needy.'' The two
terms once distinguished between welfare-related beneficiaries
and those qualifying only under special Medicaid rules.
However, nonwelfare groups have been added to the
``categorically needy'' list over the years, and recent
legislation has partially severed the automatic connection
between Medicaid and welfare. As a result, the terms are no
longer especially helpful in sorting out the various
populations for whom mandatory or optional Medicaid coverage
has been made available, and some analysts believe they should
be abandoned. However, the distinction between the
categorically and medically needy is still an important one
because the scope of covered services that States must provide
to the categorically needy is much broader than the minimum
scope of services for the medically needy.
All States must cover certain mandatory groups of
categorically needy individuals.\10\ Coverage of additional
categorically needy groups is optional, as is coverage of the
medically needy. The following discussion describes the
mandatory and optional categorically eligible groups; the
medically needy are discussed separately at the end of this
section.
---------------------------------------------------------------------------
\10\ Arizona does not operate a traditional Medicaid Program. Since
1982 it has operated a federally assisted medical assistance program
for low-income persons under a demonstration waiver.
---------------------------------------------------------------------------

Categorically Needy

Families, Pregnant Women, and Children
Prior to the enactment of the Personal Responsibility and
Work Opportunities Act of 1996 (PRWORA, Public Law 104-193),
there were two major routes to Medicaid for low-income women
and children. The first was through cash welfare: individuals
who qualified for Aid to Families with Dependent Children
(AFDC) cash assistance or Supplemental Security Income (SSI)
were automatically eligible for Medicaid. The second was
through legislation in the last decade that extended coverage
to low-income pregnant women and children who have no ties to
the welfare system. PRWORA replaced the AFDC Program with a
block grant to States for Temporary Assistance for Needy
Families (TANF), severing the automatic connection between cash
assistance and Medicaid.
AFDC-related groups
Prior to the enactment of the Personal Responsibility and
Work Opportunities Act of 1996, States were required to provide
Medicaid to all persons receiving cash assistance under AFDC,
as well as to additional AFDC-related groups that did not
actually receive cash payments. These groups included: persons
who did not receive a payment because the amount would be less
than $10; persons whose payments were reduced to zero because
of recovery of previous overpayments; certain work
supplementation participants; certain children for whom
adoption assistance agreements were in effect or for whom
foster care payments were being made under title IV-E of the
Social Security Act; and persons who were ineligible for AFDC
because of a requirement that could not be imposed under
Medicaid.
States were required to continue Medicaid for specified
periods for certain families who lost AFDC benefits after
receiving them in at least 3 of the preceding 6 months. If the
family lost AFDC benefits because of increased income from
earnings or hours of employment, Medicaid coverage had to be
extended for 12 months. (During the second 6 months a premium
could be imposed, the scope of benefits could be limited, or
alternate delivery systems could be used.) If the family lost
AFDC because of increased child or spousal support, coverage
had to be extended for 4 months. States were also required to
furnish Medicaid to certain two-parent families whose principal
earner was unemployed and who did not receive cash assistance
because the State was one of those permitted (under the Family
Support Act of 1988) to set a time limit on AFDC coverage for
such families.
States were permitted, but not required, to provide
coverage to additional AFDC-related groups. The most important
of these were the ``Ribicoff children,'' whose income and
resources were within AFDC standards but who did not meet the
definition of ``dependent child.'' States could cover these
children up to a maximum age of 21, and could limit coverage to
reasonable subgroups, such as children in privately subsidized
foster care, or those who lived in certain institutional
settings. States could also furnish Medicaid to persons who
would have received AFDC if the State's AFDC Program were as
broad as permitted under Federal law.
PRWORA repealed the AFDC Program, replacing it with the
block grant program Temporary Assistance for Needy Families
(TANF). Unlike AFDC, TANF eligibility does not confer automatic
Medicaid eligibility. Although the automatic link between AFDC
and Medicaid has been broken, the new law preserves Medicaid
entitlement for individuals who meet the requirements for the
AFDC Program that were in their State on July 16, 1996, even if
they do not qualify for assistance under TANF. States are
required to use the eligibility determination process already
in place for AFDC and Medicaid, including the same income and
resource standards and other rules formerly used to determine
if a family's income and composition made them eligible for
AFDC and Medicaid. States must continue Medicaid assistance for
recipients of adoption assistance and foster care under title
IV-E of the Social Security Act. As under prereform law, if a
family becomes ineligible for Medicaid because of earnings or
child or spousal support income and received Medicaid in three
of the preceding 6 months, the family is eligible for a period
of transitional Medicaid assistance. States also may continue
Medicaid coverage to children up to age 21 who meet what were
the AFDC income and resources requirements in effect in their
State on July 16, 1996, but do not meet the definition of
dependent child. States are permitted to deny Medicaid benefits
to nonpregnant adults and heads of households who lose TANF
benefits because of refusal to work, but must continue to
provide Medicaid coverage to their children.
PRWORA allows States to modify their ``prereform'' AFDC
income and resource standards as follows: (1) States may lower
their income eligibility standards, but not below those it used
on May 1, 1988; (2) States may increase their income and
resource standards up to the percentage increase in the
Consumer Price Index (CPI); (3) States may use less restrictive
income and resource standards than those in effect on July 16,
1996.
Poverty level pregnant women and children
Between 1986 and 1991, Congress gradually extended
Medicaid to groups of pregnant women and children defined in
terms of family income, rather than in terms of their ties to
the AFDC Program.
States are required to cover pregnant women and children
under age 6 with family incomes below 133 percent of the
Federal poverty income guidelines. In 1997, the poverty
guideline in the 48 contiguous States and the District of
Columbia is $13,330 for a family of three. Coverage for
pregnant women is limited to services related to the pregnancy
or complications of the pregnancy. Eligibility extends to 60
days after termination of the pregnancy. Children receive full
Medicaid coverage.
Since July 1, 1991, States have been required to cover all
children who are under age 19, who were born after September
30, 1983, and whose family income is below 100 percent of the
Federal poverty level. The 1983 start date means that the age
of mandatory coverage will increase each year until reaching
age 18 in fiscal year 2002.
States are permitted, but not required, to cover pregnant
women and infants under 1 year old not covered under the
mandatory rules whose family income is no more than 185 percent
of the Federal poverty level. As of August 1996, 30 States and
the District of Columbia made use of this option to cover
pregnant women and infants with family incomes over 133 percent
of poverty. States wishing to further expand eligibility have
several options under Medicaid law, including waivers of
Federal rules. As of August 1996, six States had expanded
eligibility to pregnant women, infants, or children in families
with incomes over 185 percent of the Federal poverty level.
The recently enacted Balanced Budget Act of 1997 (BBA
1997), Public Law 105-33, gives States the option to provide 12
months continuous Medicaid coverage for children regardless of
whether they continue to meet income eligibility tests and to
presume eligibility for low-income children, allowing the
States to provide services during the time that eligibility is
determined.

Aged and Disabled Persons

SSI-related groups
States are generally required to cover recipients of SSI.
However, States may use more restrictive eligibility standards
for Medicaid than those for SSI if they were using those
standards on January 1, 1972 (before the implementation of
SSI). States that have chosen to apply at least one more
restrictive standard are known as ``section 209(b)'' States,
after the section of the Social Security Amendments of 1972
(Public Law 92-603) that established the option. These States
may vary in their definition of disability, or in their
standards related to income or resources. There are 12 section
209(b) States:

Connecticut
Hawaii
Illinois
Indiana
Minnesota
Missouri
New Hampshire
North Carolina
North Dakota
Ohio
Oklahoma
Virginia

States using more restrictive income standards must allow
applicants to deduct medical expenses from income (not
including SSI or State supplemental payments, SSP) in
determining eligibility. This process is known as ``spend
down.'' For example, if an applicant has a monthly income of
$400 (not including any SSI or SSP) and the State's maximum
allowable income is $350, the applicant would be required to
incur $50 in medical expenses before qualifying for Medicaid.
As will be discussed below, the spend down process is also used
in establishing eligibility for the medically needy.
States must continue Medicaid coverage for several defined
groups of individuals who have lost SSI or SSP eligibility. The
``qualified severely impaired'' are disabled persons who have
returned to work and have lost eligibility as a result of
employment earnings, but still have the condition that
originally rendered them disabled and meet all nondisability
criteria for SSI except income (the current law threshold for
earnings is $1,053 per month). Medicaid must be continued if
such an individual needs continued medical assistance to
continue employment and the individual's earnings are
insufficient to provide the equivalent of SSI, Medicaid, and
attendant care benefits the individual would qualify for in the
absence of earnings. States must also continue Medicaid
coverage for persons who were once eligible for both SSI and
Social Security payments and who lose SSI because of a cost of
living adjustment (COLA) in their Social Security benefits.
Similar Medicaid continuations have been provided for certain
other persons who lose SSI as a result of eligibility for or
increases in Social Security or veterans benefits. Finally,
States must continue Medicaid for certain SSI-related groups
who received benefits in 1973, including ``essential persons''
(persons who care for a disabled individual).
States are permitted to provide Medicaid to individuals
who are not receiving SSI but are receiving State-only
supplementary cash payments. Effective August 1997, States have
the option of creating a new eligibility category for disabled
SSI beneficiaries with incomes up to 250 percent of poverty.
Beneficiaries can ``buy into'' Medicaid by paying a sliding
scale premium based on the individual's income as determined by
the State.
Qualified Medicare beneficiaries and related groups
Effective January 1, 1991, States must provide limited
Medicaid coverage for ``qualified Medicare beneficiaries''
(QMBs). These are aged and disabled persons who are receiving
Medicare, whose income is below 100 percent of the Federal
poverty level ($7,890 for an individual and $10,610 for a
couple in 1997), and whose resources do not exceed twice the
allowable amount under SSI ($4,000 for an individual and $6,000
for a couple). States must pay Medicare part B premiums (and,
if applicable, part A premiums) for QMBs, along with required
Medicare coinsurance and deductible amounts.
In addition, all States must pay part B premiums (but not
part A premiums or part A or B coinsurance and deductibles) for
``specified low-income Medicare beneficiaries'' (SLMBs). These
are beneficiaries who would be QMBs except that their incomes
are between 100 and 120 percent of the poverty level. Beginning
January 1998, the income eligibility level for the SLMB Program
will increase to 135 percent of poverty and States will be
required to cover a portion of the part B premium for Medicare
beneficiaries with incomes between 135 percent and 175 percent
of poverty.
States also are required to pay part A premiums, but no
other expenses, for ``qualified disabled and working
individuals.'' These are persons who formerly received Social
Security disability benefits and hence Medicare, have lost
eligibility for both programs, but are permitted under Medicare
law to continue to receive Medicare in return for payment of
the part A premium. Medicaid must pay this premium on behalf of
such individuals who have incomes below 200 percent of poverty
and resources no greater than twice the SSI standard.
States are permitted to provide full Medicaid benefits,
rather than just Medicare premiums and cost sharing, to QMBs
who meet a State-established income standard that is no higher
than 100 percent of the Federal poverty level. Seven States
make use of this option.
Institutionalized persons and related groups (all optional)
States may provide Medicaid to certain otherwise
ineligible groups of persons who are in nursing facilities or
other institutions, or who would require institutional care if
they were not receiving alternative services at home or in the
community.
States may establish a special income standard for
institutionalized persons, not to exceed 300 percent of the
maximum SSI benefits payable to a person who is living at home
and has no other resources. States may also provide Medicaid to
persons who would qualify for SSI but for the fact that they
are in an institution.
A State may obtain a waiver under section 2176 of OBRA
1981 to provide home and community-based services to a defined
group of individuals who would otherwise require institutional
care.\11\ Persons served under such a waiver may receive
Medicaid coverage if they would be eligible if they lived in an
institution. Such individuals may also be covered in a State
that terminates its waiver program in order to take advantage
of a new, no-waiver home and community-based services option
created by OBRA 1990.
---------------------------------------------------------------------------
\11\ These waivers are also known as 1915(c) waivers.
---------------------------------------------------------------------------
A State may also provide Medicaid to several other classes
of persons who need the level of care provided by an
institution and who would be eligible if they were in an
institution. These include children being cared for at home,
persons of any age who are ventilator-dependent, and persons
receiving hospice benefits in lieu of institutional services.
Aliens
Legal immigrants arriving in the United States after
August 22, 1996 are ineligible for Medicaid benefits for 5
years. Coverage of such persons after the 5 year ban is a State
option. States are required to provide Medicaid coverage to
legal immigrants who resided in the country and were receiving
benefits on August 22,1996, and for those residing in the
country as of that date who become disabled in the future.
States are also required to provide coverage to: refugees for
the first 7 years after entry into the United States; asylees
for the first 7 years after asylum is granted; individuals
whose deportation is being withheld by the Immigration and
Naturalization Service for the first 7 years after grant of
deportation withholding; lawful permanent aliens after they
have been credited with 40 quarters of coverage under Social
Security; and honorably discharged U.S. military veterans,
active duty military personnel, and their spouses and unmarried
dependent children. Qualified aliens and nonqualified aliens
who meet the financial and categorical eligibility requirements
for Medicaid may receive emergency Medicaid services.

The Medically Needy

Forty States and other jurisdictions provide Medicaid to at
least some groups of ``medically needy'' persons. These are
persons who meet the nonfinancial standards for inclusion in
one of the groups covered under Medicaid, but who do not meet
the applicable income or resource requirements for
categorically needy eligibility. The State may establish higher
income or resource standards for the medically needy. In
addition, individuals may spend down to the medically needy
standard by incurring medical expenses, in the same way that
SSI recipients in section 209(b) States may spend down to
Medicaid eligibility. For the medically needy, spend down may
involve the reduction of assets and income.
The State may set its separate medically needy income
standard for a family of a given size at any level up to 133
percent of the maximum payment for a similar family under the
State's AFDC Program as in place on July 16, 1996. States may
limit the groups of individuals who may receive medically needy
coverage. If the State provides any medically needy program,
however, it must include all children under 18 who would
qualify under one of the mandatory categorically needy groups,
and all pregnant women who would qualify under either a
mandatory or optional group, if their income or resources were
lower.
As of October 1, 1995, the following 40 States and
territories covered some groups of the medically needy:

American Samoa
Arkansas
California
Connecticut
District of Columbia
Florida
Georgia
Hawaii
Illinois
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Montana
Nebraska
New Hampshire
New Jersey
New York
North Carolina
North Dakota
Northern Mariana Islands
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
Tennessee
Texas
Utah
Vermont
Virgin Islands
Virginia
Washington
West Virginia
Wisconsin

Medicaid and the Poor

In 1996, Medicaid covered 12 percent of the total U.S.
population (excluding institutionalized persons) and 44.6
percent of those with incomes below the Federal poverty level.
Because categorical eligibility requirements for children are
less restrictive than those for adults, poor children are much
more likely to receive coverage. Table 15-12 shows Medicaid
coverage by age and income status in 1995, as reported in the
March 1996 Current Population Survey (CPS) conducted by the
Census Bureau. Note that persons shown as receiving Medicaid
may have had other health coverage as well. Nearly all the
elderly, for example, have Medicare and/or private coverage.
Children under age 6 with family incomes below poverty are
most likely to be covered. Coverage rates drop steadily with
age and income until age 65.

Services

States are required to offer the following services to
categorically needy recipients under their Medicaid Programs:
inpatient and outpatient hospital services; laboratory and x-
ray services; nursing facility (NF) services for those over age
21; home health services for those entitled to NF care; early
and periodic screening, diagnosis, and treatment (EPSDT) for
those under age 21; family planning services and supplies;
physicians' services; and nurse-midwife services. OBRA 1989
required States to provide ambulatory services offered by
federally qualified health centers, effective April 1, 1990,
and services furnished by certified family or pediatric nurse
practitioners, effective July 1, 1990. States may also provide
additional medical services such as drugs, eyeglasses, and
inpatient psychiatric care for individuals under age 21 or over
65 (see table 15-24).

TABLE 15-12.--MEDICAID COVERAGE BY AGE AND FAMILY INCOME, 1995
[In thousands]
------------------------------------------------------------------------
Percent
Age Covered by Persons in with
Medicaid age group Medicaid
------------------------------------------------------------------------
In poverty:
0-5.......................... 4,131 5,854 70.6
6-10......................... 2,687 4,228 63.5
11-18........................ 2,785 5,555 50.1
19-44........................ 4,598 13,770 33.4
45-64........................ 1,546 4,764 32.4
65 or older.................. 1,008 3,355 30.0
--------------------------------------
Total...................... 16,750 37,530 44.6
======================================
Family income between 100 and 133
percent of poverty:
0-5.......................... 842 1,804 46.7
6-10......................... 558 1,545 36.1
11-18........................ 677 2,267 29.9
19-44........................ 1,177 6,202 19.0
45-64........................ 415 2,281 18.2
65 or older.................. 495 3,093 16.0
--------------------------------------
Total...................... 4,163 17,190 24.2
======================================
Family income between 133 and 185
percent of poverty:
0-5.......................... 951 2,879 33.0
6-10......................... 467 2,299 20.3
11-18........................ 607 3,136 19.4
19-44........................ 1,095 10,060 10.9
45-64........................ 343 3,452 9.9
65 or older.................. 376 4,766 7.9
--------------------------------------
Total...................... 3,839 26,590 14.4
======================================
Family income greater than 185
percent of poverty:
0-5.......................... 1,189 13,650 8.7
6-10......................... 797 11,490 6.9
11-18........................ 1,098 19,480 5.6
19-44........................ 1,974 75,190 2.6
45-64........................ 867 42,170 2.1
65 or older.................. 942 20,440 4.6
--------------------------------------
Total...................... 6,867 182,400 3.8
======================================
All persons:
0-5.......................... 7,112 24,186 29.4
6-10......................... 4,508 19,563 23.0
11-18........................ 5,166 30,437 17.0
19-44........................ 8,843 105,222 8.4
45-64........................ 3,171 52,667 6.0
65 or older.................. 2,820 31,654 8.9
--------------------------------------
Total...................... 31,618 263,710 12.0
------------------------------------------------------------------------
Source: CRS tabulations from the March 1996 Current Population Survey
(CPS). Table excludes persons in institutions and approximately
250,000 children under age 15 living with nonfamily caretakers. Number
of recipients is lower than the number on administrative records due
to underreporting by CPS respondents.

Federal law establishes the following requirements for
coverage of the medically needy: (1) if a State provides
medically needy coverage to any group, it must provide
ambulatory services to children and prenatal and delivery
services for pregnant women; (2) if a State provides
institutional services for any medically needy group, it must
also provide ambulatory services for this population group; and
(3) if the State provides medically needy coverage for persons
in intermediate care facilities for the mentally retarded (ICF/
MRs) or in institutions for mental diseases, it must offer to
all groups covered in its medically needy program either all of
the mandatory services or alternatively the care and services
listed in 7 of the 25 paragraphs in the law defining covered
services.

Financing

The Federal Government helps States pay the cost of
Medicaid services by means of a variable matching formula which
is adjusted annually. The Federal matching rate, which is
inversely related to a State's per capita income, can range
from 50 to 83 percent, though, in 1997, the highest rate is
77.22 percent, with 11 States and the District of Columbia
receiving the minimum match of 50 percent. Beginning in fiscal
year 1998 the Federal matching rate for the District of
Columbia will increase permanently to 70 percent; Alaska's
matching percentage will increase to 59.8 percent for fiscal
years 1998, 1999, and 2000. Federal matching for the
territories is set at 50 percent with a maximum dollar limit
placed on the amount each territory can receive. The Federal
share of administrative costs is 50 percent for all States
except for certain items where the authorized rate is higher.

Reimbursement Policy

States establish their own service reimbursement policies
within general Federal guidelines. OBRA 1989 codified the
regulatory requirement that payments must be sufficient to
enlist enough providers so that covered services will be
available to Medicaid beneficiaries at least to the extent they
are available to the general population in a geographic area.
Beginning April 1, 1990, States were required to submit to the
Secretary their payment rates for pediatric and obstetrical
services along with additional data that would assist the
Secretary in evaluating the State's compliance with this
requirement. Effective October 1, 1997, States no longer must
assure adequate payment levels to obstetricians and
pediatricians nor provide annual reports on their payment
levels for these services.
Until 1980, States were required to follow Medicare rules
in paying for institutional services. The Boren amendment,
enacted with respect to nursing homes in 1980 and extended to
hospitals in 1981, authorized States to establish their own
payment systems, as long as rates were reasonable and adequate
to meet the costs of efficiently and economically operated
facilities. Rates for hospitals had to also be sufficient to
assure reasonable access to inpatient services of adequate
quality. BBA 1997 repeals the Boren amendment. Effective
October 1, 1997, States must instead provide public notice of
the proposed rates for hospitals, nursing facilities, and ICFs/
MR and the methods used to establish those rates.
State hospital reimbursement systems must provide for
additional payments to facilities serving a disproportionate
share of low-income patients. Unlike the comparable Medicare
payments, Medicaid payments must follow a formula that
considers a hospital's charity patients as well as its Medicaid
caseload.
OBRA 1990 established new rules for Medicaid reimbursement
of prescription drugs. The law denies Federal matching funds
for drugs manufactured by a firm that has not agreed to provide
rebates. Under amendments made by the Veterans Health Care Act
of 1992, a manufacturer is not deemed to have a rebate
agreement unless the manufacturer has entered into a master
agreement with the Secretary of Veterans Affairs. Rebate
amounts vary depending on the nature of the drug. The minimum
rebate is 11 percent of the average price. OBRA 1990
established a 4-year moratorium on reductions in most payment
rates for pharmacists.
Practitioners and providers are required to accept
payments under the program as payment in full for covered
services except where nominal cost-sharing charges may be
required. States may generally impose such charges with certain
exceptions. They are precluded from imposing cost sharing on
services for children under 18, services related to pregnancy,
family planning or emergency services, and services provided to
nursing facility inpatients who are required to spend all of
their income for medical care except for a personal needs
allowance. Effective August 5, 1997 States are permitted to pay
Medicaid rates to providers for services to ``dual eligibles''
(those Medicare beneficiaries who are also eligible for full
Medicaid benefits) and qualified Medicare beneficiaries (QMBs).
State Medicaid Programs are not required to pay Medicare cost-
sharing expenses for these persons if the Medicare payment for
the service exceeds the amount that the State Medicaid Program
would have paid for the service to a recipient who was not a
dual eligible or QMB.

Administration

Medicaid is a State-administered program. At the Federal
level, the Health Care Financing Administration (HCFA) of the
Department of Health and Human Services is responsible for
overseeing State operations.
Federal law requires that a single State agency be charged
with administration of the Medicaid Program. Generally, that
agency is either the State welfare agency, the State health
agency, or an umbrella human resources agency. The single State
agency may contract with other State entities to conduct some
program functions. Further, States may process claims for
reimbursement themselves or contract with fiscal agents or
health insuring agencies to process these claims.

