[Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Green Book)]
[Program Descriptions]
[Section 15. Other Programs]
[From the U.S. Government Printing Office, www.gpo.gov]


[1998 Green Book] SECTION 15. OTHER PROGRAMS

                                CONTENTS

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

                                OVERVIEW

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

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


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

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

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

                           FOOD STAMP PROGRAM

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

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

             TABLE 15-4.--RECENT FOOD STAMP ACT EXPENDITURES            
                        [In millions of dollars]                        
------------------------------------------------------------------------
                                             Administration \2\         
                                            --------------------        
         Fiscal year           Benefits \1\              State    Total 
                                 (Federal)    Federal     and           
                                                         local          
------------------------------------------------------------------------
1979.........................       $6,480       $515      $388   $7,383
1980.........................        8,685        503       375    9,563
1981.........................       10,630        678       504   11,812
1982.........................       10,408        709       557   11,674
1983.........................       11,955        778       612   13,345
1984.........................       11,499        971       805   13,275
1985.........................       11,556      1,043       871   13,470
1986.........................       11,415      1,113       935   13,463
1987.........................       11,344      1,195       996   13,535
1988.........................       11,999      1,290     1,080   14,369
1989.........................       12,483      1,332     1,101   14,916
1990.........................       15,090      1,422     1,174   17,686
1991.........................       18,249      1,516     1,247   21,012
1992.........................       21,883      1,656     1,375   24,914
1993.........................       23,033      1,716     1,572   26,321
1994.........................       23,736      1,789     1,643   27,168
1995.........................       23,759      1,917     1,748   27,424
1996.........................       23,510      1,984     1,842  27,336 
------------------------------------------------------------------------
\1\ All benefit costs associated with the Food Stamp Program and Puerto 
  Rico's block grant are included. The benefit amounts shown in the     
  table reflect small downward adjustments for overpayments collected   
  from recipients and, beginning in 1989, issued but unredeemed         
  benefits. Over time, the figures reflect both changes in benefit      
  levels and numbers of recipients.                                     
\2\ All Federal administrative costs associated with the Food Stamp     
  Program and Puerto Rico's block grant are included: Federal matching  
  for the various administrative and employment and training expenses of
  States and other jurisdictions, and direct Federal administrative     
  costs. Figures for Federal administrative costs beginning with fiscal 
  year 1989 include only those paid out of food stamp appropriation and 
  the food stamp portion of the general appropriation for food program  
  administration. Figures for earlier years include estimates of food   
  stamp related Federal administrative expenses paid out of other       
  Agriculture Department accounts. State and local costs are estimated  
  based on the known Federal shares and represent an estimate of all    
  administrative expenses of participating States and other             
  jurisdictions (including Puerto Rico).                                
                                                                        
 Source: U.S Department of Agriculture budget justification materials   
  for fiscal years 1981-98. Compiled by the Congressional Research      
  Service.                                                              

                               Eligibility

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

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

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

                                Benefits

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

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

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

                          Quality Control (QC)

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

  TABLE 15-7.--FOOD STAMP QUALITY CONTROL ERROR RATES, FISCAL YEAR 1996 
             [Percent of benefits paid or not paid in error]            
------------------------------------------------------------------------
                                  Overpayment  Underpayment    Combined 
              State                error rate   error rate    error rate
------------------------------------------------------------------------
Alabama.........................         4.87          0.93         5.80
Alaska..........................         5.22          2.27         7.50
Arizona.........................         6.99          1.45         8.44
Arkansas........................         3.64          0.90         4.54
 California.....................         5.65          3.73         9.32
Colorado........................         6.04          1.70         7.74
 Connecticut....................         8.92          1.74        10.65
Delaware........................         6.90          1.79         8.68
District of Columbia............         4.72          2.05         6.77
Florida.........................         7.43          2.27         9.70
Georgia.........................         7.20          3.06        10.26
Guam............................         7.11          2.51         9.62
Hawaii..........................         2.46          1.53         3.99
 Idaho..........................         3.89          2.39         6.28
 Illinois.......................        10.24          2.19        12.43
 Indiana........................         7.07          2.61         9.68
 Iowa...........................         9.40          2.80        12.20
 Kansas.........................         5.60          1.89         7.49
Kentucky........................         3.70          1.63         5.33
 Louisiana......................         4.48          1.49         5.97
 Maine..........................         5.98          1.39         7.37
 Maryland.......................         8.83          2.43        11.26
Massachusetts...................         3.40          1.29         4.69
 Michigan.......................         9.56          1.67        11.23
 Minnesota......................         5.51          1.44         6.95
 Mississippi....................         8.21          1.80        10.01
 Missouri.......................         9.91          3.47        13.38
 Montana........................         5.85          2.88         8.73
Nebraska........................         6.76          3.78        10.54
 Nevada.........................         7.79          2.84        10.63
 New Hampshire..................         7.19          2.17         9.37
 New Jersey.....................         6.22          2.48         8.70
 New Mexico.....................         5.94          2.02         7.96
New York........................         6.11          2.77         8.88
 North Carolina.................         7.73          2.27        10.00
 North Dakota...................         4.44          1.66         6.10
 Ohio...........................         9.31          3.32        12.63
 Oklahoma.......................         7.16          3.03        10.19
 Oregon.........................         9.03          2.14        11.17
Pennsylvania....................         6.99          2.22         9.21
Rhode Island....................         4.83          1.83         6.66
 South Carolina.................         4.32          2.00         6.32
 South Dakota...................         2.40          1.11         3.50
Tennessee.......................         7.14          1.84         8.99
Texas...........................         5.50          0.95         6.45
 Utah...........................         7.23          2.40         9.63
 Vermont........................         9.28          1.59        10.87
Virginia........................        10.92          3.03        13.95
 Virgin Islands.................         6.92          1.84         8.76
Washington......................         9.50          1.83        11.34
 West Virginia..................         9.05          3.35        12.40
 Wisconsin......................         9.27          2.13        11.40
 Wyoming........................         5.34          2.04         7.37
                                 ---------------------------------------
    U.S. average................         6.92          2.31        9.22 
------------------------------------------------------------------------
Note.--Underpayment and overpayment rates may not add to combined rates 
  due to rounding.                                                      
                                                                        
 Source: Food and Consumer Service (1997).                              

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

                Interaction With Cash Assistance Programs

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

                            Recipiency Rates

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

                    TABLE 15-8.--FOOD STAMP PARTICIPATION RATES IN THE UNITED STATES, 1975-96                   
----------------------------------------------------------------------------------------------------------------
                                                                          Food stamp participation as a percent 
                                                             Number of                     of--                 
                                                            food stamp  ----------------------------------------
                           Year                            participants                              Pretransfer
                                                                (in           Total         Poor         poor   
                                                             millions)   population \1\  population   population
----------------------------------------------------------------------------------------------------------------
1975.....................................................         16.3            7.6          63.0           NA
1976.....................................................         17.0            7.9          68.1           NA
1977.....................................................         15.6            7.2          63.1           NA
1978.....................................................         14.4            6.5          58.8           NA
1979.....................................................         15.9            7.1          61.0         57.1
1980.....................................................         19.2            8.4          65.6         60.7
1981.....................................................         20.6            9.0          64.7         60.8
1982.....................................................         20.4            8.8          59.3         56.3
1983.....................................................         21.6            9.2          61.2         58.5
1984.....................................................         20.9            8.8          62.0         58.5
1985.....................................................         19.9            8.3          60.2         56.6
1986.....................................................         19.4            8.0          59.9         56.2
1987.....................................................         19.1            7.8          59.1         55.6
1988.....................................................         18.7            7.6          58.9         55.2
1989.....................................................         18.8            7.6          59.6         55.6
1990.....................................................         20.0            8.0          59.6         55.7
1991.....................................................         22.6            9.0          63.3         59.3
1992.....................................................         25.4           10.0          68.9         64.0
1993.....................................................         27.0           10.4          68.7           NA
1994.....................................................         27.5           10.5          72.1           NA
1995.....................................................         26.6           10.1          73.0           NA
1996.....................................................         25.5            9.6          69.8          NA 
----------------------------------------------------------------------------------------------------------------
\1\ Calculated as a percent of total U.S. resident population at the end of the fiscal year. Total U.S. resident
  population was 266.22 million persons at the end of fiscal year 1996.                                         
                                                                                                                
