[House Report 107-461]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-461

======================================================================



 
      ONE-YEAR REAUTHORIZATION OF TRANSITIONAL MEDICAL ASSISTANCE

                                _______
                                

  May 14, 2002.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Tauzin, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 4584]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4584) to amend title XIX of the Social Security 
Act to extend the authorization of transitional medical 
assistance for 1 year, having considered the same, report 
favorably thereon without amendment and recommend that the bill 
do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     3
Statement of General Performance Goals and Objectives............     3
New Budget Authority, Entitlement Authority, and Tax Expenditures     3
Committee Cost Estimate..........................................     3
Congressional Budget Office Estimate.............................     3
Federal Mandates Statement.......................................     7
Advisory Committee Statement.....................................     7
Constitutional Authority Statement...............................     7
Applicability to Legislative Branch..............................     7
Section-by-Section Analysis of the Legislation...................     8
Changes in Existing Law Made by the Bill, as Reported............     8
Additional Views.................................................     9

                          Purpose and Summary

    The purpose of H.R. 4584 is to reauthorize transitional 
medical assistance for one year.

                  Background and Need for Legislation

    Transitional medical assistance--which is sometimes 
referred to as transitional Medicaid--was created to ensure 
that former welfare recipients have health care coverage after 
entering the workforce. These individuals typically enter low-
wage jobs that do not offer private coverage or offer coverage 
with expensive premiums. Transitional medical assistance was 
created to fill this void and extends up to a year of Medicaid 
coverage to these individuals and their families.
    Transitional medical assistance, as provided under section 
1925 of the Social Security Act, was established in 1988, 
although a more limited provision dates back to 1972. It was 
extended in the 1996 welfare reform law, the Personal 
Responsibility and Work Opportunity Reconciliation Act, P.L. 
104-193. Families moving from welfare to work, who lose 
eligibility for Medicaid due to earnings from employment, are 
entitled to an initial six months of Medicaid coverage without 
regard to the amount of their earned income. These families are 
also entitled to an additional six months of coverage if family 
earnings, less childcare costs, do not exceed 185 percent of 
the federal poverty level. To qualify, a family must have 
received Medicaid in three of the six months immediately before 
becoming ineligible as a result of increased income. Families 
lose their eligibility for transitional medical assistance when 
there is no longer a dependent child in the home, when they 
fail to pay any premiums, when they fail to meet quarterly 
income reporting requirements, or when the caretaker recipient 
has no earnings.
    The federal waiver process allows states to increase the 
duration of assistance, modify the income eligibility 
standards, or change the income reporting requirements to 
address the needs of their welfare population. However, budget 
neutrality requirements may limit the ability of states to use 
this process to pursue program expansions or administrative 
simplifications. In addition, because there are no state 
reporting requirements regarding transitional medical 
assistance, there is no nationwide data as to the extent to 
which eligible families obtain and keep coverage.
    Transitional medical assistance is set to expire on 
September 30, 2002. H.R. 4584, introduced by Mr. Upton, Mr. 
Hall of Texas, Mr. Tauzin, and Mr. Bilirakis, provides a one-
year reauthorization of transitional medical assistance.

                                Hearings

    The Subcommittee on Health held a hearing on ``Welfare 
Reform: A Review of Abstinence Education and Transitional 
Medical Assistance'' on Tuesday, April 23, 2002. The 
Subcommittee received testimony from Jacqueline Del Rosario, 
Executive Director, ReCapturing the Vision International; Joe 
S. McIlhaney Jr., M.D., The Medical Institute for Sexual 
Health; David W. Kaplan, M.D., Head of Adolescent Medicine and 
Professor of Pediatrics, University of Colorado School of 
Medicine; Cindy Mann, J.D., Senior Fellow, Kaiser Commission on 
Medicaid and the Uninsured; and William J. Scanlon, Ph.D., 
Director, Health Care Issues, U.S. General Accounting Office.

                        Committee Consideration

    On Wednesday, April 24, 2002, the Full Committee met in 
open markup session and favorably ordered reported a Committee 
Print to amend title XIX of the Social Security Act to extend 
the authorization of transitional medical assistance for 1 
year, without amendment, by a voice vote, a quorum being 
present. The Committee also agreed to a unanimous consent 
request by Chairman Tauzin that the Committee Print would be 
introduced as a bill, H.R. 4584, and to allow for this report 
to be filed on that bill.