Medicaid and Managed Care

To contain escalating health care costs and improve access
to the Medicaid Program, States are increasingly adopting
managed care delivery systems. Between 1991 and 1996,
enrollment in Medicaid managed care increased by nearly 400
percent. According to the Health Care Financing Administration
(HCFA), by 1996, 13.3 million Medicaid beneficiaries
representing 40 percent of the total Medicaid population were
enrolled in some form of managed care. Medicaid managed care
refers to a system of health care delivery where the provision
of an agreed upon set of Medicaid-covered health care services
is coordinated by a health plan or a primary care case manager.
These plans, or case managers, are obligated by contract or
agreement to be responsible for the care provided (or not
provided) to enrollees. The goal of managed care systems is to
provide access to quality health care while containing costs by
ensuring that all necessary services are provided to
individuals.
Until recently, States wishing to require Medicaid
beneficiaries to enroll in managed care plans had to obtain one
of two types of waivers from the HCFA. States could operate
voluntary managed care programs without a waiver. The first
type of waiver, known as a ``freedom-of-choice'' waiver, is
permitted by section 1915(b) of the Social Security Act.
Section 1915(b) waivers allow States to waive specific
requirements for a specific population or geographical area,
and have been used to require Medicaid beneficiaries to enroll
in managed care plans and to restrict the providers from whom
enrollees receive Medicaid-covered services. There are
currently some 100 freedom-of-choice programs operating in 42
States. The second, a section 1115(a) waiver, offers States the
greatest flexibility, allowing HCFA to waive a broad range of
Medicaid requirements. As of October 1997, statewide section
1115(a) waivers were approved in 18 States, implemented in 15,
and pending in eight States. In addition to permitting States
to require Medicaid beneficiaries to enroll in managed care and
to restrict their choice of providers, these waivers allow
States to expand coverage to those not traditionally eligible
for Medicaid, to impose premiums and copayments on those new
eligibles, and to modify the Medicaid benefit package. Section
1115(a) waivers are approved on condition that they are budget
neutral to the Federal Government--that Federal costs over the
life of the waiver (typically 5 years) are no more than if the
State had continued operating its prewaiver Medicaid Program.
To enforce budget neutrality, some waivers employ aggregate
caps on Federal matching and others use per capita expenditure
caps. Some States exempt aged, blind, and disabled Medicaid
eligibles, who often incur high medical expenses, from
mandatory managed care participation. Most Medicaid managed
care programs have operated under waiver authorities allowed by
Medicaid statute.
Medicaid managed care programs generally fall into two
categories: those where the health plan assumes full financial
risk for services it provides to enrollees, referred to as
``risk-based'' programs; and those where an individual health
care provider (a physician or other licensed health
professional) is paid a small monthly amount by the State in
return for managing health care services for a defined
population, referred to as ``primary care case management
(PCCM)'' programs. In the latter case, the provider acts as a
gatekeeper for services needed by an individual, but does not
assume financial risk for health care services provided. As of
July 1996, 38 States had risk-based programs, and 32 States had
PCCM programs (National Academy for State Health Policy, 1997,
p. 2).
The Medicaid population covered by State managed care
programs is composed primarily of low-income women and
children. As of July 1996, all States operating risk-based
programs enrolled the AFDC-related population; 36 enrolled
poverty-level children; and 33 enrolled poverty-level pregnant
women (p. 32). Some States enroll populations with more complex
medical needs, such as the noninstitutionalized elderly, and
persons with mental and physical disabilities. As of July 1996,
20 States covered the noninstitutional elderly in their risk-
based programs; 24 covered SSI eligible children; and 23
covered SSI eligible adults living in the community. In
general, States tend to require risk-based managed care plans
to provide a comprehensive range of Medicaid-covered services.
The exception to this are long-term care services needed by the
elderly and disabled, which generally are not included under
managed care, and behavioral health services, which are
sometimes provided under a separate contract. This is in
contrast to States that operate PCCM programs, where most
States limit the PCCM providers to gatekeeper functions for a
smaller range of services.
The Balanced Budget Act of 1997 (BBA 1997) included
several provisions that will significantly affect the operation
of State Medicaid managed care programs. Effective October 1,
1997, States no longer need a waiver of Federal law to require
the majority of Medicaid beneficiaries to enroll in managed
care. Waivers are still required to mandate the enrollment of
children with special health care needs, Native Americans/
Alaskan Natives, and dual-eligible Medicaid-Medicare
beneficiaries. BBA 1997 permits States to contract with managed
care organizations serving only Medicaid beneficiaries and to
``lock'' beneficiaries into the same plan for up to 12 months.
Prior to the new law, States required a 1115 waiver to
implement these requirements. BBA 1997 establishes new rules
intended to safeguard the quality of care provided under
managed care arrangements. These include provisions related to
enrollment and disenrollment; information that States must
provide enrollees and potential enrollees; assurances of
adequate capacity and access to care; balance billing
protections; solvency standards; marketing materials; grievance
procedures; and other quality assurance standards the Secretary
of HHS is charged with developing. The law adopts the ``prudent
layperson'' standard to whether a Medicaid managed care
organization would have to pay for services provided to an
enrollee in an emergency room and includes a ban on so-called
``gag rules,'' prohibiting interference with physician advice
to enrollees.

Legislative History

The following is a summary of the major Medicaid changes
enacted as part of the Omnibus Budget Reconciliation Act of
1990 (OBRA 1990), Public Law 101-508:
1. Reimbursement for prescribed drugs.--The law requires
manufacturers of prescription drugs to provide rebates
to State Medicaid Programs. States are required to
cover all the drugs manufactured by a firm entering
into a rebate agreement. The minimum rebate is 10
percent of the average manufacturer price for the
product. Beginning in 1993, States are required to have
prospective (i.e., point-of-sale) and retrospective
drug utilization review (DUR) programs, to assure that
prescriptions are appropriate and medically necessary.
Until the end of 1993, enhanced Federal matching
payments were provided for State administrative costs
related to the rebate and DUR programs. The law
establishes a 4-year moratorium on reductions in most
payment rates for pharmacists.
2. Required payment of premiums and cost sharing for
enrollment under group health plans where cost
effective.--Effective January 1, 1991, the law requires
States to pay premiums for group health plans for which
Medicaid beneficiaries are eligible, when it is cost
effective to do so. States pay any cost sharing
required by a plan and continue to furnish any Medicaid
benefits not covered under the plan. Providers under
group health plans are required to accept plan payment
as payment in full for Medicaid enrollees.
3. Protection of low-income Medicare beneficiaries.--The law
accelerates phase in of the requirement that States pay
Medicare premiums and cost sharing for QMBs, Medicare
beneficiaries with incomes below 100 percent of the
Federal poverty level. For all but five States, the
requirement was effective January 1, 1991. All States
must pay part B premiums (but not part A premiums or
cost sharing) for beneficiaries with incomes below 120
percent of the poverty level beginning in 1995.
4. Child health provisions.--Effective July 1, 1991, all
States are required to cover children under age 19 who
were born after September 30, 1983, and whose family
income is below 100 percent of the Federal poverty
level. States are required to accept Medicaid
applications for mothers and children at locations
other than welfare offices, and are required to
continue benefits for pregnant women until 2 months
after the end of the pregnancy, and for infants through
the first year of life. States are required to make
additional payments for outlier cases and are
prohibited from imposing durational limits on coverage
for patients who are under age 1 in any hospital or
under age 6 in a disproportionate share hospital.
5. Home and community-based care as optional service.--The law
permits States to provide home and community-based
services to functionally disabled Medicaid
beneficiaries age 65 or over, effective the later of
July 1, 1991, or 30 days after the publication of
interim rules. States are permitted to limit
eligibility for the services without waivers and thus
to provide the services without meeting cost-
effectiveness tests. Federal matching payments cannot
exceed 50 percent of what it would have cost to provide
Medicare nursing facility care to the same group of
beneficiaries. Total Federal expenditures were limited
to $580 million over the period fiscal years 1991-95.
6. Community supported living arrangements.--The law permits
between two and eight States to provide community
supported living arrangement services to
developmentally disabled individuals who live with
their families or in small community residential
settings, effective the later of July 1, 1991, or 30
days after the publication of interim rules. Services
include personal assistance, training and habilitation,
and other services needed to help with activities of
daily living. Total Federal expenditures were limited
to $100 million over the period fiscal years 1991-95.
7. Payments for COBRA continuation coverage.--The Consolidated
Omnibus Budget Reconciliation Act of 1985 (COBRA,
Public Law 99-272) provides that employees or
dependents leaving an employee health insurance group
in a firm with 20 or more employees must be offered an
opportunity to continue buying insurance through the
group for 18 to 36 months (depending on the reason for
leaving the group). OBRA 1990 permits State Medicaid
Programs to pay for COBRA continuation coverage, when
it is cost effective to do so, effective January 1,
1991. States may pay premiums for individuals with
incomes below 100 percent of poverty and resources less
than twice the SSI limit who are eligible for
continuation coverage under a group health plan offered
by an employer with 75 or more employees.
8. Miscellaneous.--The law establishes demonstration projects
in three to four States to test the effect of providing
Medicaid to families with incomes below 150 percent of
the Federal poverty level that do not meet categorical
eligibility requirements, and projects in two States to
provide Medicaid coverage for early intervention
services for HIV-infected individuals who do not meet
disability criteria. The law also includes new measures
to ensure the quality of physician services under
Medicaid, technical corrections in nursing home reform
provisions, and numerous other technical and
miscellaneous amendments.
The following is a summary of the major changes enacted in
the Medicaid Voluntary Contribution and Provider-Specific Tax
Amendments of 1991, Public Law 102-234.
1. Voluntary contributions and provider-specific taxes.--The
law caps Federal matching payments for State Medicaid
spending that is financed with revenues from provider
donations or taxes. Generally effective January 1,
1992, before the Federal share is computed, a State's
expenditures for Medicaid are reduced by revenues
received by a State or local government from provider-
related donations, and health care-related taxes that
are not broad based. Broad based taxes are those that
are uniformly imposed on all providers in a class, or
all businesses in a class furnished by the providers.
States with non-broad-based taxes in effect or approved
as of November 22, 1991, are permitted to continue them
temporarily, but the taxes may not be increased. States
with voluntary contribution programs in effect or
reported as of September 30, 1991, for States' fiscal
year 1992, may continue them temporarily but may not
increase them. During fiscal years 1993-95, Federal
matching funds for revenue from voluntary
contributions, provider specific taxes, and broad-based
taxes were limited to the greater of 25 percent of the
State share of Medicaid expenditures or the amount of
donations and taxes collected in the State in fiscal
year 1992. Federal matching funds are allowable for
certain donations. These are bona fide provider
donations that are not related to Medicaid payments to
the provider, and donations in the form of payment for
outstationing Medicaid eligibility workers. Beginning
in fiscal year 1993, the latter type of donations are
limited to 10 percent of a State's Medicaid
administrative costs.
2. Payments for disproportionate share hospitals.--The law
places an aggregate national cap of 12 percent of
Medicaid expenditures on payment adjustments for
disproportionate share hospitals (DSH). Beginning with
fiscal year 1993, States with DSH payments of 12
percent or more of total Medicaid expenditures in
fiscal year 1992 cannot exceed this dollar level in the
future; States with DSH payments of less than 12
percent may increase them at the same rate as their
overall Medicaid expenditure growth.
Two 1991 acts concern enrollment in two health maintenance
organizations. The law specifies that no more than 75 percent
of the enrollees of an HMO may be Medicaid or Medicare
beneficiaries. Public Law 102-276 authorized a waiver of this
requirement for the Dayton Area Health Plan; Public Law 102-317
authorized a similar waiver for the Tennessee Primary Care
Network.
The following is a summary of major Medicaid changes
enacted in the Veterans Health Care Act of 1992, Public Law
102-585, pertaining to Medicaid reimbursement policies for
prescription drugs.
1. Calculation of best price.--The law excludes certain prices
from calculation of best price (the lowest price
available from a manufacturer) for Medicaid drug
rebates. The law excludes the prices charged to the
Indian Health Service, the Department of Veterans
Affairs, veterans State homes, the Department of
Defense, the Public Health Service and certain private
and nonprofit hospitals, as well as any prices charged
under the Federal Supply Schedule of the General
Services Administration or under State pharmaceutical
assistance programs.
2. Rebate amounts.--The law changes the minimum basic rebates
for brand name drugs to 15.7 percent of the average
manufacturer price (AMP) in calendar year 1993, 15.4
percent of the AMP in 1994, 15.2 percent of the AMP in
1995, and 15.1 percent of the AMP thereafter. In each
calendar year, the basic rebate is the greater of the
percentage stated, or the difference between the AMP
and the best price.
The following is a summary of major Medicaid changes
enacted in the Omnibus Budget Reconciliation Act of 1993 (OBRA
1993), Public Law 103-66.
1. Medicaid fraud control units.--The law changed the State
option to a requirement that each State operate a
Medicaid fraud and abuse control unit unless the State
demonstrates that effective operation of a unit would
not be cost effective and that, in the absence of a
unit, beneficiaries would be protected from abuse and
neglect.
2. Prescription drug formularies.--States have been prohibited
from using drug formularies (lists of covered and
excluded drug products) and from imposing restrictions
on new drug products for 6 months after a drug is
approved by the Food and Drug Administration. States
are allowed to use formularies to cover only the
State's designated drug(s) in a class of therapeutic
alternatives and impose certain requirements on
prescriptions for new drugs.
3. Asset and trust provisions.--Some individuals must spend
their assets down to a State-established level before
Medicaid pays for nursing facility and other medical
care. To try to ensure that these persons apply their
assets to the cost of their care and do not give them
away in order to gain Medicaid eligibility sooner than
they otherwise would, Medicaid prohibits persons from
transferring assets for less than fair market value.
OBRA 1993 amends Medicaid law to close loopholes that
allow individuals to shelter or divest assets in order
to become eligible for Medicaid-covered long-term care.
States are required to provide for a delay in Medicaid
eligibility for institutionalized persons or their
spouses who dispose of assets for less than fair market
value. A transfer that occurred during the 36-month
period prior to an application for coverage would
trigger a period of ineligibility beginning with the
month the assets were transferred. Under the OBRA 1993
amendments, the period of ineligibility is determined
by comparing the cost of care and the fair market value
of the assets transferred. States are required to seek
recovery of Medicaid expenditures from the estate of a
deceased beneficiary who received certain Medicaid
benefits. Amounts paid by Medicaid for nursing facility
services, home and community-based care, and related
hospital and prescription drug services must be
recovered from the estates of individuals who were over
age 55 when such services were received. OBRA 1993
provides for exemptions to these asset transfer and
recovery provisions if application of the law would
result in ``undue hardship'' according to criteria
established by the Secretary.
4. Child support enforcement.--A child who is covered by
Medicaid may also be covered by private health
insurance that is carried by a noncustodial parent. To
improve medical support for children, Medicaid law is
amended to mandate that States have laws in effect to
require the cooperation of employers and insurers in
obtaining parental coverage.
5. Disproportionate share hospitals (DSH).--States are
prohibited from designating a hospital as a DSH unless
Medicaid beneficiaries account for at least 1 percent
of the hospital's impatient days. In addition, the law
requires that DSH payments to a State or locally owned
or operated facility cannot exceed the costs the
facility incurs in furnishing inpatient or outpatient
service to Medicaid beneficiaries or uninsured
patients. For this purpose, a facility's cost is net of
payments received from Medicaid (other than DSH
payments) and from uninsured individuals.
6. Physician referral.--Medicaid payments for designated
health services (including clinical laboratory,
physical and occupational therapy, radiology, or other
diagnostic services, home health and other services)
are limited if such services are furnished upon
referral from a physician who has a specified financial
relationship with the provider furnishing the service.
7. Childhood immunization.--A new entitlement program is
established under which States are entitled to receive
vaccines purchased by the Federal Government for
federally eligible children up to age 18. Providers
registered in a State's immunization program are
entitled to receive free vaccines for children covered
under the new law. Children eligible to receive
federally purchased vaccines are Medicaid-eligible,
American Indian or Alaska Native, children whose health
insurance does not cover the cost of vaccines, and
children who receive immunization at federally
qualified health centers or rural health clinics.
8. Tuberculosis-related services.--States are permitted to
provide Medicaid coverage for outpatient tuberculosis-
related services to tuberculosis-infected individuals
who meet the income and resource limits that apply to
disabled persons.
The following is a summary of major Medicaid changes
enacted in the Contract with America Advancement Act of 1996,
Public Law 104-121:
1. Alcoholics and drug addicts.--SSI benefits are terminated
for individuals receiving disability cash assistance
based on a finding of alcoholism and drug addiction.
Persons who lose SSI eligibility, which gives them
automatic Medicaid coverage, may still be eligible for
Medicaid if they meet other Medicaid eligibility
criteria. States are required to perform a
redetermination of Medicaid eligibility in any case
where an individual loses SSI and that determination
affects his or her Medicaid eligibility.
The following is a summary of major Medicaid changes
enacted in the Personal Responsibility and Work Opportunity Act
of 1996, Public Law 104-193:
1. Eligibility.--A new cash welfare block grant to States,
Temporary Aid for Needy Families (TANF), is
established. The automatic link between AFDC and
Medicaid is severed. Families who meets AFDC
eligibility criteria as of July 16, 1996 are eligible
for Medicaid, even if they do not qualify for TANF.
States must use the same income and resource standards
and other rules previously used to determine
eligibility, and the prereform AFDC family composition
requirement still must be met. A State may lower its
income standard, but not below the standard it applied
on May 1, 1988. A State may increase its income and
resource standards up to the percentage increase in the
Consumer Price Index (CPI) subsequent to July 16, 1996.
States may use less restrictive methods for counting
income and resources than were required by law as in
effect on July 16, 1996. States are permitted to deny
Medicaid benefits to adults and heads of households who
lose TANF benefits because of refusal to work; States
may not apply this requirement to poverty-related
pregnant women and children.
2. Disabled children.--The definition of disability used to
establish the eligibility of children for SSI is
narrowed. Children who lose SSI eligibility, which
gives them automatic Medicaid coverage, may still be
eligible for Medicaid if they meet other Medicaid
eligibility criteria. States are required to perform a
redetermination of Medicaid eligibility in any case
where an individual loses SSI and that determination
affects his or her Medicaid eligibility.
3. Aliens.--For legal resident aliens and other qualified
aliens who entered the United States on or after August
22, 1996 whose coverage is not mandatory (e.g., they
have been credited with 40 quarters of Social Security
coverage), Medicaid is barred for 5 years. Except for
emergency services, Medicaid coverage for such aliens
entering before August 22, 1996 and coverage after the
5 year ban are State options.
4. Administration.--A State may use the same application form
for Medicaid as they use for TANF. A State may choose
to administer the Medicaid Program through the same
agency that administers TANF or through a separate
Medicaid agency. A special fund of $500 million is
provided for enhanced Federal matching for States'
expenditures attributable to the administrative costs
of Medicaid eligibility determinations due to the law.
The following is a summary of major Medicaid changes
enacted in the Balanced Budget Act of 1997, Public Law 105-33:
1. Eligibility.--The Balanced Budget Act restores Medicaid
eligibility and SSI coverage for legal immigrants who
entered the country prior to August 22, 1996 and later
become disabled; guarantees continued Medicaid
eligibility for children with disabilities who are
expected to lose their SSI eligibility as the result of
restrictions enacted in 1996; and extends the exemption
from the ban on Medicaid and other forms of public
assistance for refugees and individuals seeking asylum
from 5 to 7 years. States are permitted to provide
continuous Medicaid coverage for 12 months to all
children, regardless of whether they continue to meet
income eligibility tests. States are permitted to
create a new Medicaid eligibility category for
individuals with incomes up to 250 percent of poverty
and who would, but for income, be eligible for SSI.
Such individuals can ``buy into'' Medicaid by paying a
sliding scale premium based on the individuals' income
as determined by the State.
2. Payment methodology.--The law repeals the Boren amendment,
which directed that payment rates to institutional
providers be ``reasonable and adequate'' to cover the
cost of ``efficiently and economically operated''
facilities, and repeals the law requiring States to
assure adequate payment levels for services provided by
obstetricians and pediatricians. The requirement to pay
federally qualified health centers and rural health
clinics 100 percent of reasonable costs will be phased
out over 6 fiscal years, with special payment rules in
place during fiscal years 1998-2002 to ease the
transition.
3. Payments for disproportionate share hospitals.--The law
reduces State DSH allotments by imposing freezes and
making graduated proportionate reductions. Limitations
are placed on payments to institutions for mental
disease (IMDs). The act establishes additional caps on
the State DSH allotments for fiscal years beginning in
1998 and specifies those caps for 1998 to 2002. States
are required to report annually on the method used to
target DSH funds and to describe the payments made to
each hospital.
4. Managed care.--The law eliminates the need for 1915(b)
waivers for most Medicaid populations. Under the new
law, States can require the majority of Medicaid
recipients to enroll in managed care simply by amending
their State plan. Waivers are still required to mandate
that children with special health care needs and
certain dual eligibles Medicaid-Medicare beneficiaries
enroll with managed care entities. The law establishes
a statutory definition of primary care case management
(PCCM), adds it as a covered service, and sets
contractual requirements for both PCCM and Medicaid
managed care organizations. The act also includes
managed care provisions that establish standards for
quality and solvency, and provide protections for
beneficiaries. The law repeals the provision that
requires managed care organizations to have no more
than 75 percent of their enrollment be Medicaid and
Medicare beneficiaries and the prohibition on cost
sharing for services furnished by health maintenance
organizations.

Program Data

Under current law, Federal Medicaid outlays are projected
to reach $104.4 billion in fiscal year 1998, a 6-percent
increase over the $98.5 billion projected for fiscal year 1997.
This and other Medicaid Program data are presented in tables
15-13 to 15-24.

TABLE 15-13.--HISTORY OF MEDICAID PROGRAM COSTS, 1966-98
----------------------------------------------------------------------------------------------------------------
Total Federal State
--------------------------------------------------------------
Fiscal year Dollars Dollars Dollars
(in Percent (in Percent (in Percent
millions) increase millions) increase millions) increase
----------------------------------------------------------------------------------------------------------------
1966 \1\......................................... $1,658 ........ $789 ........ $869 ........
1967 \1\......................................... 2,368 42.8 1,209 53.2 1,159 33.4
1968 \1\......................................... 3,686 55.7 1,837 51.9 1,849 59.5
1969 \1\......................................... 4,166 13.0 2,276 23.9 1,890 2.2
1970 \1\......................................... 4,852 16.5 2,617 15.0 2,235 18.3
1971............................................. 6,176 27.3 3,374 28.9 2,802 25.4
1972 \2\......................................... 8,434 36.6 4,361 29.3 4,074 45.4
1973............................................. 9,111 8.0 4,998 14.6 4,113 1.0
1974............................................. 10,229 12.3 5,833 16.7 4,396 6.9
1975............................................. 12,637 23.5 7,060 21.0 5,578 26.9
1976............................................. 14,644 15.9 8,312 17.7 6,332 13.5
TQ \3\....................................... 4,106 NA 2,354 NA 1,752 NA
1977............................................. 17,103 \4\ 16.8 9,713 \4\ 16.9 7,389 \4\ 16.7
1978............................................. 18,949 10.8 10,680 10.0 8,269 11.9
1979............................................. 21,755 14.8 12,267 14.9 9,489 14.8
1980............................................. 25,781 18.5 14,550 18.6 11,231 18.4
1981............................................. 30,377 17.8 17,074 17.3 13,303 18.4
1982............................................. 32,446 6.8 17,514 2.6 14,931 12.2
1983............................................. 34,956 7.7 18,985 8.4 15,971 7.0
1984............................................. 37,569 7.5 20,061 5.7 17,508 9.6
1985 \5\......................................... 40,917 8.9 \6\ 22,65
5 12.9 \6\ 18,26
2 4.3
1986............................................. 44,851 9.6 24,995 10.3 19,856 8.7
1987............................................. 49,344 10.0 27,435 9.8 21,909 10.3
1988............................................. 54,116 9.7 30,462 11.0 23,654 8.0
1989............................................. 61,246 13.2 34,604 13.6 26,642 12.6
1990............................................. 72,492 18.4 41,103 18.8 31,389 17.8
1991............................................. 91,519 26.2 52,532 27.8 38,987 24.2
1992............................................. 118,166 29.1 67,827 29.1 50,339 29.1
1993............................................. 131,775 11.5 75,774 11.7 56,001 11.2
1994............................................. 143,204 8.7 82,034 8.3 61,170 9.2
1995............................................. 156,395 9.2 89,070 8.6 67,325 10.1
1996............................................. 161,963 3.6 91,990 3.3 69,973 3.9
1997 \7\......................................... 174,310 7.6 98,503 7.1 75,807 8.3
1998 \7\......................................... 184,712 6.0 104,384 6.0 80,328 6.0
----------------------------------------------------------------------------------------------------------------
\1\ Includes related programs which are not separately identified, though for each successive year a larger
portion of the total represents Medicaid expenditures. As of January 1, 1970, Federal matching was only
available under Medicaid.
\2\ Intermediate care facilities (ICFs) transferred from the cash assistance programs to Medicaid effective
January 1, 1972. Data for prior periods do not include these costs.
\3\ Transitional quarter (beginning of Federal fiscal year moved from July 1 to October 1).
\4\ Represents increase over fiscal year 1976, i.e., five calendar quarters.
\5\ Includes transfer of function of State fraud control units to Medicaid from Office of Inspector General.
\6\ Temporary reductions in Federal payments authorized for fiscal years 1982-84 were discontinued in fiscal
year 1985.
\7\ Current law estimate.

NA--Not available.

Note.--Totals may not add due to rounding.

