Medicaid Enrollment: Amid Declines, State Efforts to Ensure Coverage
After Welfare Reform Vary (Letter Report, 09/10/1999, GAO/HEHS-99-163).

Pursuant to a congressional request, GAO provided information on the
decline in Medicaid enrollment, focusing on: (1) Medicaid enrollment
changes for families and children following welfare reform, as well as
associated key federal protections established for Medicaid; and (2)
states' welfare-related policies and practices that can influence
Medicaid enrollment.

GAO noted that: (1) between 1995 and 1997, Medicaid enrollment declined
nationwide, but substantially less than welfare participation; (2)
overall, Medicaid enrollment among the nonelderly and nondisabled adults
and children declined by about 7 percent, compared with a 23-percent
decline in welfare participation; (3) shifts in individual states'
Medicaid enrollment for these adults and children during this period
ranged from a 19-percent decline in Wisconsin to a 26-percent increase
in Delaware; (4) while most states experienced declines in Medicaid
enrollment, enrollment increased in some states, in part as a result of
individual state program expansions; (5) on the other hand, Medicaid and
welfare enrollment declines have been attributed to strong state
economies, low unemployment rates, and new state welfare-to-work
initiatives; (6) the smaller declines in Medicaid enrollment may also be
due to federal eligibility protections built into welfare reform and
ongoing expansions of Medicaid coverage for low-income children that
predate welfare reform; (7) one eligibility protection that predates
welfare reform--transitional Medicaid assistance--provides an additional
year of Medicaid coverage for individuals who lose Medicaid eligibility
as a result of employment or increased income; (8) the extent to which
transitional Medicaid has affected national enrollment trends, however,
is uncertain because of the lack of uniform reporting and tracking of
this entitlement; (9) GAO's analysis shows that changes in state-level
welfare policies and practices can both positively and negatively
influence Medicaid enrollment; (10) recognizing that the income
reporting requirements can limit beneficiaries' access to the
transitional Medicaid entitlement, the Health Care Financing
Administration (HCFA) has submitted a legislative proposal to eliminate
these requirements for up to 1 year; and (11) GAO's work shows that
increased state flexibility to ease reporting requirements could
facilitate the transition from welfare to work and make Medicaid more
available to eligible individuals.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-99-163
     TITLE:  Medicaid Enrollment: Amid Declines, State Efforts to
	     Ensure Coverage After Welfare Reform Vary
      DATE:  09/10/1999
   SUBJECT:  Health insurance
	     State-administered programs
	     Disadvantaged persons
	     Health care programs
	     Surveys
	     Federal/state relations
	     Eligibility determinations
	     Reporting requirements
	     Workfare
	     Public assistance programs
IDENTIFIER:  State Children's Health Insurance Program
	     HHS Temporary Assistance for Needy Families Program
	     Aid to Families with Dependent Children Program
	     Medicaid Program
	     AFDC

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Cover
================================================================ COVER

Report to Congressional Requesters

September 1999

MEDICAID ENROLLMENT - AMID
DECLINES, STATE EFFORTS TO ENSURE
COVERAGE AFTER WELFARE REFORM VARY

GAO/HEHS-99-163

Medicaid After Welfare Reform

(101762)

Abbreviations
=============================================================== ABBREV

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

Letter
=============================================================== LETTER

B-281152

September 10, 1999

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

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

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

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

Given your concerns about apparent declines in Medicaid enrollment
after welfare reform, you asked us to (1) analyze Medicaid enrollment
changes for families and children following welfare reform, as well
as associated key federal protections established for Medicaid, and
(2) assess states' welfare-related policies and practices that can
influence Medicaid enrollment.  In conducting our work, we analyzed
enrollment data from the 50 states and from the Health Care Financing
Administration (HCFA) for 1995 and 1997.\3 To assess the procedures
and protections that states have used to enroll Medicaid-eligible
individuals since welfare reform, we also contacted 21 states to
review state policies and practices that influenced enrollment.  We
performed our work between July 1998 and July 1999 in accordance with
generally accepted government auditing standards.  (For more detailed
information on our study scope and methodology, see apps.  I and II.)

--------------------
\1 Fiscal year 1998 expenditures were $177 billion; data on the
number of beneficiaries for 1998 are not yet available. 

\2 The Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 (P.L.  104-193). 

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

   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

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

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

  -- States we contacted are increasingly implementing welfare
     reform-related policies and programs designed to divert families
     from enrolling in cash assistance programs.  While a diversion
     strategy such as requiring a job search before providing cash
     assistance can affect the timing of Medicaid eligibility
     determinations, such a requirement does not appear to exceed the
     maximum time allowed by the Medicaid statute. 

  -- The length of time that states we contacted provide transitional
     Medicaid for newly working families varied, ranging from 1 to 3
     years.  Participation in transitional Medicaid ranged from about
     4 percent to 94 percent of those leaving cash assistance in the
     several states that were able to provide such data. 
     Additionally, adherence to beneficiary income reporting
     requirements can affect the extent to which families initially
     receive and then retain transitional Medicaid coverage for the
     full period for which they may be entitled.  States taking
     advantage of the statutory authority to obtain HCFA waivers of
     these income reporting requirements reported higher
     participation rates than states that did not. 

  -- Some states have initiated outreach and education campaigns to
     counter confusion among beneficiaries regarding Medicaid
     eligibility.  In concert with the State Children's Health
     Insurance Program (SCHIP) authorized in 1997, some states have
     simplified Medicaid application and eligibility determination
     processes to facilitate enrollment.  Also, officials in some
     states have noted increased Medicaid enrollment stemming from
     eligibility screening for SCHIP. 

Recognizing that the income reporting requirements can limit
beneficiaries' access to the transitional Medicaid entitlement, HCFA
has submitted a legislative proposal to eliminate these requirements
for up to 1 year.  Our work shows that increased state flexibility to
ease reporting requirements could facilitate the transition from
welfare to work and make Medicaid more available to eligible
individuals.  Therefore, we are recommending that the Congress
consider allowing states, as a feature of their Medicaid programs, to
guarantee a full year of transitional Medicaid coverage to eligible
beneficiaries without quarterly income reporting requirements.  State
options in this area would be similar to the flexibility granted
under section 4731 of the Balanced Budget Act of 1997 (BBA), which
allowed states to guarantee children a longer period of Medicaid
coverage, regardless of changes in a family's financial status or
size.  This report also recommends that the Administrator of HCFA (1)
analyze states' use of transitional Medicaid and (2) provide states
with technical assistance regarding best approaches to implementing
transitional Medicaid.  In commenting on a draft of this report, HCFA
concurred with these recommendations. 

   BACKGROUND
------------------------------------------------------------ Letter :2

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

The welfare reform law also provided states with new choices
regarding how to administer Medicaid and determine applicants'
eligibility for coverage.\6 Previously, states had been required to
use a single state agency to administer both AFDC and Medicaid as
well as a single application for use in determining eligibility for
both programs.  Now states have the option of using separate state
agencies, applications, eligibility criteria, and application
procedures for TANF and Medicaid.  While welfare reform required that
states use the July 16, 1996, AFDC eligibility income and resource
(asset) criteria for determining Medicaid eligibility, states were
free to apply different criteria for TANF eligibility, including work
and preapplication requirements that had to be satisfied before TANF
applications were processed. 

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

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

The federal welfare reform law also left unaltered Medicaid coverage
for the so-called "expansion population"--pregnant women as well as
infants and children under age 19 born after September 30, 1983,
whose family income falls below states' poverty-level standards.\9
The Medicaid statute requires that states annually expand Medicaid
coverage to children living in low-income families until October
2002, when children through the age of 18 will be eligible.\10
Currently, the law requires that children only up to age 15 be
covered; however, over 20 states have accelerated the expansion
schedule and are allowing older children to qualify for Medicaid
coverage sooner than prescribed by the law.  By August 1996 when the
federal welfare reform legislation was passed, 16 states, including 6
in our sample, were already covering children up to age 19.  \11

One year after passage of welfare reform, as part of the BBA, the
Congress established SCHIP, an optional health insurance program for
children in families with incomes up to 200 percent of the federal
poverty level who do not qualify for Medicaid.\12

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

--------------------
\4 TANF became effective on July 1, 1997, but states had the option
of implementing their TANF programs as early as October 1996.  TANF
implementation dates varied among the 21 states we contacted from
October 1996 in Connecticut, Florida, Utah, and Wisconsin to January
1998 in California.  California's TANF plan was approved in November
1996, and the state implemented its program in January 1998.  For
more information on TANF implementation, see Welfare Reform:  States
Are Restructuring Programs to Reduce Welfare Dependence
(GAO/HEHS-98-109, June 17, 1998). 