                            Committee Votes

    Clause 3(b) of rule XIII of the rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were taken in connection with ordering H.R. 4584 
reported to the House. A motion by Mr. Tauzin to order H.R. 
4584 reported, without amendment, to the House was agreed to by 
a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held an oversight 
hearing and made findings that are reflected in this report.

         Statement of General Performance Goals and Objectives

    The objective of H.R. 4584 is to extend the authorization 
of transitional medical assistance for one year.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
4584, to amend title XIX of the Social Security Act to extend 
the authorization of transitional medical assistance for 1 
year, would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 10, 2002.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4584, a bill to 
amend title XIX of the Social Security Act to extend the 
authorization of transitional medical assistance for one year.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Eric 
Rollins and Jeanne De Sa.
            Sincerely,
                                           Steven Lieberman
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 4584--A bill to amend title XIX of the Social Security Act to 
        extend the authorization of transitional medical assistance for 
        one year

    Summary: This bill would extend by one year the requirement 
that state Medicaid programs provide up to 12 months of 
eligibility, known as transitional medical assistance (TMA), to 
certain Medicaid beneficiaries (usually former welfare 
recipients) who would otherwise be ineligible because they have 
returned to work and have increased earnings. Under current 
law, the requirement will expire on September 30, 2002.
    CBO estimates that H.R. 4584 would increase direct spending 
by $355 million over the 2003-2007 period. Within that total, 
CBO anticipates that federal Medicaid spending would rise by 
$365 million and that federal spending in the State Children's 
Health Insurance Program (SCHIP) would decline by $10 million. 
Because this bill would affect direct spending, pay-as-you-go 
procedures would apply.
    This bill does not contain any intergovernmental or 
private-sector mandates as defined in the Unfunded Mandates 
Reform Act (UMRA). The bill's one-year extension of 
transitional medical assistance would result in additional 
state spending of $265 million over the 2003-2007 period.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 4584 is shown in the following table. 
The costs of this legislation fall within budget function 550 
(health).

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2003     2004     2005     2006     2007
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Medicaid:
    Estimated Budget Authority.....................................      130      200       25       10        0
    Estimated Outlays..............................................      130      200       25       10        0
SCHIP:
    Estimated Budget Authority.....................................        0        0        0        0        0
    Estimated Outlays..............................................       -5      -10        5        0        0
Total cost of H.R. 4584:
    Estimated Budget Authority.....................................      130      200       25       10        0
    Estimated Outlays..............................................      125      190       30       10        0
----------------------------------------------------------------------------------------------------------------
Note.--SCHIP is the State Children's Health Insurance Program.