Source: Budget of the U.S. Government, fiscal years 1969-98 and Health Care Financing Administration.

TABLE 15-14.--UNDUPLICATED NUMBER OF MEDICAID RECIPIENTS BY ELIGIBILITY CATEGORY, FISCAL YEARS 1972-95
[Numbers in thousands]
----------------------------------------------------------------------------------------------------------------
Adults in
Permanent Dependent family
Fiscal year Total Age 65 or Blindness and total children with Other \1\
recipients over disabled under age dependent title XIX
21 children
----------------------------------------------------------------------------------------------------------------
1972........................ 17,606 3,318 108 1,625 7,841 3,137 1,576
1973........................ 19,622 3,496 101 1,804 8,659 4,066 1,495
1974........................ 21,462 3,732 135 2,222 9,478 4,392 1,502
1975........................ 22,007 3,615 109 2,355 9,598 4,529 1,800
1976........................ 22,815 3,612 97 2,572 9,924 4,774 1,836

1977 \2\.................... 22,832 3,636 92 2,710 9,651 4,785 1,959
1978........................ 21,965 3,376 82 2,636 9,376 4,643 1,852
1979........................ 21,520 3,364 79 2,674 9,106 4,570 1,727
1980 \3\.................... 21,605 3,440 92 2,819 9,333 4,877 1,499
1981 \3\.................... 21,980 3,367 86 2,993 9,581 5,187 1,364

1982 \3\.................... 21,603 3,240 84 2,806 9,563 5,356 1,434
1983 \3\.................... 21,554 3,371 77 2,844 9,535 5,592 1,129
1984 \3\.................... 21,607 3,238 79 2,834 9,684 5,600 1,187
1985 \3\.................... 21,814 3,061 80 2,937 9,757 5,518 1,214
1986 \3\.................... 22,515 3,140 82 3,100 10,029 5,647 1,362

1987 \3\.................... 23,109 3,224 85 3,296 10,168 5,599 1,418
1988 \3\.................... 22,907 3,159 86 3,401 10,037 5,503 1,343
1989 \3\.................... 23,511 3,132 95 3,496 10,318 5,717 1,175
1990........................ 25,255 3,202 83 3,635 11,220 6,010 1,105
1991........................ 28,280 3,359 85 3,983 13,415 6,778 658

1992........................ 30,926 3,742 84 4,378 15,104 6,954 664
1993........................ 33,432 3,863 84 4,932 16,285 7,505 763
1994........................ 35,053 4,035 87 5,372 17,194 7,586 779
1995........................ 36,282 4,119 92 5,767 17,164 7,604 1,537
----------------------------------------------------------------------------------------------------------------
\1\ This category is composed predominantly of children not meeting the definition of ``dependent'' children,
that is, ``Ribicoff children.''
\2\ Fiscal year 1977 began in October 1976 and was the first year of the new Federal fiscal cycle. Before 1977,
the fiscal year began in July.
\3\ Beginning in fiscal year 1980, recipients' categories do not add to the unduplicated total due to the small
number of recipients that are in more than one category during the year.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services.

TABLE 15-15.--MEDICAID RECIPIENTS BY BASIS OF ELIGIBILITY BY STATE, FISCAL YEAR 1995
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total AFDC Other title
State recipients Aged Blind Disabled children AFDC adults IX
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama...................................................... 539,251 71,301 1,515 129,850 243,999 88,912 2,879
Alaska....................................................... 68,117 4,464 90 6,578 38,834 18,151 --
Arizona...................................................... 493,693 24,651 792 60,748 296,550 110,952 --
Arkansas..................................................... 353,370 52,618 1,239 86,160 119,702 58,665 31,644
California................................................... 5,016,645 486,356 25,645 716,667 2,198,066 1,377,013 93,680
Colorado..................................................... 293,723 36,851 121 49,345 128,301 71,962 --
Connecticut.................................................. 380,327 66,428 317 49,498 177,792 86,285 7
Delaware..................................................... 78,555 6,102 114 12,528 42,830 15,947 632
District of Columbia......................................... 138,444 8,021 168 23,733 73,181 33,264 77
Florida...................................................... 1,735,141 211,814 3,206 272,622 996,873 209,152 41,474
Georgia...................................................... 1,147,443 103,985 14,020 177,401 597,092 244,346 100
Hawaii....................................................... 51,674 17,366 15 13,664 11,229 7,658 --
Idaho........................................................ 115,014 9,337 51 18,432 61,850 24,785 559
Illinois..................................................... 1,551,949 127,142 1,368 275,631 763,633 331,662 52,513
Indiana...................................................... 559,020 65,968 1,029 66,466 297,569 109,870 9,326
Iowa......................................................... 304,304 37,978 543 49,514 140,081 74,056 743
Kansas....................................................... 255,702 25,739 139 39,040 129,222 55,611 7
Kentucky..................................................... 640,930 63,219 1,817 154,518 270,303 125,936 --
Louisiana.................................................... 785,399 102,421 1,718 158,416 376,075 146,769 --
Maine........................................................ 153,180 19,404 230 31,741 65,978 31,299 3,977
Maryland..................................................... 414,261 47,957 318 85,320 196,813 73,724 10,129
Massachusetts................................................ 727,506 103,504 6,879 153,622 310,943 152,558 --
Michigan..................................................... 1,168,435 86,101 2,016 220,836 543,287 300,692 3,036
Minnesota.................................................... 473,420 63,098 617 74,953 234,174 100,578 --
Mississippi.................................................. 519,697 66,639 1,558 124,253 247,312 76,328 2,076
Missouri..................................................... 695,458 92,948 1,115 96,592 347,712 155,552 --
Montana...................................................... 98,708 9,260 86 16,255 34,947 17,397 19,200
Nebraska..................................................... 168,383 21,310 235 23,715 42,586 27,099 53,438
Nevada....................................................... 105,233 11,311 427 15,754 51,492 23,006 1,924
New Hampshire................................................ 96,954 12,240 399 11,337 49,552 22,552 313
New Jersey................................................... 789,666 91,674 1,205 142,824 356,618 188,048 290
New Mexico................................................... 286,763 17,385 645 39,161 170,368 59,204 --
New York..................................................... 3,035,477 378,165 3,766 506,807 1,353,135 626,200 167,404
North Carolina............................................... 1,084,337 152,218 1,364 142,610 536,678 251,467 --
North Dakota................................................. 61,383 10,791 34 8,686 26,074 12,402 2,291
Ohio......................................................... 1,532,547 188,866 1,086 231,435 777,100 329,710 4,350
Oklahoma..................................................... 393,613 51,666 686 55,479 198,806 86,032 944
Oregon....................................................... 451,959 37,783 1,341 44,816 119,661 55,512 --
Pennsylvania................................................. 1,230,193 167,477 564 268,478 548,087 219,112 24,078
Rhode Island................................................. 135,230 19,294 224 25,028 60,761 29,923 --
South Carolina............................................... 495,500 77,488 1,857 92,681 234,783 86,897 1,794
South Dakota................................................. 74,077 9,380 149 13,337 38,011 13,200 --
Tennessee.................................................... 1,466,194 108,325 3,063 217,635 460,778 172,713 14,475
Texas........................................................ 2,561,957 307,993 4,158 266,035 1,451,316 532,455 --
Utah......................................................... 160,408 9,125 128 18,882 87,330 43,324 781
Vermont...................................................... 99,693 10,327 78 14,621 50,406 21,019 --
Virginia..................................................... 681,313 85,366 1,112 104,621 363,954 126,260 --
Washington................................................... 639,256 53,111 380 104,436 316,436 163,507 60
West Virginia................................................ 388,667 34,765 342 74,303 178,801 96,283 4,173
Wisconsin.................................................... 460,016 65,133 1,185 103,560 127,206 79,946 80,339
Wyoming...................................................... 51,374 5,924 14 6,218 27,249 10,947 587
Puerto Rico.................................................. 1,054,638 180,065 444 69,129 582,038 222,962 --
Virgin Islands............................................... 17,389 1,095 7 877 10,130 4,618 662
------------------------------------------------------------------------------------------
United States............................................ 35,209,559 3,937,789 91,168 5,696,842 16,571,536 7,375,942 629,300
All jurisdictions........................................ 36,281,586 4,118,949 91,619 5,766,848 17,163,704 7,603,522 629,962
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Total recipients include unknowns which are not reflected in this table.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services.

TABLE 15-16.--MEDICAID EXPENDITURES BY BASIS OF ELIGIBILITY BY STATE, FISCAL YEAR 1995
[In millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Aged, blind and AFDC
State Total Aged Blind Disabled AFDC AFDC Other disabled children
expenditures children adults title XIX (percent) (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.................................... $1,455 $452 $6 $589 $194 $171 $10 71.9 13.3
Alaska..................................... 252 45 1 76 79 52 ......... 48.1 31.3
Arizona.................................... 218 16 1 66 75 60 ......... 38.2 34.2
Arkansas................................... 1,376 387 8 662 121 79 108 76.9 8.8
California................................. 10,521 2,386 139 4,242 1,394 2,043 216 64.3 13.3
Colorado................................... 1,063 321 3 451 144 136 ......... 72.9 13.5
Connecticut................................ 2,125 955 4 768 229 170 0 81.3 10.8
Delaware................................... 324 76 1 148 58 38 2 69.2 17.8
District of Columbia....................... 532 132 2 251 87 60 0 72.2 16.4
Florida.................................... 4,802 1,552 16 1,785 1,093 293 64 69.8 22.8
Georgia.................................... 3,076 572 154 1,077 643 610 0 58.6 20.9
Hawaii..................................... 258 156 0 93 3 3 ......... 97.0 1.3
Idaho...................................... 360 94 0 165 52 47 1 72.1 14.5
Illinois................................... 5,600 1,068 11 2,744 958 654 165 68.3 17.1
Indiana.................................... 1,878 685 6 688 309 168 16 73.4 16.5
Iowa....................................... 1,036 296 2 457 169 111 1 72.8 16.3
Kansas..................................... 831 251 1 346 135 90 0 72.0 16.2
Kentucky................................... 1,945 468 8 882 294 264 ......... 69.9 15.1
Louisiana.................................. 2,708 683 11 1,170 509 335 ......... 68.8 18.8
Maine...................................... 760 247 1 319 99 74 20 74.6 13.0
Maryland................................... 2,019 509 3 923 328 189 67 71.1 16.3
Massachusetts.............................. 3,972 1,499 101 1,701 393 278 ......... 83.1 9.9
Michigan................................... 3,409 796 11 1,595 451 429 10 70.5 13.2
Minnesota.................................. 2,550 903 10 1,182 274 181 ......... 82.1 10.8
Mississippi................................ 1,266 352 6 528 232 139 7 70.0 18.3
Missouri................................... 2,039 696 5 726 374 236 ......... 70.0 18.3
Montana.................................... 326 107 1 130 32 30 25 73.0 13.4
Nebraska................................... 608 213 2 217 45 45 85 71.3 13.2
Nevada..................................... 350 78 3 139 59 47 18 62.7 13.0
New Hampshire.............................. 473 190 10 165 68 39 0 77.2 12.8
New Jersey................................. 3,813 1,191 10 1,741 374 483 1 77.1 12.6
New Mexico................................. 714 124 6 301 182 102 ......... 60.2 12.4
New York................................... 22,086 7,726 187 9,484 2,657 1,707 325 78.8 12.2
North Carolina............................. 3,175 959 11 1,034 633 538 ......... 63.1 12.0
North Dakota............................... 297 121 0 119 30 22 3 80.8 11.8
Ohio....................................... 5,585 2,029 5 2,118 857 574 2 74.3 11.6
Oklahoma................................... 1,055 321 2 376 243 111 1 66.3 11.4
Oregon..................................... 1,327 270 34 499 215 79 ......... 60.5 11.2
Pennsylvania............................... 4,633 1,956 2 1,759 551 323 42 80.2 11.0
Rhode Island............................... 673 273 2 302 54 42 ......... 85.7 10.8
South Carolina............................. 1,438 400 7 607 262 160 2 70.5 10.6
South Dakota............................... 305 102 1 136 44 22 ......... 78.4 10.4
Tennessee.................................. 2,772 603 10 876 366 217 119 53.7 10.2
Texas...................................... 6,565 1,841 23 2,024 1,527 1,150 ......... 59.2 10.0
Utah....................................... 464 84 1 185 92 89 10 58.1 9.8
Vermont.................................... 320 95 1 143 50 30 ......... 74.5 9.6
Virginia................................... 1,833 566 6 722 329 210 ......... 70.6 9.4
Washington................................. 1,461 508 2 562 173 214 0 73.4 9.2
West Virginia.............................. 1,169 296 1 467 176 181 48 65.4 9.0
Wisconsin.................................. 1,894 782 9 747 90 105 131 81.2 8.8
Wyoming.................................... 171 50 0 66 29 24 1 67.8 8.6
Puerto Rico................................ 244 41 0 16 135 52 ......... 23.6 8.3
Virgin Islands............................. 12 3 0 2 4 4 0 36.8 8.1
------------------------------------------------------------------------------------------------------------
United States.......................... 119,885 36,483 848 48,552 17,838 13,456 1,499 71.6 7.9
All jurisdictions...................... 120,141 36,527 848 48,570 17,976 13,511 1,499 71.5 7.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Total expenditures include unknowns which are not reflected in this table.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services.

TABLE 15-17.--TOTAL AND PER CAPITA MEDICAID PAYMENTS FOR CATEGORICALLY NEEDY AND MEDICALLY NEEDY, FISCAL YEARS 1975, 1981, 1992, AND 1995
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1975 1981 1992 1995 Percent change
-------------------------------------------------------------------------------------------------------------------------- 1975-95
Category of needy Total Percent Total Percent Total Percent Total Percent -------------------
amount of Per amount of Per amount of Per amount of Per Total Per
(millions) total capita (millions) total capita (millions) total capita (millions) total capita spending capita
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Categorically needy:

Receiving cash payments......................... $7,188 58.7 $431 $14,534 53.4 $861 $41,742 46.0 $2,238 $53,718 44.7 $2,773 647.3 543.4
Aged...................................... 1,341 11.0 555 2,480 9.1 1,270 5,795 6.4 3,778 7,089 5.9 4,540 428.6 718.0
Blind..................................... 61 0.5 717 109 0.4 1,527 334 0.4 4,669 464 0.4 6,745 660.2 840.7
Disabled.................................. 2,042 16.7 1,094 5,616 20.6 2,490 19,863 21.9 6,097 29,524 24.6 6,926 1,345.9 533.1
AFDC children............................. 1,850 15.1 222 3,002 11.0 361 8,376 9.2 891 9,193 7.7 1,006 396.9 353.2
Adults in AFDC families................... 1,895 15.5 478 3,328 12.2 769 7,374 8.1 1,682 7,448 6.2 1,715 293.0 258.8

Not receiving cash payments................... 1,753 14.3 1,261 4,736 17.4 2,641 16,064 17.7 4,243 20,458 17.0 4,369 1,067.0 246.5
Aged...................................... 1,275 10.4 2,331 3,143 11.6 5,273 7,085 7.8 11,658 8,935 7.4 13,823 600.8 493.0
Blind..................................... 12 0.1 1,094 19 0.1 2,785 80 0.1 15,310 70 0.1 14,167 483.3 1,195.0
Disabled.................................. 353 2.9 1,854 1,214 4.5 5,146 5,065 5.6 11,913 6,248 5.2 11,375 1,670.0 513.5
AFDC children............................. 61 0.5 152 153 0.6 302 1,764 1.9 1,156 2,560 2.1 1,222 4,096.7 703.9
Adults in AFDC families................... 27 0.2 144 87 0.3 298 1,428 1.6 1,606 1,720 1.4 1,679 6,270.4 1,066.0
Other title XIX........................... 25 0.2 463 120 0.4 734 643 0.7 1,927 925 0.8 2,560 3,600.0 452.9
---------------------------------------------------------------------------------------------------------------------------------------------
Total................................... 8,941 73.0 495 19,270 70.8 1,032 57,807 63.7 2,577 74,176 61.7 3,084 729.6 523
=============================================================================================================================================
Medically needy:
Aged.......................................... 1,742 14.2 2,672 4,303 15.8 5,260 8,927 9.8 11,724 10,203 8.5 12,396 485.7 363.9
Blind......................................... 20 0.2 1,472 27 0.1 3,132 71 0.1 21,865 133 0.1 35,709 565.0 2,325.9
Disabled...................................... 657 5.4 2,202 2,471 9.1 4,924 5,243 5.8 13,876 7,200 6.0 15,831 995.9 618.9
AFDC children................................. 274 2.2 324 353 1.3 460 1,592 1.8 943 1,953 1.6 1,101 612.8 239.8
Adults in AFDC families....................... 140 1.1 368 348 1.3 613 1,265 1.4 1,930 1,628 1.4 1,730 1,062.9 370.1
Other title XIX............................... 467 3.8 267 433 1.6 360 268 0.3 1,844 293 0.2 2,208 -37.3 727.0
---------------------------------------------------------------------------------------------------------------------------------------------
Total....................................... 3,301 27.0 838 7,935 29.2 2,145 17,367 19.1 4,782 21,410 17.8 5,186 548.6 518.9
=============================================================================================================================================
Grand total................................. 12,242 100.0 556 27,205 100.0 1,216 90,814 100.0 2,936 120,140 100.0 3,311 881.4 495.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Totals may not addd due to rounding. Fiscal year 1975 ends in June; fiscal years 1981, 1992, and 1995 end in September. Total includes other coverage groups and unknowns. Other
categories not shown in the total for 1995 are: Other coverage pre-1988, $15,475; coverage from 1988, $7,871; and medical assistance status unknown, $1,209.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services.

TABLE 15-18.--MEDICAID RECIPIENTS AND PAYMENTS BY BASIS OF ELIGIBILITY, FISCAL YEAR 1995
----------------------------------------------------------------------------------------------------------------
Amount (in Percent of Recipients Percent of Per capita
Basis of eligibility millions) total (in thousands) total payments
----------------------------------------------------------------------------------------------------------------
Age 65 and over......................... $36,527 30.4 4,119 11.4 $8,868
Blind................................... 848 0.7 92 0.3 9,256
Disabled................................ 48,570 40.4 5,767 15.9 8,422
Dependent children under age 21......... 17,976 15 17,164 47.3 1,047
Adults in families with dependent
children............................... 13,511 11 7,604 21 1,777
Other title XIX......................... 1,499 1.2 630 1.7 2,380
-----------------------------------------------------------------------
Total \1\........................... 120,140 100.0 36,282 100.0 3,311
----------------------------------------------------------------------------------------------------------------
\1\ Total expenditure and recipient data includes unknowns.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services.

TABLE 15-19.--MEDICAID PAYMENTS AND PER CAPITA PAYMENTS BY BASIS OF ELIGIBILITY, SELECTED FISCAL YEARS 1975-95
[In millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year Percent
Basis of eligibility ------------------------------------------------------------------------------------------------------------ change
1975 1981 1984 1986 1988 1989 1990 1991 1992 1994 1995 1975-95
--------------------------------------------------------------------------------------------------------------------------------------------------------
In nominal dollars
---------------------------------------------------------------------------------------------------------------------
Payments:
Age 65 and over................. $4,358 $9,226 $12,815 $15,097 $17,135 $18,558 $21,508 $25,453 $29,078 $33,618 $36,527 738.2
Blind........................... 93 154 219 277 344 409 434 475 530 644 848 811.8
Disabled........................ 3,052 9,301 11,758 14,635 18,250 20,476 23,969 27,798 33,326 41,654 48,570 1,491.4
Dependent children under age 21. 2,186 3,508 3,979 5,135 5,848 6,892 9,100 11,690 14,491 17,302 17,976 722.3
Adults in families with
dependent children............. 2,062 3,763 4,420 4,880 5,883 6,897 8,590 10,439 12,185 13,585 13,511 555.2
Other........................... 492 552 700 980 1,198 1,137 1,051 973 1,032 1,243 1,499 204.7
---------------------------------------------------------------------------------------------------------------------
Total \1\..................... 12,242 27,204 33,891 41,005 48,710 54,500 64,859 77,048 90,814 108,270 120,140 881.4
=====================================================================================================================
Per capita payment:
Age 65 and over................. 1,205 2,948 3,957 4,808 5,425 5,926 6,717 7,577 7,770 8,331 8,868 635.9
Blind........................... 850 1,784 2,766 3,401 4,005 4,319 5,212 5,572 6,298 7,412 9,256 988.9
Disabled........................ 1,296 3,108 4,149 4,721 5,366 5,858 6,595 6,979 7,612 7,755 8,422 549.8
Dependent children under age 21. 228 366 411 512 583 668 811 871 959 1,006 1,047 359.2
Adults in families with
dependent children............. 455 725 789 864 1,069 1,206 1,429 1,540 1,752 1,791 1,777 290.5
Other title XIX................. 273 405 590 719 891 967 1,062 1,732 1,814 2,169 2,380 771.8
---------------------------------------------------------------------------------------------------------------------
Total, per capita payment..... 556 1,238 1,569 1,821 2,126 2,318 2,568 2,725 2,936 3,089 3,311 495.5
---------------------------------------------------------------------------------------------------------------------
In constant 1995 dollars
---------------------------------------------------------------------------------------------------------------------
Payments:
Age 65 and over................. 12,476 16,907 18,863 20,919 22,169 22,919 25,300 28,503 31,610 34,562 36,527 192.8
Blind........................... 266 262 322 384 445 505 511 532 576 662 848 218.5
Disabled........................ 8,737 15,842 17,307 20,279 23,611 25,288 28,195 31,129 36,227 42,823 48,570 455.9
Dependent children under age 21. 6,258 5,975 5,857 7,115 7,566 8,512 10,704 13,091 15,753 17,788 17,976 187.2
Adults in families with
dependent children............. 5,903 6,409 6,506 6,762 7,611 8,518 10,105 11,690 13,246 13,966 13,511 128.9
Other........................... 1,408 940 1,030 1,358 1,550 1,404 1,236 1,090 1,122 1,278 1,499 6.4
---------------------------------------------------------------------------------------------------------------------
Total \1\..................... 35,046 46,336 49,886 56,818 63,019 67,308 76,295 86,281 98,721 111,309 120,140 242.8
=====================================================================================================================
Per capita payment:
Age 65 and over................. 3,450 5,021 5,825 6,662 7,019 7,319 7,901 8,485 8,446 8,565 8,868 157.1
Blind........................... 2,433 3,039 4,071 4,713 5,182 5,334 6,131 6,240 6,846 7,620 9,256 280.4
Disabled........................ 3,710 5,294 6,107 6,542 6,942 7,235 7,758 7,815 8,275 7,973 8,422 127.0
Dependent children under age 21. 653 623 605 709 754 825 954 975 1,042 1,034 1,047 60.4
Adults in families with
dependent children............. 1,303 1,235 1,161 1,197 1,383 1,489 1,681 1,725 1,905 1,841 1,777 36.4
Other........................... 782 690 868 996 1,153 1,194 1,249 1,940 1,972 2,230 2,380 204.5
---------------------------------------------------------------------------------------------------------------------
Total, per capita payment..... 1,592 2,109 2,310 2,523 2,751 2,863 3,021 3,052 3,192 3,176 3,311 108.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Data includes unknowns.

Note.--Total may not add due to rounding. Fiscal year 1975 ends in June; all other fiscal years end in September. Nominal dollars converted to constant
dollars using CPI-U price index. Total expenditures includes other coverage groups and unknowns for fiscal year 1994.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services, and Congressional Research Service.