\5 For information on the states' efforts to track the impact of
welfare reform on former cash assistance recipients, see Welfare
Reform:  Information on Former Recipients' Status (GAO/HEHS-99-48,
Apr.  28, 1999). 

\6 See Medicaid:  Early Implications of Welfare Reform for
Beneficiaries and States (GAO/HEHS-98-62, Feb.  24, 1998) for
additional information on states' Medicaid-related choices following
federal welfare reform. 

\7 In 1999, the federal poverty level for a family of three was
$13,880, or about $1,157 per month. 

\8 States have 90 days to determine eligibility for
disability-related coverage. 

\9 The Omnibus Budget Reconciliation Act of 1989 (P.L.  101-239)
required states to provide Medicaid coverage for pregnant women and
children up to age 6 with family incomes below 133 percent of the
federal poverty level.  The act also froze eligibility standards at
December 19, 1989, levels for 17 states that had chosen to provide
coverage for pregnant women and infants in families with incomes
above 133 percent and up to 185 percent of the federal poverty level. 

\10 Sec.  4601 of the Omnibus Budget Reconciliation Act of 1990 (P.L. 
101-508) mandated the annual expansion of coverage for children
living in families with incomes below 100 percent of the federal
poverty level. 

\11 In addition to expansions for older children, some states have
continued to expand eligibility above the required poverty level; by
September 1997, 35 states provided Medicaid coverage for pregnant
women and infants with incomes of more than 133 percent of the
federal poverty level, and 14 states exceeded the 133-percent level
for children up to age 6 as well. 

\12 SCHIP allows states with Medicaid income levels that already
approach or exceed 200 percent of the federal poverty level to expand
eligibility up to 50 percentage points above their existing Medicaid
eligibility standards.  For additional information on SCHIP, see
Children's Health Insurance Program:  State Implementation Approaches
Are Evolving (GAO/HEHS-99-65, May 14, 1999). 

   MEDICAID ENROLLMENT DECLINE HAS
   BEEN INFLUENCED BY VARIOUS
   FACTORS, INCLUDING KEY FEDERAL
   PROTECTIONS
------------------------------------------------------------ Letter :3

From 1995 to 1997, national enrollment in Medicaid among adults and
children declined by about 1.7 million, or 7 percent, ranging from a
decrease of 19 percent in Wisconsin to an increase of 26 percent in
Delaware.  In contrast, national welfare participation declined an
average of about 23 percent, or 3.1 million recipients, from 1995 to
1997; declines ranged from 7 percent in Alaska to nearly 56 percent
in Wisconsin.\13 (See app.  II for an analysis of states' Medicaid
enrollment and welfare participation data.) In several states for
which data were available, child enrollment for Medicaid showed a
much smaller decline than that of adults. 

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

--------------------
\13 Only one state--Hawaii--had an increase in welfare participation
during this time. 

      WELFARE DECLINES HAVE
      OUTPACED MEDICAID DECLINES
---------------------------------------------------------- Letter :3.1

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

                          Table 1
          
               Percentage Changes in Medicaid
          Enrollment and Welfare Participation in
                 Our State Sample, 1995-97

                          Percentage
                           change in  Percentage change in
                            Medicaid               welfare
                          enrollment         participation
--------------------  --------------  --------------------
National\a                      -7.4                 -23.4
Our sample\b                    -8.9                 -23.4

Individual states\c
----------------------------------------------------------
California                      -7.6                 -13.5
Colorado                        -9.6                 -32.2
Connecticut                     -1.0                 -11.5
Delaware                       +26.2                 -15.8
Florida                        -13.4                 -35.2
Georgia                         -4.6                 -30.4
Idaho                          -10.8                 -49.0
Indiana                         -9.0                 -36.8
Kansas                         -10.5                 -37.0
Kentucky                       -10.1                 -20.3
Maryland                        -7.2                 -31.2
Michigan                        -8.9                 -26.9
Nevada                         -11.5                 -29.3
North Dakota                    -8.0                 -27.0
Ohio                           -15.9                 -23.5
Oklahoma                        -9.3                 -34.0
Oregon                         -13.0                 -42.2
South Carolina                  +2.4                 -32.9
Utah                            -5.0                 -26.2
Vermont                         +2.6                 -16.8
Wisconsin                      -19.0                 -55.6
----------------------------------------------------------
\a We were unable to obtain comparable enrollment data for the
District of Columbia, Rhode Island, and West Virginia. 

\b We over-sampled states with Medicaid declines in order to focus
our analysis on state policy and practices that can contribute to
declines in enrollment. 

\c States had varying amounts of Medicaid enrollment data available
for analysis.  For a state-by-state discussion of available data, see
app.  II, table II.1. 

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

On the national level, the declines in welfare participation did not
explain the changes in Medicaid enrollment; moreover, the ratios of
declines for both programs were not closely related.  Differences in
state policy and practices may also help explain some of the
variation.  For example, South Carolina's Medicaid enrollment
increased 2.4 percent, in part because of state expansions of
eligibility for Medicaid and significant outreach efforts; during
this same period, welfare participation dropped 32.9 percent. 
Delaware's nearly 94-percent increase in adult enrollment occurred
after the state implemented a Medicaid waiver expanding eligibility
to adults with incomes up to the federal poverty level.  During the
same period, welfare enrollment dropped 15.8 percent.  Ohio and
Wisconsin had the largest declines in Medicaid enrollment among the
states we contacted--about 16 percent and 19 percent,
respectively--but very different declines in welfare.  Ohio's decline
in welfare participation was less than twice its decline in Medicaid
enrollment, while Wisconsin's decline in welfare participation was
almost three times as great as its Medicaid enrollment decline.  Both
states reported that an improved economy and successful
welfare-to-work strategies might have accounted for some of the
declines in Medicaid enrollment.  However, they also expressed
concern that beneficiaries and state caseworkers were confused about
the change in the relationship between welfare and Medicaid. 

      MAGNITUDE OF MEDICAID
      DECLINES VARIED ACROSS THE
      STATES
---------------------------------------------------------- Letter :3.2

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

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

   (See figure in printed
   edition.)

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

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

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

      FOR FAMILIES LEAVING CASH
      ASSISTANCE, MEDICAID
      ELIGIBILITY REMAINS LIKELY
      DESPITE STRONG STATE
      ECONOMIES
---------------------------------------------------------- Letter :3.3

While a strong economy helps explain the decreases in welfare
participation, it may have had a more limited effect on Medicaid
enrollment.  Officials in most of the 21 states we contacted
attributed their declines in welfare and Medicaid enrollment to
successful welfare-to-work strategies and strong state economies. 
These officials said that low unemployment rates have aided their
efforts to help welfare recipients quickly find jobs.  Nationally,
the unemployment rate averaged about 4.9 percent in 1997, down from
about 5.6 percent in 1995, and almost all the states in our sample
experienced declines in their unemployment rates between 1995 and
1997.  In comparison, in 1994 when welfare participation was at its
peak (14.2 million), the unemployment rate was 6.1 percent.  The
federal minimum wage increased from $4.25 in 1995 to $4.75 in
1997.\14

Despite strong state economies, families may continue to be eligible
for Medicaid while working because of federal requirements and state
flexibility to disregard certain types of income in calculating
Medicaid eligibility.  For example, states are required to exclude or
disregard the first $30 of monthly family earnings for 1 year as
well as one-third of the remaining income for the first 4 months of
employment.\15

Additional income disregards include $90 per month for work-related
expenses, such as clothing and transportation, and $175 to $200 per
child, based on age, for monthly child care expenses.  Eight of our
sample states--California, Connecticut, Delaware, Maryland, Ohio,
South Carolina, Utah, and Vermont--had federal waivers in place or
made changes to state Medicaid policy that allowed them to continue
to use more generous income disregards in determining eligibility for
Medicaid.\16

The option available under federal welfare reform to continue waiver
criteria, as well as the income disregards noted above, enables many
former cash recipients working in minimum wage jobs to remain
eligible for Medicaid, at least for the first 4 months of
employment.\17 Data on former cash recipients in California, Indiana,
Maryland, and Wisconsin showed former welfare recipients generally
held low-wage jobs--such as in retail stores, hotels, restaurants,
and health care establishments--and worked less than full-time.  For
example, out of nearly 1,600 former welfare recipients surveyed in
Indiana, 514 current and former cash recipients were working in
low-wage jobs.  In addition, 43 percent of the heads of households
worked fewer than 32 hours per week and did not have health
insurance.  Over half of those surveyed had been offered
employer-provided health insurance; of these, about 60 percent had
declined coverage because it was too expensive or for other reasons. 
Only 8 percent of those declining coverage were enrolled in
Medicaid.\18 Although state monthly income eligibility standards
varied greatly--from $200 in South Carolina\ to $663 in
California--it appears that in every state in our sample except
Colorado, heads of three-member households could have worked
full-time at the 1997 minimum wage and remained Medicaid-eligible. 
In Colorado, heads of three-member households could have worked up to
36 hours per week at the 1997 minimum wage and retained Medicaid
eligibility. 