Basis of estimate

            Medicaid
    State Medicaid programs are required by section 1931 of the 
Social Security Act to cover individuals who meet the 
eligibility requirements for the state's Aid to Families with 
Dependent Children (AFDC) program that were in effect on July 
16, 1996. AFDC has since been replaced by the Temporary 
Assistance for Needy Families (TANF) program. States that wish 
to expand eligibility beyond this minimum requirement may do so 
by disregarding a portion of an applicant's income and assets. 
Although there is no formal link between Medicaid and TANF 
eligibility, many states have aligned the two programs' 
eligibility standards. As a result, most of the individuals who 
receive Medicaid under section 1931 are welfare recipients.
    Under current law, states are required to temporarily 
continue Medicaid coverage for certain individuals (and their 
dependents) whose earnings increase above the state's 
eligibility levels. This transitional medical assistance is 
available for individuals who have received Medicaid under 
section 1931 for at least three of the previous six months and 
would otherwise lose their eligibility because their earnings 
have increased. TMA recipients are guaranteed to remain 
eligible for Medicaid for six months; after that, they may 
remain eligible for another six months if they report their 
income on a periodic basis and have incomes below185 percent of 
the poverty level. Some states have opted to soften the three-out-of-
six requirement (by disregarding some of a recipient's income when 
determining eligibility) or provide TMA for longer periods (under a 
waiver).
    The requirement for states to provide TMA currently applies 
to individuals who lose their eligibility under section 1931 
prior to September 30, 2002. H.R. 4584 would extend the 
requirement through September 30, 2003. CBO estimates that this 
bill would increase federal Medicaid spending by $130 million 
in 2003 and a total of $365 million over the 2003-2007 period.
    Number of Beneficiaries. Many families move on and off the 
Medicaid and TANF rolls as their family and employment 
circumstances change. Under current law, CBO anticipates that 
about 1.4 million families enrolled under section 1931 will 
lose their Medicaid eligibility in 2003. Based in part on 
experience with welfare case closures, CBO projects that 
slightly more than one million families will leave the TANF 
rolls in 2003. As noted earlier, many of those families will 
also lose their Medicaid eligibility. The remaining families 
will be Medicaid recipients who were not enrolled in TANF.
    Based on research on families leaving welfare, CBO 
anticipates that about 500,000 families would meet the basic 
requirements for TMA in 2003. Recent TANF data on the number of 
recipients in each family suggest that there are about 500,000 
adults and 900,000 children in those families. (Virtually all 
families that receive TANF and have an adult recipient are 
single-parent families.)
    From this eligible population, CBO estimates that the 
extension of TMA would enroll an additional 300,000 adults and 
360,000 children in Medicaid. Those estimates account for 
individuals who would remain enrolled in Medicaid under other 
eligibility categories after losing their section 1931 
eligibility (and thus not receive TMA). Based on studies of 
families leaving welfare, CBO also assumed only moderate 
participation in TMA. As noted earlier, many children in 
families that lose their section 1931 eligibility remain 
eligible for Medicaid under other eligibility rules. However, 
studies suggest that many children drop off the rolls once 
their parents lose eligibility. By extending TMA, the bill 
would therefore keep some of those children enrolled in 
Medicaid.
    CBO anticipates that the bill's effect on Medicaid 
enrollment would be much smaller when measured on a full-year 
equivalent basis. Under current law, families losing their 
section 1931 eligibility would receive four months of 
eligibility--even without TMA--under a separate provision of 
Medicaid law. The bill would therefore provide most families 
with another eight months of eligibility instead of 12. Even 
then, research on TMA recipients indicates that many people do 
not remain eligible for a full 12 months because they fail to 
report their incomes on a periodic basis.
    After accounting for these factors, CBO estimates that H.R. 
4584 would increase Medicaid enrollment on a full-year-
equivalent basis by about 115,000 in 2003, 160,000 in 2004, and 
smaller amounts in 2005 and 2006. The bill's effects would 
extend beyond 2003 because families who qualify for TMA at any 
point in that year would be entitled to as many as 12 months of 
additional eligibility, even if that period of eligibility runs 
beyond 2003. (Families living in states that provide more than 
12 months of TMA through a waiver could remain eligible into 
2005 or 2006.)
    Per Capita Costs. CBO estimates that the federal share of 
costs in 2003 per full-year equivalent would be about $1,350 
for an adult and $975 for a child. Those figures are lower than 
CBO's baseline figures for adults and children (by about 30 
percent and 10 percent, respectively) because of a number of 
adjustments. First, CBO excluded pregnancy-related costs for 
adults. Pregnant women are typically eligible for Medicaid at 
much higher income levels than under section 1931, so they 
would be unlikely to receive TMA. Second, CBO assumed that 
adults and children in families receiving TMA would be somewhat 
healthier than other Medicaid recipients and thus have lower 
costs, on average. Finally, CBO assumed that some TMA 
recipients would receive a more limited set of benefits than 
Medicaid usually provides because states do not have to provide 
non-acute care services to TMA recipients in their second six-
month period of eligibility.
            State Children's Health Insurance Program
    CBO anticipates that under current law about 10 percent of 
the families leaving welfare in 2003 because of higher earnings 
would have incomes high enough to make their children 
ineligible for Medicaid, and that some of the children in these 
families would enroll in SCHIP instead. By extending TMA, the 
bill would make those children eligible for Medicaid. Since 
children who are eligible for Medicaid cannot receive SCHIP, 
the bill would lead to savings in SCHIP.
    CBO estimates that the bill would reduce federal SCHIP 
outlays by $5 million in 2003 and $10 million in 2004. Since 
states generally have three years to spend their SCHIP 
allotments, those savings would free up funds that could be 
spent on benefits in later years, and CBO estimates that 
spending would increase by $5 million in 2005.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays that are subject to pay-as-you-go procedures 
are shown in the following table. For the purposes of enforcing 
pay-as-you-go procedures, only the effects through fiscal year 
2006 are counted.

