Participation in Welfare and Medicaid Enrollment – Issue Paper
Participation in Welfare and Medicaid Enrollment
The number of families receiving cash assistance through Aid to Families with Dependent Children (AFDC) or Temporary Assistance to Needy Families (TANF) programs has decreased dramatically in recent years. From March 1994 to March 1998, caseloads fell by 35%, declining from 5 million to 3.2 million families. Recent data also indicates that there has been a decline in Medicaid enrollment. Although the decline is small in comparison to the TANF decline, it is striking at a time of continuing expansions of Medicaid eligibility. Moreover, Medicaid enrollment data corresponding to the period of the greatest TANF caseload declines is not yet available.
AFDC/TANF caseloads began to fall in 1994, but most of the decline has occurred since enactment of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996. From August 1996 to March 1998, the number of families receiving assistance dropped by 27%. Medicaid enrollment of children under 15 years also fell from 15.5 million in 1995 to 15.1 million in 1996; the number of adults aged 21-44 dropped from 8.6 million to 8.2 million over the same period. Overall, the number of Medicaid beneficiaries declined slightly (from 36.3 million to 36.1 million from 1995-1996), with preliminary indications of a further decline in 1997.
Is the AFDC/TANF caseload decline contributing to a reduction in Medicaid participation? If so, how? Although there is no conclusive analysis of the factors contributing to this reduction, one important piece of evidence comes from a set of recent state studies of families no longer receiving AFDC/TANF. These studies consistently find that Medicaid enrollment falls after families leave AFDC/TANF. If the drop in Medicaid participation was because families were leaving AFDC/TANF due to employment and receiving employment-based health care coverage, the decline might not be a point of concern, but this is often not the case. The reduction in Medicaid enrollment when families leave AFDC/TANF significantly exceeds the numbers receiving employment-based health care coverage.
The TANF exit studies do not analyze the reasons for the drop in Medicaid enrollment and it remains unclear how much of the drop might be attributable to family members no longer being eligible, to failure to identify eligible families, lack of awareness of the availability of continuing benefits, agency errors, or other factors. What does seem clear, however, is that the drop in enrollment is substantial and needs state attention to ensure that eligible families do not lose Medicaid assistance.
- summarizes the relationship between AFDC receipt and Medicaid eligibility and how the relationship changes under TANF;
- describes evidence from recent state studies of AFDC/TANF exits and sanctions indicating that Medicaid enrollment and health care coverage fall after families leave AFDC/TANF; and
- raises a set of questions as to why such declines in Medicaid enrollment are occurring.
A. Background: The relationship between AFDC, TANF, and Medicaid
Before considering what happens to Medicaid when families leave AFDC/TANF, it is helpful to review what is supposed to happen under federal law. The following summarizes the relationship between AFDC and Medicaid and how the relationship changes under TANF.
Prior to the passage of the 1996 welfare law, PRWORA, AFDC recipients were automatically eligible for Medicaid. When a family left AFDC, federal law required the state to continue the family's Medicaid until the state determined whether family members qualified for Medicaid on another basis. In recent years, it became increasingly likely that at least the younger children in the family would remain eligible for Medicaid on independent grounds, e.g., children under six with incomes below 133% of poverty, children born after September 30, 1993 with family incomes below 100% of poverty, children covered through optional state expansions. For parents and older children, however, the principal basis for continued eligibility was through transitional Medicaid, which provided up to twelve months of Medicaid eligibility for family members leaving AFDC due to employment or four months of eligibility for those leaving AFDC due to increased collection of child or spousal support.1
An AFDC family member could lose Medicaid as a result of an AFDC “sanction.” In the last years of AFDC, states were increasingly likely to impose sanctions when a family member failed to comply with work-related requirements without good cause. Typically, a sanction would result in a reduction or elimination of the family's cash assistance, and in loss of AFDC-linked Medicaid for the individual violating program rules, but a sanction should not have resulted in loss of AFDC-linked Medicaid for other family members.
The 1996 welfare law created Temporary Assistance to Needy Families and “delinked” Medicaid from family cash assistance. Thus, TANF recipients are not automatically eligible for Medicaid. As noted above, many children and some parents will be eligible for Medicaid on independent grounds. However, if a family member does not qualify for Medicaid on other grounds, the state must determine whether the family member is eligible for Medicaid based on a new category known as Section 1931 eligibility.