Additionally, a 1999 analysis by the Center on Budget and Policy
Priorities showed that in 6 of the 21 states in our
sample--California, Connecticut, Delaware, Ohio, Oregon, and
Vermont--heads of three-member households could have worked
full-time, earning as much as $5.15 per hour, and still have
continued their Medicaid eligibility.\19

Among the remaining 15 states, the number of hours per week that
heads of three-member households could have worked and still have
continued to be income-eligible for Medicaid ranged from 17 in
Indiana to 36 in Florida.\20

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

\15 After 4 months, states must still disregard the first $30 of
earnings for 1-year but may alter any other income disregards. 

\16 Before the 1996 enactment of the welfare reform law, many states
had received waivers from the federal rules applicable to the AFDC
program.  These waivers allowed states to experiment with various
welfare polices, including the use of more generous income disregards
for working families.  Federal welfare law allowed the states to
continue applying welfare waiver provisions to Medicaid eligibility
when such provisions involved income and resource methodologies and
certain other criteria involving family composition.  However,
provisions such as time limits, sanctions (withholding coverage), and
more restrictive eligibility criteria cannot now be continued beyond
the expiration of the waiver.  Under TANF, states determine their own
eligibility criteria, including any amounts of income to be
disregarded. 

\17 See app.  I for additional information on our methodology for
this analysis. 

\18 See Abt Associates, Inc., and The Urban Institute, The Indiana
Welfare Reform Evaluation:  Program Implementation and Economic
Impacts After Two Years (Nov.  1998). 

\19 Center on Budget and Policy Priorities, Employed But Not Insured
(Washington, D.C.:  Mar.  1, 1999). 

\20 Our previous work found that in four states in our
sample--Indiana, Oklahoma, South Carolina, and Wisconsin--former cash
assistance recipients were likely to earn an average hourly wage
above the federal minimum wage.  See GAO/HEHS-99-48, Apr.  28, 1999. 

      FEDERAL PROTECTIONS FOR
      LOW-INCOME FAMILIES MAY HAVE
      TEMPERED WELFARE-RELATED
      MEDICAID DECLINES
---------------------------------------------------------- Letter :3.4

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

                          Table 2
          
           Percentage Changes in Child and Adult
          Medicaid Enrollment in Our State Sample,
                          1995-97

            Percentage                          Percentage
             change in                          decline in
                 total  Percentage  Percentage     welfare
              Medicaid  change for  change for  participat
State\a     enrollment  children\b      adults         ion
----------  ----------  ----------  ----------  ----------
California        -7.6        -6.5       -10.5       -13.5
Colorado          -9.6        -5.0       -21.9       -32.2
Connecticu        -1.0        -0.2        -2.8       -11.5
 t
Delaware\c       +26.2        +3.7     +93.8\d       -15.8
Georgia           -4.6        +0.1       -18.7       -30.4
Idaho            -10.8        -6.5       -24.7       -49.0
Kentucky         -10.1        -7.2       -17.2       -20.3
Maryland          -7.2        -4.6       -14.2       -31.2
Nevada           -11.5        -5.2       -30.2       -29.3
North             -8.0        -5.0       -15.8       -27.0
 Dakota
Utah              -5.0        -4.8        -5.3       -26.2
----------------------------------------------------------
\a We were unable to readily obtain separate enrollment data for
children and adults from Florida, Indiana, Kansas, Michigan, Ohio,
Oklahoma, Oregon, South Carolina, Vermont, and Wisconsin. 

\b The upper age limit states use to define children varies from 18
to 21. 

\c In calculating the percentage of change for children and adults in
Delaware, we excluded less than 5 percent of total adult/child
enrollment because state officials were unable to determine in which
of the two categories the data belonged. 

\d In 1995, Delaware expanded adult eligibility to those with incomes
of up to 100 percent of the federal poverty level.  The state
reported that this expansion caused 16,000 more adults to become
eligible for Medicaid. 

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

      PROTECTIONS FOR ADULTS IN
      LOW-INCOME FAMILIES
---------------------------------------------------------- Letter :3.5

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

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

Other health coverage protections for adults include provisions of
the Medicaid statute that predated federal welfare reform and allow
states to use higher income standards and more liberal methodologies
for determining Medicaid eligibility than used for determining
applicant eligibility for cash assistance.  For example, section
1902(r)(2) of the Social Security Act permits states to reduce (or
even eliminate) income and resource standards for many categories of
prospective Medicaid beneficiaries, including, for example, pregnant
women, children, and certain blind or disabled people.\24 States such
as California, Colorado, Connecticut, Delaware, Kansas, and Vermont
expanded Medicaid eligibility for adults in low-income families by
disregarding more than the standard amounts for resources.\25
California, Colorado, Connecticut, and Kansas allow families to have
more than the former AFDC standard amount of $1,000 in liquid assets,
while both Delaware and Vermont have eliminated asset tests for
families applying only for Medicaid coverage. 

--------------------
\21 In commenting on a draft copy of this report, Maryland officials
noted that they have submitted a state plan amendment and taken steps
to delink their cash assistance and Medicaid programs. 

\22 Under sec.  1931(b)(2), states were permitted to expand Medicaid
eligibility by (1) using less restrictive methodologies for
calculating family income and resources than used on July 16, 1996,
or (2) increasing their AFDC July 16, 1996, income and resource
standards by as much as the year's consumer price index.  States were
also allowed to restrict eligibility by lowering their AFDC July 16,
1996, income standards, but not below May 1, 1988, levels. 

\23 States could not impose additional restrictions on Medicaid
eligibility without jeopardizing access to SCHIP funds.  In
particular, the BBA stipulated that states participating in SCHIP
could not use more restrictive income or resource standards than the
standards used for Medicaid on June 1, 1997. 

\24 Before welfare reform, when cash assistance and Medicaid
eligibility were still linked, states disregarded additional amounts
of earned income as an incentive to encourage cash assistance
recipients to work. 

\25 Under the former AFDC program, cash recipients were limited to
$1,000 in total resources (assets).  However, in calculating family
assets, states were required to disregard (not include in the
calculation) certain assets, such as a personal residence and its
contents, burial plots, and education grants and scholarships, and to
discount the value of other assets.  For example, in calculating
total resources, states were required to discount vehicle equity by
$1,500 and prepaid funeral or burial arrangements by $1,500 per
person. 