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      2002   2003   2004   2005   2006   2007   2008   2009   2010   2011   2012
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................      0    125    190     30     10      0      0      5      0      0      0
Changes in receipts................                                 Not applicable
----------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-section impact: This bill 
does not contain any intergovernmental or private-sector 
mandates as defined in UMRA. The bill's one-year extension of 
transitional medical assistance would result in additional 
state spending of $265 million over the 2003-2007 period.
    Estimate prepared by: Federal Costs: Eric Rollins and 
Jeanne De Sa; Impact on State, Local, or Tribal Governments: 
Leo Lex; and Impact on the Private Sector: Amy Fedigan.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. One-year reauthorization of transitional medical assistance

    Under current law, transitional medical assistance sunsets 
after September 30, 2002.
    This section reauthorizes transitional medical assistance 
for an additional year, extending the sunset date to September 
30, 2003.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                          SOCIAL SECURITY ACT

           *       *       *       *       *       *       *



      TITLE XIX--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS

           *       *       *       *       *       *       *



                   STATE PLANS FOR MEDICAL ASSISTANCE

  Sec. 1902. (a)  * * *

           *       *       *       *       *       *       *

  (e)(1)(A)  * * *
  (B) Subparagraph (A) shall not apply with respect to families 
that cease to be eligible for aid under part A of title IV 
during the period beginning on April 1, 1990, and ending on 
September 30, [2002] 2003. During such period, for provisions 
relating to extension of eligibility for medical assistance for 
certain families who have received aid pursuant to a State plan 
approved under part A of title IV and have earned income, see 
section 1925.

           *       *       *       *       *       *       *


            EXTENSION OF ELIGIBILITY FOR MEDICAL ASSISTANCE

  Sec. 1925. (a)  * * *

           *       *       *       *       *       *       *

  (f) Sunset.--This section shall not apply with respect to 
families that cease to be eligible for aid under part A of 
title IV after September 30, [2002] 2003.