TABLE 15-20.--MEDICAID PAYMENTS BY SERVICE CATEGORY, FISCAL YEARS 1975, 1981, 1990, AND 1995
[In millions of constant 1995 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
1975 1981 1990 1995 Average
-------------------------------------------------------------------------------- annual
Service category percent
Amount Percent Amount Percent Amount Percent Amount Percent change 1975-
of total 95
--------------------------------------------------------------------------------------------------------------------------------------------------------
Inpatient hospital........................................ $10,818 30.9 $13,747 29.7 $21,630 28.4 $28,841 24.0 5.3
General................................................. 9,659 27.6 12,253 26.4 19,582 25.7 26,331 21.9 5.4
Mental.................................................. 1,159 3.3 1,494 3.2 2,016 2.6 2,511 2.1 4.2
Skilled nursing facilities................................ 6,968 19.9 6,873 14.8 9,441 12.4 29,052 24.2 7.8
Intermediate care facilities.............................. 6,484 18.5 12,780 27.6 20,022 26.2 (\2\) (\1\) (\1\)
Intermediate care facilities for the mentally retarded.. 1,088 3.1 5,103 11.0 8,651 11.3 10,383 8.6 2.5
Other................................................... 5,396 15.4 7,677 16.6 11,371 14.9 (\2\) (\1\) (\1\)
Physician................................................. 3,507 10.0 3,579 7.7 4,726 6.2 7,360 6.1 4.0
Dental.................................................... 970 2.8 925 2.0 698 0.9 1,019 0.8 0.3
Other practitioner........................................ 364 1.0 388 0.8 438 0.6 986 0.8 5.4
Outpatient hospital....................................... 1,068 3.0 2,400 5.2 3,910 5.1 6,627 5.5 10.1
Clinic.................................................... 1,114 3.2 635 1.4 1,986 2.6 4,280 3.6 7.3
Lab and x ray............................................. 361 1.0 250 0.5 848 1.1 1,180 1.0 6.4
Home health............................................... 200 0.6 729 1.6 4,004 5.2 9,406 7.8 22.5
Prescribed drugs.......................................... 2,333 6.7 2,615 5.6 5,199 6.8 9,791 8.1 7.8
Family planning........................................... 192 0.5 237 0.5 312 0.4 514 0.4 5.3
Early and periodic screening.............................. (\2\) 0.0 114 0.2 233 0.3 1,169 1.0 (\1\)
Rural health clinic....................................... (\2\) 0.0 7 0.0 40 0.1 216 0.2 (\1\)
Other..................................................... 667 1.9 1,054 2.3 2,806 3.7 9,214 7.7 14.8
---------------------------------------------------------------------------------------------
Total \3\............................................. 35,046 100.0 46,336 100.0 76,295 100.0 120,141 100.0 6.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Prior to fiscal year 1991, there were two categories of Medicaid nursing home care: skilled nursing facilities and intermediate nursing facilities.
\2\ 1975 data not available. \3\ Total includes unknowns.

Note.--Totals may not add due to rounding. Fiscal year 1975 ends in June; all other fiscal years end in September. Spending amounts converted to
constant dollars using the Consumer Price Index (CPI-U).

Source: Health Care Financing Administration, U.S. Department of Health and Human Services, and Congressional Research Service.

TABLE 15-21.--MEDICAID RECIPIENTS BY SERVICE CATEGORY, SELECTED FISCAL YEARS 1975-95
[In thousands]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fiscal year
Service category -------------------------------------------------------------------------------------------------------
1975 1981 1989 1990 1991 1992 1994 1995
--------------------------------------------------------------------------------------------------------------------------------------------------------
Inpatient hospital:
General..................................... 3,432 3,703 4,171 4,593 5,137 5,768 5,866 5,561
Mental...................................... 67 90 90 92 5,072 77 85 84
Nursing facilities \1\.......................... 1,312 1,385 1,452 1,461 1,499 1,573 1,639 1,667
Intermediate care facilities for the mentally
retarded....................................... 69 151 148 147 146 151 159 151
Physician....................................... 15,198 14,403 15,686 17,078 19,321 21,627 24,267 23,789
Dental.......................................... 3,944 5,173 4,214 4,552 5,209 5,700 6,352 6,383
Other practitioner.............................. 2,673 3,582 3,555 3,873 4,282 4,711 5,409 5,528
Outpatient hospital............................. 7,437 10,018 11,344 12,370 14,137 15,120 16,567 16,712
Clinic.......................................... 1,086 1,755 2,391 2,804 3,511 4,115 5,258 5,322
Laboratory & x ray.............................. 4,738 3,822 7,759 8,959 10,505 11,804 13,412 13,064
Home health..................................... 343 402 609 719 813 925 1,293 1,639
Prescribed drugs................................ 14,155 14,256 15,916 17,294 19,602 22,030 24,471 23,723
Family planning................................. 1,217 1,473 1,564 1,752 2,185 2,550 2,566 2,501
Early and periodic screening.................... (\2\) 1,969 2,524 2,952 3,957 4,982 6,456 6,612
Rural health clinics............................ (\2\) 81 166 224 405 743 945 1,242
Other........................................... 2,911 2,344 4,583 5,126 5,957 6,702 9,908 11,416
-------------------------------------------------------------------------------------------------------
Unduplicated total........................ 22,007 21,980 23,511 25,255 28,280 30,926 35,053 36,282
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Prior to fiscal year 1991, there were two categories of Medicaid nursing home care: skilled nursing facilities and intermediate nursing facilities.
\2\ 1975 data not available.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services.

TABLE 15-22.--AMOUNTS OF MEDICAL VENDOR PAYMENTS BY BASIS OF ELIGIBILITY AND TYPE OF SERVICE, FISCAL YEAR 1995
----------------------------------------------------------------------------------------------------------------
AFDC
Type of service Aged Blind Disabled ------------------------ Other Total
Children Adults title XIX
----------------------------------------------------------------------------------------------------------------
In millions of dollars

-----------------------------------------------------------------------------------
Inpatient hospital services. $2,049.8 $86.2 $11,334.9 $6,587.5 $5,544.1 $529.1 $26,131.8
Mental hospital services for
the aged................... 1,124.1 0.2 44.7 8.3 1.1 12.8 1,191.2
SNF/ICF mental health
services for the aged...... 25.3 0.0 5.3 91.1 0.0 0.0 121.7
Inpatient psychiatric
services, aged under 21.... 0.7 0.3 487.9 587.6 13.3 162.6 1,252.3
ICF services for the
mentally retarded.......... 636.9 191.5 9,488.6 46.5 3.5 7.7 10,374.7
ICF services--all other..... 1,956.4 5.0 296.1 0.2 0.9 0.3 2,258.9
SNF services................ 22,191.5 214.0 4,283.0 28.1 38.2 20.3 26,775.0
Physicians services......... 556.1 28.9 2,074.9 2,079.6 2,162.2 200.7 7,102.5
Dental services............. 61.5 1.7 180.2 547.0 201.9 23.8 1,016.0
Other practitioners services 95.8 3.5 431.7 252.8 156.2 44.7 984.7
Outpatient hospital services 534.5 25.2 2,425.9 1,862.6 1,651.8 94.5 6,594.5
Clinic services............. 258.3 30.9 2,388.7 884.9 609.0 77.6 4,249.3
Home health services........ 2,806.9 124.8 5,735.2 375.5 79.0 53.1 9,174.5
Family planning services.... 1.6 0.6 48.6 54.1 398.9 7.6 511.4
Lab and x-ray services...... 73.0 4.0 380.2 242.1 458.4 15.6 1,173.4
Prescribed drugs............ 2,861.3 69.6 4,724.7 1,116.6 939.1 63.9 9,775.3
Early and periodic screening 0.2 1.9 215.8 854.7 31.5 34.1 1,138.3
Rural health clinic services 197.3 0.5 42.3 279.3 54.3 0.7 574.3
Other care.................. 1,009.2 59.0 3,974.2 2,174.1 1,167.7 150.2 8,534.4
Unknown/error............... 1.3 0.2 7.3 1.7 0.0 0.0 10.4
-----------------------------------------------------------------------------------
Total................. 36,441.5 848.0 48,570.1 18,074.4 13,511.0 1,499.4 118,944.4
-----------------------------------------------------------------------------------

In percent

-----------------------------------------------------------------------------------
Inpatient hospital services. 5.6 10.2 23.3 36.4 41.0 35.3 22.0
Mental hospital services for
the aged................... 3.1 0.0 0.1 0.0 0.0 0.9 1.0
SNF/ICF mental health
services for the aged...... 0.1 0.0 0.0 0.5 0.0 0.0 0.1
Inpatient psychiatric
services, aged under 21.... 0.0 0.0 1.0 3.3 0.1 10.8 1.1
ICF services for the
mentally retarded.......... 1.7 22.6 19.5 0.3 0.0 0.5 8.7
ICF services--all others.... 5.4 0.6 0.6 0.0 0.0 0.0 1.9
SNF services................ 60.9 25.2 8.8 0.2 0.3 1.4 22.5
Physicians services......... 1.5 3.4 4.3 11.5 16.0 13.4 6.0
Dental services............. 0.2 0.2 0.4 3.0 1.5 1.6 0.9
Other practitioners services 0.3 0.4 0.9 1.4 0.0 3.0 0.8
Outpatient hospital services 1.5 3.0 5.0 10.3 12.2 6.3 5.5
Clinic services............. 0.7 3.6 4.9 4.9 4.5 5.2 3.6
Home health services........ 7.7 14.7 11.8 2.1 0.6 3.5 7.7
Family planning services.... 0.0 0.1 0.1 0.3 3.0 0.5 0.0
Lab and x-ray services...... 0.2 0.5 0.8 1.3 3.4 1.0 1.0
Prescribed drugs............ 7.9 8.2 9.7 6.2 7.0 4.3 8.2
Early and periodic screening 0.0 0.2 0.4 4.7 0.2 2.3 1.0
Rural health clinic services 0.5 0.1 0.1 1.5 0.4 0.0 0.5
Other care.................. 2.8 7.0 8.2 12.0 8.6 10.0 7.2
Unknown/error............... 0.0 0.0 0.0 0.0 0.0 0.0 0.0
-----------------------------------------------------------------------------------
Total................. 100.0 100.0 100.0 100.0 100.0 100.0 100.0
----------------------------------------------------------------------------------------------------------------
Source: Health Care Financing Administration, U.S. Department of Health and Human Services.

TABLE 15-23.--AVERAGE EXPENDITURE PER RECIPIENT BY BASIS OF ELIGIBILITY BY STATE, FISCAL YEAR 1995
----------------------------------------------------------------------------------------------------------------
AFDC Other
State Total Aged Blind Disabled -------------------- title
Children Adults XIX
----------------------------------------------------------------------------------------------------------------
Alabama................................... $2,698 $6,339 $3,795 $4,534 $794 $1,920 $3,372
Alaska.................................... 3,698 10,056 7,571 11,500 2,033 2,849 -
Arizona................................... 442 656 1,449 1,087 251 542 -
Arkansas.................................. 3,893 7,361 6,433 7,684 1,014 1,355 3,403
California................................ 2,097 4,906 5,425 5,919 634 1,484 2,310

Colorado.................................. 3,619 8,714 27,940 9,131 1,120 1,883 -
Connecticut............................... 5,588 14,373 13,890 15,512 1,286 1,966 449
Delaware.................................. 4,128 12,472 7,613 11,778 1,348 2,384 3,441
District of Columbia...................... 3,843 16,439 9,062 10,572 1,195 1,814 777
Florida................................... 2,768 7,325 4,974 6,548 1,096 1,401 1,534

Georgia................................... 2,681 5,500 10,998 6,070 1,076 2,498 3,398
Hawaii.................................... 4,983 9,002 6,215 6,837 300 416 -
Idaho..................................... 3,129 10,040 8,239 8,975 846 1,889 2,129
Illinois.................................. 3,608 8,399 8,181 9,955 1,254 1,972 3,148
Indiana................................... 3,359 10,389 5,578 10,353 1,038 1,532 1,714

Iowa...................................... 3,406 7,794 4,496 9,220 1,209 1,499 959
Kansas.................................... 3,250 9,768 6,387 8,856 1,045 1,620 213
Kentucky.................................. 3,035 7,408 4,597 5,711 1,089 2,094 -
Louisiana................................. 3,449 6,665 6,584 7,384 1,354 2,286 -
Maine..................................... 4,965 12,738 6,486 10,043 1,502 2,349 4,966

Maryland.................................. 4,873 10,615 8,941 10,816 1,668 2,565 6,589
Massachusetts............................. 5,460 14,483 14,740 11,069 1,264 1,824 -
Michigan.................................. 2,918 9,245 5,348 7,223 831 1,426 3,259
Minnesota................................. 5,386 14,311 15,901 15,765 1,172 1,799 -
Mississippi............................... 2,436 5,277 3,645 4,251 938 1,826 3,424

Missouri.................................. 2,932 7,492 4,836 7,518 1,075 1,516 -
Montana................................... 3,300 11,546 6,631 8,009 916 1,732 1,307
Nebraska.................................. 3,609 10,019 8,831 9,171 1,063 1,652 1,584
Nevada.................................... 3,322 6,863 6,803 8,806 1,145 2,048 9,405
New Hampshire............................. 4,880 15,559 24,356 14,570 1,377 1,735 531

New Jersey................................ 4,828 12,988 8,237 12,188 1,049 2,567 2,581
New Mexico................................ 2,491 7,110 8,608 7,685 1,067 1,730 -
New York.................................. 7,276 20,431 49,636 18,713 1,964 2,727 1,939
North Carolina............................ 2,928 6,301 8,281 7,251 1,179 2,139 -
North Dakota.............................. 4,839 11,176 5,837 13,713 1,156 1,805 1,487

Ohio...................................... 3,644 10,742 5,042 9,152 1,103 1,742 350
Oklahoma.................................. 2,680 6,217 3,291 6,781 1,225 1,288 934
Oregon.................................... 2,937 7,149 25,375 11,140 1,798 1,418 -
Pennsylvania.............................. 3,766 11,679 4,113 6,553 1,006 1,473 1,752
Rhode Island.............................. 4,973 14,155 8,095 12,053 882 1,416 -

South Carolina............................ 2,902 5,157 3,979 6,552 1,118 1,840 884
South Dakota.............................. 4,120 10,926 5,645 10,192 1,164 1,645 -
Tennessee................................. 1,891 5,567 3,108 4,024 793 1,256 8,195
Texas..................................... 2,562 5,978 5,491 7,608 1,052 2,160 -
Utah...................................... 2,895 9,240 6,122 9,792 1,058 2,064 13,209

Vermont................................... 3,210 9,160 6,741 9,801 999 1,448 -
Virginia.................................. 2,690 6,627 5,356 6,901 904 1,662 -
Washington................................ 2,285 9,572 4,428 5,384 547 1,308 4,278
West Virginia............................. 3,009 8,517 4,252 6,283 985 1,876 11,571
Wisconsin................................. 4,118 12,010 7,413 7,215 704 1,307 1,630

Wyoming................................... 3,328 8,389 1,606 10,648 1,067 2,225 2,014
Puerto Rico............................... 232 229 685 234 232 232 -
Virgin Islands............................ 670 2,453 3,190 1,803 355 772 295
---------------------------------------------------------------------
United States......................... 3,405 9,265 9,298 8,523 1,076 1,824 2,382
All jurisdictions..................... 3,311 8,868 9,256 8,422 1,047 1,777 2,380
----------------------------------------------------------------------------------------------------------------
Source: Health Care Financing Administration, U.S. Department of Health and Human Services.

TABLE 15-24.--OPTIONAL MEDICAID SERVICES AND NUMBER OF STATES \1\
OFFERING EACH SERVICE, OCTOBER 1996
------------------------------------------------------------------------
States
States offering Access to
offering services to include
Service services to both Medicaid
categorically categorically services
needy only and medically to the
needy uninsured
------------------------------------------------------------------------
Podiatrists' services......... 9 27 10
Optometrists' services........ 11 28 10
Chiropractors' services....... 4 20 4
Psychologists' services....... 6 20 6
Medical social workers'
services..................... 1 6 3
Nurse anesthetists' services.. 8 16 5
Private duty nursing.......... 4 16 6
Clinic services............... 13 33 9
Dental services............... 11 26 9
Physical therapy.............. 10 29 6
Occupational therapy.......... 6 24 6
Speech, hearing and language
disorder..................... 11 26 5
Prescribed drugs.............. 14 32 10
Dentures...................... 7 25 6
Prosthetic devices............ 14 31 10
Eyeglasses.................... 12 27 9
Diagnostic services........... 5 22 7
Screening services............ 5 20 7
Preventive services........... 6 20 6
Rehabilitative services....... 13 31 9
Services for age 65 and older
in mental institutions:
A. Inpatient hospital
services................. 12 21 9
B. SNF services........... 9 17 6
C. ICF/MR services........ 18 22 10
Inpatient psychiatric services 12 21 9
Christian science nurses...... 1 2 1
Christian science sanitoria... 3 7 4
SNF for under age 21.......... 16 26 10
Emergency hospital services... 11 25 8
Personal care services........ 7 18 6
Transportation services....... 13 32 10
Case management services...... 11 27 8
Hospice services.............. 8 22 8
Respiratory care services..... 2 9 3
TB related services........... 1 5 3
------------------------------------------------------------------------
\1\ Includes the territories.

Source: Health Care Financing Administration, U.S. Department of Health
and Human Services.

FEDERAL HOUSING ASSISTANCE \12\
---------------------------------------------------------------------------

\12\ This discussion draws directly from Congressional Budget
Office (1988). For this report, CBO has updated all figures with 9
additional years of data. For a more recent study on these topics, see
Congressional Budget Office (1994).
---------------------------------------------------------------------------
A number of Federal programs administered by the Department
of Housing and Urban Development (HUD) and the Farmers Home
Administration (FmHA) address the housing needs of lower income
households. Housing assistance has never been provided as an
entitlement to all households that qualify for aid. Instead,
each year the Congress has appropriated funds for a number of
new commitments. Because these commitments generally run from 1
to 40 years, the appropriation is actually spent gradually over
many years. These additional commitments have expanded the pool
of available aid, thus increasing the total number of
households that can be served. They have also contributed to
growth in Federal outlays in the past and have committed the
government to continuing expenditures for many years to come.
This section describes recent trends in the number and mix of
new commitments, as well as trends in expenditures.

Types of Assistance

The Federal Government has traditionally provided housing
aid directly to lower income households in the form of rental
subsidies and mortgage interest subsidies. The 1990 Cranston-
Gonzalez National Affordable Housing Act (hereafter referred to
as the 1990 Housing Act), authorized a new, indirect approach
in the form of housing block grants to State and local
governments, which may use these funds for various housing
assistance activities specified in the law. Both the number of
households receiving aid and total Federal expenditures have
steadily increased each year, but the growth in assisted
households has slowed since the 1980s.
A number of different housing assistance programs evolved
over time in response to changing housing policy objectives.
The primary purpose of housing assistance has always been to
improve housing quality and to reduce housing costs for lower
income households. Other goals have included promoting
residential construction, expanding housing opportunities for
disadvantaged groups and groups with special housing needs,
promoting neighborhood preservation and revitalization,
increasing home ownership, and, most recently, empowering the
poor to become self-sufficient.
New housing programs have been developed because of
shifting priorities among these objectives as housing-related
problems changed and because of the relatively high Federal
costs associated with some approaches. Other programs have
become inactive as Congress stopped appropriating funds for new
assistance commitments through them. Because housing programs
traditionally have involved multiyear contractual obligations,
however, these so-called inactive programs continue to play an
important role by serving a large number of households through
commitments for which funds were appropriated some time ago.
Traditional rental assistance
Most Federal housing aid is now targeted to very-low-income
renters through the rental assistance programs administered by
HUD and the FmHA (Congressional Research Service, 1991; 1993).
Rental assistance is provided through two basic approaches: (1)
project-based aid, which is typically tied to projects
specifically produced for lower income households through new
construction or substantial rehabilitation; and (2) household-
based subsidies, which permit renters to choose standard
housing units in the existing private housing stock. Some
funding is also provided each year to modernize units built
with Federal aid.
Rental assistance programs generally reduce tenants' rent
payments to a fixed percentage--currently 30 percent--of their
income after certain deductions, with the government paying the
remaining portion of the rent.
Almost all project-based aid is provided through
production-oriented programs, which include the Public Housing
Program, the section 8 New Construction and Substantial
Rehabilitation Program, and the section 236 Mortgage Interest
Subsidy Program--all administered by HUD--and the section 515
Mortgage Interest Subsidy Program administered by the FmHA.\13\
Today, new commitments are being funded through only two of the
four--a modified version of the section 8 new construction
program for elderly and disabled families only and the section
515 program. Some assistance has also been funded annually
under two small HUD programs authorized in 1983--the Rental
Housing Development Grants (HoDAG) and the Rental
Rehabilitation Block Grant Programs.\14\ These programs
distributed funds through a national competition and by
formula, respectively, to units of local government that met
eligibility criteria established by statute.
---------------------------------------------------------------------------
\13\ A small number of renters continue to receive project-based
subsidies through the now inactive section 221(d)(3) below-market
interest rate and rent supplement programs.
\14\ The Housing and Community Development Act of 1987 terminated
the HoDAG Program at the end of fiscal year 1989; the 1990 Housing Act
repealed the Rental Rehabilitation Block Grant Program at the end of
fiscal year 1991.
---------------------------------------------------------------------------
Some project-based aid is also provided through several
components of HUD's section 8 Existing Housing Program, which
tie subsidies to specific units in the existing housing stock,
many of which have received other forms of aid or mortgage
insurance through HUD. These components include the section 8
loan management set-aside (LMSA) and property disposition (PD)
components, which are designed to improve cash flows in
selected financially troubled projects that are or were insured
by the Federal Housing Administration (FHA); the section 8
conversion assistance component, which subsidizes units that
were previously aided through other programs; and the section 8
Moderate Rehabilitation Program, which provides subsidies tied
to units that are brought up to standard by the owner.\15\ In
recent years, few, if any, new commitments have been funded
through these programs. Today, new funding for these programs
is predominantly used to replace aid to households who are
being displaced from assisted projects because the projects are
being demolished or because their owners choose to opt out of
the Federal assistance programs.
---------------------------------------------------------------------------
\15\ The 1990 Housing Act repealed the section 8 Moderate
Rehabilitation Program at the end of fiscal year 1991, except for
single-room occupancy units for the homeless.
---------------------------------------------------------------------------
Household-based subsidies are provided through two other
components of the section 8 Existing Housing Program--section 8
rental certificates and vouchers. These programs, both of which
are currently active, tie aid to households that choose
standard units in the private housing stock. Certificate
holders generally must occupy units with rents that are within
guidelines--the so-called fair market rents--established by
HUD. Voucher recipients, however, are allowed to occupy units
with rents above the HUD guidelines provided they pay the
difference.
Traditional homeowners' assistance
Each year, the Federal Government also assists some low-
and moderate-income households in becoming homeowners by making
long-term commitments to reduce their mortgage interest.\16\
Most of this aid has been provided through the section 502
program administered by the FmHA. This program supplies direct
mortgage loans at low interest rates roughly equal to the long-
term government borrowing rates or provides guarantees for
private loans with interest rates that may not exceed those set
by the Department of Veterans Affairs. Many home buyers,
however, receive much deeper subsidies through the interest-
credit component of this program, which reduces their effective
interest rate to as low as 1 percent.
---------------------------------------------------------------------------
\16\ In addition, a small number of very-low-income homeowners
receive grants or loans each year from the FmHA for housing repairs.
---------------------------------------------------------------------------
A number of home buyers have received aid through the
section 235 program administered by HUD. This program provides
interest subsidies for mortgages financed by private lenders.
New commitments are now being made only through the section 502
program, but a small number of homeowners continue to receive
aid from prior commitments made under the section 235
program.\17\ Both programs generally reduce mortgage payments,
property taxes, and insurance costs to a fixed percentage of
income, ranging from 20 percent for the FmHA program to 28
percent for the latest commitments made under the HUD program.
Households with relatively low incomes generally would have to
pay larger shares, however, since mortgage payments must cover
a minimum interest rate--currently 1 percent and 4 percent for
the FmHA and HUD programs, respectively. Starting in 1991,
however, the FmHA has allowed some very-low-income households
to defer up to 25 percent of their monthly payments, subject to
later repayment.
---------------------------------------------------------------------------
\17\ The Housing and Community Development Act of 1987 terminated
the section 235 program at the end of fiscal year 1989.
---------------------------------------------------------------------------
New directions in housing assistance
The 1990 Housing Act authorized several new housing
assistance approaches. The major initiatives of the 1990 act
are: the HOME Investment Partnerships Block Grant Program, the
Home Ownership and Opportunity for People Everywhere (HOPE)
Program, and the National Home Ownership Trust Demonstration.
Since 1996, funds have been appropriated only for the HOME
Program.
The HOME Program is designed to increase the supply of
housing affordable to low-income families through the provision
of Federal grants to State and local governments. Funds may be
used for tenant-based rental assistance or for acquisition,
rehabilitation or, in limited circumstances, construction of
both rental and ownership housing. Currently, participating
jurisdictions must provide matching contributions of at least
25 percent of HOME funds spent in each fiscal year.