         PROTECTIONS AND MANDATED
         PROGRAM EXPANSIONS FOR
         CHILDREN IN LOW-INCOME
         FAMILIES
-------------------------------------------------------- Letter :3.5.1

Smaller declines in Medicaid enrollment for children can also be
attributed to program expansions for children mandated by the
Medicaid statute.  As table 3 shows, as of September 30, 1997, 11 of
the 21 states we contacted provided Medicaid coverage to children
older than 14 years of age, with family incomes at or above the
federal poverty level.  Such coverage will soon become a legal
requirement for all low-income children up to age 19.\26

                                Table 3
                
                  Medicaid Coverage of Pregnant Women,
                   Infants, and Children in Our State
                    Sample as of September 30, 1997

                                            Poverty level
                                           percentages for
                                          Medicaid coverage
                                        ----------------------
                                                                 Upper
                                                                   age
                                        Pregna                   limit
                                            nt                     for
                                         women  Childr  Childr  defini
                                           and      en    en 6      ng
                                        infant   under     and  "child
                                             s   age 6   older       "
--------------------------------------  ------  ------  ------  ------
Federal minimum mandatory coverage       133\a     133     100      14

State
----------------------------------------------------------------------
California                                 200     133     100      14
Colorado                                   133     133     100      14
Connecticut                                185     185     185    16\b
Delaware                                   185     133     100      18
Florida                                    185     133     100      14
Georgia                                    185     133     100      19
Idaho                                      133     133     100      14
Indiana                                    150     133     100      18
Kansas                                     150     133     100      17
Kentucky                                   185     133     100      14
Maryland                                   185     185     185      14
Michigan\c                                 185     150     150      16
Nevada                                     133     133     100      14
North Dakota                               133     133     100      18
Ohio                                       133     133     100      14
Oklahoma\c                                 150     133     100      14
Oregon                                     133     133     100      19
South Carolina                             185     150     150      18
Utah                                       133     133     100      18
Vermont                                   200/     225     225      17
                                         225\d
Wisconsin                                  185     185     100      14
----------------------------------------------------------------------
\a The minimum mandatory income requirement for pregnant women and
infants may be higher than 133 percent of the federal poverty level
for states that, as of December 19, 1989, had opted to set
eligibility for this category between 133 percent and 185 percent of
the federal poverty level. 

\b Beginning January 1, 1998, Connecticut expanded coverage to
include children up to age 19. 

\c After the BBA of 1997, Michigan expanded Medicaid eligibility to
include children up to age 19 in families with incomes below 200
percent of the federal poverty level, and Oklahoma expanded program
coverage to include children in families with incomes of up to 185
percent of the federal poverty level. 

\d Vermont provides Medicaid coverage for pregnant women with family
incomes up to 200 percent of the federal poverty level and coverage
for infants with family incomes of up to 225 percent of the poverty
level. 

Source:  National Governors' Association. 

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

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

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

         TRANSITIONAL MEDICAID
         ASSISTANCE DESIGNED TO
         PROTECT FAMILIES MOVING
         FROM WELFARE TO WORK
-------------------------------------------------------- Letter :3.5.2

In addition to the protections in the welfare law and state efforts
to expand coverage, transitional Medicaid assistance is another
avenue for preventing the immediate loss of Medicaid coverage for
families who transition from welfare to work.  Section 1925 of the
Social Security Act requires that states provide transitional
Medicaid coverage to families losing Medicaid eligibility as a result
of employment or other financial circumstances.\28 Under this
provision, states are specifically required to provide two sequential
6-month periods of transitional Medicaid to families when certain
conditions are met.\29 Nationwide, the extent to which eligible
families obtain and keep coverage under transitional Medicaid is
unknown.  HCFA does not require state reporting or otherwise monitor
state compliance with the requirement to provide this program
benefit.  Further, states do not separately identify families
receiving transitional Medicaid when reporting enrollment data to
HCFA. 

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

--------------------
\28 Other circumstances include increased hours of work or changes in
income disregards, which states can choose to disallow after 4 months
of employment.  Families who lose Medicaid eligibility on the basis
of the former AFDC standards because of increased child or spousal
support are entitled to 4 months of transitional coverage. 

\29 For instance, in order to qualify for transitional Medicaid, a
family must have received Medicaid under the former AFDC standards in
3 of the 6 months immediately before becoming ineligible as a result
of increased income.  No limit on income is imposed during the
initial 6-month period of transitional Medicaid.  During the second
6-month period, however, a family's gross monthly earnings, less
child care expenses, cannot exceed 185 percent of the federal poverty
level. 

\30 58 Fed.  Reg.  65,312.  Currently, HCFA officials are working on
an updated version of the proposal, linking transitional Medicaid to
enrollment in the new section 1931 Medicaid eligibility category
instead of receipt of AFDC.  The states did not strongly oppose the
proposed regulation, and HCFA received only six comments on it. 

   CHANGES IN STATE WELFARE
   POLICIES AND PRACTICES HAVE HAD
   MIXED INFLUENCES ON MEDICAID
   ENROLLMENT
------------------------------------------------------------ Letter :4

Changes in state welfare policies and practices have had both
positive and negative influences on Medicaid enrollment.  We
identified four approaches of states' welfare reform programs that
may influence Medicaid enrollment:  (1) diversionary programs, which
are intended to help families avoid the need to enroll in TANF; (2)
eligibility policies and procedures, which states use to determine
who is qualified for coverage; (3) transitional Medicaid assistance,
which helps families moving from welfare to work; and (4) education
and outreach efforts, which are aimed at minimizing confusion about
Medicaid eligibility following welfare reform.  These program
approaches vary by state and can affect Medicaid enrollment levels. 
Finally, our contacts with states showed that SCHIP outreach efforts
have had a positive impact on Medicaid enrollment, particularly for
children. 

      STATES' WELFARE DIVERSION
      POLICIES CAN INFLUENCE
      MEDICAID ENROLLMENT
---------------------------------------------------------- Letter :4.1

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

                                Table 4
                
                    Comparison of 21 States' Welfare
                  Diversion Policies as of April 1999

                        Up-front job search     Lump-sum payment
State                   required                offered
----------------------  ----------------------  ----------------------
California\a                                    X

Colorado\a                                      X

Connecticut                                     X

Delaware\b                                      X

Florida                                         X

Georgia                 X

Idaho                   X                       X

Indiana\b               X                       X

Kansas                  X

Kentucky\c                                      X

Maryland\a              X                       X

Michigan

Nevada\b                X                       X

North Dakota

Ohio\a                  X                       X

Oklahoma                X

Oregon                  X

South Carolina          X

Utah                                            X

Vermont\d

Wisconsin\e             X

Total                   11                      12
----------------------------------------------------------------------
\a Lump-sum payments and job search requirements may differ by county
in these states. 

\b States have not yet fully implemented mandatory job search or
lump-sum payment programs. 

\c Although Kentucky requires cash assistance applicants to join a
job registry, it does not deny cash benefits to families that do not
comply.  As a result, we did not consider Kentucky to have a
mandatory up-front job search requirement. 

\d Vermont requires principal wage-earners in two-parent families--10
percent of the state's June 1999 TANF caseload--to register with the
state's Department of Employment and Training and begin job search as
a condition for cash assistance. 

\e Although Wisconsin has a job access loan program for its cash
assistance clients, we did not consider it a diversion strategy;
unlike lump-sum payments offered in other states, clients must repay
job access loans in cash or in-kind. 

         MANDATORY UP-FRONT JOB
         SEARCH POLICIES
-------------------------------------------------------- Letter :4.1.1

To encourage work over welfare, 11 of the states in our sample have
established mandatory, up-front job search requirements that families
must satisfy to be eligible for cash assistance.  States'
requirements vary greatly--from joining a job registry, as in Utah
and Wisconsin, to spending time (ranging from 2 weeks in Maryland to
45 days in Oregon) pursuing various state-provided job leads. 

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

--------------------
\31 Since states are required to determine applicant eligibility for
Medicaid coverage within 45 days of the date of application (90 days
when a disability determination is involved), states do not appear to
be exceeding the maximum amount of time allowed by the Medicaid
statute. 

         LUMP-SUM PAYMENTS
-------------------------------------------------------- Letter :4.1.2

Officials in nine states reported offering welfare applicants
one-time lump-sum diversion assistance, and officials in three other
states indicated that they will soon implement such programs
statewide.\32 Of the nine states with operational programs, Utah's
and Maryland's programs appear somewhat more active than those in the
other seven states, where relatively few families have accepted
lump-sum payments.  According to Utah officials, between 190 and 200
families applying for cash assistance each month--less than 1 percent
of the state's 1997 average monthly welfare participation--accept
lump-sum diversion payments in lieu of ongoing assistance.  Utah
began offering diversion assistance statewide in July 1996 under a
welfare waiver that was approved before the federal reform law was
enacted.  State officials explained that families accepting diversion
payments must be eligible for ongoing cash assistance; furthermore,
the state enrolls these families in Medicaid and offers them child
care and job placement assistance.  Families can receive the lump-sum
equivalent of 3 months of cash assistance--$1,353 for a family of
three--and 3 months of Medicaid coverage.  Utah allocates its
diversion payments over a 3-month period so that the payment does not
make recipients automatically ineligible for Medicaid.\33 At the end
of the 3-month period, eligibility workers determine whether the
families are eligible for any additional months of Medicaid coverage. 