 NA--Not available.                                                                                             
                                                                                                                
 Note.--Participants in Puerto Rico are not included in this table.                                             
                                                                                                                
 Source: U.S. Bureau of the Census.                                                                             

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

                           Legislative History

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

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

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

                                     TABLE 15-10.--CHARACTERISTICS OF FOOD STAMP HOUSEHOLDS, SELECTED YEARS 1980-95                                     
                                                                      [In percent]                                                                      
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Year and month survey was conducted                                   
                                             -----------------------------------------------------------------------------------------------------------
       Food stamp recipient households         1980     1985      1987      1988      1989      1990      1991      1992      1993      1994      1995  
                                              (Aug.)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Annual)
--------------------------------------------------------------------------------------------------------------------------------------------------------
With gross monthly income:                                                                                                                              
    Below the Federal poverty levels........      87       94        94        92        92        92        91        92        91        90        92 
    Between the poverty levels and 130                                                                                                                  
     percent of the poverty levels..........      10        6         6         8         8         8         9         8         8         9         8 
    Above 130 percent of the poverty levels.       2    (\3\)     (\3\)     (\3\)     (\3\)     (\3\)     (\3\)     (\3\)         1         1     (\3\) 
With earnings...............................      19       20        21        20        20        19        20        21        21        21        21 
With public assistance income \1\...........      65       68        74        72        73        73        70        66        68        69        68 
    With AFDC income........................      NA       39        41        42        42        43        41        40        40        38        38 
    With SSI income.........................      18       19        21        20        21        19        19        19        20        23        23 
With children...............................      60       59        61        61        60        61        61        62        60        61        60 
    And female heads of household...........      NA       46        50        50        50        51        51        51        52        51        50 
With elderly members \2\....................      23       21        21        19        20        18        17        15        16        16        16 
    With elderly female heads of household                                                                                                              
     \2\....................................      NA       16        15        14        14        11        10         9        NA        11        NA 
                                             -----------------------------------------------------------------------------------------------------------
Average household size......................     2.8      2.7       2.7       2.6       2.6       2.6       2.6       2.5       2.6       2.5      2.5  
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Public assistance income includes Aid to Families with Dependent Children, Supplemental Security Income, and general assistance.                    
\2\ Elderly members and heads of household include those age 60 or older.                                                                               
\3\ Percentage equals 0.5 or less.                                                                                                                      
                                                                                                                                                        
 NA--Not available.                                                                                                                                     
                                                                                                                                                        
 Note.--The proportion of households with public assistance income shown in this table is an estimate that generally overcounts them because it is not  
  corrected for households with multiple sources of public assistance income. The proportion of households with elderly female heads shown in this table
  for years prior to 1994 is an estimate that generally undercounts them because it counts only single-person female households. The 1995 figures       
  represent characteristics over the full course of fiscal year 1995.                                                                                   
                                                                                                                                                        
 Source: U.S. Department of Agriculture, Food and Consumer Service surveys of the characteristics of food stamp households. Compiled by the             
  Congressional Research Service.                                                                                                                       


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

                                MEDICAID

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

                               Eligibility

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

                           Categorically Needy

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

                       Aged and Disabled Persons

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

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

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

                          The Medically Needy

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

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

                         Medicaid and the Poor

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

                                Services

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

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

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

                                Financing

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

                          Reimbursement Policy

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

                             Administration

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

                        Medicaid and Managed Care

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

                          Legislative History

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

                              Program Data

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

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


     TABLE 15-14.--UNDUPLICATED NUMBER OF MEDICAID RECIPIENTS BY ELIGIBILITY CATEGORY, FISCAL YEARS 1972-95     
                                             [Numbers in thousands]                                             
----------------------------------------------------------------------------------------------------------------
                                                                                           Adults in            
                                                                   Permanent   Dependent    family              
         Fiscal year             Total     Age 65 or   Blindness   and total   children      with      Other \1\
                              recipients     over                  disabled    under age   dependent   title XIX
                                                                                  21       children             
----------------------------------------------------------------------------------------------------------------
1972........................      17,606       3,318         108       1,625       7,841       3,137       1,576
1973........................      19,622       3,496         101       1,804       8,659       4,066       1,495
1974........................      21,462       3,732         135       2,222       9,478       4,392       1,502
1975........................      22,007       3,615         109       2,355       9,598       4,529       1,800
1976........................      22,815       3,612          97       2,572       9,924       4,774       1,836
                                                                                                                
1977 \2\....................      22,832       3,636          92       2,710       9,651       4,785       1,959
1978........................      21,965       3,376          82       2,636       9,376       4,643       1,852
1979........................      21,520       3,364          79       2,674       9,106       4,570       1,727
1980 \3\....................      21,605       3,440          92       2,819       9,333       4,877       1,499
1981 \3\....................      21,980       3,367          86       2,993       9,581       5,187       1,364
                                                                                                                
1982 \3\....................      21,603       3,240          84       2,806       9,563       5,356       1,434
1983 \3\....................      21,554       3,371          77       2,844       9,535       5,592       1,129
1984 \3\....................      21,607       3,238          79       2,834       9,684       5,600       1,187
1985 \3\....................      21,814       3,061          80       2,937       9,757       5,518       1,214
1986 \3\....................      22,515       3,140          82       3,100      10,029       5,647       1,362
                                                                                                                
1987 \3\....................      23,109       3,224          85       3,296      10,168       5,599       1,418
1988 \3\....................      22,907       3,159          86       3,401      10,037       5,503       1,343
1989 \3\....................      23,511       3,132          95       3,496      10,318       5,717       1,175
1990........................      25,255       3,202          83       3,635      11,220       6,010       1,105
1991........................      28,280       3,359          85       3,983      13,415       6,778         658
                                                                                                                
1992........................      30,926       3,742          84       4,378      15,104       6,954         664
1993........................      33,432       3,863          84       4,932      16,285       7,505         763
1994........................      35,053       4,035          87       5,372      17,194       7,586         779
1995........................      36,282       4,119          92       5,767      17,164       7,604      1,537 
----------------------------------------------------------------------------------------------------------------
\1\ This category is composed predominantly of children not meeting the definition of ``dependent'' children,   
  that is, ``Ribicoff children.''                                                                               
\2\ Fiscal year 1977 began in October 1976 and was the first year of the new Federal fiscal cycle. Before 1977, 
  the fiscal year began in July.                                                                                
\3\ Beginning in fiscal year 1980, recipients' categories do not add to the unduplicated total due to the small 
  number of recipients that are in more than one category during the year.                                      
                                                                                                                
 Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                    


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


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


                            TABLE 15-17.--TOTAL AND PER CAPITA MEDICAID PAYMENTS FOR CATEGORICALLY NEEDY AND MEDICALLY NEEDY, FISCAL YEARS 1975, 1981, 1992, AND 1995                           
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                1975                          1981                           1992                           1995                Percent change  
                                                   --------------------------------------------------------------------------------------------------------------------------       1975-95     
                 Category of needy                     Total    Percent              Total    Percent              Total    Percent               Total    Percent           -------------------
                                                      amount       of      Per      amount       of      Per      amount       of       Per      amount       of       Per      Total      Per  
                                                    (millions)   total    capita  (millions)   total    capita  (millions)   total    capita   (millions)   total    capita   spending   capita 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Categorically needy:                                                                                                                                                                            
                                                                                                                                                                                                
  Receiving cash payments.........................     $7,188      58.7     $431    $14,534      53.4     $861    $41,742      46.0    $2,238    $53,718      44.7    $2,773     647.3     543.4
        Aged......................................      1,341      11.0      555      2,480       9.1    1,270      5,795       6.4     3,778      7,089       5.9     4,540     428.6     718.0
        Blind.....................................         61       0.5      717        109       0.4    1,527        334       0.4     4,669        464       0.4     6,745     660.2     840.7
        Disabled..................................      2,042      16.7    1,094      5,616      20.6    2,490     19,863      21.9     6,097     29,524      24.6     6,926   1,345.9     533.1
        AFDC children.............................      1,850      15.1      222      3,002      11.0      361      8,376       9.2       891      9,193       7.7     1,006     396.9     353.2
        Adults in AFDC families...................      1,895      15.5      478      3,328      12.2      769      7,374       8.1     1,682      7,448       6.2     1,715     293.0     258.8
                                                                                                                                                                                                
    Not receiving cash payments...................      1,753      14.3    1,261      4,736      17.4    2,641     16,064      17.7     4,243     20,458      17.0     4,369   1,067.0     246.5
        Aged......................................      1,275      10.4    2,331      3,143      11.6    5,273      7,085       7.8    11,658      8,935       7.4    13,823     600.8     493.0
        Blind.....................................         12       0.1    1,094         19       0.1    2,785         80       0.1    15,310         70       0.1    14,167     483.3   1,195.0
        Disabled..................................        353       2.9    1,854      1,214       4.5    5,146      5,065       5.6    11,913      6,248       5.2    11,375   1,670.0     513.5
        AFDC children.............................         61       0.5      152        153       0.6      302      1,764       1.9     1,156      2,560       2.1     1,222   4,096.7     703.9
        Adults in AFDC families...................         27       0.2      144         87       0.3      298      1,428       1.6     1,606      1,720       1.4     1,679   6,270.4   1,066.0
        Other title XIX...........................         25       0.2      463        120       0.4      734        643       0.7     1,927        925       0.8     2,560   3,600.0     452.9
                                                   ---------------------------------------------------------------------------------------------------------------------------------------------
          Total...................................      8,941      73.0      495     19,270      70.8    1,032     57,807      63.7     2,577     74,176      61.7     3,084     729.6       523
                                                   =============================================================================================================================================
Medically needy:                                                                                                                                                                                
    Aged..........................................      1,742      14.2    2,672      4,303      15.8    5,260      8,927       9.8    11,724     10,203       8.5    12,396     485.7     363.9
    Blind.........................................         20       0.2    1,472         27       0.1    3,132         71       0.1    21,865        133       0.1    35,709     565.0   2,325.9
    Disabled......................................        657       5.4    2,202      2,471       9.1    4,924      5,243       5.8    13,876      7,200       6.0    15,831     995.9     618.9
    AFDC children.................................        274       2.2      324        353       1.3      460      1,592       1.8       943      1,953       1.6     1,101     612.8     239.8
    Adults in AFDC families.......................        140       1.1      368        348       1.3      613      1,265       1.4     1,930      1,628       1.4     1,730   1,062.9     370.1
    Other title XIX...............................        467       3.8      267        433       1.6      360        268       0.3     1,844        293       0.2     2,208     -37.3     727.0
                                                   ---------------------------------------------------------------------------------------------------------------------------------------------
      Total.......................................      3,301      27.0      838      7,935      29.2    2,145     17,367      19.1     4,782     21,410      17.8     5,186     548.6     518.9
                                                   =============================================================================================================================================
      Grand total.................................     12,242     100.0      556     27,205     100.0    1,216     90,814     100.0     2,936    120,140     100.0     3,311     881.4    495.5 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Totals may not addd due to rounding. Fiscal year 1975 ends in June; fiscal years 1981, 1992, and 1995 end in September. Total includes other coverage groups and unknowns. Other         
  categories not shown in the total for 1995 are: Other coverage pre-1988, $15,475; coverage from 1988, $7,871; and medical assistance status unknown, $1,209.                                  
                                                                                                                                                                                                
 Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                                                                                                    


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


                     TABLE 15-19.--MEDICAID PAYMENTS AND PER CAPITA PAYMENTS BY BASIS OF ELIGIBILITY, SELECTED FISCAL YEARS 1975-95                     
                                                                [In millions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Fiscal year                                                  Percent
       Basis of eligibility        ------------------------------------------------------------------------------------------------------------  change 
                                      1975     1981     1984      1986      1988      1989      1990      1991      1992      1994      1995     1975-95
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     In nominal dollars                                                 
                                   ---------------------------------------------------------------------------------------------------------------------
Payments:                                                                                                                                               
  Age 65 and over.................   $4,358   $9,226   $12,815   $15,097   $17,135   $18,558   $21,508   $25,453   $29,078   $33,618   $36,527     738.2
  Blind...........................       93      154       219       277       344       409       434       475       530       644       848     811.8
  Disabled........................    3,052    9,301    11,758    14,635    18,250    20,476    23,969    27,798    33,326    41,654    48,570   1,491.4
  Dependent children under age 21.    2,186    3,508     3,979     5,135     5,848     6,892     9,100    11,690    14,491    17,302    17,976     722.3
  Adults in families with                                                                                                                               
   dependent children.............    2,062    3,763     4,420     4,880     5,883     6,897     8,590    10,439    12,185    13,585    13,511     555.2
  Other...........................      492      552       700       980     1,198     1,137     1,051       973     1,032     1,243     1,499     204.7
                                   ---------------------------------------------------------------------------------------------------------------------
    Total \1\.....................   12,242   27,204    33,891    41,005    48,710    54,500    64,859    77,048    90,814   108,270   120,140     881.4
                                   =====================================================================================================================
Per capita payment:                                                                                                                                     
  Age 65 and over.................    1,205    2,948     3,957     4,808     5,425     5,926     6,717     7,577     7,770     8,331     8,868     635.9
  Blind...........................      850    1,784     2,766     3,401     4,005     4,319     5,212     5,572     6,298     7,412     9,256     988.9
  Disabled........................    1,296    3,108     4,149     4,721     5,366     5,858     6,595     6,979     7,612     7,755     8,422     549.8
  Dependent children under age 21.      228      366       411       512       583       668       811       871       959     1,006     1,047     359.2
  Adults in families with                                                                                                                               
   dependent children.............      455      725       789       864     1,069     1,206     1,429     1,540     1,752     1,791     1,777     290.5
  Other title XIX.................      273      405       590       719       891       967     1,062     1,732     1,814     2,169     2,380     771.8
                                   ---------------------------------------------------------------------------------------------------------------------
    Total, per capita payment.....      556    1,238     1,569     1,821     2,126     2,318     2,568     2,725     2,936     3,089     3,311     495.5
                                   ---------------------------------------------------------------------------------------------------------------------
                                                                                  In constant 1995 dollars                                              
                                   ---------------------------------------------------------------------------------------------------------------------
Payments:                                                                                                                                               
  Age 65 and over.................   12,476   16,907    18,863    20,919    22,169    22,919    25,300    28,503    31,610    34,562    36,527     192.8
  Blind...........................      266      262       322       384       445       505       511       532       576       662       848     218.5
  Disabled........................    8,737   15,842    17,307    20,279    23,611    25,288    28,195    31,129    36,227    42,823    48,570     455.9
  Dependent children under age 21.    6,258    5,975     5,857     7,115     7,566     8,512    10,704    13,091    15,753    17,788    17,976     187.2
  Adults in families with                                                                                                                               
   dependent children.............    5,903    6,409     6,506     6,762     7,611     8,518    10,105    11,690    13,246    13,966    13,511     128.9
  Other...........................    1,408      940     1,030     1,358     1,550     1,404     1,236     1,090     1,122     1,278     1,499       6.4
                                   ---------------------------------------------------------------------------------------------------------------------
    Total \1\.....................   35,046   46,336    49,886    56,818    63,019    67,308    76,295    86,281    98,721   111,309   120,140     242.8
                                   =====================================================================================================================
Per capita payment:                                                                                                                                     
  Age 65 and over.................    3,450    5,021     5,825     6,662     7,019     7,319     7,901     8,485     8,446     8,565     8,868     157.1
  Blind...........................    2,433    3,039     4,071     4,713     5,182     5,334     6,131     6,240     6,846     7,620     9,256     280.4
  Disabled........................    3,710    5,294     6,107     6,542     6,942     7,235     7,758     7,815     8,275     7,973     8,422     127.0
  Dependent children under age 21.      653      623       605       709       754       825       954       975     1,042     1,034     1,047      60.4
  Adults in families with                                                                                                                               
   dependent children.............    1,303    1,235     1,161     1,197     1,383     1,489     1,681     1,725     1,905     1,841     1,777      36.4
  Other...........................      782      690       868       996     1,153     1,194     1,249     1,940     1,972     2,230     2,380     204.5
                                   ---------------------------------------------------------------------------------------------------------------------
    Total, per capita payment.....    1,592    2,109     2,310     2,523     2,751     2,863     3,021     3,052     3,192     3,176     3,311    108.0 
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Data includes unknowns.                                                                                                                             
                                                                                                                                                        
 Note.--Total may not add due to rounding. Fiscal year 1975 ends in June; all other fiscal years end in September. Nominal dollars converted to constant
  dollars using CPI-U price index. Total expenditures includes other coverage groups and unknowns for fiscal year 1994.                                 
                                                                                                                                                        
 Source: Health Care Financing Administration, U.S. Department of Health and Human Services, and Congressional Research Service.                        


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


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


 TABLE 15-22.--AMOUNTS OF MEDICAL VENDOR PAYMENTS BY BASIS OF ELIGIBILITY AND TYPE OF SERVICE, FISCAL YEAR 1995 
----------------------------------------------------------------------------------------------------------------
                                                                           AFDC                                 
       Type of service           Aged        Blind     Disabled  ------------------------    Other       Total  
                                                                   Children     Adults     title XIX            
----------------------------------------------------------------------------------------------------------------
                                                            In millions of dollars                              
                                                                                                                
                             -----------------------------------------------------------------------------------
Inpatient hospital services.    $2,049.8       $86.2   $11,334.9    $6,587.5    $5,544.1      $529.1   $26,131.8
Mental hospital services for                                                                                    
 the aged...................     1,124.1         0.2        44.7         8.3         1.1        12.8     1,191.2
SNF/ICF mental health                                                                                           
 services for the aged......        25.3         0.0         5.3        91.1         0.0         0.0       121.7
Inpatient psychiatric                                                                                           
 services, aged under 21....         0.7         0.3       487.9       587.6        13.3       162.6     1,252.3
ICF services for the                                                                                            
 mentally retarded..........       636.9       191.5     9,488.6        46.5         3.5         7.7    10,374.7
ICF services--all other.....     1,956.4         5.0       296.1         0.2         0.9         0.3     2,258.9
SNF services................    22,191.5       214.0     4,283.0        28.1        38.2        20.3    26,775.0
Physicians services.........       556.1        28.9     2,074.9     2,079.6     2,162.2       200.7     7,102.5
Dental services.............        61.5         1.7       180.2       547.0       201.9        23.8     1,016.0
Other practitioners services        95.8         3.5       431.7       252.8       156.2        44.7       984.7
Outpatient hospital services       534.5        25.2     2,425.9     1,862.6     1,651.8        94.5     6,594.5
Clinic services.............       258.3        30.9     2,388.7       884.9       609.0        77.6     4,249.3
Home health services........     2,806.9       124.8     5,735.2       375.5        79.0        53.1     9,174.5
Family planning services....         1.6         0.6        48.6        54.1       398.9         7.6       511.4
Lab and x-ray services......        73.0         4.0       380.2       242.1       458.4        15.6     1,173.4
Prescribed drugs............     2,861.3        69.6     4,724.7     1,116.6       939.1        63.9     9,775.3
Early and periodic screening         0.2         1.9       215.8       854.7        31.5        34.1     1,138.3
Rural health clinic services       197.3         0.5        42.3       279.3        54.3         0.7       574.3
Other care..................     1,009.2        59.0     3,974.2     2,174.1     1,167.7       150.2     8,534.4
Unknown/error...............         1.3         0.2         7.3         1.7         0.0         0.0        10.4
                             -----------------------------------------------------------------------------------
      Total.................    36,441.5       848.0    48,570.1    18,074.4    13,511.0     1,499.4   118,944.4
                             -----------------------------------------------------------------------------------
                                                                                                                
                                                                  In percent                                    
                                                                                                                
                             -----------------------------------------------------------------------------------
Inpatient hospital services.         5.6        10.2        23.3        36.4        41.0        35.3        22.0
Mental hospital services for                                                                                    
 the aged...................         3.1         0.0         0.1         0.0         0.0         0.9         1.0
SNF/ICF mental health                                                                                           
 services for the aged......         0.1         0.0         0.0         0.5         0.0         0.0         0.1
Inpatient psychiatric                                                                                           
 services, aged under 21....         0.0         0.0         1.0         3.3         0.1        10.8         1.1
ICF services for the                                                                                            
 mentally retarded..........         1.7        22.6        19.5         0.3         0.0         0.5         8.7
ICF services--all others....         5.4         0.6         0.6         0.0         0.0         0.0         1.9
SNF services................        60.9        25.2         8.8         0.2         0.3         1.4        22.5
Physicians services.........         1.5         3.4         4.3        11.5        16.0        13.4         6.0
Dental services.............         0.2         0.2         0.4         3.0         1.5         1.6         0.9
Other practitioners services         0.3         0.4         0.9         1.4         0.0         3.0         0.8
Outpatient hospital services         1.5         3.0         5.0        10.3        12.2         6.3         5.5
Clinic services.............         0.7         3.6         4.9         4.9         4.5         5.2         3.6
Home health services........         7.7        14.7        11.8         2.1         0.6         3.5         7.7
Family planning services....         0.0         0.1         0.1         0.3         3.0         0.5         0.0
Lab and x-ray services......         0.2         0.5         0.8         1.3         3.4         1.0         1.0
Prescribed drugs............         7.9         8.2         9.7         6.2         7.0         4.3         8.2
Early and periodic screening         0.0         0.2         0.4         4.7         0.2         2.3         1.0
Rural health clinic services         0.5         0.1         0.1         1.5         0.4         0.0         0.5
Other care..................         2.8         7.0         8.2        12.0         8.6        10.0         7.2
Unknown/error...............         0.0         0.0         0.0         0.0         0.0         0.0         0.0
                             -----------------------------------------------------------------------------------
      Total.................       100.0       100.0       100.0       100.0       100.0       100.0      100.0 
----------------------------------------------------------------------------------------------------------------
Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                     