Trends in Commitments and Payments

Trends in commitments
Although the Federal Government has been subsidizing the
shelter costs of low-income households since 1937, more than
half of all currently outstanding commitments were funded over
the past 21 years. Between 1977 and 1997, about 2.9 million net
new commitments were funded to aid low-income renters. Another
1.1 million new commitments were provided in the form of
mortgage assistance to low- and moderate-income home buyers.
Between 1977 and 1983, the number of net new rental commitments
funded each year declined steadily, however, from 375,000 to
78,000. Trends have been somewhat erratic since 1983. Over the
21-year period, commitments for new home buyers generally
decreased, ranging from a high of 140,000 in 1980 to a low of
less than 24,000 in 1991 (see table 15-25).
The production-oriented approach in rental programs has
been sharply curtailed since 1982 in favor of the less costly
section 8 Existing Housing and Voucher Programs. Between 1977
and 1982, commitments through programs for new construction and
substantial rehabilitation ranged annually from 53 to 73
percent of the total; since then, however, they have ranged
between 28 percent and 40 percent of all additional rental
commitments.
The total number of households receiving assistance has
increased substantially, from 3.2 million at the beginning of
fiscal year 1977 to almost 5.8 million at the beginning of
fiscal year 1997--an increase of more than 80 percent (see
table 15-26). This increase results largely from net new
commitments over the past 20 years, but also from commitments
made before 1977 that have been processed during this period.
The number of households receiving rental subsidies increased
from 2.1 to 5.1 million. The number of homeowners receiving
assistance in a given year rose from less than 1.1 million in
1977 to over 1.2 million in 1983, but then declined steadily to
less than 0.7 million by 1997. The latter pattern reflects
commitments for newly assisted households being more than
offset by loan repayments, prepayments, and foreclosures among
previously assisted households, and by sales of 141,000 loans
by the FmHA to investors. (Although these 141,000 families
continued to benefit from these loans, even after the transfer
to the private sector, data are not readily available on the
attrition of these loans between 1988 and 1994). Thus, the
proportion of all assisted households that receives
homeownership assistance has declined from 34 percent at the
beginning of 1977 to around 11 percent at the beginning of
1996. Among rental assistance programs, the shift away from
production-oriented programs toward existing housing is
reflected in the increasing proportion of renters receiving aid
through the latter approach, from 13 percent at the beginning
of fiscal year 1977 to about 40 percent at the beginning of
1997, with the proportion of renters receiving household-based
subsidies increasing from 8 to almost 29 percent.

TABLE 15-25.--NET NEW COMMITMENTS FOR RENTERS AND NEW COMMITMENTS FOR HOME BUYERS, 1977-97
----------------------------------------------------------------------------------------------------------------
Net new commitments for renters New
---------------------------------------- commitments
Fiscal year Existing New for home
housing construction Total buyers
----------------------------------------------------------------------------------------------------------------
1977....................................................... 127,581 247,667 375,248 112,234
1978....................................................... 126,472 214,503 340,975 112,214
1979....................................................... 102,669 231,156 333,825 107,871
1980....................................................... 58,402 155,001 213,403 140,564
1981....................................................... 83,520 94,914 178,434 74,636
1982....................................................... 37,818 48,157 85,975 66,711
1983....................................................... 54,071 23,861 77,932 54,550
1984....................................................... 78,648 36,719 115,367 44,409
1985....................................................... 85,741 42,667 128,408 45,387
1986....................................................... 85,476 34,375 119,851 25,479
1987....................................................... 72,788 37,247 110,035 24,132
1988....................................................... 65,295 36,456 101,751 26,200
1989....................................................... 68,858 30,049 98,907 25,264
1990....................................................... 61,309 23,491 84,800 24,968
1991....................................................... 55,900 28,478 84,378 23,879
1992 \1\................................................... 62,595 38,324 100,919 25,690
1993 \1\................................................... 50,593 34,065 84,658 30,982
1994 \1\................................................... 66,907 29,194 96,101 38,588
1995 \1\................................................... 25,822 19,440 45,262 31,985
1996 \1\................................................... 33,696 16,259 49,955 40,838
1997 (estimate) \1\........................................ 36,134 14,027 50,161 48,360
----------------------------------------------------------------------------------------------------------------
\1\ Figures are not adjusted for units for which funds were deobligated because data were unavailable.

Note.--Net new commitments for renters represent net additions to the available pool of rental aid and are
defined as the total number of commitments for which new funds are appropriated in any year. To avoid double-
counting, these numbers are adjusted for the number of commitments for which such funds are deobligated or
canceled that year (except where noted otherwise); the number of commitments for units converted from one type
of assistance to another; in the FmHA section 515 program, the number of units that receive more than one
subsidy; starting in 1985, the number of commitments specifically designed to replace those lost because
private owners of assisted housing opt out of the programs or because public housing units are demolished;
and, starting in 1989, the number of commitments for units whose section 8 contracts expire.
New commitments for home buyers are defined as the total number of new loans that the FmHA or HUD makes or
subsidizes each year. This measure of program activity is meant to indicate how many new home buyers can be
helped each year and is therefore not adjusted to account for homeowners who leave the programs in any year
because of mortgage repayments, prepayments, or foreclosures. Thus, it does not represent net additions to the
total number of assisted homeowners and therefore cannot be added to net new commitments for renters.

Source: Congressional Budget Office based on data provided by the U.S. Department of Housing and Urban
Development and the Farmers Home Administration.

Trends in commitments, budget authority, and outlays
Traditionally, funding for most additional commitments for
housing assistance is provided each year through appropriations
of long-term budget authority for subsidies to households and
through appropriations of budget authority for grants, direct
loans, and loan guarantees to public housing agencies, home
buyers, and developers of rental housing. Today, new rental
subsidies are funded for either 1 or 5 years at a time,
depending on program type.

TABLE 15-26.--TOTAL HOUSEHOLDS RECEIVING ASSISTANCE BY TYPE OF SUBSIDY, 1977-97
[In thousands]
----------------------------------------------------------------------------------------------------------------
Assisted renters
------------------------------------------------------ Total
Existing housing Total assisted assisted
Fiscal year ------------------------------ New Total homeowners \1\ homeowners
Household Project construction assisted and renters
based based Subtotal renters \1\
----------------------------------------------------------------------------------------------------------------
1977......................... 162 105 268 1,825 2,092 1,071 3,164
1978......................... 297 126 423 1,977 2,400 1,082 3,482
1979......................... 427 175 602 2,052 2,654 1,095 3,749
1980......................... 521 185 707 2,189 2,895 1,112 4,007
1981......................... 599 221 820 2,379 3,012 1,127 4,139
1982......................... 651 194 844 2,559 3,210 1,201 4,411
1983......................... 691 265 955 2,702 3,443 1,226 4,668
1984......................... 728 357 1,086 2,836 3,700 1,219 4,920
1985......................... 749 431 1,180 2,931 3,887 1,193 5,080
1986......................... 797 456 1,253 2,986 3,998 1,176 5,174
1987......................... 893 473 1,366 3,047 4,175 1,126 5,301
1988......................... 956 490 1,446 3,085 4,296 918 5,213
1989......................... 1,025 509 1,534 3,117 4,402 892 5,295
1990......................... 1,090 527 1,616 3,141 4,515 875 5,390
1991......................... 1,137 540 1,678 3,180 4,613 853 5,465
1992......................... 1,166 554 1,721 3,204 4,680 826 5,506
1993......................... 1,326 574 1,900 3,196 4,851 774 5,625
1994......................... 1,392 593 1,985 3,213 4,962 751 5,714
1995......................... 1,487 595 2,081 3,242 5,087 705 5,792
1996......................... 1,413 608 2,021 3,293 5,079 670 5,748
1997......................... 1,465 586 2,051 3,305 5,120 631 5,751
----------------------------------------------------------------------------------------------------------------
\1\ Starting 1988, figures reflect a one-time decrease of 141,000 in the number of assisted homeowners because
of asset sales by the FmHA to private investors.

Note.--Figures for total assisted renters have been adjusted since 1980 to avoid double-counting households
receiving more than one subsidy. Data are for beginning of fiscal year.

Source: Congressional Budget Office based on data provided by the U.S. Department of Housing and Urban
Development and the Farmers Home Administration.

Annual appropriations of new budget authority for housing
assistance were cut dramatically during the 1980s. These cuts
reflect four underlying factors: the previously mentioned
reduction in the number of newly assisted households; the shift
toward cheaper existing housing assistance; a systematic
reduction in the average term of new commitments from more than
24 years in 1977 to less than 5 years in 1997; and changes in
the method for financing the construction and modernization of
public housing and the construction of housing for the elderly
and the disabled.\18\ For HUD's programs alone, appropriations
of budget authority declined (in 1997 dollars) from a high of
$77.6 billion in 1978 to a low of $11.6 billion in 1989 (see
table 15-27). The increased levels of budget authority after
1990 reflect primarily the cost of renewing section 8 contracts
that expire. The decreased levels after 1994 reflect both the
reduction in the terms of renewed contracts over time from 5
years to 1 year and further reductions in funding for new
activity.
---------------------------------------------------------------------------
\18\ Before 1987, new commitments for the construction and
modernization of public housing were financed over periods ranging from
20 to 40 years, with the appropriations for budget authority reflecting
both the principal and interest payments for this debt. Starting in
1987, these activities were financed with up front grants, which reduce
their budget authority requirements by between 51 and 67 percent.
Similarly, prior to 1991, housing for the elderly and the disabled was
financed by direct Federal loans for construction, coupled with 20 year
section 8 rental assistance, which helped repay the direct loan.
Starting in 1991, the loans have been replaced by grants, which has
reduced the amount of budget authority required for annual rental
assistance.

TABLE 15-27.--NET BUDGET AUTHORITY APPROPRIATED FOR HOUSING AID
ADMINISTERED BY HUD, 1977-97
[In millions of current and 1997 dollars]
------------------------------------------------------------------------
Net budget authority
-------------------------------
Fiscal year Current
dollars 1997 dollars
------------------------------------------------------------------------
1977.................................... $28,579 $73,356
1978.................................... 32,169 77,558
1979.................................... 25,123 55,622
1980.................................... 27,435 54,657
1981.................................... 26,022 47,112
1982.................................... 14,766 24,981
1983.................................... 10,001 16,201
1984.................................... 11,425 17,757
1985.................................... 11,071 16,595
1986.................................... 10,032 14,673
1987.................................... 8,979 12,765
1988.................................... 8,592 11,732
1989.................................... \1\ 8,879 11,576
1990.................................... \1\ 10,557 13,109
1991.................................... \1\ 19,239 22,741
1992.................................... \1\ 16,883 19,375
1993.................................... \1\ 18,466 20,564
1994.................................... \1\ 18,414 19,981
1995.................................... \1\ 11,840 12,497
1996.................................... \1\ 13,229 13,586
1997 (estimate)......................... \1\ 12,020 12,020
------------------------------------------------------------------------
\1\ Includes $99 million, $1,164 million, $8,814 million, $7,585
million, $6,926 million, $5,202 million, $2,197 million, $4,008
million, and $3,550 million for renewing expiring section 8 contracts
in 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, and 1997
respectively.

Note.--All figures are net of funding rescissions, exclude
reappropriations of funds, but include supplemental appropriations.
Totals include funds appropriated for various public housing programs,
including modernization of operating subsidies, drug elimination, and
severely distressed public housing. Excludes budget authority for
HUD's section 202 loan fund and for programs administered by FmHA.

Source: Congressional Budget Office based on data provided by the U.S.
Department of Housing and Urban Development.

On the other hand, with the continuing increase in the
number of households served, total outlays (expenditures on
behalf of all households actually receiving aid in a given
year) for all of HUD's housing assistance programs combined
have risen steadily (in 1996 dollars), from $7.5 billion in
fiscal year 1977 to an estimated $26 billion in fiscal year
1997, an increase of 247 percent (see table 15-28). Moreover,
despite measures to contain costs, and the increase in
household contributions from 25 to 30 percent of adjusted
income, average Federal outlays per unit for all programs
combined have generally continued to rise in real terms, from
around $2,980 in 1977 to an estimated $5,490 in 1997--an
increase of 84 percent (see table 15-29).\19\
---------------------------------------------------------------------------
\19\ The change in the method for financing the construction and
modernization of public housing caused a large one-time expenditure in
1985, when most of the outstanding debt incurred since 1974 for
construction and modernization was paid off (see table 15-29). Without
that bulge in expenditures, average outlays per unit in 1985 would have
been about $3,950 in 1994 dollars.

TABLE 15-28.--OUTLAYS FOR HOUSING AID ADMINISTERED BY HUD, 1977-97
[In millions of current and 1997 dollars]
------------------------------------------------------------------------
Outlays
-------------------------
Fiscal year Current 1997
dollars dollars
------------------------------------------------------------------------
1977.......................................... $2,928 $7,515
1978.......................................... 3,592 8,660
1979.......................................... 4,189 9,275
1980.......................................... 5,364 10,687
1981.......................................... 6,733 12,189
1982.......................................... 7,846 13,273
1983.......................................... 9,419 15,257
1984.......................................... 11,000 17,096
1985.......................................... 25,064 37,569
1986.......................................... 12,179 17,813
1987.......................................... 12,509 17,784
1988.......................................... 13,684 18,684
1989.......................................... 14,466 18,860
1990.......................................... 15,690 19,484
1991.......................................... 16,898 19,973
1992.......................................... 18,243 20,936
1993.......................................... 20,490 22,817
1994.......................................... 22,191 24,079
1995.......................................... \1\ 24,059 25,394
1996.......................................... \1\ 25,349 26,032
1997 (estimate)............................... \1\ 26,110 26,110
------------------------------------------------------------------------
\1\ Figures have been adjusted to account for $1.2 billion of advance
spending that occurred in 1995 but that should have occurred in 1996.

Note.--The bulge in outlays in 1985 is caused by a change in the method
of financing public housing, which generated close to $14 billion in
one-time expenditures. This amount paid off--all at once--the capital
cost of public housing construction and modernization activities
undertaken between 1974 and 1985, which otherwise would have been paid
off over periods of up to 40 years. Because of this one-time
expenditure, however, outlays for public housing since that time have
been lower than they would have been otherwise.

Source: Congressional Budget Office based on data provided by the U.S.
Department of Housing and Urban Development.

TABLE 15-29.--PER UNIT OUTLAYS FOR HOUSING AID ADMINISTERED BY HUD, 1977-
97
[In current and 1997 dollars]
------------------------------------------------------------------------
Per unit outlays
-------------------------
Fiscal year Current 1997
dollars dollars
------------------------------------------------------------------------
1977.......................................... $1,160 $2,980
1978.......................................... 1,310 3,160
1979.......................................... 1,430 3,160
1980.......................................... 1,750 3,480
1981.......................................... 2,100 3,810
1982.......................................... 2,310 3,900
1983.......................................... 2,600 4,220
1984.......................................... 2,900 4,500
1985.......................................... 6,420 9,620
1986.......................................... 3,040 4,440
1987.......................................... 3,040 4,320
1988.......................................... 3,270 4,460
1989.......................................... 3,390 4,420
1990.......................................... 3,610 4,480
1991.......................................... 3,830 4,530
1992.......................................... 4,060 4,670
1993.......................................... 4,450 4,960
1994.......................................... 4,720 5,120
1995.......................................... 5,080 5,360
1996.......................................... 5,350 5,490
1997 (estimate)............................... 5,490 5,490
------------------------------------------------------------------------
Note.--The peak in outlays per unit in 1985 of $6,420 is attributable to
the bulge in 1985 expenditures associated with the change in the
method for financing public housing. Without this change, outlays per
unit would have amounted to around $2,860.

Source: Congressional Budget Office based on data provided by the U.S.
Department of Housing and Urban Development.

Several factors have contributed to this growth. First,
rents in assisted housing have probably risen faster than the
income of assisted households, causing subsidies to rise faster
than the inflation index used here--the revised Consumer Price
Index, for all urban consumers (CPI-U-X1).\20\ Second, the
number of households that occupy units completed under the
section 8 New Construction Program rose during the 1980s. These
units require larger subsidies compared with the older units
that were built prior to the 1980s under the Mortgage Interest
Subsidy Programs and the Public Housing Program. Third, the
share of households receiving less costly home ownership
assistance has decreased. Fourth, housing aid is being targeted
toward a poorer segment of the population, requiring larger
subsidies per assisted household.
---------------------------------------------------------------------------
\20\ For example, between 1980 and 1990, the CPI-U-X1 increased 59
percent. Over the same period, median household income of renters and
the Consumer Price Index for residential rents increased by 70 and 71
percent, respectively, but the maximum rents allowed for section 8
existing housing rental certificates--the so-called fair market rents--
rose 85 percent.
---------------------------------------------------------------------------
In recent years, annual appropriations acts have contained
several cost containment measures, including providing no or
reduced annual adjustment factors for the rents of certain
units with project-based subsidies. Because the Federal
Government pays part of those rents, subsidies have been lower
than they would have been without those provisions. Because the
Balanced Budget Act of 1997 made those provisions permanent,
starting in 1999, average subsidies are expected to grow slower
in the future.

SCHOOL LUNCH AND BREAKFAST PROGRAMS \21\
---------------------------------------------------------------------------

\21\ Other major Federal child nutrition programs include: the
Child and Adult Care Food Program (discussed in section 10) and the
Summer Food Service Program (which provides subsidies for meals served
during the summer months to some 2 million children participating in
recreational and other programs in low-income areas).
---------------------------------------------------------------------------
The School Lunch and School Breakfast Programs provide
Federal cash and commodity support for meals served by public
and private nonprofit elementary and secondary schools and
residential child care institutions (RCCIs) that opt to enroll
and guarantee to offer free or reduced-price meals to eligible
low-income children. The programs are ``entitlement'' programs,
and both subsidize participating schools and RCCIs for all
meals served that meet Federal nutrition standards at specific,
inflation-indexed rates for each meal. Each program has a
three-tiered system for per-meal Federal reimbursements to
schools and RCCIs that: (1) allows children to receive free
meals if they have family income below 130 percent of the
Federal poverty guidelines (about $20,900 for a four-person
family in the 1997-98 school year); (2) permits children to
receive reduced-price meals (no more than 40 cents for a lunch
or 30 cents for a breakfast) if their family income is between
130 and 185 percent of the poverty guidelines (between about
$20,900 and $29,700 for a four-person family in the 1997-98
school year); and (3) provides a small per-meal subsidy for
``full-price'' meals (the price is set by the school or RCCI)
served to children whose families do not apply, or whose family
income does not qualify them for free or reduced-price meals.
Children in TANF and food stamp households may automatically
qualify for free school meals without an income application,
and the majority actually receive them.
The School Lunch Program subsidizes lunches (4.3 billion
in fiscal year 1996) to children in 5,800 RCCIs and almost all
schools (89,000). During fiscal year 1996, average daily
participation was 25.9 million students (57 percent of the 45.3
million children enrolled in participating schools and RCCIs);
of these, 49 percent received free lunches, and 8 percent ate
reduced-price lunches (see table 15-30). More than 90 percent
of Federal funding is used to subsidize free and reduced-price
lunches served to low-income children. For the 1997-98 school
year, per-lunch Federal subsidies (cash and commodity support)
range from about 33 cents for full-price lunches to $2.04 and
$1.64 for free and reduced-price lunches.\22\ Fiscal year 1996
Federal school lunch costs (including commodity assistance)
totaled over $5.4 billion (see table 15-30).
---------------------------------------------------------------------------
\22\ Schools and RCCIs with very high proportions of low-income
children receive an extra 2 cents a meal. Federally donated commodity
assistance make up about 15 cents of each cited subsidy rate.
---------------------------------------------------------------------------
The School Breakfast Program serves far fewer students
than does the School Lunch Program; about 1.1 billion
breakfasts in 62,000 schools (and 5,600 RCCIs) were subsidized
in fiscal year 1996. Average daily participation was 6.6
million children (20 percent of the 33 million students
enrolled in participating schools and RCCIs). Unlike the School
Lunch Program, the great majority received free or reduced-
price meals: 80 percent received free meals, and 6 percent
purchased reduced-price meals (see table 15-31). In the 1997-98
school year, per-breakfast Federal subsidies (cash only) range
from about 20 cents for full-price meals to $1.05 and 75 cents
for free and reduced-price breakfasts, respectively.\23\ Fiscal
year 1996 Federal school breakfast funding totaled about $1.1
billion (see table 15-31).
---------------------------------------------------------------------------
\23\ Subsidies are substantially higher (about 20 cents more) for
schools in which breakfast service is required by State law or at least
40 percent of lunches are served free or at reduced price.

TABLE 15-30.--THE NATIONAL SCHOOL LUNCH PROGRAM PARTICIPATION AND FEDERAL COSTS, FISCAL YEARS 1977-96
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Participation 9 month average (in Federal costs
millions) \1\ -------------------------
------------------------------------------
Fiscal year Reduced- Full- Current Constant
Free price price Total \3\ dollars \4\ 1996
meals meals meals \2\ dollars
----------------------------------------------------------------------------------------------------------------
1977........................................ 10.5 1.3 14.5 26.3 $2,111.1 $5,510.0
1978........................................ 10.3 1.5 14.9 26.7 2,293.6 5,596.4
1979........................................ 10.0 1.7 15.3 27.0 2,659.0 5,876.4
1980........................................ 10.0 1.9 14.7 26.6 3,044.9 5,937.6
1981........................................ 10.6 1.9 13.3 25.8 2,959.5 5,179.1
1982........................................ 9.8 1.6 11.5 22.9 2,611.5 4,256.7
1983........................................ 10.3 1.5 11.2 23.0 2,828.6 4,469.2
1984........................................ 10.3 1.5 11.5 23.3 2,948.2 4,451.8
1985........................................ 9.9 1.6 12.1 23.6 3,034.4 4,430.2
1986........................................ 10.0 1.6 12.2 23.8 3,160.2 4,487.5
1987........................................ 10.0 1.6 12.4 24.0 3,245.6 4,478.9
1988........................................ 9.8 1.6 12.8 24.2 3,383.7 4,500.3
1989........................................ 9.7 1.6 12.7 24.2 3,479.4 4,418.8
1990........................................ 9.9 1.6 12.8 24.1 3,676.4 4,448.4
1991........................................ 10.3 1.8 12.1 24.2 4,072.9 4,683.8
1992........................................ 11.1 1.7 11.7 24.5 4,474.5 5,011.4
1993........................................ 11.8 1.7 11.3 24.8 4,663.8 5,036.9
1994........................................ 12.2 1.8 11.3 25.3 4,994.5 5,294.2
1995........................................ 12.4 1.9 11.3 25.6 5,254.0 5,411.6
1996........................................ 12.6 2.0 11.3 25.9 5,439.0 5,439.0
----------------------------------------------------------------------------------------------------------------
\1\ In order to reflect participation for the actual school year (September through May), these estimates are
based on 9 month averages of October through May, plus September, rather than averages of the 12 months of the
fiscal year (October through September).
\2\ The Federal Government provides a small subsidy for these meals.
\3\ Details may not sum to total because of rounding.
\4\ Includes cash payments and the value of ``entitlement'' commodities; does not include the value of ``bonus''
commodities. Overstates actual support for school lunches because a small portion (less than $75 million a
year) of commodity support included in the figures is used for other child nutrition programs.

Note.--Constant dollars were calculated using the fiscal year CPI-U.

Source: U.S. Department of Agriculture, Food and Consumer Service (FCS): (1) budget justification materials
prepared by the FCS for appropriations requests for fiscal years 1980-98; and (2) monthly ``Program
Information Report'' summaries prepared by the FCS.