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

Officials in the remaining seven states attributed low participation
in their voluntary diversion programs both to the small amounts of
money that families are offered and to other benefits they might
forgo in accepting the lump-sum payment.  For example, only 12
families in Florida have accepted lump-sum payments since the state
implemented the program in November 1997.  Florida officials
hypothesized that more families have not found the program an
acceptable alternative to cash assistance because the payment is
small in comparison with the benefits they could receive as cash
assistance recipients.  A family of three, for instance, is limited
to a single payment of $606the equivalent of 2 months of cash
assistance.  To receive that payment, the family must prove
eligibility by completing the standard welfare application and,
possibly, forgo food stamps and Medicaid coverage if the payment
raises family resources above the state's $2,000 cash limit; the
family must also agree not to apply for more cash assistance for 3
months. 

--------------------
\32 For example, Delaware plans to implement its lump-sum payment
program in October 1999.  Indiana is piloting both a lump-sum payment
program and up-front job search requirements in several of its
counties.  Indiana officials indicated that if the pilots were
successful, they would be implemented in additional counties during
the year.  Nevada officials said that their legislature has approved
a lump-sum payment program, and state officials are considering the
software and eligibility system changes needed before implementing
the program. 

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

      STATES' ELIGIBILITY
      REDETERMINATION PROCESSES
      HAVE ADDED COMPLEXITIES FOR
      WORKERS
---------------------------------------------------------- Letter :4.2

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

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

Beneficiary advocates we spoke with in Florida, Maryland, and
California indicated that the added pressures on eligibility workers
can strain worker-beneficiary relations and, in some cases, make
communication between the parties so difficult that eligible families
do not get the information they need to apply for or retain Medicaid
coverage.  The growing number of Medicaid-only cases concerns
eligibility workers, who previously handled very few of these cases
and consider Medicaid too complex given its many eligibility
categories for differing income, resource, and family composition
criteria.  The addition of the section 1931 eligibility category has
added to this problem.  Officials in the 21 states we contacted
reported numbers of welfare-related Medicaid eligibility categories
that ranged from almost 30 to over 100.  According to state officials
and workers, the proliferation of eligibility categories is
challenging for workers in most states and is particularly
troublesome for workers in states with computer systems that have not
kept up with welfare policy changes.  For example, we were told that
workers in Florida must either manually determine Medicaid
eligibility or understand the policies well enough to verify the
accuracy of the state's computerized eligibility determinations. 
California officials told us that workers must manually determine
Medicaid eligibility for the section 1931 eligibility category.  They
also said that most of California's programming expertise has been
devoted to ensuring that more vital state systems are year 2000
compliant. 

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

      WIDE VARIATION IN
      BENEFICIARY ACCESS TO
      TRANSITIONAL MEDICAID EXISTS
      ACROSS STATES
---------------------------------------------------------- Letter :4.3

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

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

         TRANSITIONAL MEDICAID USE
         VARIES BY STATE
-------------------------------------------------------- Letter :4.3.1

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

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

--------------------
\36 Lack of data has been a consistent problem in understanding the
availability and use of transitional Medicaid.  See Welfare to Work: 
Implementation and Evaluation of Transitional Benefits Need HHS
Action (GAO/HRD-92-118, Sept.  29, 1992). 

\37 As shown in table 1, between 1995 and 1997, Idaho's Medicaid
enrollment decline was 10.8 percent, compared with 49.0 percent for
welfare. 

\38 According to data from ACF, 61,096 individuals lost cash
assistance in Maryland between January 1997 and September 1998. 

         INCOME REPORTING
         REQUIREMENTS CAN LIMIT
         TRANSITIONAL MEDICAID
         PARTICIPATION
-------------------------------------------------------- Letter :4.3.2

HCFA and state officials noted that quarterly beneficiary income
reporting requirements can pose barriers to family receipt of
transitional Medicaid benefits.  Transitional Medicaid entitles
certain families who are losing Medicaid as a result of employment or
increased income to an additional year of Medicaid coverage. 
Reporting requirements can pose barriers for families leaving cash
assistance at two points:  (1) entering transitional Medicaid and (2)
maintaining this entitlement for the full period of eligibility.  In
the first case, the failure to notify eligibility workers of
employment can prevent families from being enrolled in transitional
Medicaid.  Theoretically, a head of household would report increased
earnings, be removed from cash assistance, and be placed on
transitional Medicaid.  However, many heads of households do not
notify their eligibility workers that they have obtained employment;
thus, once disqualified from cash assistance, these heads of
households are not automatically rolled over into transitional
Medicaid eligibility.  Thus, the eligible family never receives
transitional Medicaid. 

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

  -- To receive the first 6 months of transitional Medicaid, families
     must notify the state--typically through the family's
     eligibility worker--of their employment and income status. 
     Although there is no income eligibility limit during this
     period, families must also submit an income report to the state
     by the 21\st day of the 4\th month of transitional Medicaid
     coverage. 

  -- To receive the second 6 months of transitional Medicaid
     coverage, family income minus child care expenses may not exceed
     185 percent of the federal poverty level.  Families also must
     submit quarterly income reports by the 21\st day of the 1\st and
     4\th months of the second 6-month period.  During this period,
     families may also be required to pay premiums for Medicaid
     coverage, and the state can reduce the level of Medicaid
     benefits and services to which they are entitled. 

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

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

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

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

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

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

\41 The Southern Institute on Children and Families is an
independent, nonprofit public policy organization founded in 1990
that tries to improve opportunities for disadvantaged children and
families in the South. 

         SEVERAL STATES HAVE
         STRATEGIES AND INCENTIVES
         TO INCREASE USE OF
         TRANSITIONAL MEDICAID
-------------------------------------------------------- Letter :4.3.3

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

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

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

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

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

--------------------
\42 See Medicaid:  Demographics of Nonenrolled Children Suggest State
Outreach Strategies, (GAO/HEHS-98-93, Mar.  20, 1998). 

\43 Oregon provides the required 12 months of transitional Medicaid
coverage and also obtained a waiver before welfare reform to
eliminate quarterly income reporting for transitional Medicaid
beneficiaries. 

         HCFA INITIATIVE SEEKS TO
         ELIMINATE BENEFICIARY
         INCOME REPORTING
         REQUIREMENTS FOR
         TRANSITIONAL MEDICAID
-------------------------------------------------------- Letter :4.3.4

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

      SOME STATES HAVE INITIATED
      MEDICAID OUTREACH AND
      BENEFICIARY EDUCATION
      CAMPAIGNS TO LESSEN
      CONFUSION OVER WELFARE
      REFORM
---------------------------------------------------------- Letter :4.4

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

Individually, some states have initiated efforts to counter any
confusion that may have resulted from welfare reform.  For instance,
South Carolina contracted with the Southern Institute for Children
and Families to produce education and outreach materials for
distribution to beneficiaries and employers on post-welfare-reform
benefits, such as Medicaid, that low-income working families might be
eligible to receive.  This effort was the result of an outreach
project involving several of the state's larger counties.  In
addition, South Carolina randomly surveys 500 families quarterly
after their welfare cases have closed to determine, among other
things, if the families have health insurance or are
Medicaid-eligible.  State officials use the survey results to provide
feedback to the counties.  South Carolina officials believe that
performance goals related to job placements have had the effect of an
added incentive to counties to follow up with families to ensure that
eligible families do not lose Medicaid coverage. 

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

In light of the fears and confusion among immigrants regarding this
issue, the administration has recently published a proposed rule to
clarify the circumstances in which individuals can accept certain
public benefits without fear of negative immigration consequences.\45
The proposed rule specifies a list of benefits, prepared by HHS, the
Immigration and Naturalization Service (INS), and the State
Department, that immigrants can receive without affecting their
admission to the United States or their resident status.  Under
current law, before admitting someone as a legal permanent resident,
the INS or State Department must conclude that the individual is not
likely to become a public charge--that is, a person whose main
source of support is from government programs.  Medicaid and SCHIP
are among the benefits specified in the proposed rule that would be
exempt from the public charge test for immigrant admission,
adjustment, or deportation.\46

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

  -- Georgia is using nearly 150 Right From the Start Medicaid
     outreach eligibility workers to enroll Medicaid-eligible
     children and to act as intermediaries for families who are
     seeking only Medicaid coverage and do not wish to go to a local
     welfare office to apply. 