       TABLE 15-23.--AVERAGE EXPENDITURE PER RECIPIENT BY BASIS OF ELIGIBILITY BY STATE, FISCAL YEAR 1995       
----------------------------------------------------------------------------------------------------------------
                                                                                           AFDC           Other 
                   State                      Total     Aged      Blind   Disabled --------------------   title 
                                                                                    Children   Adults      XIX  
----------------------------------------------------------------------------------------------------------------
Alabama...................................    $2,698    $6,339    $3,795    $4,534      $794    $1,920    $3,372
Alaska....................................     3,698    10,056     7,571    11,500     2,033     2,849         -
Arizona...................................       442       656     1,449     1,087       251       542         -
Arkansas..................................     3,893     7,361     6,433     7,684     1,014     1,355     3,403
California................................     2,097     4,906     5,425     5,919       634     1,484     2,310
                                                                                                                
Colorado..................................     3,619     8,714    27,940     9,131     1,120     1,883         -
Connecticut...............................     5,588    14,373    13,890    15,512     1,286     1,966       449
Delaware..................................     4,128    12,472     7,613    11,778     1,348     2,384     3,441
District of Columbia......................     3,843    16,439     9,062    10,572     1,195     1,814       777
Florida...................................     2,768     7,325     4,974     6,548     1,096     1,401     1,534
                                                                                                                
Georgia...................................     2,681     5,500    10,998     6,070     1,076     2,498     3,398
Hawaii....................................     4,983     9,002     6,215     6,837       300       416         -
Idaho.....................................     3,129    10,040     8,239     8,975       846     1,889     2,129
Illinois..................................     3,608     8,399     8,181     9,955     1,254     1,972     3,148
Indiana...................................     3,359    10,389     5,578    10,353     1,038     1,532     1,714
                                                                                                                
Iowa......................................     3,406     7,794     4,496     9,220     1,209     1,499       959
Kansas....................................     3,250     9,768     6,387     8,856     1,045     1,620       213
Kentucky..................................     3,035     7,408     4,597     5,711     1,089     2,094         -
Louisiana.................................     3,449     6,665     6,584     7,384     1,354     2,286         -
Maine.....................................     4,965    12,738     6,486    10,043     1,502     2,349     4,966
                                                                                                                
Maryland..................................     4,873    10,615     8,941    10,816     1,668     2,565     6,589
Massachusetts.............................     5,460    14,483    14,740    11,069     1,264     1,824         -
Michigan..................................     2,918     9,245     5,348     7,223       831     1,426     3,259
Minnesota.................................     5,386    14,311    15,901    15,765     1,172     1,799         -
Mississippi...............................     2,436     5,277     3,645     4,251       938     1,826     3,424
                                                                                                                
Missouri..................................     2,932     7,492     4,836     7,518     1,075     1,516         -
Montana...................................     3,300    11,546     6,631     8,009       916     1,732     1,307
Nebraska..................................     3,609    10,019     8,831     9,171     1,063     1,652     1,584
Nevada....................................     3,322     6,863     6,803     8,806     1,145     2,048     9,405
New Hampshire.............................     4,880    15,559    24,356    14,570     1,377     1,735       531
                                                                                                                
New Jersey................................     4,828    12,988     8,237    12,188     1,049     2,567     2,581
New Mexico................................     2,491     7,110     8,608     7,685     1,067     1,730         -
New York..................................     7,276    20,431    49,636    18,713     1,964     2,727     1,939
North Carolina............................     2,928     6,301     8,281     7,251     1,179     2,139         -
North Dakota..............................     4,839    11,176     5,837    13,713     1,156     1,805     1,487
                                                                                                                
Ohio......................................     3,644    10,742     5,042     9,152     1,103     1,742       350
Oklahoma..................................     2,680     6,217     3,291     6,781     1,225     1,288       934
Oregon....................................     2,937     7,149    25,375    11,140     1,798     1,418         -
Pennsylvania..............................     3,766    11,679     4,113     6,553     1,006     1,473     1,752
Rhode Island..............................     4,973    14,155     8,095    12,053       882     1,416         -
                                                                                                                
South Carolina............................     2,902     5,157     3,979     6,552     1,118     1,840       884
South Dakota..............................     4,120    10,926     5,645    10,192     1,164     1,645         -
Tennessee.................................     1,891     5,567     3,108     4,024       793     1,256     8,195
Texas.....................................     2,562     5,978     5,491     7,608     1,052     2,160         -
Utah......................................     2,895     9,240     6,122     9,792     1,058     2,064    13,209
                                                                                                                
Vermont...................................     3,210     9,160     6,741     9,801       999     1,448         -
Virginia..................................     2,690     6,627     5,356     6,901       904     1,662         -
Washington................................     2,285     9,572     4,428     5,384       547     1,308     4,278
West Virginia.............................     3,009     8,517     4,252     6,283       985     1,876    11,571
Wisconsin.................................     4,118    12,010     7,413     7,215       704     1,307     1,630
                                                                                                                
Wyoming...................................     3,328     8,389     1,606    10,648     1,067     2,225     2,014
Puerto Rico...............................       232       229       685       234       232       232         -
Virgin Islands............................       670     2,453     3,190     1,803       355       772       295
                                           ---------------------------------------------------------------------
    United States.........................     3,405     9,265     9,298     8,523     1,076     1,824     2,382
    All jurisdictions.....................     3,311     8,868     9,256     8,422     1,047     1,777    2,380 
----------------------------------------------------------------------------------------------------------------
Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                     


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

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

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

                          Types of Assistance

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

                   Trends in Commitments and Payments

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

           TABLE 15-25.--NET NEW COMMITMENTS FOR RENTERS AND NEW COMMITMENTS FOR HOME BUYERS, 1977-97           
----------------------------------------------------------------------------------------------------------------
                                                                 Net new commitments for renters         New    
                                                            ---------------------------------------- commitments
                        Fiscal year                            Existing        New                     for home 
                                                               housing    construction     Total        buyers  
----------------------------------------------------------------------------------------------------------------
1977.......................................................      127,581       247,667      375,248      112,234
1978.......................................................      126,472       214,503      340,975      112,214
1979.......................................................      102,669       231,156      333,825      107,871
1980.......................................................       58,402       155,001      213,403      140,564
1981.......................................................       83,520        94,914      178,434       74,636
1982.......................................................       37,818        48,157       85,975       66,711
1983.......................................................       54,071        23,861       77,932       54,550
1984.......................................................       78,648        36,719      115,367       44,409
1985.......................................................       85,741        42,667      128,408       45,387
1986.......................................................       85,476        34,375      119,851       25,479
1987.......................................................       72,788        37,247      110,035       24,132
1988.......................................................       65,295        36,456      101,751       26,200
1989.......................................................       68,858        30,049       98,907       25,264
1990.......................................................       61,309        23,491       84,800       24,968
1991.......................................................       55,900        28,478       84,378       23,879
1992 \1\...................................................       62,595        38,324      100,919       25,690
1993 \1\...................................................       50,593        34,065       84,658       30,982
1994 \1\...................................................       66,907        29,194       96,101       38,588
1995 \1\...................................................       25,822        19,440       45,262       31,985
1996 \1\...................................................       33,696        16,259       49,955       40,838
1997 (estimate) \1\........................................       36,134        14,027       50,161      48,360 
----------------------------------------------------------------------------------------------------------------
\1\ Figures are not adjusted for units for which funds were deobligated because data were unavailable.          
                                                                                                                