TABLE 15-31.--THE SCHOOL BREAKFAST PROGRAM PARTICIPATION AND FEDERAL COSTS, FISCAL YEARS 1977-96
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Participation 9 month average (in Federal costs
millions) \1\ -------------------------
------------------------------------------
Fiscal year Reduced- Full- Current Constant
Free price price Total \3\ dollars \4\ 1996
meals meals meals \2\ dollars
----------------------------------------------------------------------------------------------------------------
1977........................................ 2.0 0.1 0.4 2.5 $148.6 $387.8
1978........................................ 2.2 0.2 0.4 2.8 181.2 442.1
1979........................................ 2.6 0.2 0.5 3.3 231.0 510.5
1980........................................ 2.8 0.2 0.6 3.6 287.8 561.2
1981........................................ 3.0 0.2 0.5 3.8 331.7 580.5
1982........................................ 2.8 0.2 0.4 3.3 317.3 517.2
1983........................................ 2.9 0.1 0.3 3.4 343.8 543.2
1984........................................ 2.9 0.1 0.4 3.4 364.0 549.6
1985........................................ 2.9 0.2 0.4 3.4 379.3 553.8
1986........................................ 2.9 0.2 0.4 3.5 406.3 576.9
1987........................................ 3.0 0.2 0.4 3.7 446.8 616.6
1988........................................ 3.0 0.2 0.5 3.7 482.0 641.1
1989........................................ 3.1 0.2 0.5 3.8 507.0 643.9
1990........................................ 3.3 0.2 0.5 4.0 589.1 712.8
1991........................................ 3.6 0.2 0.6 4.4 677.2 778.8
1992........................................ 4.0 0.3 0.6 4.9 782.6 876.5
1993........................................ 4.4 0.3 0.7 5.4 868.4 937.9
1994........................................ 4.8 0.3 0.7 5.8 958.7 1,016.2
1995........................................ 5.1 0.4 0.8 6.3 1,181.8 1,217.3
1996........................................ 5.3 0.4 0.9 6.6 1,122.1 1,122.1
----------------------------------------------------------------------------------------------------------------
\1\ In order to reflect participation for the actual school year (September through May), these estimates are
based on 9 month averages of October through May, plus September, rather than averages of the 12 months of the
fiscal year (October through September).
\2\ The Federal Government provides a small subsidy for these meals.
\3\ Details may not sum to totals due to rounding.
\4\ Does not include the value of any federally donated commodities. Fiscal year 1995 figure for Federal costs
is not reduced for a ``write-down'' of approximately $50-$80 million for obligations not expected to be paid.

Note.--Constant dollars were calculated using the fiscal year CPI-U.

SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN
(WIC)

The Special Supplemental Nutrition Program for Women,
Infants, and Children (the WIC Program) provides food
assistance, nutrition risk screening, and related services
(e.g., nutrition education and breastfeeding support to low-
income pregnant and postpartum women and their infants, as well
as to low-income children up to age 5. Participants in the
program must have family income at or below 185 percent of
poverty, and must be judged to be nutritionally at risk.
Nutrition risk is defined as detectable abnormal nutritional
conditions; documented nutritionally-related medical
conditions; health-impairing dietary deficiencies; or
conditions that predispose people to inadequate nutrition or
nutritionally related medical problems.
Beneficiaries of the WIC Program receive supplemental
foods each month in the form of actual food items or, more
commonly, vouchers for purchases of specific items in retail
stores. The law requires that the WIC Program provide foods
containing protein, iron, calcium, vitamin A, and vitamin C,
and allows Federal limits on the foods that may be provided by
the WIC Program. Among the items that may be included in a food
package are milk, cheese, eggs, infant formula, cereals, and
fruit or vegetable juices. U.S. Department of Agriculture
(USDA) regulations require tailored food packages that provide
specified types and amounts of food appropriate for six
categories of participants: (1) infants from birth to 3 months;
(2) infants from 4 to 12 months; (3) women and children with
special dietary needs; (4) children from 1 to 5 years of age;
(5) pregnant and nursing mothers; and (6) postpartum nonnursing
mothers. In addition to food benefits, recipients also must
receive nutrition education and breast feeding support (where
called for).
The Federal cost of providing WIC benefits varies widely
depending on the recipient and the foods included in the food
package, as well as differences in retail prices (where
vouchers are used), food costs (where the WIC agency buys and
distributes food), and administrative costs (including the
significant costs of nutrition risk screening, breastfeeding
support, and nutrition education). Moreover, the program's food
costs are significantly influenced by the degree to which
States gain rebates from infant formula manufacturers under a
requirement to pursue ``cost containment'' strategies; these
rebates total over $1 billion a year nationwide. In fiscal year
1996, the national average Federal cost of a WIC food package
(after rebates) was $31 a month, and, for each participant, the
average monthly administrative cost (including nutrition risk
assessments and nutrition education) was about $11.
The WIC Program has categorical, income, and nutrition
risk requirements for eligibility. Only pregnant and postpartum
women, infants, and children under age 5 may participate. As
noted above, WIC applicants must show evidence of health or
nutrition risk, medically verified by a health professional, in
order to qualify. They must also have family income below 185
percent of the most recent Federal poverty guidelines
(currently, about $24,000 a year for a three-person family).
But State WIC agencies may (but seldom do) set lower income
eligibility cutoff points; they can set them as low as poverty
guidelines themselves (about $13,000 for three persons).
Receipt of TANF, food stamps, or Medicaid assistance also can
satisfy the WIC Program's income test, and States may consider
pregnant women meeting the income test ``presumptively''
eligible until a nutritional risk evaluation is made. Drawing
on a 1994 study, over 60 percent of WIC enrollees had family
income below the Federal poverty guidelines, 27 percent of WIC
enrollees were cash welfare recipients, 37 percent received
food stamps, and 53 percent were covered by Medicaid.
WIC participants receive benefits for a specified period
of time, and in some cases must be recertified during this
period to show continuing need. Pregnant women may continue to
receive benefits throughout their pregnancy and for up to 6
months after childbirth, without recertification. Nursing
mothers are certified at 6-month intervals, ending with their
infant's first birthday.
The WIC Program, which is federally funded but administered
by State and local health agencies, does not serve all who are
eligible. It is not an ``entitlement'' program, and
participation is limited by the amount of Federal funding
appropriated, whatever State supplementary funding is provided,
and the extent of manufacturers' infant formula rebates. In
fiscal year 1996, Federal spending was $3.688 billion, and the
program served a monthly average of 7.2 million women, infants,
and children: 23 percent women, 25 percent infants, and 52
percent children. The administration's most recent estimate of
the total number of persons eligible and likely to apply for
WIC benefits is 7.5 million persons. Table 15-32 summarizes WIC
participation and Federal costs.

TABLE 15-32.--THE SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN (WIC) PARTICIPATION AND
FEDERAL SPENDING, FISCAL YEARS 1977-96
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Participation (in thousands) Federal spending
---------------------------------------------------------------
Fiscal year Constant
Women Infants Children Total \1\ Current 1996
dollars \2\ dollars
----------------------------------------------------------------------------------------------------------------
1977............................................ 165.0 213.0 471.0 848.0 $255.9 $667.9
1978............................................ 240.0 308.0 633.0 1,181.0 379.6 926.2
1979............................................ 312.0 389.0 782.0 1,483.0 525.4 1,161.1
1980............................................ 411.0 507.0 995.0 1,913.0 724.7 1,413.2
1981............................................ 446.0 585.0 1,088.0 2,119.0 874.4 1,530.2
1982............................................ 478.0 623.0 1,088.0 2,189.0 948.2 1,545.6
1983............................................ 542.0 730.0 1,265.0 2,537.0 1,123.1 1,774.5
1984............................................ 657.0 825.0 1,563.0 3,045.0 1,386.3 2,093.3
1985............................................ 665.0 874.0 1,600.0 3,138.0 1,488.9 2,173.8
1986............................................ 712.0 945.0 1,655.0 3,312.0 1,580.5 2,244.3
1987............................................ 751.0 1,019.0 1,660.0 3,429.0 1,663.6 2,295.8
1988............................................ 815.0 1,095.0 1,683.0 3,593.0 1,802.4 2,397.2
1989............................................ 951.8 1,259.6 1,907.0 4,118.4 1,929.4 2,450.3
1990............................................ 1,035.0 1,412.5 2,069.4 4,516.9 2,125.9 2,572.3
1991............................................ 1,120.1 1,558.8 2,213.8 4,892.6 2,301.1 2,646.3
1992............................................ 1,221.5 1,684.1 2,505.2 5,410.8 2,566.5 2,874.5
1993............................................ 1,364.9 1,741.9 2,813.4 5,920.3 2,819.5 3,045.1
1994............................................ 1,499.2 1,786.3 3,191.7 6,477.2 3,159.8 3,349.4
1995............................................ 1,576.8 1,817.3 3,500.1 6,894.2 3,451.0 3,554.5
1996............................................ 1,648.2 1,827.3 3,712.3 7,187.8 3,688.2 3,688.2
----------------------------------------------------------------------------------------------------------------
\1\ Details may not sum to totals due to rounding.
\2\ Includes funding for studies, surveys, pilots, and farmers' market programs. Spending figures include
adjustments for significant interyear carryovers and reflect spending by State WIC agencies derived both from
current-year appropriations and prior-year amounts, adjusted for amounts carried forward into the next year.

Note.--Constant dollars were calculated using the fiscal year CPI-U.

JOB TRAINING PARTNERSHIP ACT

Title II of the Job Training Partnership Act of 1982 (JTPA)
provides block grants to States to fund training and related
services for economically disadvantaged youths and adults.
Title II consists of three programs: the II-A Adult Training
Program, the II-B Summer Youth Employment and Training Program,
and the II-C (year-round) Youth Training Program. Prior to the
1992 amendments to JTPA, which became effective July 1, 1993--
the beginning of program year 1993--title II-A provided
services to both adults and youth.
JTPA's title II programs are administered by States and
localities, which select participants and design projects
within Federal guidelines. The programs are intended to
increase participants' future employment and earnings and
reduce their dependence on welfare. Services authorized under
title II-A include institutional and on-the-job training, work
experience, job search assistance, counseling, and other work-
related assistance. In general, participants must be
economically disadvantaged, which is defined as being a member
of a family whose total income for the 6-month period prior to
application (exclusive of unemployment compensation, child
support payments, and welfare payments) does not exceed the
higher of the poverty line or 70 percent of the Bureau of Labor
Statistics' lower living standard. Members of families
receiving Aid to Families with Dependent Children (AFDC) or
other cash welfare payments and those eligible for food stamps
are also defined as economically disadvantaged.
As shown in table 15-33a, of title II-A participants who
terminated during program year 1995, 48 percent were white, 32
percent were black, and 17 percent were Hispanic. Of
participants who terminated benefits, 63 percent entered
employment. The average hourly wage for adult terminees who
entered employment was $7.26.
Among the 41 percent of title II-A terminees who were cash
welfare recipients at the time of enrollment in program year
1995, 84 percent received AFDC payments. Women comprised 83
percent of terminees receiving cash welfare payments, as
compared with 56 percent of terminees who were not recipients.
Among title II-A participants receiving cash welfare payments,
25 percent did not complete high school, compared with 21
percent of those participants who were not recipients. Fifty-
nine percent of cash welfare recipients entered employment in
program year 1995, compared with 66 percent for those II-A
terminees who did not receive cash welfare payments. The
average hourly starting wage for cash welfare recipients
entering employment was $7.01, compared with $7.39 for
nonrecipients.
As shown in table 15-33b, of the youth participants in
year-round services who terminated during program year 1995, 38
percent were white, 34 percent were black, and 24 percent were
Hispanic. Of the title II-C participants who terminated, 38
percent entered employment, and the average hourly wage for
terminees who entered employment was $5.80.

TABLE 15-33a.--CHARACTERISTICS OF JTPA TITLE II-A ADULT TERMINEES, PROGRAM YEARS 1990-95 \1\ \2\
----------------------------------------------------------------------------------------------------------------
Selected characteristics 1990 1991 1992 1993 1994 1995
----------------------------------------------------------------------------------------------------------------
Sex:
Male............................................ 42 42 41 36 33 33
Female.......................................... 58 58 59 64 67 67
Ethnic status:
White (excluding Hispanic)...................... 52 54 52 53 52 48
Black (excluding Hispanic)...................... 31 29 30 31 31 32
Hispanic........................................ 14 13 15 13 14 17
Other........................................... 4 4 4 3 3 4
Age at enrollment:
22-29........................................... 43 42 42 42 42 42
30-54........................................... 54 55 56 56 56 56
55 and older.................................... 3 3 3 2 2 2
Economically disadvantaged.......................... 93 93 NA 97 98 98
Receiving AFDC...................................... 26 27 28 32 35 35
Receiving public assistance (including AFDC)........ 31 35 33 40 42 41
U.C. claimant....................................... 8 10 13 14 10 8
Education status:
High school graduate............................ 49 50 51 55 56 56
Post high school................................ 24 24 25 21 21 21
Average weeks participated.......................... 23 25 26 31 37 39
Entered employment.................................. 63 63 62 62 63 63
Average hourly wage at placement.................... $5.85 $6.08 $6.40 $6.86 $7.09 $7.26
-----------------------------------------------------------
Total terminees................................. 307,935 276,227 257,561 180,178 175,647 162,120
----------------------------------------------------------------------------------------------------------------
\1\ Prior to 1993, title II-A served both adults and youth. Data in this table is for adults only.
\2\ Numbers (except total terminees, average weeks participated, and average hourly wage at placement) represent
percentages.

Source: U.S. Department of Labor.

TABLE 15-33b.--CHARACTERISTICS OF JTPA YEAR-ROUND YOUTH PROGRAM TERMINEES, PROGRAM YEARS 1990-95 \1\ \2\
----------------------------------------------------------------------------------------------------------------
Selected characteristics 1990 1991 1992 1993 1994 1995
----------------------------------------------------------------------------------------------------------------
Sex:
Male............................................ 48 47 47 45 44 42
Female.......................................... 52 53 53 55 56 58
Ethnic status:
White (excluding Hispanic)...................... 42 43 40 41 41 38
Black (excluding Hispanic)...................... 36 35 36 35 35 34
Hispanic........................................ 18 19 21 20 20 24
Other........................................... 4 4 4 4 5 4
Age at enrollment:
14-15........................................... 15 16 18 16 14 12
16-17........................................... 32 32 33 34 36 35
18-21........................................... 53 51 48 49 50 53
Economically disadvantaged.......................... 93 92 NA 95 95 95
Receiving AFDC...................................... 21 23 25 27 27 26
Receiving public assistance (including AFDC)........ 23 25 27 35 31 30
U.C. claimant....................................... 1 2 1 1 1 1
Education status:
Less than high school graduate.................. 74 76 78 79 77 75
High school graduate............................ 21 20 18 19 20 22
Post high school................................ 5 4 4 3 3 3
Average weeks participated.......................... 26 28 29 35 36 40
Entered employment.................................. 39 36 34 34 37 38
Average hourly wage at placement.................... $4.93 $5.07 $5.19 $5.45 $5.61 $5.80
-----------------------------------------------------------
Total terminees................................. 266,623 257,503 255,268 167,444 158,083 113,563
----------------------------------------------------------------------------------------------------------------
\1\ Prior to 1993, youth were served under title II-A. Since that time, year-round services for youth are
provided under title II-C.
\2\ Numbers (except total terminees, average weeks participated, and average hourly wage at placement) represent
percentages.

Source: U.S. Department of Labor.

Among the 30 percent of title II-C (youth) participants
receiving cash welfare payments in program year 1995, 36
percent entered employment, compared with 39 percent of II-C
participants who did not receive cash welfare payments. The
average hourly starting wage for cash welfare recipients was
$5.86, compared with $5.78 for nonrecipients. Among the 56
percent of II-C terminees who had either dropped out of school
or were behind in grade level, the average entered employment
rate in program year 1995 was 31 percent as compared with 47
percent for those not in this legislatively defined hard-to-
serve category. The average hourly starting wage for youths who
had dropped out of school or were behind in their grade level
was $5.44 compared with $6.13 for those not in this category.
In fiscal year 1997, an estimated $950 million is expected
to be spent for JTPA II-A and II-C grants, providing training
and other services to over 417,000 participants. Data on
participation and budget authority for recent years are
provided in table 15-34 below.
For the Summer Youth Program (title II-B), $625 million was
appropriated for the summer of 1996, with 409,400 participants
served. For the summer of 1997, $871 million was appropriated
to serve an estimated 530,000 individuals.
In the summer of 1996, 48 percent of title II-B enrollees
were ages 14 and 15, 37 percent were either 16 or 17 years old,
and 16 percent were between the ages of 18 and 21. During that
summer, 85 percent of summer enrollees were students and 7
percent were high school graduates. Black youth comprised 41
percent of enrollees, while 22 percent were white, 32 percent
were Hispanic, 3 percent were Asian or Pacific Islanders, and 1
percent were Native American. Fourteen percent had limited
English-speaking ability, and 15 percent had disabilities.
Table 15-35 presents a funding and participation history of
the summer program.
Job Corps, authorized by title IV-B of JTPA, serves
economically disadvantaged youth, ages 14-24, who demonstrate
both the need for, and the ability to benefit from, an
intensive and wide range of services provided in a residential
setting. The program is administered directly by the Federal
Government through contractors and currently operates at 111
centers around the country. Services include basic education,
vocational skill training, work experience, counseling, health
care, and other supportive services.
In program year 1995 (July 1, 1995-June 30, 1996), nearly
61,000 participants terminated from Job Corps, 60 percent of
whom were male. In that same year, 49 percent of terminees were
black, 29 percent were white, 16 percent were Hispanic, 4
percent were Native Americans, and 2 percent were Asian or
Pacific Islanders. Seventy-eight percent of terminees had
dropped out of high school and 64 percent had never worked full
time. Forty percent of Job Corps terminees in program year 1995
came from families on public assistance.

TABLE 15-34.--JOB TRAINING PROGRAMS \1\ FOR THE DISADVANTAGED: NEW ENROLLEES, FEDERAL APPROPRIATIONS AND
OUTLAYS, FISCAL YEARS 1975-97
----------------------------------------------------------------------------------------------------------------
Budget
New enrollees/ authority Outlays in
Fiscal year total Appropriations Outlays in constant constant
participants \2\ (millions) (millions) 1990 1990
dollars dollars
----------------------------------------------------------------------------------------------------------------
1975................................... 1,126,000 $1,580 $1,304 $3,755 $3,099
1976................................... 1,250,000 1,580 1,697 3,515 3,775
1977................................... 1,119,000 2,880 1,756 5,964 3,636
1978................................... 965,000 1,880 2,378 3,658 4,627
1979................................... 1,253,000 2,703 2,547 4,829 4,550
1980................................... 1,208,000 3,205 3,236 5,154 5,203
1981................................... 1,011,000 3,077 3,395 4,493 4,958
1982................................... NA 1,594 2,277 2,175 3,107
1983................................... NA 2,181 2,291 2,846 2,990
1984................................... 716,200 1,886 1,333 2,361 1,669
1985................................... 803,900 1,886 1,710 2,279 2,066
1986................................... 1,003,900 1,783 1,911 2,101 2,252
1987................................... 960,700 1,840 1,880 2,108 2,154
1988................................... 873,600 1,810 1,902 1,991 2,092
1989................................... 823,200 1,788 1,868 1,877 1,961
1990................................... 630,000 1,745 1,803 1,745 1,803
1991................................... 603,900 1,779 1,746 1,694 1,676
1992................................... 602,300 1,774 1,767 1,637 1,632
1993................................... 403,825 1,692 1,747 1,530 1,580
Adult.............................. 239,505 1,015 1,048 918 948
Youth.............................. 164,320 677 699 612 632
1994................................... 419,593 1,597 1,693 1,415 1,500
Adult.............................. 229,643 988 1,016 875 900
Youth.............................. 189,950 609 677 540 600
1995................................... 507,509 1,124 1,534 971 1,325
Adult.............................. 329,329 997 934 861 807
Youth.............................. \3\ 178,180 127 600 110 518
1996................................... \4\ 426,100 977 1,023 824 862
Adult.............................. 301,700 850 981 717 827
Youth.............................. 124,400 127 365 107 308
1997................................... 417,400 1,022 949 838 779
Adult.............................. 310,900 895 799 734 656
Youth.............................. 106,500 127 150 104 123
----------------------------------------------------------------------------------------------------------------
\1\ Figures shown in years 1975-83 are for training activities under the Comprehensive Employment and Training
Act (CETA); public service employment under CETA is not included. Figures shown in years 1984-92 are for
activities under title II-A of the Job Training Partnership Act (JTPA). For 1993-96 figures are for titles II-
A (adult) and II-C (youth) of the JTPA, as amended in 1992.
\2\ Figures for 1975-94 are new enrollees. total participants are shown from 1995 forward.
\3\ Reduced budget authority in fiscal year 1995 was insufficient to serve those already enrolled and to enroll
a comparable number of new participants. In fiscal year 1996, transfers from II-B (summer youth) enabled more
participants to be enrolled.
\4\ Estimate.

NA--Not available.

Source: U.S. Department of Labor.

TABLE 15-35.--SUMMER YOUTH EMPLOYMENT PROGRAM: FEDERAL APPROPRIATIONS, OUTLAYS, AND PARTICIPANTS, FISCAL YEARS
1984-97 \1\
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Outlays
--------------------------
Appropriations \2\ Constant Participants \3\
Current 1990
dollars dollars
----------------------------------------------------------------------------------------------------------------
1984............................................ $824 $584 $731 672,000
1985............................................ 724 776 938 767,600
1986............................................ 636 746 879 785,000
1987............................................ 750 723 828 634,400
1988............................................ 718 707 778 722,900
1989............................................ 709 697 732 607,900
1990............................................ 700 699 699 585,100
1991............................................ 683 698 663 555,200
1992............................................ \3\ 995 958 \8\ 912 782,100
1993............................................ \4\ 1,025 915 827 647,400
1994............................................ \5\ 888 834 739 574,400
1995............................................ \6\ 185 883 763 \3\ 489,200
1996............................................ \7\ 625 499 421 409,400
1997............................................ \8\ 871 \9\ 913 \9\ 749 \9\ 530,000
----------------------------------------------------------------------------------------------------------------
\1\ Appropriations and outlays are for fiscal years; participants are for calendar years.
\2\ Because JTPA is an advance-funded program, appropriations for the Summer Youth Program in a particular
fiscal year are generally spent the following summer. For example, fiscal year 1991 appropriations were spent
during the summer of calendar year 1992. The pattern has varied somewhat in recent years. These variations are
noted.
\3\ Fiscal year 1992 funding includes a $500 million supplemental appropriation for summer 1992 and $495 million
for summer 1993.
\4\ Fiscal year 1993 funding includes $354 million for summer 1993 and $671 million for summer 1994.
\5\ Fiscal year 1994 funding includes $206 million for summer 1994 and $682 million for summer 1995.
\6\ Public Law 104-19 rescinded $682 million in fiscal year 1995 funds which were to be available for the summer
of 1996. The remaining $185 million was for the summer of 1995.
\7\ Fiscal year 1996 funds are for the summer of 1996.
\8\ Fiscal year 1997 funds are for the summer of 1996.
\9\ Estimate.

Source: Employment and Training Administration, U.S. Department of Labor.

The average length of stay in Job Corps in program year
1995 was 6.9 months. The Labor Department estimates that 65
percent of terminees entered employment after leaving the
program, while another 10 percent either continued their
education or entered another training program, for a total
positive termination rate in 1995 of 75 percent.
Table 15-36 provides a funding and participation history of
the Job Corps since 1982. The program was first authorized in
the mid-1960s by the Economic Opportunity Act and has been
authorized under JTPA since 1982.

TABLE 15-36.--JOB CORPS: FEDERAL APPROPRIATIONS, OUTLAYS, AND NEW ENROLLEES, FISCAL YEARS 1982-97 \1\
[Dollars in millions]
----------------------------------------------------------------------------------------------------------------
Outlays
--------------------------
Appropriations Constant New
Current 1990 enrollees
dollars dollars
----------------------------------------------------------------------------------------------------------------
1982..................................................... $590 $595 $812 53,581
1983..................................................... 618 563 735 60,465
1984..................................................... 599 581 727 57,386
1985..................................................... 617 593 716 63,020
1986..................................................... 612 594 701 64,964
1987..................................................... 656 631 723 65,150
1988..................................................... 716 688 757 68,068
1989..................................................... 742 689 724 62,550
1990..................................................... 803 740 740 61,453
1991..................................................... 867 769 769 62,205
1992..................................................... 919 834 789 61,762
1993..................................................... 966 936 846 62,749
1994..................................................... 1,040 981 869 58,460
1995..................................................... 1,089 1,011 873 68,540
1996..................................................... 1,094 994 838 \2\ 63,955
1997..................................................... 1,154 \2\ 1,165 \2\ 956 \2\ 68,317
----------------------------------------------------------------------------------------------------------------
\1\ Appropriations and outlays are for fiscal years; enrollees are for program years.
\2\ Estimate.