  -- Utah has been able to reach beyond the traditional outstation
     locations by placing additional workers in schools, Indian
     reservations, and large medical clinics.\47 The state has also
     allowed families to apply for Medicaid by telephone and through
     the mail.  Additionally, Utah's Department of Workforce
     Services, which oversees the TANF program, also accepts Medicaid
     applications by telephone. 

  -- In Wisconsin, where the welfare and Medicaid programs are
     separately administered, officials were particularly concerned
     about the confusion this separation could cause beneficiaries
     and providers.  In an effort to avoid such confusion, Wisconsin
     has increased the number of outstationed locations in
     Milwaukee--one of the state's larger urban areas--and contracted
     with advocates to assist beneficiaries in navigating the new
     system. 

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

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

\46 While Medicaid would not be considered in public charge
determinations, the proposed rule specifies an exception:  Medicaid
or similar state programs would be considered in limited
circumstances if they were needed to pay for long-term care, in the
form of nursing home or institutionalized care for the individual. 
The proposed rule provides, however, that the need for long-term care
alone would not automatically result in a public charge
determination.  INS and State Department officials would need to
consider other factors required by law (such as age, health, family
status, and assets), and determinations would be made on a
case-by-case basis. 

\47 Section 4602 of the Omnibus Budget Reconciliation Act of 1990
(P.L.  101-508) added the requirement that states outstation
eligibility workers at locations other than local welfare offices,
allowing mothers and children to apply for Medicaid at the sites
where they receive health care. 

      SCHIP OUTREACH AND RELATED
      SIMPLIFICATIONS MAY INCREASE
      FUTURE MEDICAID ENROLLMENT
---------------------------------------------------------- Letter :4.5

While officials in most of the 21 states we contacted reported that
outreach for SCHIP has had a positive spillover effect on Medicaid
enrollment among children, officials in 6 states specifically
suggested that such efforts may have directly contributed to
enrollment increases or stabilization in their Medicaid programs. 
Although firm data are not yet available, officials from the states
in our sample estimated that perhaps as many as an additional 135,000
children have recently been enrolled in Medicaid as a result of SCHIP
outreach and the requirement that states screen all SCHIP applicants
for Medicaid eligibility and enroll those who qualify.  For instance,
Michigan officials reported that they enrolled two children in
Medicaid for each SCHIP enrollee.  However, since SCHIP was enacted
in 1997 and program implementation was just getting under way in 1998
and 1999 in most states, these spillover enrollment effects are not
reflected in our 1997 Medicaid data. 

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

  -- California has shortened its 28-page joint Medicaid/SCHIP
     booklet on child eligibility to a 4-page application. 

  -- In Kansas, since January 1999, low-income families have been
     able to submit Medicaid redetermination information by mail and
     are no longer required to meet personally with an eligibility
     worker. 

  -- Utah had instituted several innovative procedures even before
     SCHIP, including allowing application by mail or telephone and
     redetermination by mail, telephone, or facsimile. 

  -- Vermont has created a centralized Health Access and Eligibility
     Unit to receive and process mailed applications for those
     applying only for state medical assistance. 

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

   CONCLUSIONS
------------------------------------------------------------ Letter :5

Despite federal protections to ensure that low-income families retain
health insurance regardless of whether they are receiving cash
assistance, it has become more complicated for eligible low-income
families to establish and keep Medicaid coverage with the advent of
welfare reform.  States are challenged with identifying and enrolling
families that no longer qualify for cash assistance yet continue to
retain Medicaid eligibility.  Some states have taken advantage of the
flexibility under welfare reform by using protections provided by the
law to ensure that Medicaid coverage is sustained for low-income
families that are transitioning to work.  Other states have found it
increasingly difficult to communicate to both beneficiaries and
workers that Medicaid coverage can be maintained even though changes
in welfare policies may limit or deny cash assistance.  National
declines in Medicaid enrollment raise questions about whether states
have been able to de-link welfare and Medicaid policies in a manner
that consistently ensures Medicaid coverage for eligible individuals. 

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

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

Information on the extent to which transitional Medicaid is
implemented across the states is scarce.  HCFA is responsible for
overseeing the states' implementation of this entitlement and is in
the position to serve as a conduit of technical assistance and
dissemination of states' best practices in implementing transitional
Medicaid.  Doing so could heighten understanding of systemic barriers
and provide states with strategies to foster and maintain
transitional Medicaid coverage for eligible families. 

   RECOMMENDATION TO THE CONGRESS
------------------------------------------------------------ Letter :6

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

   RECOMMENDATIONS TO THE
   ADMINISTRATOR OF HCFA
------------------------------------------------------------ Letter :7

In order to ensure that eligible individuals leaving cash assistance
do not lose Medicaid coverage, we recommend that the Administrator of
HCFA

  -- determine the extent to which transitional Medicaid is reaching
     the eligible population and

  -- provide states with guidance or other appropriate technical
     assistance regarding best approaches for implementing
     transitional Medicaid in a manner that facilitates the full and
     appropriate use of this entitlement for eligible beneficiaries. 

   AGENCY AND OTHER COMMENTS
------------------------------------------------------------ Letter :8

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

HCFA concurred with our conclusions and recommendations and
highlighted steps it has taken to ensure that states understand
Medicaid eligibility and the enrollment options families have
following welfare reform.  HCFA also noted a number of studies it is
sponsoring, along with HHS and the Office of the Assistant Secretary
for Planning and Evaluation, to better understand the factors
contributing to declining enrollment.  In particular, HCFA plans to
use the results of a 6-state study performed by an independent
contractor as the basis for a more extensive longitudinal analysis of
individual Medicaid eligibility in 8 to 10 states.  Additional
studies, which are planned or under way, include comparisons of
national trends in pre- and post-welfare-reform Medicaid enrollment
and expenditures.  HCFA also commented that it plans to issue
additional guidance on transitional Medicaid, conduct outreach to
beneficiaries, and propose legislative changes to make access to
transitional Medicaid less burdensome.  Finally, HCFA cited plans to
provide on-site technical assistance to the states to further assist
in the coordination between TANF and Medicaid.  Specifically, HCFA
officials intend to visit every state to ensure that states are
taking full advantage of their opportunities and that states are
meeting the challenges posed by changes in the BBA and welfare
reform. 

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

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

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

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

--------------------
\48 "2082" is an annual state-submitted report designed to collect
statistical data on Medicaid. 

\49 We sent a draft of this report to officials in all 21 states in
our sample:  17 responded; Delaware, Georgia, Idaho, and North Dakota
did not. 

---------------------------------------------------------- Letter :8.1

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

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

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

SCOPE AND METHODOLOGY
=========================================================== Appendix I

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

To report the change in Medicaid enrollment between 1995 and 1997, we
used state-provided data because average monthly data provided a
better indicator of changes in states' Medicaid enrollment than the
cumulative, annual count of enrollees that HCFA reports.  Moreover,
we found significant inconsistencies in the HCFA data for federal
fiscal years 1995 and 1997, which are described in greater detail at
the end of this appendix.  We analyzed average monthly enrollment
data for calendar years 1995 and 1997 that we collected by contacting
the 50 states and the District of Columbia.\51

When states did not provide 12 months of data for each year, we
extrapolated the data provided to derive annual averages.  Finally,
we obtained state-specific welfare participation data from the
Administration for Children and Families (ACF). 

To review the effects of minimum wage employment on Medicaid
eligibility, we used the Department of Labor's 1997 minimum wage data
and the minimum income disregards required by the former AFDC program
that applied to the first 4 months of employment.  This approach
enabled us to determine the extent to which heads of three-member
households might work and continue to qualify for Medicaid coverage. 
We estimated that family income from working 52 weeks at 40 hours per
week, at the 1997 minimum wage of $4.75 per hour, would be
approximately $823 per month.  After deducting the standard
disregards required by the former Aid to Families With Dependent
Children (AFDC) program and still applicable in determining Medicaid
eligibility ($30 plus one-third of $793), we calculated that family
income would be approximately $529.  If states also exercised their
option to disregard a portion of work- and child care-related
expenses, family income could be even less.  According to the most
recent data available on the optional disregards, states disregarded
an average of $102 per month for work-related expenses and $137 for
child care expenses in 1995.  Applying these averages to $529 results
in a net income of $290 per month. 