 Note.--Net new commitments for renters represent net additions to the available pool of rental aid and are     
  defined as the total number of commitments for which new funds are appropriated in any year. To avoid double- 
  counting, these numbers are adjusted for the number of commitments for which such funds are deobligated or    
  canceled that year (except where noted otherwise); the number of commitments for units converted from one type
  of assistance to another; in the FmHA section 515 program, the number of units that receive more than one     
  subsidy; starting in 1985, the number of commitments specifically designed to replace those lost because      
  private owners of assisted housing opt out of the programs or because public housing units are demolished;    
  and, starting in 1989, the number of commitments for units whose section 8 contracts expire.                  
New commitments for home buyers are defined as the total number of new loans that the FmHA or HUD makes or      
  subsidizes each year. This measure of program activity is meant to indicate how many new home buyers can be   
  helped each year and is therefore not adjusted to account for homeowners who leave the programs in any year   
  because of mortgage repayments, prepayments, or foreclosures. Thus, it does not represent net additions to the
  total number of assisted homeowners and therefore cannot be added to net new commitments for renters.         
                                                                                                                
 Source: Congressional Budget Office based on data provided by the U.S. Department of Housing and Urban         
  Development and the Farmers Home Administration.                                                              

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

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

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

     TABLE 15-27.--NET BUDGET AUTHORITY APPROPRIATED FOR HOUSING AID    
                      ADMINISTERED BY HUD, 1977-97                      
                [In millions of current and 1997 dollars]               
------------------------------------------------------------------------
                                               Net budget authority     
                                         -------------------------------
               Fiscal year                    Current                   
                                              dollars      1997 dollars 
------------------------------------------------------------------------
1977....................................         $28,579         $73,356
1978....................................          32,169          77,558
1979....................................          25,123          55,622
1980....................................          27,435          54,657
1981....................................          26,022          47,112
1982....................................          14,766          24,981
1983....................................          10,001          16,201
1984....................................          11,425          17,757
1985....................................          11,071          16,595
1986....................................          10,032          14,673
1987....................................           8,979          12,765
1988....................................           8,592          11,732
1989....................................       \1\ 8,879          11,576
1990....................................      \1\ 10,557          13,109
1991....................................      \1\ 19,239          22,741
1992....................................      \1\ 16,883          19,375
1993....................................      \1\ 18,466          20,564
1994....................................      \1\ 18,414          19,981
1995....................................      \1\ 11,840          12,497
1996....................................      \1\ 13,229          13,586
1997 (estimate).........................      \1\ 12,020         12,020 
------------------------------------------------------------------------
\1\ Includes $99 million, $1,164 million, $8,814 million, $7,585        
  million, $6,926 million, $5,202 million, $2,197 million, $4,008       
  million, and $3,550 million for renewing expiring section 8 contracts 
  in 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, and 1997           
  respectively.                                                         
                                                                        
 Note.--All figures are net of funding rescissions, exclude             
  reappropriations of funds, but include supplemental appropriations.   
  Totals include funds appropriated for various public housing programs,
  including modernization of operating subsidies, drug elimination, and 
  severely distressed public housing. Excludes budget authority for     
  HUD's section 202 loan fund and for programs administered by FmHA.    
                                                                        
 Source: Congressional Budget Office based on data provided by the U.S. 
  Department of Housing and Urban Development.                          

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

   TABLE 15-28.--OUTLAYS FOR HOUSING AID ADMINISTERED BY HUD, 1977-97   
                [In millions of current and 1997 dollars]               
------------------------------------------------------------------------
                                                         Outlays        
                                               -------------------------
                  Fiscal year                     Current        1997   
                                                  dollars      dollars  
------------------------------------------------------------------------
1977..........................................       $2,928       $7,515
1978..........................................        3,592        8,660
1979..........................................        4,189        9,275
1980..........................................        5,364       10,687
1981..........................................        6,733       12,189
1982..........................................        7,846       13,273
1983..........................................        9,419       15,257
1984..........................................       11,000       17,096
1985..........................................       25,064       37,569
1986..........................................       12,179       17,813
1987..........................................       12,509       17,784
1988..........................................       13,684       18,684
1989..........................................       14,466       18,860
1990..........................................       15,690       19,484
1991..........................................       16,898       19,973
1992..........................................       18,243       20,936
1993..........................................       20,490       22,817
1994..........................................       22,191       24,079
1995..........................................   \1\ 24,059       25,394
1996..........................................   \1\ 25,349       26,032
1997 (estimate)...............................   \1\ 26,110      26,110 
------------------------------------------------------------------------
\1\ Figures have been adjusted to account for $1.2 billion of advance   
  spending that occurred in 1995 but that should have occurred in 1996. 
                                                                        
 Note.--The bulge in outlays in 1985 is caused by a change in the method
  of financing public housing, which generated close to $14 billion in  
  one-time expenditures. This amount paid off--all at once--the capital 
  cost of public housing construction and modernization activities      
  undertaken between 1974 and 1985, which otherwise would have been paid
  off over periods of up to 40 years. Because of this one-time          
  expenditure, however, outlays for public housing since that time have 
  been lower than they would have been otherwise.                       
                                                                        
 Source: Congressional Budget Office based on data provided by the U.S. 
  Department of Housing and Urban Development.                          


