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Poor Families Gain Jobs; Lose Health Insurance

Saturday, April 15, 2000

Two new studies indicate that many of the parents who left federal welfare for paid employment have needlessly lost their federal health insurance.

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Two new studies indicate that many of the parents who left federal welfare for paid employment have needlessly lost their federal health insurance.
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Two new studies indicate that many of the parents who left federal welfare for paid employment have needlessly lost their federal health insurance.

A recent report in Health Affairs, a peer-reviewed policy journal, found that 49 percent of women and 30 percent of children were uninsured a year or more after leaving federal welfare. And another study, this one published by the Alan Guttmacher Institute, showed the proportion of women of reproductive age enrolled in Medicaid fell by 21 percent between 1994 and 1998.

Several imposing barriers prevent these newly employed workers from receiving Medicaid benefits, even though the new welfare reform law retains their Medicaid eligibility immediately after cash assistance ends, says Rachel Klein, a health policy analyst for Families USA.

In many cases, eligible Medicaid recipients have been inappropriately, even illegally, removed from the Medicaid system because states have not updated their computers, Klein says.

Also, most states still have 25-page to 30-page application forms that are very cumbersome. A simple form would be a big help, Klein says, but only North Carolina and a few other states have adopted two-page Medicaid forms.

Moreover, several states also are imposing additional burdensome requirements to qualify for Medicaid, say Bowen Garrett and John Holahan, the authors of the Health Affairs study. For example, states require Medicaid applicants to undergo periodic, in-person interviews at welfare offices. Newly employed parents may find it extremely difficult to miss a day's work to fulfill that requirement, they say.

As a result of these barriers and the current economic boom, welfare caseloads across the country have fallen by half from their peak in 1994, according to a January report by the Center on Budget and Policy Priorities, a nonpartisan research organization and policy institute in Washington, D.C. That translates to about one million fewer Medicaid recipients, says Liz Schott, a senior policy analyst for the policy center.

The Health Care Financing Administration has recognized the barriers that states have created, adds Schott. In fact, the Department of Health and Human Services recently proposed rules that would take into account how well states serve low-income families with food stamps, Medicaid and the Children's Health Insurance Program, by awarding bonus money to states as part of a high performance award program, she notes.

The center's report points out that while the former recipients are going without medical insurance, drops in Medicaid and welfare caseloads have created a $7.3 billion surplus of federal funds intended to assist low-income families.

In outlining what steps can be taken to ensure uninsured families receive health benefits, the policy priorities center suggests that states:

  • Make eligibility requirements easier for working families to meet. In short, review eligibility less often and allow eligibility reviews to be completed by mail.
  • Ensure that procedures for continuing food stamps and Medicaid are effective. Specifically, review computer systems, emphasize training of caseworkers and periodically monitor results.
  • Engage in outreach or community education efforts so families that lost food stamps and Medicaid may regain those benefits.
  • Ensure that a welfare recipient's request to "close my case" does not result in the unintended loss of food stamps or Medicaid benefits.
  • Take corrective action when warranted. Reinstate benefits for families that improperly lost them.

These recommendations are consistent with those recommended by the Health Care Financing Administration and the U.S. Department of Agriculture, Schott says.