Source: Employment and Training Administration, U.S. Department of Labor.

HEAD START

Head Start began operating in 1965 under the general
authority of the Economic Opportunity Act of 1964. Head Start
provides a wide range of services to primarily low-income
children, ages 0 to 5, and their families. Its goals are to
improve the social competence, learning skills, and health and
nutrition status of low-income children so that they can begin
school on an equal basis with their more advantaged peers. The
services provided include cognitive and language development;
medical, dental, and mental health services (including
screening and immunizations); and nutritional and social
services. Parental involvement is extensive, through both
volunteer participation and employment of parents as Head Start
staff. Formal training and certification as child care workers
is provided to some parents through the Child Development
Associate Program.
Head Start's eligibility guidelines require that at least
90 percent of the children served come from families with
incomes at or below the poverty line. At least 10 percent of
the enrollment slots in each local program must be available
for children with disabilities. In fiscal year 1996, 752,077
children were served in Head Start Programs, at a total Federal
cost of $3.569 billion. In June 1996, 49 percent of Head Start
children came from families receiving AFDC benefits. Table 15-
37 provides historical data on participation in and funding of
the Head Start Program, while table 15-38 provides
characteristics of children enrolled in the program.

TABLE 15-37.--HEAD START ENROLLMENT AND FEDERAL FUNDING, FISCAL YEARS
1965-96
------------------------------------------------------------------------
Appropriations
Fiscal year Enrollment (in millions
of dollars)
------------------------------------------------------------------------
1965 (summer only)...................... 561,000 $96.4
1966.................................... 733,000 198.9
1967.................................... 681,400 349.2
1968.................................... 693,900 316.2
1969.................................... 663,600 333.9
1970.................................... 477,400 325.7
1971.................................... 397,500 360.0
1972.................................... 379,000 376.3
1973.................................... 379,000 400.7
1974.................................... 352,800 403.9
1975.................................... 349,000 403.9
1976.................................... 349,000 441.0
1977.................................... 333,000 475.0
1978.................................... 391,400 625.0
1979.................................... 387,500 680.0
1980.................................... 376,300 735.0
1981.................................... 387,300 818.7
1982.................................... 395,800 911.7
1983.................................... 414,950 912.0
1984.................................... 442,140 995.8
1985.................................... 452,080 1,075.0
1986.................................... 451,732 1,040.0
1987.................................... 446,523 1,130.5
1988.................................... 448,464 1,206.3
1989.................................... 450,970 1,235.0
1990.................................... 548,470 \1\ 1,552.0
1991.................................... 583,471 1,951.8
1992.................................... 621,078 2,201.8
1993.................................... 713,903 2,776.3
1994.................................... 740,493 3,325.7
1995.................................... 750,696 3,534.1
1996.................................... 752,077 3,569.3
------------------------------------------------------------------------
\1\ After sequestration.

Source: Head Start Bureau, U.S. Department of Health and Human
Services.

TABLE 15-38.--CHARACTERISTICS OF CHILDREN ENROLLED IN HEAD START, SELECTED FISCAL YEARS 1980-96
[In percent]
----------------------------------------------------------------------------------------------------------------
Age of children enrolled Enrollment by race
--------------------------------------------------------------------
Fiscal year Disabled 5 and Under Native
older 4 3 3 American Hispanic Black White Asian
----------------------------------------------------------------------------------------------------------------
1980............................. 12 21 55 24 0 4 19 42 34 1
1982............................. 12 17 55 26 2 4 20 42 33 1
1984............................. 12 16 56 26 2 4 20 42 33 1
1986............................. 12 15 58 25 2 4 21 40 32 3
1988............................. 13 11 63 23 3 4 22 39 32 3
1990............................. 14 8 64 25 3 4 22 38 33 3
1991............................. 13 7 63 27 3 4 22 38 33 3
1992............................. 13 7 63 27 3 4 23 37 33 3
1993............................. 13 6 64 27 3 4 24 36 33 3
1994............................. 13 7 62 28 3 4 24 36 33 3
1995............................. 13 7 62 27 4 4 25 35 33 3
1996............................. 13 6 62 29 4 4 25 36 32 3
----------------------------------------------------------------------------------------------------------------
Source: Head Start Bureau, U.S. Department of Health and Human Services.

LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM (LIHEAP)

Background

The Federal Government has been involved in providing
energy assistance for the poor since 1973. But in 1980, in
response to the 1973-74 Organization of Petroleum Exporting
Countries (OPEC) oil embargo and the accompanying shortages and
increased petroleum prices, Congress passed the Crude Oil
Windfall Profit Tax Act (Public Law 96-223), title III of which
was officially named the Home Energy Assistance Act of 1980.
The 1980 program generally is considered the predecessor to the
present Low-Income Home Energy Assistance Program (LIHEAP).
In 1981, title XXVI of the Omnibus Budget Reconciliation
Act (Public Law 97-35), the Low-Income Home Energy Assistance
Act of 1981, authorized the Secretary of Health and Human
Services to make LIHEAP allotments to States for fiscal years
1982-84. The act permitted States to provide three types of
energy assistance. States can: (1) help eligible households pay
their home heating or cooling bills; (2) use up to 15 percent
of their LIHEAP allotment for low-cost weatherization; and (3)
provide assistance to households during energy-related
emergencies.
LIHEAP is a block grant program under which the Federal
Government gives States, the District of Columbia, U.S.
territories and Commonwealths (American Samoa, Commonwealth of
Puerto Rico, Commonwealth of the Northern Mariana Islands,
Guam, Palau, and the U.S. Virgin Islands), and Indian tribal
organizations annual grants to operate multicomponent home
energy assistance programs for needy households. Public Law
103-252, the Human Services Reauthorization Act of 1994,
reauthorized LIHEAP through fiscal year 1999. In fiscal year
1981, more than $1.8 billion was appropriated for the program.
Over the years, LIHEAP funding has reached a high of $2.1
billion in 1985 and a low of about $1.06 billion in 1996 (see
bottom of table 15-39).

Program Components

Federal LIHEAP funds may be used by grantees for the
following activities:
--Home heating and cooling assistance;
--Energy crisis intervention (with a reasonable amount
reserved, based on prior years' data, until March 15 of
each program year);
--Low-cost weatherization or other energy-related home
repairs (not to exceed 15 percent of the funds allotted
to or available to a grantee, although a grantee may
request a waiver that increases the amount of LIHEAP
funds for weatherization from 15 to 25 percent);
--Administrative and planning costs (not to exceed 10 percent
of funds net of set-asides for Indian tribal grants);
--Carryover of funds to the next fiscal year (not to exceed
10 percent of funds net of set-asides for Indian tribal
grants); and
--Development or implementation of a leveraging incentive
program that may be used by States to attract funds
from non-Federal sources.

Allotments to States

Several sources of Federal and non-Federal funds generally
are available to LIHEAP grantees:
--Federal LIHEAP block grant allotments;
--LIHEAP emergency contingency allotment for weather
emergencies (these funds can only be released at the
President's directive);
--LIHEAP leveraging incentive awards;
--LIHEAP carryover (grantees can request that up to 10
percent of their Federal LIHEAP funds be held available
for the next fiscal year);
--Oil overcharge funds (disbursed by the Department of Energy
from settlements of cases of oil price overcharges
pursuant to the Emergency Petroleum Act of 1973. States
determine how to allocate these funds among several
eligible activities, including LIHEAP.); and
--State and other funds (States use their own funds to
supplement LIHEAP benefits or administrative costs.
Other funds include reimbursements to LIHEAP agencies
for taking application for low-income weatherization
programs or winter heating protection programs.).
Table 15-39 shows State allotments for selected fiscal
years.

TABLE 15-39.--LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM STATE ALLOTMENTS, SELECTED FISCAL YEARS 1981-97
--------------------------------------------------------------------------------------------------------------------------------------------------------
States 1981 \1\ 1985 1990 1991 1992 1993 1994 1995 \2\ 1996 \3\ 1997 \4\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama......................... $15,674 $18,234 $11,961 $15,856 $12,664 $11,344 $12,127 $11,063 $9,077 $9,937
Alaska.......................... 7,505 7,247 7,635 9,594 8,034 7,241 7,741 7,062 5,794 6,343
Arizona......................... 6,426 8,150 5,785 6,200 6,125 5,486 5,865 5,350 4,390 4,806
Arkansas........................ 11,960 13,973 9,127 11,069 9,663 8,656 9,253 8,442 6,926 7,582
California...................... 84,088 97,894 64,168 68,764 67,940 60,855 65,056 59,352 48,693 53,308
Colorado........................ 29,319 33,299 22,373 23,419 23,688 21,218 22,683 20,694 16,978 18,587
Connecticut..................... 38,247 43,440 29,187 35,541 30,902 27,680 34,986 28,011 22,148 24,247
Delaware........................ 5,077 5,931 3,874 5,471 4,102 3,674 4,214 3,583 2,940 3,218
District of Columbia............ 5,940 6,940 4,533 5,269 4,799 4,299 4,595 4,193 3,440 3,766
Florida......................... 25,921 28,970 18,926 21,731 20,039 17,950 19,188 17,506 14,362 15,722
Georgia......................... 19,609 22,910 14,964 17,439 15,844 14,191 15,171 13,841 11,355 12,431
Hawaii.......................... 1,975 2,243 1,507 1,531 1,596 1,429 1,528 1,394 1,144 1,252
Idaho........................... 11,181 12,877 8,727 9,493 9,240 8,277 8,848 8,072 6,622 7,250
Illinois........................ 105,862 123,679 80,784 85,711 85,533 76,614 93,921 90,445 61,302 76,588
Indiana......................... 47,431 55,371 36,577 41,069 38,727 34,689 39,408 39,568 27,756 30,386
Iowa............................ 29,470 38,581 25,922 28,719 27,466 24,584 34,335 28,584 19,671 24,576
Kansas.......................... 15,515 18,211 11,905 12,901 12,605 11,290 12,069 11,011 9,034 9,890
Kentucky........................ 24,943 29,141 19,034 22,537 20,153 18,052 24,639 22,996 14,444 15,813
Louisiana....................... 16,024 18,867 12,228 13,203 12,947 11,597 12,398 11,311 9,279 10,159
Maine........................... 27,513 27,914 18,908 23,550 20,020 17,932 27,275 17,489 14,349 15,708
Maryland........................ 29,285 34,214 22,348 29,361 23,662 21,194 29,288 20,671 16,959 18,566
Massachusetts................... 82,707 86,878 58,383 69,364 61,815 55,369 73,071 56,312 44,304 48,502
Michigan........................ 111,598 113,951 76,697 86,099 81,206 72,738 126,605 81,746 58,201 63,717
Minnesota....................... 72,409 82,239 55,256 62,063 58,504 52,404 93,421 56,152 41,931 52,386
Mississippi..................... 13,930 15,683 10,255 12,391 10,858 9,725 10,397 9,485 7,782 8,519
Missouri........................ 37,885 48,026 32,268 35,779 34,165 30,603 32,715 37,030 24,487 30,592
Montana......................... 11,350 12,298 10,236 10,938 10,838 9,708 10,378 9,468 7,768 9,705
Nebraska........................ 13,799 19,032 12,820 13,851 13,573 12,158 12,997 14,572 9,728 12,154
Nevada.......................... 3,560 4,151 2,717 3,214 2,877 2,577 2,754 2,513 2,062 2,257
New Hampshire................... 14,481 16,447 11,051 13,648 11,700 10,480 14,352 10,535 8,386 9,180
New Jersey...................... 71,025 82,849 54,200 66,929 57,386 51,402 61,894 50,132 41,129 45,027
New Mexico...................... 8,867 9,973 7,242 8,123 7,668 6,868 7,342 6,698 5,495 6,016
New York........................ 231,907 263,291 176,970 214,983 187,373 167,835 240,880 175,232 134,293 147,019
North Carolina.................. 34,561 40,378 26,374 35,612 27,924 25,013 26,739 24,394 20,014 21,910
North Dakota.................... 7,995 14,612 11,120 12,503 11,773 10,546 19,376 10,868 8,438 13,302
Ohio............................ 93,651 109,413 71,465 78,365 75,666 67,776 96,381 76,346 54,231 59,370
Oklahoma........................ 15,998 16,004 10,995 12,250 11,641 10,427 11,147 10,169 8,343 9,134
Oregon.......................... 22,723 25,808 17,340 19,298 18,360 16,445 17,580 16,039 13,159 14,405
Pennsylvania.................... 124,568 141,479 95,059 107,475 100,647 90,152 116,857 95,330 72,135 78,971
Rhode Island.................... 12,594 14,220 9,610 11,572 10,175 9,114 11,471 9,341 7,293 7,984
South Carolina.................. 13,822 14,544 9,500 12,451 10,058 9,009 9,631 8,787 7,209 7,892
South Dakota.................... 10,241 11,434 9,031 10,691 9,562 8,565 11,150 9,319 6,853 10,802
Tennessee....................... 25,267 29,520 19,281 21,652 20,415 18,286 19,548 17,834 14,632 16,018
Texas........................... 41,261 48,206 31,487 36,455 33,337 29,861 31,922 29,123 23,893 26,158
Utah............................ 13,289 14,827 10,397 11,062 11,008 9,860 10,541 9,617 7,890 8,637
Vermont......................... 10,854 12,328 8,283 9,813 8,770 7,855 13,197 7,908 6,285 6,881
Virginia........................ 39,019 41,677 27,222 36,051 28,822 25,817 28,277 25,179 20,657 22,615
Washington...................... 33,104 40,896 28,522 31,495 30,199 27,050 28,917 26,382 21,644 23,695
West Virginia................... 16,507 19,285 12,596 13,676 13,337 11,946 16,503 11,651 9,559 10,465
Wisconsin....................... 61,679 74,027 49,738 56,987 52,662 47,171 65,147 53,718 37,744 41,320
Wyoming......................... 3,561 6,195 4,163 4,605 4,407 3,948 4,220 3,850 3,159 3,458
-----------------------------------------------------------------------------------------------------------------------
U.S. total.................... 1,813,177 2,077,577 1,390,749 1,607,819 1,472,503 1,318,961 1,709,998 1,386,368 1,055,364 1,188,225
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes reallocation of funds and crisis intervention funds.
\2\ Includes $100 million in LIHEAP emergency contingency funds.
\3\ Includes $180 million in LIHEAP emergency contingency funds.
\4\ Includes $215 million in LIHEAP emergency contingency funds.

Note.--Columns may not add due to rounding. The table includes payments to Indian tribal organizations and excludes payments to the insular areas.

Source: U.S. Department of Health and Human Services.

Eligibility and Types of Assistance

States have considerable discretion to determine
eligibility criteria for LIHEAP and the types of energy
assistance to be provided. At State option, LIHEAP payments can
be made to households, based on categorical eligibility, where
one or more persons are receiving Supplemental Security Income
(SSI), Aid to Families with Dependent Children (AFDC),
Temporary Assistance for Needy Families (TANF), food stamps, or
needs-tested veterans benefits. States can also elect to make
payments to households with incomes of up to 150 percent of the
Federal poverty income guidelines or 60 percent of the State's
median income, whichever is greater.
Individuals who are denied benefits are entitled to an
administrative hearing. The term ``household'' is defined as
any individual or group of individuals who are living together
as one economic unit and for whom residential energy is
customarily purchased in common, or who make undesignated
payments for energy in the form of rent. States cannot
establish an income eligibility ceiling that is below 110
percent of the poverty level, but may give priority to those
households with the highest energy costs in relation to
household income, taking into consideration the presence of
very young children, frail elderly, or persons with
disabilities. States also are prohibited from treating
categorically eligible and income eligible households
differently with respect to LIHEAP. However, Public Law 103-185
permits States to reduce benefits to tenants of federally
assisted housing if it is determined that such a reduction is
reasonably related to any utility allowance they may receive.
LIHEAP benefits cannot be used to calculate income or
resources, or affect other benefits, under Federal or State
law, including public assistance programs.
Section 607(a) of Public Law 98-558 directs the Department
of Health and Human Services to collect annual data, including
information on the number of LIHEAP households in which at
least one household member is 60 years old or handicapped. In
addition, Public Law 103-252 authorized the establishment of
the Residential Energy Assistance Challenge (REACH) Program, an
incentive grant program designed to increase efficient energy
use, minimize health and safety risks, and prevent hopelessness
among low-income families with high energy burdens. Up to 25
percent of leveraging incentive moneys may be used to fund
REACH Programs.
States have considerable discretion in the methods they may
use to provide assistance to eligible households, including
cash payments, vendor payments, two-party checks, vouchers/
coupons, and payments directly to landlords. When paying home
energy suppliers directly, States are required to give
assurances that suppliers will charge the eligible households
the difference between the amount of the assistance and the
actual cost of home energy. Also, States may use Federal funds
to provide tax credits to energy suppliers that supply home
energy to low-income households at reduced rates. Table 15-40
presents estimates by State for 1995 of total dollars spent on
heating assistance, the number of households receiving benefits
from the single largest program component (heating assistance),
and average heating benefits.

TABLE 15-40.--LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM (LIHEAP), ESTIMATED HEATING ASSISTANCE BENEFITS, NUMBER
OF HOUSEHOLDS, AND ESTIMATED AVERAGE BENEFITS, FISCAL YEAR 1995
----------------------------------------------------------------------------------------------------------------
Estimated heating Number of Estimated
State assistance households average
benefits assisted benefits
----------------------------------------------------------------------------------------------------------------
Alabama.................................................... $6,763,061 50,085 $122
Alaska..................................................... 4,220,958 11,850 345
Arizona.................................................... 3,421,066 22,928 163
Arkansas................................................... 4,848,231 48,129 87
California................................................. 32,768,699 346,452 93
Colorado................................................... 16,617,579 61,237 303
Connecticut................................................ 28,915,128 75,636 411
Delaware................................................... 2,636,007 13,623 194
District of Columbia....................................... 2,882,551 14,607 197
Florida.................................................... 11,292,706 88,169 92
Georgia.................................................... 10,325,887 65,689 157
Hawaii..................................................... 1,033,936 6,519 159
Idaho...................................................... 4,883,453 27,005 181
Illinois................................................... 56,944,972 201,597 267
Indiana.................................................... 28,440,973 108,210 254
Iowa....................................................... 14,598,217 72,395 197
Kansas..................................................... 4,436,830 28,139 164
Kentucky................................................... 9,493,563 110,823 86
Louisiana.................................................. 3,565,059 24,064 139
Maine...................................................... 11,225,463 52,648 201
Maryland................................................... 19,559,137 85,713 225
Massachusetts.............................................. 48,846,902 140,158 348
Michigan................................................... 69,058,318 378,725 182
Minnesota.................................................. 42,997,221 103,760 414
Mississippi................................................ 5,317,082 33,100 150
Missouri................................................... 21,355,601 115,248 187
Montana.................................................... 6,041,867 21,684 267
Nebraska................................................... 4,950,000 32,509 152
Nevada..................................................... 2,318,599 9,534 230
New Hampshire.............................................. 8,191,877 22,363 366
New Jersey................................................. 44,016,381 164,918 283
New Mexico................................................. 5,645,250 48,083 89
New York................................................... 98,256,990 957,442 108
North Carolina............................................. 14,926,921 186,152 80
North Dakota............................................... 6,032,757 15,130 411
Ohio....................................................... 27,788,359 287,629 97
Oklahoma................................................... 7,010,932 75,603 95
Oregon..................................................... 11,085,376 54,225 215
Pennsylvania............................................... 49,043,261 330,502 171
Rhode Island............................................... 7,759,275 22,787 349
South Carolina............................................. 5,772,063 77,053 78
South Dakota............................................... 6,758,611 16,859 394
Tennessee.................................................. 13,894,707 66,390 200
Texas...................................................... 5,096,583 44,565 145
Utah....................................................... 7,291,941 33,027 219
Vermont.................................................... 6,772,740 22,745 281
Virginia................................................... 20,657,059 118,709 174
Washington................................................. 17,057,014 67,540 209
West Virginia.............................................. 6,601,747 56,796 116
Wisconsin.................................................. 32,625,604 117,562 300
Wyoming.................................................... 2,801,630 11,303 232
-------------------------------------
Total................................................ $884,846,144 5,147,619
----------------------------------------------------------------------------------------------------------------
\1\ Includes leveraging awards.

Source: Administration for Children and Families, U.S. Department of Health and Human Services.

Planning and Administration

LIHEAP is administered within the Department of Health and
Human Services by the administration for Children and Families.
Grantees are required to submit an application for funds to the
Secretary of Health and Human Services. As part of the annual
application, the chief executive officer of the State (Indian
tribe, or territory), or her designee, is required to make
several assurances related to eligibility requirements,
anticipated use of funds, as well as to satisfy planning and
administrative requirements. States are prohibited from using
more than 10 percent of their total LIHEAP allotment for
planning and administrative costs.
States must provide for public participation and public
hearings in the development of the State plan, including making
it, and any substantial revisions, available for public
inspection and allowing public comment on the plan. Public Law
98-558 requires States to engage an independent person or
organization to prepare an audit at least once every 2 years.
However, the Single Audit Act of 1984 (Public Law 98-502)
supersedes this requirement in most instances, and requires
grantees to conduct an annual audit of all Federal financial
assistance received.

VETERANS BENEFITS AND SERVICES

The Department of Veterans Affairs (VA) offers a wide
range of benefits and services to eligible veterans, members of
their families, and survivors of deceased veterans. VA programs
include veterans compensation and pensions, readjustment
benefits, medical care, and housing and loan guaranty programs.
The VA also provides life insurance, burial benefits, and
special counseling and outreach programs. In fiscal year 1996,
Federal outlays for veterans benefits and services were nearly
$37 billion (see table 15-41).
Service-connected compensation is paid to veterans who
have disabilities from injuries and illnesses sustained while
in service. The amounts of monthly payments are determined by
disability ratings that are based on presumed average
reductions in earning capacities caused by the disabilities.
Disability ratings generally range from 10 percent to 100
percent in 10-percent intervals; however, some injuries are
compensable at a zero-percent rating. Death compensation, or
dependency and indemnity compensation, is paid to survivors of
veterans who died as a result of service-connected causes. In
fiscal year 1996, about 2.2 million disabled veterans and
306,241 survivors received about $15 billion in compensation
payments.

TABLE 15-41.--EXPENDITURES FOR VETERANS BENEFITS AND SERVICES, SELECTED FISCAL YEARS 1975-96
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Other
Compensation Readjustment, veterans
Fiscal year and pensions education, Medical Housing benefits Total
\1\ job training programs \2\ loans \3\ and
services
----------------------------------------------------------------------------------------------------------------
1975.................................. $7,860 $4,593 $3,665 $24 $442 $16,584
1980.................................. 11,688 2,342 6,515 -23 648 21,169
1981.................................. 12,909 2,254 6,965 201 643 22,973
1982.................................. 13,710 1,947 7,517 102 662 23,938
1983.................................. 14,250 1,625 8,272 3 673 24,824
1984.................................. 14,400 1,359 8,861 244 725 25,588
1985.................................. 14,714 1,059 9,547 214 728 26,262
1986.................................. 15,031 526 9,872 114 784 26,327
1987.................................. 14,962 454 10,266 330 737 26,750
1988.................................. 15,963 454 10,842 1,292 834 29,386
1989.................................. 16,544 459 11,343 878 808 30,031
1990.................................. 15,241 278 12,134 517 888 29,058
1991.................................. 16,961 427 12,889 85 943 31,305
1992.................................. 17,296 783 14,091 901 992 34,064
1993.................................. 17,758 826 14,812 1,299 976 35,671
1994.................................. 19,613 1,115 15,678 197 982 37,585
1995.................................. 18,966 1,124 16,428 329 1,043 37,890
1996.................................. 18,201 1,114 16,586 66 1,018 36,985
----------------------------------------------------------------------------------------------------------------
\1\ Primarily compensation and pension benefits; includes amounts for insurance and burial benefits.
\2\ Medical program expenditure data include outlays for direct medical services, medical research and training,
and construction programs.
\3\ Numbers provided for expenditures under housing loans are not comparable to program expenditures in the
other columns because they are revolving funds with loan outlays and repayments.