Generally, Section 1931 provides that a family member will qualify for Medicaid if he or she meets the income, resource, and family composition rules that applied to the state's AFDC Program on July 16, 1996.2 States were provided with a limited ability to modify these rules, including a provision which allows states, in effect, to liberalize their treatment of income and resources.3
As a result:
- If a state's income, resource, and family composition rules under TANF are the same as or narrower than the rules in effect in AFDC on July 16, 1996, then all TANF families should qualify for Medicaid under Section 1931;
- If a state's TANF eligibility is broader than that in effect in AFDC on July 16, 1996, the state may be able to exercise options to make Section 1931 eligibility conform with TANF eligibility; if the state cannot or does not choose to do so, then some TANF families will not qualify for Medicaid under Section 1931;
- Since Section 1931 eligibility depends on income, resources, and family composition rather than receipt of TANF, it is entirely possible that a family will still qualify under Section 1931 even after losing TANF eligibility. As states implement TANF time limits and other restrictions on TANF eligibility, one would anticipate an increasingly large group of persons who meet Section 1931 eligibility standards without qualifying for TANF assistance.
There is still a transitional Medicaid category under the new law, but eligibility is not based on losing TANF. Rather, it is based on losing Section 1931 eligibility, i.e., a family member losing Section 1931 Medicaid due to employment may qualify for up to twelve months of transitional Medicaid, and a family member losing Section 1931 Medicaid due to increased collection of child or spousal support may continue to qualify for Medicaid for an additional four months.
Under TANF, a state has broad discretion to impose sanctions or terminate family assistance for reasons of the state's choosing, e.g., failure to attend school, failure to immunize children, etc. However, under the law, the only TANF sanction that could affect Medicaid eligibility is a work-related sanction. A state can choose to terminate the Medicaid of an adult (or minor child head of household) for a refusal to work, but may not extend the Medicaid sanction to other family members. According to preliminary information, fifteen states had elected this option as of January 1997.4
In summary, under both AFDC and TANF, the loss of cash assistance should not result in automatic loss of Medicaid. The state has an obligation to examine alternative eligibility pathways. Younger children may still qualify through other categories and the entire family may qualify for transitional Medicaid. If a family is terminated from cash assistance due to sanction, the sanction could affect Medicaid eligibility for the person who violated program rules, but not other family members.
B. AFDC/TANF Exits and Health Care Coverage: Recent Evidence from State Studies
This section describes the context for state studies of AFDC/TANF exits, and then draws from a set of exit studies to highlight how Medicaid enrollment falls when families leave AFDC/TANF.
1. The context for state exit studies
As the AFDC/TANF caseload has fallen, there has been increasing interest in trying to understand reasons for the decline and what has happened to the families who have left assistance. Unfortunately, there is little reliable national data from which one can identify the principal components of the decline, i.e., how much is attributable to the economy, to new supports for working families, to state restrictions on assistance, or other causes. Moreover, the caseload could be declining because fewer people are applying for assistance, fewer applications are being approved, the exit rate has increased or some combination of these factors.5 However, national data is not available to help understand if there has been a change in the number of applicants, the rate of application approval, or the number of exits since TANF implementation began.
The following discussion focuses on exits from assistance because a number of state studies provide data about what happens to Medicaid after families exit from AFDC/TANF. However, it should be emphasized that some observers believe that a large part of the caseload decline may be attributable to fewer families entering TANF. There are significant concerns that state policies intended to “divert” applicants from TANF may also result in the families failing to proceed with Medicaid applications. Thus, the focus here on exits only encompasses one aspect of the relationship between the TANF caseload decline and Medicaid enrollment.
It is broadly viewed that two factors contributing to exits are increases in the numbers of families entering employment and increases in the numbers losing assistance due to state sanction/penalty policies. It is almost universally believed that employment exits have increased under TANF, though administrative data about reasons for exits have historically been unreliable, so it is difficult to know whether the number of employment-related exits has changed.6 It is also broadly believed that one reason for the caseload decline has been the increase in states' use of sanctions for violations of program rules. A recent survey of state TANF policies found that thirty-six states now impose “full-family sanctions,” i.e., benefit terminations at some point in the sanction process, with fourteen states imposing such penalties for the first violation of program rules.7
Employment and sanctions are not the only reasons why families might be exiting or not entering the TANF system. Families have always left assistance for an array of other reasons: e.g. moving, ceasing to have an eligible child, marrying, or failing to comply with procedural requirements.
