MEDICAID: Welfare Reform Exacerbates Uninsurance Levels
Hundreds of thousands of low-income people have lost their health insurance as a direct result of the 1996 welfare reform law, and even more will drop off the Medicaid rolls over the next three years, according to a new Families USA report. The study estimates that 675,000 people have lost Medicaid coverge as a result of welfare reform -- 420,000 of them children. When Congress severed the link between cash assistance and Medicaid, many recipients (and case workers) became confused as to their continued Medicaid eligibility. As a result, many who move from welfare to work lose their Medicaid -- either because transitional Medicaid runs out or because they were never offered it in the first place -- and find themselves in low-wage jobs that offer no health insurance benefits. Families USA reports that termination from welfare often results in "illegal closure of Medicaid cases, despite the fact that most people remain eligible." Further, some states deter people from applying for welfare and in the process -- although doing so violates federal law -- make it difficult for people to apply for Medicaid. "What we are seeing is the tip of the iceberg," warns Families USA Executive Director Ron Pollack. "Surely this isn't what Congress and the president intended, especially since it is a disincentive to move from welfare to work," he said.
More to Come ...
By 1999, two years after the law took effect, many welfare recipients will have reached the two-year time limit when they must be working to keep their benefits. By July 2002, individual families will have reached the lifetime limit on receiving cash welfare. As these limits approach, the report suggests, many more families and children will likely lose coverage. The report's key findings:
- Fifty-four percent of all people who lost Medicaid as a result of welfare reform became uninsured in 1997.
- More than half of those children who lost Medicaid coverage between 1995 and 1997 as a direct result of welfare reform were dropped unnecessarily from Medicaid.
- For recipients with incomes below the federal poverty line, 62% of adults and 57% of children became uninsured when they dropped Medicaid coverage. For those with slightly higher incomes, up to 200% of the federal poverty level, 45% of adults and 42% of children became uninsured when they dropped Medicaid coverage.
- Fifty-eight percent of minority children became uninsured when they lost Medicaid, as compared to 41% of white children.
Federal and state officials "who promoted welfare reform must now work together to fix this problem," Pollack said, pointing to two largely unused federal protections. Although states can expand Medicaid eligibility for low-wage working families and can draw on a $500 million federal fund for improved Medicaid outreach efforts, few states have availed themselves of either opportunity (report/release, 5/13). However, the New York Times reports that the Clinton administration, "which in the past has embraced Families USA as an impeccable source of health policy research, said it had questions about the methodology of" the study, and an HHS spokesperson said it was too early to "know for sure" if there is a link between the growing number of uninsured and welfare reform (Pear, 5/14). Click here to read the full report.