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

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

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

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

      TABLE 15-30.--THE NATIONAL SCHOOL LUNCH PROGRAM PARTICIPATION AND FEDERAL COSTS, FISCAL YEARS 1977-96     
                                              [Dollars in millions]                                             
----------------------------------------------------------------------------------------------------------------
                                                  Participation 9 month average (in           Federal costs     
                                                            millions) \1\              -------------------------
                                             ------------------------------------------                         
                 Fiscal year                            Reduced-    Full-                 Current      Constant 
                                                Free      price     price    Total \3\  dollars \4\      1996   
                                                meals     meals   meals \2\                            dollars  
----------------------------------------------------------------------------------------------------------------
1977........................................      10.5       1.3       14.5       26.3     $2,111.1     $5,510.0
1978........................................      10.3       1.5       14.9       26.7      2,293.6      5,596.4
1979........................................      10.0       1.7       15.3       27.0      2,659.0      5,876.4
1980........................................      10.0       1.9       14.7       26.6      3,044.9      5,937.6
1981........................................      10.6       1.9       13.3       25.8      2,959.5      5,179.1
1982........................................       9.8       1.6       11.5       22.9      2,611.5      4,256.7
1983........................................      10.3       1.5       11.2       23.0      2,828.6      4,469.2
1984........................................      10.3       1.5       11.5       23.3      2,948.2      4,451.8
1985........................................       9.9       1.6       12.1       23.6      3,034.4      4,430.2
1986........................................      10.0       1.6       12.2       23.8      3,160.2      4,487.5
1987........................................      10.0       1.6       12.4       24.0      3,245.6      4,478.9
1988........................................       9.8       1.6       12.8       24.2      3,383.7      4,500.3
1989........................................       9.7       1.6       12.7       24.2      3,479.4      4,418.8
1990........................................       9.9       1.6       12.8       24.1      3,676.4      4,448.4
1991........................................      10.3       1.8       12.1       24.2      4,072.9      4,683.8
1992........................................      11.1       1.7       11.7       24.5      4,474.5      5,011.4
1993........................................      11.8       1.7       11.3       24.8      4,663.8      5,036.9
1994........................................      12.2       1.8       11.3       25.3      4,994.5      5,294.2
1995........................................      12.4       1.9       11.3       25.6      5,254.0      5,411.6
1996........................................      12.6       2.0       11.3       25.9      5,439.0     5,439.0 
----------------------------------------------------------------------------------------------------------------
\1\ In order to reflect participation for the actual school year (September through May), these estimates are   
  based on 9 month averages of October through May, plus September, rather than averages of the 12 months of the
  fiscal year (October through September).                                                                      
\2\ The Federal Government provides a small subsidy for these meals.                                            
\3\ Details may not sum to total because of rounding.                                                           
\4\ Includes cash payments and the value of ``entitlement'' commodities; does not include the value of ``bonus''
  commodities. Overstates actual support for school lunches because a small portion (less than $75 million a    
  year) of commodity support included in the figures is used for other child nutrition programs.                
                                                                                                                
 Note.--Constant dollars were calculated using the fiscal year CPI-U.                                           
                                                                                                                
 Source: U.S. Department of Agriculture, Food and Consumer Service (FCS): (1) budget justification materials    
  prepared by the FCS for appropriations requests for fiscal years 1980-98; and (2) monthly ``Program           
  Information Report'' summaries prepared by the FCS.                                                           


        TABLE 15-31.--THE SCHOOL BREAKFAST PROGRAM PARTICIPATION AND FEDERAL COSTS, FISCAL YEARS 1977-96        
                                              [Dollars in millions]                                             
----------------------------------------------------------------------------------------------------------------
                                                  Participation 9 month average (in           Federal costs     
                                                            millions) \1\              -------------------------
                                             ------------------------------------------                         
                 Fiscal year                            Reduced-    Full-                 Current      Constant 
                                                Free      price     price    Total \3\  dollars \4\      1996   
                                                meals     meals   meals \2\                            dollars  
----------------------------------------------------------------------------------------------------------------
1977........................................       2.0       0.1        0.4        2.5       $148.6       $387.8
1978........................................       2.2       0.2        0.4        2.8        181.2        442.1
1979........................................       2.6       0.2        0.5        3.3        231.0        510.5
1980........................................       2.8       0.2        0.6        3.6        287.8        561.2
1981........................................       3.0       0.2        0.5        3.8        331.7        580.5
1982........................................       2.8       0.2        0.4        3.3        317.3        517.2
1983........................................       2.9       0.1        0.3        3.4        343.8        543.2
1984........................................       2.9       0.1        0.4        3.4        364.0        549.6
1985........................................       2.9       0.2        0.4        3.4        379.3        553.8
1986........................................       2.9       0.2        0.4        3.5        406.3        576.9
1987........................................       3.0       0.2        0.4        3.7        446.8        616.6
1988........................................       3.0       0.2        0.5        3.7        482.0        641.1
1989........................................       3.1       0.2        0.5        3.8        507.0        643.9
1990........................................       3.3       0.2        0.5        4.0        589.1        712.8
1991........................................       3.6       0.2        0.6        4.4        677.2        778.8
1992........................................       4.0       0.3        0.6        4.9        782.6        876.5
1993........................................       4.4       0.3        0.7        5.4        868.4        937.9
1994........................................       4.8       0.3        0.7        5.8        958.7      1,016.2
1995........................................       5.1       0.4        0.8        6.3      1,181.8      1,217.3
1996........................................       5.3       0.4        0.9        6.6      1,122.1     1,122.1 
----------------------------------------------------------------------------------------------------------------
\1\ In order to reflect participation for the actual school year (September through May), these estimates are   
  based on 9 month averages of October through May, plus September, rather than averages of the 12 months of the
  fiscal year (October through September).                                                                      
\2\ The Federal Government provides a small subsidy for these meals.                                            
\3\ Details may not sum to totals due to rounding.                                                              
\4\ Does not include the value of any federally donated commodities. Fiscal year 1995 figure for Federal costs  
  is not reduced for a ``write-down'' of approximately $50-$80 million for obligations not expected to be paid. 
                                                                                                                
 Note.--Constant dollars were calculated using the fiscal year CPI-U.                                           
                                                                                                                
 Source: U.S. Department of Agriculture, Food and Consumer Service (FCS): (1) budget justification materials    
  prepared by the FCS for appropriations requests for fiscal years 1980-98; and (2) monthly ``Program           
  Information Report'' summaries prepared by the FCS.                                                           

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

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

    TABLE 15-32.--THE SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN (WIC) PARTICIPATION AND   
                                     FEDERAL SPENDING, FISCAL YEARS 1977-96                                     
                                              [Dollars in millions]                                             
----------------------------------------------------------------------------------------------------------------
                                                        Participation (in thousands)          Federal spending  
                                                 ---------------------------------------------------------------
                   Fiscal year                                                                          Constant
                                                    Women    Infants  Children  Total \1\    Current      1996  
                                                                                           dollars \2\   dollars
----------------------------------------------------------------------------------------------------------------
1977............................................     165.0     213.0     471.0      848.0      $255.9     $667.9
1978............................................     240.0     308.0     633.0    1,181.0       379.6      926.2
1979............................................     312.0     389.0     782.0    1,483.0       525.4    1,161.1
1980............................................     411.0     507.0     995.0    1,913.0       724.7    1,413.2
1981............................................     446.0     585.0   1,088.0    2,119.0       874.4    1,530.2
1982............................................     478.0     623.0   1,088.0    2,189.0       948.2    1,545.6
1983............................................     542.0     730.0   1,265.0    2,537.0     1,123.1    1,774.5
1984............................................     657.0     825.0   1,563.0    3,045.0     1,386.3    2,093.3
1985............................................     665.0     874.0   1,600.0    3,138.0     1,488.9    2,173.8
1986............................................     712.0     945.0   1,655.0    3,312.0     1,580.5    2,244.3
1987............................................     751.0   1,019.0   1,660.0    3,429.0     1,663.6    2,295.8
1988............................................     815.0   1,095.0   1,683.0    3,593.0     1,802.4    2,397.2
1989............................................     951.8   1,259.6   1,907.0    4,118.4     1,929.4    2,450.3
1990............................................   1,035.0   1,412.5   2,069.4    4,516.9     2,125.9    2,572.3
1991............................................   1,120.1   1,558.8   2,213.8    4,892.6     2,301.1    2,646.3
1992............................................   1,221.5   1,684.1   2,505.2    5,410.8     2,566.5    2,874.5
1993............................................   1,364.9   1,741.9   2,813.4    5,920.3     2,819.5    3,045.1
1994............................................   1,499.2   1,786.3   3,191.7    6,477.2     3,159.8    3,349.4
1995............................................   1,576.8   1,817.3   3,500.1    6,894.2     3,451.0    3,554.5
1996............................................   1,648.2   1,827.3   3,712.3    7,187.8     3,688.2   3,688.2 
----------------------------------------------------------------------------------------------------------------
\1\ Details may not sum to totals due to rounding.                                                              
\2\ Includes funding for studies, surveys, pilots, and farmers' market programs. Spending figures include       
  adjustments for significant interyear carryovers and reflect spending by State WIC agencies derived both from 
  current-year appropriations and prior-year amounts, adjusted for amounts carried forward into the next year.  
                                                                                                                