There is no requirement that a state conduct a study of exits from assistance, though a number of states have chosen to do so. Because there are no federal requirements, there is also no federal protocol that states must follow when they choose to do an exit study, so the studies that have been done vary widely in their methodologies and research questions. Studies are also being conducted for different purposes. Some are looking broadly at what happens to families who exit from assistance. Some focus in particular on families that have been subject to sanctions or to benefit termination for program noncompliance. Some ask about Medicaid receipt and others do not. Most exit studies that ask about Medicaid receipt do not distinguish between parents' and childrens' coverage. Some of the studies ask employed parents whether health coverage is available at the parent's job, but most do not ask whether the parent actually receives such coverage or whether coverage is available for both the adult and her dependents.
2. Findings from State Exit Studies Concerning Medicaid Consequences of Loss of AFDC/TANF
Despite the array of approaches, methodologies, and questions asked, the studies that ask about Medicaid receipt do provide a fairly consistent picture:
- When families cease receiving AFDC/TANF, Medicaid enrollment goes down. The magnitude of the decline varies between studies, but often, one-third or more of children and most adults in families that have exited are no longer reported to be receiving Medicaid when exiters are surveyed some number of months after leaving.
- Most families entering employment after having received AFDC/TANF do not have employment-based health care coverage. Typically, among families who are employed, the share reporting employment-based coverage is 25% or less.
This section describes the basic findings, first describing the more general exit studies, and then focusing on those which examine families that lost cash assistance as a result of sanction/benefit termination policies.
South Carolina's most recent study of exiters found that eight to twelve months after leaving cash assistance, 16% of children and half of adults had no form of health care coverage.8 The survey drew from a sample of cases that were closed for any reason during April 1997 to June 1997. Interviews were conducted in February1998 to May 1998 with a 76% response rate. At the time of the interviews, most (70%) respondents said they were employed, with an average wage of $6.44 per hour. Most children (84%) had some form of health insurance. Private insurance played only a small role: 73% of children were receiving Medicaid; 11% had other coverage. No information was available as to why the remaining children had no reported coverage. For adults, 36% received Medicaid, 14% had other coverage, and the remaining 50% had no coverage. The survey also asked “Was somebody in your home ever sick or hurt when you could not get medical care?” Respondents in 9.7% of households responded “yes” for the period after having left welfare, as opposed to 3.6% for the period while receiving welfare.9
A New Mexico exit survey contains data suggesting that about one-quarter of children and most adults had neither Medicaid nor employment-based health care coverage at the time of the survey. The New Mexico survey had a very low response rate; the survey was sent to 5,000 randomly selected persons whose AFDC cases had been closed between July 1996 and June 1997, and there were 617 valid responses (12%).10 At the time of the survey, 56% of respondents were currently working. Almost two-thirds (64%) of respondents were receiving Medicaid for their children; only 30% of respondents indicated that they were personally covered by Medicaid. Only 20% of employed respondents indicated that they were actually getting medical insurance at work. Half of employed respondents indicated that they could get health insurance at work, but only 41% of employed respondents who indicated that they could get medical insurance at work were actually doing so. Of employed respondents not receiving available medical insurance at work, 49% indicated that the insurance was too expensive, and 18% indicated that a waiting period was imposed. Even if one assumes that respondents with medical insurance at work were receiving coverage for both themselves and their children (which may be an optimistic assumption), the resulting estimate would be that about 75% of children and 41% of adults who had left AFDC/TANF had health coverage either through Medicaid or employment.
An Indiana survey found that about one-third of children and most adults had no health care coverage after having exited TANF.11 The Indiana survey looked at the circumstances of a group of families 12 to 18 months after they first enrolled in the state's welfare reform initiative; at that point, slightly more than half of the respondents (53%) were no longer receiving TANF assistance. Of the families no longer receiving TANF, 64% were working at the time of the survey. The survey found that among families no longer receiving TANF assistance, 46% of the adult respondents and 65% of children were covered by some form of health insurance (Medicaid or private coverage) at the time of the survey.12 The survey found that 53% of respondents were receiving Medicaid for one or more family members, although the report does not distinguish whether the Medicaid enrollment was for children only or also extended to the parent. Among working respondents, 61% were reported to be in jobs that offered health insurance, but the survey results do not indicate what share of employed recipients were actually receiving employer-based health insurance.