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    We support this legislation, which extends the sunset of 
transitional medical assistance (TMA) for an additional year. 
Our strong preference, however, is that Congress eliminate the 
sunset entirely, making the program more dependable for the 
beneficiaries who depend on it and the states that administer 
it. At a minimum, the Committee should have reauthorized TMA 
for five years, consistent with the reauthorization of 
Temporary Assistance for Needy Families (TANF).
    Additionally, even though TMA is a vital route to coverage 
for parents leaving welfare for work, a significant number of 
parents miss out on TMA coverage. According to the latest Urban 
Institute data, two-thirds of parents lose Medicaid after 
leaving welfare, even though the vast majority are likely to be 
eligible for TMA, suggesting that simplifications to TMA are 
needed to assure that eligible families secure the coverage. In 
particular, there are four administrative simplifications that 
we wish to see enacted:
    (1) A waiver of reporting requirements for families who 
qualify for TMA: Families can be eligible for TMA for up to 12 
months; however, they must meet prescriptive reporting 
requirements to keep their eligibility. To receive the first 
six months of TMA, families must notify the state of their 
employment and income status (even though there is no income 
eligibility limit during this period). They then must report 
income to the state by the 21st day of the 4th month. In order 
to maintain eligibility for the second six months, the family 
must report again to the redetermination office after six 
months even if their income has not changed. In the second six 
months of TMA, families must report income to the state by the 
21st day of the first and fourth month. A trip to the 
redetermination office can entail an entire day off from work, 
and if all paperwork is not correct, the family must make 
another trip. Often, a day off from work means a day of no pay. 
If the family does not show up as required, coverage is 
terminated.
    (2) The elimination of TMA requirements for the subset of 
states that already provide health insurance to families at or 
above 185% of poverty. If states already meet TMA requirements 
through their regular Medicaid program, compliance with 
administrative rules of TMA is unnecessary and duplicative.
    (3) A state option to waive requirement that families have 
been on Medicaid for three of the previous six months to 
qualify for TMA: Currently, in order to be eligible for TMA, a 
family must have had Medicaid coverage for three of the 
previous six months. This requirement excludes families who, 
for one reason or another, decided not to seek medical 
assistance even when they were eligible for it.
    (4) A state option to expand TMA coverage above 185% of 
poverty: Currently, the income limit for TMA is 185% of 
poverty. Some states, however, would like the option to expand 
their TMA programs to individuals above that income level in 
order to make the transition from welfare to work rewarding.
    While states could potentially use section 1115 of the 
Social Security Act to waive these administrative requirements, 
budget neutrality makes this an unattractive option for states, 
because they would be forced to reduce program spending in 
other areas, such as benefits or eligibility. We have long 
supported enacting these simplifications, and two of the four 
were included in H.R. 5291, the ``Beneficiary Improvement and 
Protection Act of 2000,'' reported by the Committee in October 
of 2000.
    In addition, we would like to see the Committee take action 
on the issue of health insurance coverage for pregnant women 
and children in Medicaid and the Children's Health Insurance 
Program who are legal immigrants. Until the passage of the 1996 
welfare reform law, legal immigrants were generally eligible 
for public benefits on the same basis as citizens. The welfare 
law eliminated the ability of most legal immigrants to receive 
any federal benefits, because it conditioned eligibility on 
citizenship status rather than legal status, extending to most 
legal immigrants the eligibility restrictions that had 
traditionally applied only to undocumented immigrants. Since 
passage of welfare reform, Congress has acted in some instances 
to reinstate eligibility for public benefits. In 1997, Congress 
restored Supplemental Security Income (SSI) to most immigrants 
who were already in the United States when the welfare law was 
enacted, and in 1998, it restored food stamp eligibility for 
immigrant children and for elderly and disabled persons who 
were here before August of 1996.
    As a result, the eligibility of legal immigrants for public 
benefits varies among federal programs and depends on a variety 
of factors, including date of entry to the United States, type 
of immigration status, work history, age, and state of 
residence. Welfare reauthorization provides an opportunity to 
reconsider the restrictions and other immigrant provisions in 
the welfare law in a more comprehensive manner than has been 
undertaken to date. Therefore, we believe it would have been 
appropriate to address the issue of legal immigrants when the 
TANF was reauthorized.
    There has been significant interest in giving states the 
option to provide Medicaid (and CHIP) coverage for legal 
immigrants and eliminating the five-year deeming requirement 
that accompanies the ban. Congressmen Diaz-Balart and Waxman 
are the lead sponsors of a bill, H.R. 1143, which would allow 
states to provide Medicaid coverage for legal immigrant 
children and pregnant women under Medicaid and CHIP and not 
require sponsor deeming for the first five years of residency. 
In 2000, the Committee reported out the Beneficiary Improvement 
and Protection Act (H.R. 5291) which allowed states the option 
to cover legal immigrant children and pregnant women under 
Medicaid and CHIP after they lawfully resided in the country 
for two years. This prohibition on coverage of legal immigrants 
is bad health policy as individuals who lack insurance tend to 
forgo or delay needed treatment and later on tax the health 
system as preventable illnesses turn into serious conditions 
requiring more expensive care. We believe the Committee should 
act to rectify this problem quickly.

                                   John D. Dingell.
                                   Peter Deutsch.
                                   Ed Towns.
                                   Henry A. Waxman.
                                   Lois Capps.
                                   Karen McCarthy.
                                   Tom Sawyer.
                                   Frank Pallone, Jr.
                                   Albert R. Wynn.
                                   Jane Harman.
                                   Sherrod Brown.
                                   Diana DeGette.
                                   Ted Strickland.
                                   Gene Green.
                                   Eliot L. Engel.
                                   Edward J. Markey.
                                   Bobby L. Rush.
                                   Bart Stupak.

                                  
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