Source: Office of the President (1997).

Veterans pensions are means-tested cash benefits paid to
war veterans who have become permanently and totally disabled
from non-service-connected causes, and to survivors of war
veterans. Under the current or ``improved law'' program,
benefits are based on family size, and the pensions provide a
floor of income. For 1997, the basic benefit before subtracting
other income sources is $11,115 for a veteran with one
dependent $8,486 for a veteran living alone). Somewhat less
generous benefits are available to survivors; a surviving
spouse with no children could receive two-thirds of the basic
benefit amount given a single veteran. About 765,406 persons
received about $3 billion in veterans pension payments in
fiscal year 1996.
Several VA programs support readjustment, education, and
job training for veterans and military personnel who meet
certain eligibility criteria. The largest of these programs was
the Montgomery GI bill (MGIB). The MGIB provides educational
assistance to persons, who as members of the Armed Forces or
the Selected Reserve, elect to participate in the program after
June 30, 1985. The purposes of the MGIB are to assist service
members leaving the Armed Forces in their readjustment into
civilian life, to provide an incentive for the recruitment and
retention of qualified personnel in the Armed Forces, and to
develop a more educated and productive work force. To
participate in the MGIB, active duty military personnel
contribute $100 per month, for the first 12 months of
enlistment. Benefit levels are contingent upon length of
service. To receive the maximum benefit of $427.87 per month
for 36 months, service members must generally serve
continuously for 3 years.
The VA also provides vocational rehabilitation to disabled
veterans. In fiscal year 1996, net outlays for VA readjustment
programs was $1,114 million (see table 15-41). In addition, the
Department of Labor also provides employment counseling and job
training for veterans.
The VA provides a comprehensive array of inpatient and
outpatient medical services through 173 medical centers, 133
nursing homes, 40 domiciliaries, 398 ambulatory clinics, and
205 readjustment counseling centers (Vet centers). Public Law
104-262 reformed eligibility rules for VA medical services.
These reforms not only simplified the rules, but give the VA
greater flexibility in how it provides medical care to
veterans. Past eligibility rules were seen as emphasizing
inpatient over outpatient care and, thus, impeded the efficient
use of VA medical resources. Under the new eligibility rules,
the VA provides free medical care, both inpatient and
outpatient, to veterans for service-connected conditions and to
low-income veterans for nonservice-connected conditions. For
1997, veterans with an income of $25,935 or less, and married
or with one dependent; plus $1,445 for each additional
dependent; or $21,610 or less if single; would meet the low-
income criterion for free medical care. As facilities and other
resources permit, the VA provides care to veterans for
nonservice-connected conditions with incomes that exceed these
limits; however, copayments are required. Again, as facilities
and other resources permit, the VA provides nursing home care
to veterans, with priority going to those with service-
connected disabilities. The VA also contracts with private
facilities and/or medical providers when it is determined to be
in the interests of the veteran and cost effective for the VA.
VA-operated nursing home care is augmented by VA-supported care
through contracts with private community nursing homes and with
per diem payments for veterans in State-run homes for veterans.
In fiscal year 1996, VA medical programs cost $16.6
billion (see table 15-41). VA medical services were provided to
about 1.6 million separate applicants, resulting in over
932,000 inpatient episodes and over 29 million outpatient
visits (see table 15-42).

TABLE 15-42.--NUMBER OF RECIPIENTS OF VETERANS BENEFITS AND SERVICES, SELECTED FISCAL YEARS 1975-96
[In thousands]
----------------------------------------------------------------------------------------------------------------
Readjustment, Medical care
Fiscal year Compensation education, ------------------------------- Housing
and pensions job training Inpatient \1\ Outpatient \2\ loans
----------------------------------------------------------------------------------------------------------------
1975................................... 4,855 2,692 1,220 14,630 290
1980................................... 4,646 1,233 1,359 17,930 297
1981................................... 4,535 1,081 1,360 17,809 188
1982................................... 4,407 906 1,358 18,510 103
1983................................... 4,286 755 1,401 18,616 245
1984................................... 4,123 629 1,412 19,601 252
1985................................... 4,005 492 1,435 20,188 179
1986................................... 3,900 419 1,462 21,635 314
1987................................... 3,850 365 1,466 21,635 479
1988................................... 3,762 352 1,224 23,233 235
1989................................... 3,686 349 1,153 22,629 190
1990................................... 3,614 360 1,113 22,600 196
1991................................... 3,546 322 1,072 23,007 181
1992................................... 3,462 388 1,053 23,902 266
1993................................... 3,397 438 1,043 24,236 383
1994................................... 3,351 472 1,032 25,443 602
1995................................... 3,332 476 1,003 27,528 263
1996................................... 3,315 475 932 29,295 292
----------------------------------------------------------------------------------------------------------------
\1\ Patients treated: the sum of discharges and deaths during the period plus patients remaining as bed
occupants or absent bed occupants at the end of the report period.
\2\ Visits for outpatient care.

Source: U.S. Department of Veterans Affairs.

WORKERS' COMPENSATION

Overview Through 1993 \24\
---------------------------------------------------------------------------

\24\ Largely drawn from Schmulowitz (1995).
---------------------------------------------------------------------------
Workers' compensation laws provide for cash and medical
benefits to persons with job-related disabilities and
survivors' benefits to dependents of those whose death resulted
from a work-related accident or illness. In 1993, workers'
compensation laws protected approximately 96.1 million workers
in 51 jurisdictions, including the District of Columbia.
Although the laws vary from State to State, and among the
Federal programs, the underlying principle is that employers
should assume the costs of occupational disabilities without
regard to fault. Prior to the enactment of workers'
compensation laws (the first of which was enacted in 1908), a
worker was only protected in cases in which employer negligence
could be proven as the cause of injury or death. By 1949, all
States and the Federal Government had enacted laws to cover
workers and their dependents in any case of occupational
disability or death.
Most workers' compensation benefits are paid by insurance
companies through policies purchased by private employers that
are keyed to the benefits required by the State or Federal
workers' compensation law covering the employer. In addition,
benefits may be paid by special State or Federal insurance
funds, by employers themselves acting as self-insurers, and by
the Federal Government (for Federal employees and some black
lung beneficiaries). State laws generally are administered by
entities such as industrial commissions or special units within
State labor departments. Federal laws are administered by the
U.S. Department of Labor, although the Social Security
Administration has responsibility for paying some black lung
claims.
Federal involvement in the workers' compensation system is
minimal. Federal laws cover work-related disability and death
benefits for Federal employees, certain maritime and railroad
employees, and benefits for black-lung-related disability or
death.\25\ In general, Federal funding extends only to benefits
for Federal employees and some black lung beneficiaries and
administrative costs at the Labor Department and Social
Security Administration.\26\ There are no Federal standards for
or controls over the State laws that cover most of the work
force, although they are structured similarly, and a 1972
Federal commission issued a still-current set of recommended
goals for State laws. Workers' compensation benefits are not
taxed at any level of government; if taxed as income by the
Federal Government, the Joint Committee on Taxation estimates
revenues would be about $4 billion (for tax year 1995).
---------------------------------------------------------------------------
\25\ The Federal Employees' Compensation Act (FECA) covers Federal
employees and certain others (e.g., some law enforcement officers and
volunteers, postal service employees). The Longshore and Harbor
Workers' Compensation Act (LHWCA) and the Jones Act cover certain
workers in maritime endeavors (including, for example, workers on the
outer continental shelf). The Federal Employers' Liability Act (FELA)
covers interstate railroad employees. The Black Lung Benefits Act
(BLBA) provides for benefits to coal mine employees and survivors for
disability or death related to black lung disease.
\26\ Under the FECA, the Federal Government pays all administrative
and benefit costs from annual appropriations to the employing agencies
and the Labor Department. Under the LHWCA, private employers are
responsible for virtually all benefits; the Federal Government pays for
a very small and declining payment to pre-1972 claimants and, standing
in the place of a State, the administrative costs of the system. Under
the Jones Act and the FELA, there are few Federal costs, limited to
some Federal court costs and potential effects on the Federal
appropriation for Amtrak. Under the BLBA, Federal appropriations pay
for benefits and administrative costs for claims filed before 1974
(through the Social Security Administration) and Department of Labor
administrative expenses (for claims filed later). Black lung benefits
for claims filed after 1973 are paid directly by responsible coal mine
operators or the Black Lung Disability trust fund (which is financed
through an excise tax on coal and borrowing from the Federal Treasury).
---------------------------------------------------------------------------
Cash compensation for lost earnings made up 59 percent of
total workers' compensation benefits in 1993. Some 70 percent
of cash payments are for permanent partial disabilities of
either major or minor severity. These payments cover loss (or
loss of use) of body parts and partial, but permanent, loss of
earning capacity due to work-related injuries. About 5-8
percent of cash benefits are awarded to survivors because of
work-related deaths. The remainder is paid for temporary
disabilities in which an employee is unable to work, or must
work at a reduced level, but is expected to recover fully.
Permanently disabled workers receiving workers'
compensation also may be eligible for benefits under the Social
Security Disability Insurance (DI) Program if they meet
generally more stringent DI tests. However, the Social Security
Act stipulates that total benefits under workers' compensation
and DI cannot exceed 80 percent of a worker's former earnings
(or, if higher, 80 percent of the total family Social Security
benefit). If there is an excess, the Social Security benefit is
reduced by the amount of the excess, or, in 13 States, the
workers' compensation benefit is reduced.
Workers' compensation laws require that all injury-related
medical and hospital care be paid for. As a result, medical
expenses made up 41 percent of total workers' compensation
benefits in 1993. Medical benefits are typically paid on an
``as-charged'' basis; the majority of States and the Federal
Government allow relatively unfettered employee choice of
physician/care provider. However, the medical benefit component
of workers' compensation has grown substantially in recent
years, and a growing number of States (now over half) have
instituted at least some form of ``managed care'' or ``fee
schedules'' to control these costs.
Workers' compensation laws make coverage compulsory for
most private employers, except in South Carolina and Texas.\27\
If employers reject coverage in these States, they lose the use
of common-law negligence defenses if sued. However, many State
laws exempt from coverage employees of nonprofit, charitable,
or religious institutions, as well as very small employers,
domestic and agricultural employment, and casual labor.
Coverage of State and local government employees differs widely
from State to State.
---------------------------------------------------------------------------
\27\ While coverage in New Jersey is technically elective, no
employer has chosen an exemption from the workers' compensation
statute, which requires that the election be made in writing prior to
an accident.
---------------------------------------------------------------------------
In 1993, 96.1 million employees were covered by State or
Federal workers' compensation laws, and wages and salaries of
covered workers totaled $2.5 trillion, about 82 percent of all
civilian wages and salaries. However, while the number of
covered employees grew from 1991, when 93.6 million workers
were covered, the proportion of the civilian payroll covered by
workers' compensation laws declined from 84 percent.
The total of $42.9 billion in 1993 workers' compensation
benefit costs (including those for black lung recipients) is
driven by the level of benefits provided under workers'
compensation laws, the cost of medical benefits, and injury
rates, as well as ``administrative'' factors such as the degree
of litigation involved.
Cash compensation levels are established by formulas set
in State and Federal workers' compensation laws and are
typically a percentage of weekly earnings at the time of injury
or death. Most laws provide benefits equal to two-thirds of
gross (pretax) lost earnings (or earning capacity); but several
States calculate benefits as a percentage of lost ``spendable''
(aftertax) earnings, usually replacing 75 or 80 percent.
Workers' compensation laws also set maximum weekly benefit
amounts. While maximum benefits are most often set at between
two-thirds and 100 percent of the State's average weekly wage,
they vary widely. For example, as of January 1996, maximum
weekly compensation for permanent total disability ranged from
$1,299 for Federal employees ($782 for those covered by the
Federal LHWCA) to $846 for Iowa (the highest State figure) and
$264 for Mississippi (the lowest State figure).
In 1993, compensation under regular Federal and State
Workers' Compensation Programs totaled $24.2 billion, of which
$1.2 billion was paid to survivors. In addition, $1.2 billion
in black lung cash benefits were provided, almost 60 percent of
which went to survivors.
In 1993, medical and hospitalization payments under
regular Federal and State workers' compensation laws totaled
$17.4 billion, and an additional $100 million was paid out for
black lung beneficiaries.
The Bureau of Labor Statistics (BLS) reported a 1993
workplace injury and illness incidence rate of 8.5 cases per
100 full-time equivalent private industry workers. The
incidence rate for lost workday cases was 3.8. Since 1989, the
overall incidence rate has ranged between 8.9 and 8.4, and the
lost-workday rate has varied between 3.8 and 4.1. According to
the Survey of Occupational Injuries and Illnesses, the total
number of private sector workplace injuries/illnesses in 1993
was 6.7 million, of which nearly 3 million involved lost
workdays. In addition, the BLS Census of Fatal Occupational
Injuries reported some 6,300 fatalities resulting from on-the-
job injuries (see Schmulowitz, 1995).
Generally, employers insure against their workers'
compensation liability through commercial insurance companies.
However, they also may self-insure by providing proof of
financial ability to carry their own risk (normally, large
employers), purchase their insurance through a State ``fund''
(essentially, a State-run insurance company), or buy insurance
commercially through a State-established ``high-risk''
insurance pool. In two States (North Dakota and Wyoming),
employers must purchase insurance from their State fund, and,
in four other States (Nevada, Ohio, Washington, West Virginia),
they must either self-insure or buy insurance from the State
fund. And nearly half of the remaining States have fully
``competitive'' State funds that allow employers to buy private
insurance, self insure, or buy from a State fund.
In 1993, 51 percent ($21.8 billion) of the total of $42.9
billion in workers' compensation benefits (including all cash
and medical costs under Federal and State laws) was paid by
private insurers; 23 percent ($9.9 billion) was provided
through self-insurance; 19 percent ($8.1 billion) came from
State funds; and 7 percent ($3.1 billion) was paid under
Federal programs.\28\
---------------------------------------------------------------------------
\28\ Federal program disbursements were for black lung benefits and
payments for Federal employees. Some of the payments financed through
private insurers, self-insurance, and State funds were mandated by
Federal laws covering private-sector employers (e.g., the LHWCA).
---------------------------------------------------------------------------
Total workers' compensation costs to employers in a given
year are greater than annual benefits paid out because of the
built-in cost of long-term benefits. In 1993, employer costs
totaled $57.3 billion. These costs included benefits paid,
administration of insurance operations, insurer profits and
taxes, and reserves for future benefit payments. Where
insurance is purchased, the premium paid by employers varies
with the risk involved in the covered employment and the
industrial classification of the employer's particular
industry, although it may be modified by ``experience rating''
for some moderate to large employers and other factors judged
relevant by the insurer.
By type of insurer, the total 1993 cost to employers was:
$33.6 billion (59 percent) paid to private insurers, $10.9
billion (19 percent) paid to State funds, $10.6 billion (18
percent) financed by self-insured employers, and $2.3 billion
(4 percent) from Federal appropriations for Federal employees
and from that portion of black lung benefits financed by coal
mine employers (as opposed to Federal appropriations).
In 1993, average employer costs per covered employee were
$597; as a proportion of employers' payrolls, this represented
$2.30 per $100 of payroll. Although substantial increases in
employers' workers' compensation costs were recorded in the
1980s, these costs actually decreased in real terms in the
early 1990s, dropping from a high of $2.40 per $100 of payroll
in 1991.
Table 15-43 shows the estimated number of workers covered
and the total annual payroll in covered employment for selected
years between 1948 and 1993. Over that time, the number of
workers covered in an average month increased from 36 to 96.1
million, and covered payroll rose from $105 billion to $2.5
trillion.

TABLE 15-43.--ESTIMATED NUMBER OF WORKERS COVERED BY WORKERS' COMPENSATION IN AVERAGE MONTH AND TOTAL ANNUAL
PAYROLL IN COVERED EMPLOYMENT, SELECTED YEARS 1948-93 \1\
----------------------------------------------------------------------------------------------------------------
Workers covered in average Total payroll in covered
month employment
----------------------------------------------------------
Percent of
Year employed Percent of
Number (in wage and Amount (in civilian wage
millions) salary billions) and salary
workers \2\ disbursements
----------------------------------------------------------------------------------------------------------------
1948................................................. 36.0 77.0 $105 79.9
1953................................................. 40.7 80.0 154 81.5
1958................................................. 42.5 80.2 192 83.1
1963................................................. 47.3 80.5 254 83.7
1968................................................. 56.8 83.8 376 83.0
1973................................................. 66.3 86.3 578 84.2
1978................................................. 75.6 86.7 922 84.3
1983................................................. 78.0 85.6 1,382 84.6
1988................................................. 91.3 87.0 2,000 84.2
1990................................................. 95.1 87.0 2,250 84.0
1991................................................. 93.6 87.0 2,300 84.0
1993................................................. 96.1 NA 2,500 82.0
----------------------------------------------------------------------------------------------------------------
\1\ Before 1963, excludes Alaska and Hawaii.
\2\ Beginning in 1968, excludes those under age 16 and includes certain workers previously classified as self-
employed.

NA--Not available.

Source: Nelson (1991, 1993); Schmulowitz (1995).

Table 15-44 illustrates benefit payments under workers'
compensation laws by type of benefit for the years 1987-93
(except 1992). In 1993, total benefits paid equaled $42.9
billion, of which $41.6 billion was paid out under regular
State and Federal workers' compensation laws and nearly $1.4
billion was provided through the Federal Black Lung Benefit
Programs.

TABLE 15-44.--ESTIMATED WORKERS' COMPENSATION BENEFIT PAYMENT AMOUNTS BY TYPE OF BENEFIT 1987-93
[In millions of dollars]
----------------------------------------------------------------------------------------------------------------
Type of benefit 1987 1988 1989 1990 1991 1993
----------------------------------------------------------------------------------------------------------------
Regular program:
Medical and hospitalization......... $9,794 $11,401 $13,299 $15,067 $16,715 $17,409
Compensation........................ 15,979 17,833 19,538 21,737 24,063 24,160
Disability...................... 15,046 16,956 18,553 20,635 22,840 22,930
Survivor........................ 933 877 985 1,102 1,223 1,229
-----------------------------------------------------------------------
Total....................... 25,773 29,234 32,837 36,804 40,778 41,569
=======================================================================
Black Lung Program:
Medical and hospitalization......... 118 117 125 120 117 112
Compensation........................ 1,426 1,381 1,354 1,314 1,274 1,243
Disability...................... 698 657 618 577 533 520
Survivor........................ 729 725 736 737 741 723
-----------------------------------------------------------------------
Total....................... 1,545 1,499 1,479 1,434 1,391 1,355
=======================================================================
Regular and Black Lung:
Medical and hospitalization......... 9,912 11,518 13,424 15,187 16,832 17,521
Compensation........................ 17,406 19,215 20,892 23,051 25,337 25,403
Disability...................... 15,775 17,613 19,171 21,212 23,373 23,450
Survivor........................ 1,631 1,602 1,721 1,839 1,964 1,952
-----------------------------------------------------------------------
Total....................... 27,318 30,733 34,316 38,238 42,169 42,925
----------------------------------------------------------------------------------------------------------------
Source: Nelson (1991, 1993); Schmulowitz (1995).

Recent Developments in Employers' Costs and Benefit Payments \29\
---------------------------------------------------------------------------

\29\ Largely drawn from Burton, Yates, and Blum (1997) and National
Foundation (1997).
---------------------------------------------------------------------------
The historical data series providing national information
on the costs, benefits, and coverage of the workers'
compensation system (used in the above overview through 1993)
was discontinued by the Social Security Administration (SSA)
after publication of data for 1993. However, while not directly
comparable to the historical SSA series, estimates from other
sources the now-retired author of the SSA series (Jack
Schmulowitz) and John F. Burton (editor of John Burton's
Workers' Compensation Monitor) are available to portray cost
trends since 1993. And recent work by the National Academy of
Social Insurance as reported by the National Foundation for
Unemployment Compensation and Workers' Compensation updates
benefit payments under State workers' compensation laws through
1995.\30\
---------------------------------------------------------------------------
\30\ Note: Unlike the SSA series of data through 1993, the National
Foundation data does not include amounts paid under the workers'
compensation system for Federal employees and the Black Lung Programs.
These payments totaled some $3.1 billion in fiscal year 1995.
---------------------------------------------------------------------------
Preliminary estimates made available by Schmulowitz (that
both revise and extend the SSA series) indicate that workers'
compensation costs to employers have declined from 1993 through
1995, both absolutely and as a percent of payroll. First,
revised figures for 1993 show costs of $60.8 billion (2.17
percent of payroll) in 1993, as opposed to $57.3 billion (2.3
percent of payroll) noted earlier in this section (and drawn
from the unrevised SSA data series). Then, an extension of
these revised figures estimates that costs dropped to $60.3
billion (2.04 percent of payroll) in 1994 and $56.9 billion
(1.82 percent of payroll) in 1995.
Another set of estimates produced by Burton and his
colleagues, and derived from different data sources, indicate
that, since 1993, employers' workers' compensation costs have
increased in absolute terms, but decreased slightly as a
percent of payroll. After estimating 1993 costs at $80.4
billion (well above other estimates), the Burton figures show
absolute dollar costs rising to $87.3 billion in 1994, $87.6
billion in 1995, and $92.7 billion in 1996. However, as a
percent of payroll, the Burton figures estimate costs at 2.67
percent 1993, rising to 2.75 percent in 1994, and then dropping
to 2.61 percent in 1995 and 1996.
Estimates of benefit payments under State workers'
compensation laws and the Federal Longshore and Harbor Workers'
Compensation Act by the National Foundation for Unemployment
Compensation and Workers' Compensation (based on work done by
the National Academy of Social Insurance) indicate that they
have dropped since 1993. A revised 1993 estimate for total
(cash and medical) payments places them at $47.1 billion,
slightly higher than the amount included in the SSA series for
1993. For 1994 and 1995, the National Foundation figures show a
decline to $41.5 billion and $40.1 billion. In addition, the
National Foundation's estimates indicate a reduction in average
annual benefit costs per covered employee under State workers'
compensation laws from $453 in 1993 to $413 in 1995.

REFERENCES

Burton, John F., Elizabeth H. Yates, and Florence Blum (1997).
The employers' costs of workers' compensation in the
1990s: The $100 billion gap. John Burton's Workers'
Compensation Monitor. March/April 1997. pp. 1-11.
Committee on Energy and Commerce, U.S. House of
Representatives. (1993). Medicaid source book:
Background data and analysis (Committee Print 103A).
Washington, DC: U.S. Government Printing Office.
Congressional Budget Office. (1988). Current housing problems
and possible Federal responses. Washington, DC: Author.
Congressional Budget Office. (1994). The challenges facing
Federal rental assistance programQ. Washington, DC:
Author.
Congressional Research Service. (1991). Housing assistance in
the United States (91-872E). Washington, DC: Author.
Congressional Research Service. (1993). HUD housing assistance
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Food and Consumer Service. (1995, July). Food stamp quality
control annual report, fiscal year 1995. Washington,
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National Academy for State Health Policy. (1997). Medicaid
managed care: Program characteristics and State survey
results. Volume 1. Washington, DC: Author.
National Foundation for Unemployment Compensation and Workers'
Compensation. (1997). Fiscal data for State workers'
compensation systems 1986-95. Research Bulletin, 97 WC-
2. September 15, 1997. pp. 1-17.
Nelson, W.J. (1991). Workers' compensation: Coverage, benefits,
and costs, 1988. Social Security Bulletin, 54(3), pp.
12-20.
Nelson, W.J. (1993). Workers' compensation: Coverage, benefits,
and costs, 1990-91. Social Security Bulletin, 56(3),
pp. 18-74.
Schmulowitz, J. (1995). Workers' compensation: Coverage,
benefits, and costs, 1992-93. Social Security Bulletin
58(2), pp. 51-57.
U.S. Department of Agriculture. (1994, October). Food stamp
participation rates: January 1992. Washington, DC:
Author.
U.S. Department of Agriculture. (1995, December). Trends in FSP
participation rates: Focus on August 1993. Washington,
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