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

To identify the procedures and protections states are using to enroll
Medicaid-eligibles, we judgmentally selected 21 states to contact for
additional review, over-sampling for states with declines in Medicaid
enrollment to focus our analysis on those policies and practices that
may have contributed to declines in enrollment.  We initially
selected the 15 states with the largest declines in Medicaid
enrollment, based on a preliminary analysis of HCFA data, and
subsequently expanded the sample by adding states with relatively
stable or increased enrollment.  The 21 states represented about 46
percent and 45 percent of Medicaid enrollment in 1995 and 1997,
respectively, as well as approximately 39 percent of total program
expenditures for fiscal year 1997.  In addition to geographic
diversity, the states had varying degrees of experiences with and
approaches to welfare reform.  We visited four states and several
locales within the statesCalifornia (Sacramento and Los Angeles),
Florida (Tallahassee and Miami), Maryland (Baltimore and Prince
George's County), and Wisconsin (Madison and Milwaukee).  We
interviewed by telephone, collecting and analyzing documentation on
Medicaid eligibility and application processes from officials in the
17 remaining statesColorado, Connecticut, Delaware, Georgia, Idaho,
Indiana, Kansas, Kentucky, Michigan, Nevada, North Dakota, Ohio,
Oklahoma, Oregon, South Carolina, Utah, and Vermont. 

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

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

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

--------------------
\50 HCFA collects and publishes annual Medicaid enrollment on a
state-by-state basis as part of the agency's 2082 reporting format. 

\51 We were unable to obtain comparable monthly data for the District
of Columbia, Rhode Island, and West Virginia. 

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

   LIMITATIONS OF HCFA ENROLLMENT
   DATA
--------------------------------------------------------- Appendix I:1

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

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

ANALYSIS OF STATES' MEDICAID
ENROLLMENT AND WELFARE
PARTICIPATION DATA
========================================================== Appendix II

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

                               Table II.1
                
                    Changes in Adult/Child Medicaid
                    Enrollment Between 1995 and 1997

                                                           Average
                                                           monthly
                                                          enrollment
                                                        --------------
                                                Percen
                                                  tage
                                                enroll
                                                  ment
                                                change
                                                     ,
                                                 1995-
State                                               97    1995    1997
----------------------------------------------  ------  ------  ------
Alabama                                           -4.2  289,33  277,04
                                                             3       1
Alaska                                            +0.2  52,197  52,306
Arizona\a                                         +2.8  322,90  331,90
                                                             4       8
Arkansas\a                                        -0.5  139,17  138,47
                                                             5       2
======================================================================
California                                        -7.6  4,189,  3,869,
                                                           509     454
Colorado                                          -9.6  169,95  153,59
                                                             7       2
Connecticut                                       -1.0  224,12  221,93
                                                             8       5
Delaware                                         +26.2  49,085  61,953
District of Columbia\b
======================================================================
Florida\c                                        -13.4  988,80  855,88
                                                             5       8
Georgia\a                                         -  674,37  643,30
                                                   4.6       4       1
Hawaii\c                                         -13.9  153,10  131,83
                                                             3       4
======================================================================
Idaho\a                                          -10.8  55,746  49,745
Illinois                                          -6.8  1,083,  1,010,
                                                           802     397
======================================================================
Indiana\a                                         -9.0  337,79  307,42
                                                             1       9
Iowa                                              -5.8  230,13  216,74
                                                             9       2
======================================================================
Kansas                                           -10.5  133,29  119,26
                                                             5       5
======================================================================
Kentucky\a                                       -10.1  828,40  744,41
                                                             3       8
Louisiana\d                                       -7.1  499,26  463,99
                                                             5       9
Maine\d                                           -4.2  107,79  103,29
                                                             1       7
======================================================================
Maryland                                          -7.2  319,79  296,84
                                                             9       3
Massachusetts                                     +1.2  409,71  414,63
                                                             3       9
======================================================================
Michigan\e                                        -8.9  688,64  627,56
                                                             6       1
Minnesota                                         -0.8  340,33  337,52
                                                             0       9
Mississippi                                      -13.4  254,80  220,53
                                                             1       6
Missouri\a                                        -5.2  436,94  414,27
                                                             5       6
Montana\a                                         -8.6  76,518  69,947
Nebraska                                          +5.1  99,977  105,04
                                                                     7
======================================================================
Nevada                                           -11.5  65,480  57,943
New Hampshire\e                                   +1.2  60,296  61,034
New Jersey                                        -4.9  489,75  465,95
                                                             3       9
New Mexico                                       +13.7  182,54  207,50
                                                             3       7
New York                                          -9.4  2,248,  2,037,
                                                           274     802
North Carolina                                    -1.5  526,78  518,65
                                                             0       0
======================================================================
North Dakota                                      -8.0  31,110  28,628
======================================================================
Ohio                                             -15.9  900,34  756,91
                                                             7       6
======================================================================
Oklahoma                                          -9.3  199,38  180,83
                                                             3       8
======================================================================
Oregon                                           -13.0  329,78  286,77
                                                             6       9
Pennsylvania                                     -17.4  1,253,  1,035,
                                                           478     142
Rhode Island\b
======================================================================
South Carolina                                    +2.4  231,88  237,33
                                                             2       8
South Dakota                                      -0.5  39,264  39,081
Tennessee\a                                       -0.3  910,49  907,48
                                                             4       5
Texas                                             -8.6  1,592,  1,455,
                                                           553     059
======================================================================
Utah\a                                            -5.0  97,733  92,881
======================================================================
Vermont                                           +2.6  61,950  63,548
Virginia                                          -8.1  362,38  333,09
                                                             3       2
Washington                                       +13.2  489,42  554,03
                                                             7       0
West Virginia\b
======================================================================
Wisconsin                                        -19.0  316,41  256,44
                                                             9       9
Wyoming                                          -14.5  29,694  25,400
======================================================================
Total for all states                              -7.4  23,574  21,840
                                                          ,557    ,914
======================================================================
Total for our sample states                       -8.9  10,893  9,912,
                                                          ,628     703
----------------------------------------------------------------------
Note:  States in boldface were part of our sample. 

\a The average monthly enrollment for these states was calculated
using less than a full year of monthly data. 

\b We were unable to obtain comparable monthly enrollment data for
the District of Columbia, Rhode Island, and West Virginia. 

\c Data for Florida and Hawaii may reflect only a
portion--approximately 70 percent and 80 percent, respectively--of
the state's nonelderly, nondisabled adult/child enrollment. 

\d Louisiana and Maine officials were unable to provide separate
monthly enrollment data for their welfare-related populations.  As a
result, we arrived at these figures by using each state's 2082 data
submission to HCFA. 

\e Michigan and New Hampshire provided a yearly enrollment figure
that reflected their states' fiscal years--October 1\st to September
30\th and July 1\st to June 30\th , respectively.  As a result, the
monthly enrollment data calculations for Michigan are for October
1994 through September 1995 and October 1996 through September 1997;
for New Hampshire, the calculations are for July 1994 through June
1995 and July 1996 through June 1997. 

Source:  GAO analysis of state monthly enrollment data. 

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

                               Table II.2
                
                Changes in Welfare Participation Between
                             1995 and 1997