 Note.--Constant dollars were calculated using the fiscal year CPI-U.                                           
                                                                                                                
 Source: U.S. Department of Agriculture, Food and Consumer Service (FCS): (1) budget justification materials    
  prepared by the FCS for appropriations requests for fiscal years 1980-98; and (2) monthly ``Program           
  Information Report'' summaries prepared by the FCS.                                                           

                      JOB TRAINING PARTNERSHIP ACT

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

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


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

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

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


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

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

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

                               HEAD START

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

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


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

           LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM (LIHEAP)

                               Background

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

                           Program Components

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

                          Allotments to States

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

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

                  Eligibility and Types of Assistance

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

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

                      Planning and Administration

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

                     VETERANS BENEFITS AND SERVICES

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

          TABLE 15-41.--EXPENDITURES FOR VETERANS BENEFITS AND SERVICES, SELECTED FISCAL YEARS 1975-96          
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                                                Other           
                                        Compensation  Readjustment,                           veterans          
              Fiscal year               and pensions    education,      Medical     Housing   benefits    Total 
                                             \1\       job training  programs \2\  loans \3\     and            
                                                                                              services          
----------------------------------------------------------------------------------------------------------------
1975..................................      $7,860         $4,593        $3,665          $24      $442   $16,584
1980..................................      11,688          2,342         6,515          -23       648    21,169
1981..................................      12,909          2,254         6,965          201       643    22,973
1982..................................      13,710          1,947         7,517          102       662    23,938
1983..................................      14,250          1,625         8,272            3       673    24,824
1984..................................      14,400          1,359         8,861          244       725    25,588
1985..................................      14,714          1,059         9,547          214       728    26,262
1986..................................      15,031            526         9,872          114       784    26,327
1987..................................      14,962            454        10,266          330       737    26,750
1988..................................      15,963            454        10,842        1,292       834    29,386
1989..................................      16,544            459        11,343          878       808    30,031
1990..................................      15,241            278        12,134          517       888    29,058
1991..................................      16,961            427        12,889           85       943    31,305
1992..................................      17,296            783        14,091          901       992    34,064
1993..................................      17,758            826        14,812        1,299       976    35,671
1994..................................      19,613          1,115        15,678          197       982    37,585
1995..................................      18,966          1,124        16,428          329     1,043    37,890
1996..................................      18,201          1,114        16,586           66     1,018   36,985 
----------------------------------------------------------------------------------------------------------------
\1\ Primarily compensation and pension benefits; includes amounts for insurance and burial benefits.            
\2\ Medical program expenditure data include outlays for direct medical services, medical research and training,
  and construction programs.                                                                                    
\3\ Numbers provided for expenditures under housing loans are not comparable to program expenditures in the     
  other columns because they are revolving funds with loan outlays and repayments.                              
                                                                                                                
 Source: Office of the President (1997).                                                                        

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

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

                         WORKERS' COMPENSATION

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

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

  TABLE 15-43.--ESTIMATED NUMBER OF WORKERS COVERED BY WORKERS' COMPENSATION IN AVERAGE MONTH AND TOTAL ANNUAL  
                            PAYROLL IN COVERED EMPLOYMENT, SELECTED YEARS 1948-93 \1\                           
----------------------------------------------------------------------------------------------------------------
                                                        Workers covered in average    Total payroll in covered  
                                                                  month                      employment         
                                                      ----------------------------------------------------------
                                                                       Percent of                               
                         Year                                           employed                     Percent of 
                                                         Number  (in    wage and      Amount  (in  civilian wage
                                                         millions)       salary       billions)      and salary 
                                                                       workers \2\                 disbursements
----------------------------------------------------------------------------------------------------------------
1948.................................................           36.0          77.0           $105           79.9
1953.................................................           40.7          80.0            154           81.5
1958.................................................           42.5          80.2            192           83.1
1963.................................................           47.3          80.5            254           83.7
1968.................................................           56.8          83.8            376           83.0
1973.................................................           66.3          86.3            578           84.2
1978.................................................           75.6          86.7            922           84.3
1983.................................................           78.0          85.6          1,382           84.6
1988.................................................           91.3          87.0          2,000           84.2
1990.................................................           95.1          87.0          2,250           84.0
1991.................................................           93.6          87.0          2,300           84.0
1993.................................................           96.1            NA          2,500          82.0 
----------------------------------------------------------------------------------------------------------------
\1\ Before 1963, excludes Alaska and Hawaii.                                                                    
\2\ Beginning in 1968, excludes those under age 16 and includes certain workers previously classified as self-  
  employed.                                                                                                     
                                                                                                                
 NA--Not available.                                                                                             
                                                                                                                
 Source: Nelson (1991, 1993); Schmulowitz (1995).                                                               

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

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

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

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

                               REFERENCES

Burton, John F., Elizabeth H. Yates, and Florence Blum (1997). 
        The employers' costs of workers' compensation in the 
        1990s: The $100 billion gap. John Burton's Workers' 
        Compensation Monitor. March/April 1997. pp. 1-11.
Committee on Energy and Commerce, U.S. House of 
        Representatives. (1993). Medicaid source book: 
        Background data and analysis (Committee Print 103A). 
        Washington, DC: U.S. Government Printing Office.
Congressional Budget Office. (1988). Current housing problems 
        and possible Federal responses. Washington, DC: Author.
Congressional Budget Office. (1994). The challenges facing 
        Federal rental assistance programQ. Washington, DC: 
        Author.
Congressional Research Service. (1991). Housing assistance in 
        the United States (91-872E). Washington, DC: Author.
Congressional Research Service. (1993). HUD housing assistance 
        programs: Their current status (93-222E). Washington, 
        DC: Author.
Food and Consumer Service. (1995, July). Food stamp quality 
        control annual report, fiscal year 1995. Washington, 
        DC: U.S. Department of Agriculture.
National Academy for State Health Policy. (1997). Medicaid 
        managed care: Program characteristics and State survey 
        results. Volume 1. Washington, DC: Author.
National Foundation for Unemployment Compensation and Workers' 
        Compensation. (1997). Fiscal data for State workers' 
        compensation systems 1986-95. Research Bulletin, 97 WC-
        2. September 15, 1997. pp. 1-17.
Nelson, W.J. (1991). Workers' compensation: Coverage, benefits, 
        and costs, 1988. Social Security Bulletin, 54(3), pp. 
        12-20.
Nelson, W.J. (1993). Workers' compensation: Coverage, benefits, 
        and costs, 1990-91. Social Security Bulletin, 56(3), 
        pp. 18-74.
Schmulowitz, J. (1995). Workers' compensation: Coverage, 
        benefits, and costs, 1992-93. Social Security Bulletin 
        58(2), pp. 51-57.
U.S. Department of Agriculture. (1994, October). Food stamp 
        participation rates: January 1992. Washington, DC: 
        Author.
U.S. Department of Agriculture. (1995, December). Trends in FSP 
        participation rates: Focus on August 1993. Washington, 
        DC: Author.