A recent Washington study found that about one-third of families were without adult health care coverage and 16% of children were without child health coverage after leaving TANF.13 The study used a telephone survey of single-parent families who left TANF between December 1997 and March 1998; interviews were conducted between mid-April and the end of May. Two-thirds (68%) of respondents were employed at the time of the survey. Of those currently working or who had worked during the last 12 months, 37% reported health care benefits from their current or most recent job; however, only 21% of those currently employed reported that they were currently covered by an employer-sponsored plan.14 Respondents reported that 53% of children of former TANF recipients had Medicaid coverage; when taking into account employer-based coverage and other health coverage, 16% of children were reported to have no coverage. For adults, 36% reported receiving Medicaid and 35% of adults reported they were without health care coverage for themselves.15
The Washington survey also asked respondents whether they considered themselves better off, worse off, or about the same since leaving welfare. Those reporting being worse off were more likely to also report having no health care coverage for adults or children; the difference was statistically significant.16
Another Washington State survey did not focus on current health care coverage of exiters, but does provide further evidence of the lack of employer-based health care coverage.17 Washington surveyed a random sample of all AFDC single-parent households who had ever received assistance between May and October 1996, with the surveys taking place between February and May of 1997. Almost half (46%) had worked at some point since January 1996. Of those who had ever worked in that time, 23.3% reported that health care was provided by the employer in their current or most recent job.18
A recent Louisiana study looking at families leaving assistance in New Orleans found that most respondents reported that they were not receiving Medicaid after leaving assistance.19 The telephone survey in April1998 to May 1998 sought to survey all families in the New Orleans metropolitan area who stopped receiving assistance in the months of January to March of 1998; the response rate was only about 17.5%. One fifth (21%) reported having lost assistance due to employment and one-third (34%) reported being employed at the time of the survey. Only 40% of respondents stated that they were currently receiving Medicaid; based on the survey wording, it is unclear how respondents who were receiving Medicaid for their children but not themselves would have responded to the question. When asked about problems encountered in the past three months since ceasing to receive welfare, 39% of respondents said that they couldn't afford medical care or medications.20
A recent study in Wisconsin does not provide information on health care coverage generally, but does find that after leaving AFDC, nearly half of families were no longer receiving Medicaid.21 The study tracked the earnings and employment experience for all single parents receiving AFDC in Milwaukee County in December 1995. Of the initial group of 25,125, nearly one-third (7502) were no longer receiving AFDC in September 1996. Of the group not receiving AFDC in September 1996, most (66%) had earnings in the next quarter, although 50% had earnings below the poverty line for a family of four and an additional 34% had no earnings. The study asked whether any family member was receiving Medicaid, and found that for at least 45% of the closed cases, no family member was receiving Medicaid in December 1996.22
The highest levels of continued public health coverage are found in Tennessee's follow-up survey.23 Tennessee's report is a compilation of surveys of recipients employed full or part time or individuals whose cases were closed due to full-time employment; recipients closed for noncompliance; and recipients who refused to sign a Personal Responsibility Plan. A survey of individuals who were employed beginning in March 1997 and could be reached during a four-week interview window between June and October found that 15% had medical insurance; 13% with hospital insurance; and 92% were covered by TennCare. The survey of sanctioned individuals found that TennCare covered 88% of the sanctioned group. Tennessee officials note that under the state's TennCare waiver, all family members (except a parent subject to a child support sanction) are eligible for eighteen months of transitional Medicaid when losing TANF assistance.Return to top
Participation in Welfare and Medicaid Enrollment
Policy Brief Part 1 Part 2
also of interest
- Year Two of the ACA Coverage Expansions: On-the-Ground Experiences from Five States
- How Have State Medicaid Expansion Decisions Affected the Experiences of Low-Income Adults? Perspectives from Ohio, Arkansas, and Missouri
- The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid – An Update
- Where Are States Today? Medicaid and CHIP Eligibility Levels for Adults, Children, and Pregnant Women