                                                        Average annual
                                                           welfare
                                                        participation
                                                        --------------
                                              Percenta
                                                    ge
                                               decline
                                                    in
                                               welfare
                                              particip
State                                            ation    1995    1997
--------------------------------------------  --------  ------  ------
Alabama                                          -33.3  115,05  76,766
                                                             3
Alaska                                            -6.6  36,348  33,939
Arizona                                          -27.8  183,35  132,36
                                                             0       8
Arkansas                                         -26.5  62,274  45,792
======================================================================
California                                       -13.5  2,670,  2,310,
                                                           487     530
Colorado                                         -32.2  105,24  71,393
                                                             1
Connecticut                                      -11.5  166,22  147,18
                                                             8       4
Delaware                                         -15.8  24,734  20,823
District of Columbia                             -12.9  71,206  62,000
======================================================================
Florida                                          -35.2  616,43  399,60
                                                             3       8
Georgia                                          -30.4  378,28  263,34
                                                             5       8
Hawaii                                            +7.0  65,949  70,565
======================================================================
Idaho                                            -49.0  23,799  12,129
Illinois                                         -17.8  686,62  564,35
                                                             2       3
======================================================================
Indiana                                          -36.8  172,15  108,82
                                                             4       0
Iowa                                             -24.2  97,418  73,890
======================================================================
Kansas                                           -37.0  76,131  47,995
======================================================================
Kentucky                                         -20.3  185,16  147,55
                                                             2       9
Louisiana                                        -34.7  248,71  162,49
                                                             4       3
Maine                                            -21.2  58,646  46,222
======================================================================
Maryland                                         -31.2  217,84  149,96
                                                             4       0
Massachusetts                                    -25.2  264,37  197,87
                                                             4       2
======================================================================
Michigan                                         -26.9  573,96  419,63
                                                             4       8
Minnesota                                        -14.5  176,20  150,61
                                                             3       6
Mississippi                                      -37.3  139,67  87,564
                                                             4
Missouri                                         -25.4  248,82  185,54
                                                             4       1
Montana                                          -27.8  33,435  24,138
Nebraska                                          -7.5  40,346  37,313
======================================================================
Nevada                                           -29.3  41,169  29,118
New Hampshire                                    -31.2  26,595  18,287
New Jersey                                       -23.0  307,49  236,69
                                                             2       2
New Mexico                                       -25.6  103,88  77,287
                                                             1
New York                                         -18.3  1,233,  1,007,
                                                           599     952
North Carolina                                   -25.7  299,96  222,72
                                                             1       9
======================================================================
North Dakota                                     -27.0  14,286  10,424
======================================================================
Ohio                                             -23.5  591,01  452,41
                                                             2       7
======================================================================
Oklahoma                                         -34.0  118,91  78,471
                                                             7
======================================================================
Oregon                                           -42.2  99,896  57,740
Pennsylvania                                     -24.5  582,18  439,71
                                                             2       4
Rhode Island                                     -11.1  61,531  54,673
======================================================================
South Carolina                                   -32.9  127,63  85,628
                                                             5
South Dakota                                     -28.6  17,237  12,303
Tennessee                                        -38.8  273,65  167,45
                                                             1       7
Texas                                            -27.9  739,99  533,22
                                                             2       1
======================================================================
Utah                                             -26.2  44,309  32,681
======================================================================
Vermont                                          -16.8  26,791  22,292
Virginia                                         -31.6  177,75  121,62
                                                             3       3
Washington                                       -13.1  283,47  246,25
                                                             9       8
West Virginia                                    -27.2  103,05  75,019
                                                             4
======================================================================
Wisconsin                                        -55.6  199,30  88,507
                                                             7
Wyoming                                          -54.3  14,483   6,613
======================================================================
Total for all states                             -23.4  13,227  10,127
                                                          ,097    ,510
======================================================================
Total for our sample states                      -23.4  6,473,  4,956,
                                                           778     260
----------------------------------------------------------------------
Note:  States in boldface were part of our sample. 

Source:  ACF's AFDC/TANF recipient data. 

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

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

                                                     1997
                                                enrollment as
                                                 a proportion
                                                   of 1995
                                                  enrollment
                                                --------------
                                                                 Ratio
                                                                    of
                                                                welfar
                                                                 e-to-
                                                Medica  Welfar  Medica
                                                    id       e      id
                                                enroll  enroll  change
State                                             ment    ment      \a
----------------------------------------------  ------  ------  ------
Alabama                                           0.96    0.67     1.4
Alaska                                            1.00    0.93     1.1
Arizona                                           1.03    0.72     1.4
Arkansas                                          0.99    0.74     1.4
======================================================================
California                                        0.92    0.74     1.4
======================================================================
Colorado                                          0.90    0.68     1.3
======================================================================
Connecticut                                       0.99    0.89     1.1
======================================================================
Delaware                                          1.26    0.84     1.5
District of Columbia\b
======================================================================
Florida                                           0.87    0.65     1.3
======================================================================
Georgia                                           0.95    0.70     1.4
Hawaii                                            0.86    1.07     0.8
======================================================================
Idaho                                             0.89    0.51     1.8
Illinois                                          0.93    0.82     1.1
======================================================================
Indiana                                           0.91    0.63     1.4
Iowa                                              0.94    0.76     1.2
======================================================================
Kansas                                            0.89    0.63     1.4
======================================================================
Kentucky                                          0.90    0.80     1.1
Louisiana                                         0.93    0.65     1.4
Maine                                             0.96    0.79     1.2
======================================================================
Maryland                                          0.93    0.69     1.3
Massachusetts                                     1.01    0.75     1.4
======================================================================
Michigan                                          0.91    0.73     1.2
Minnesota                                         0.99    0.85     1.2
Mississippi                                       0.87    0.63     1.4
Missouri                                          0.95    0.75     1.3
Montana                                           0.91    0.72     1.3
Nebraska                                          1.05    0.92     1.1
======================================================================
Nevada                                            0.88    0.71     1.3
New Hampshire                                     1.01    0.69     1.5
New Jersey                                        0.95    0.77     1.2
New Mexico                                        1.14    0.74     1.5
New York                                          0.91    0.82     1.1
North Carolina                                    0.98    0.74     1.3
======================================================================
North Dakota                                      0.92    0.73     1.3
======================================================================
Ohio                                              0.84    0.77     1.1
======================================================================
Oklahoma                                          0.91    0.66     1.4
======================================================================
Oregon                                            0.87    0.58     1.5
Pennsylvania                                      0.83    0.76     1.1
Rhode Island\b
======================================================================
South Carolina                                    1.02    0.67     1.5
South Dakota                                      1.00    0.71     1.4
Tennessee                                         1.00    0.61     1.6
Texas                                             0.91    0.72     1.3
======================================================================
Utah                                              0.95    0.74     1.3
======================================================================
Vermont                                           1.03    0.83     1.2
Virginia                                          0.92    0.68     1.3
Washington                                        1.13    0.87     1.3
West Virginia\b
======================================================================
Wisconsin                                         0.81    0.44     1.8
Wyoming                                           0.86    0.46     1.9
======================================================================
National ratios\b                                 0.93    0.77     1.2
======================================================================
Our sample                                        0.91    0.77     1.2
----------------------------------------------------------------------
Note:  States in boldface were part of our sample. 

\a We derived these ratios by dividing 1997 average monthly Medicaid
and welfare participation by 1995 average monthly Medicaid and
welfare participation. 

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

(See figure in printed edition.)Appendix III
COMMENTS FROM THE HEALTH CARE
FINANCING ADMINISTRATION
========================================================== Appendix II

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

GAO CONTACT AND STAFF
ACKNOWLEDGMENTS
========================================================== Appendix IV

GAO CONTACT

Carolyn Yocom, (202) 512-4931

STAFF ACKNOWLEDGMENTS

In addition, Carol Carter, Enchelle Bolden, Christine DeMars, JoAnn
Martinez, and Craig Winslow made key contributions to this report. 

RELATED GAO PRODUCTS

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

Welfare Reform:  Public Assistance Benefits Provided to Recently
Naturalized Citizens (GAO/HEHS-99-102, June 23, 1999). 

Children's Health Insurance Program:  State Implementation Approaches
Are Evolving (GAO/HEHS-99-65, May 14, 1999). 

Welfare Reform:  Information on Former Recipients' Status
(GAO/HEHS-99-48, Apr.  8, 1999). 

Welfare Reform:  States' Experiences in Providing Employment
Assistance to TANF Clients (GAO/HEHS-99-22, Feb.  26, 1999). 

Welfare Reform:  Status of Awards and Selected States' Use of
Welfare-to-Work Grants (GAO/HEHS-99-40, Feb.  5, 1999). 

Welfare Reform:  Few States Are Likely to Use the Simplified Food
Stamp Program (GAO/RCED-99-43, Jan.  29, 1999). 

Year 2000 Computing Crisis:  Readiness of State Automated Systems to
Support Federal Welfare Programs (GAO/AIMD-99-28, Nov.  6, 1998). 

Welfare Reform:  Early Fiscal Effects of the TANF Block Grant
(GAO/AIMD-98-137, Aug.  18, 1998). 

Welfare Reform:  Child Support an Uncertain Income Supplement for
Families Leaving Welfare (GAO/HEHS-98-168, Aug.  3, 1998). 

Welfare Reform:  Many States Continue Some Federal or State Benefits
for Immigrants (GAO/HEHS-98-132, July 31, 1998). 

Welfare Reform:  States Are Restructuring Programs to Reduce Welfare
Dependence (GAO/HEHS-98-109, June 17, 1998). 

Medicaid:  Early Implications of Welfare Reform for Beneficiaries and
States (GAO/HEHS-98-62, Feb.  24, 1998). 

*** End of document. ***