Copyright 2000 Federal News Service, Inc.
Federal News Service
May 16, 2000, Tuesday
SECTION: PREPARED TESTIMONY
LENGTH: 1878 words
HEADLINE:
PREPARED TESTIMONY OF RONALD F. POLLACK EXECUTIVE DIRECTOR FAMILIES USA
BEFORE THE HOUSE WAYS & MEANS COMMITTEE
SUBCOMMITTEE ON HUMAN RESOURCES
SUBJECT - HEALTH
COVERAGE FOR FAMILIES LEAVING WELFARE
BODY:
Madam Chairwoman and Members of the Committee:
Thank you for
inviting me to testify today. Families USA is a national non-profit organization
dedicated to the needs of health care consumers. We have been
engaged in research and advocacy about the impact of TANF changes on the
Medicaid program for some time. As an organization that focuses exclusively on
health care issues, we have not been engaged in any evaluations
of the successes and failures of welfare reform except for the issue we are here
to discuss today -- the impact that these changes have had on families'
insurance status.
In May of 1999 Families USA released a report titled
"Losing Health Insurance: The Unintended Consequences of
Welfare Reform." This study was prompted by reports we began receiving from
around the country of Medicaid declines for low-income families. Our analysis
found that, as of 1997, approximately 675,000 parents and children lost Medicaid
coverage and were uninsured because of changes associated with
welfare reform. In October 1999 we released a subsequent report titled "One Step
Forward, One Step Back: Children's Health Coverage after CHIP
and Welfare Reform." This report examined the 12 states with the largest number
of uninsured children and found that children's enrollment in
federal-state health programs (Medicaid and SCHIP) declined by
2 percent between 1996 and 1999. While SCHIP enrollment was increasing during
this period, these gains were offset by reductions in children's Medicaid
coverage - largely due to welfare reform. We believe that there are three ways
that eligible families are not receiving the Medicaid coverage to which they are
entitled. The first is when people move from welfare to work. Most people making
this move wind up in entry-level jobs that provide minimal salaries and no
health care coverage. After they leave welfare, most parents
should remain eligible for Transitional Medicaid (TMA) coverage--and their
children are most likely still eligible for Medicaid or SCHIP. Yet many of these
families are not receiving federally supported health coverage
after their TANF case is closed. These terminations--many of which are clearly
erroneous--are happening in significant numbers. Washington State alone
identified approximately 100,000 family members who lost their Medicaid when
their TANF case was closed.1 As families start to meet their time limits in
TANF, this problem may become even more severe unless states move quickly to
address it.
Second, when families apply for welfare, they are often
diverted from filing an application as part of the states' attempts to reduce
cash assistance. Many families and some caseworkers are unaware of the fact that
families are still eligible for Medicaid even if they are not receiving cash
assistance, and that families have a right to file a Medicaid application and
have that application processed within 45 days.
And finally, the
significant publicity around welfare restrictions has convinced many families
that they are no longer eligible for Medicaid, and, as a result, many families
are not coming to welfare offices to apply for cash assistance and/or Medicaid.
A recent study of families eligible for or receiving Medicaid by the Kaiser
Commission found that over 70 percent believed there are time limits on
Medicaid, even though this is not true.
While outreach and
simplification efforts in SCHIP and children's Medicaid will help to reach some
of the children who lost coverage due to welfare reform, the intent of the SCHIP
legislation was to reduce the number of uninsured children -
not to compensate for welfare reform losses. SCHIP would be even more successful
if a large part of its enrollment growth was not simply compensating for losses
among lower-income Medicaid children.
Moreover, these efforts will do
nothing to address the significant numbers of parents who are losing Medicaid
coverage inappropriately.
Families USA is currently working on a report
that examines states' own data with respect to parents who lost Medicaid between
January 1996 and December 1999. Our preliminary findings indicate that these
numbers will be dramatic. In Florida alone, where we have already released our
data, enrollment of low-income parents dropped by 82,682 during this time
period. We know from work done by the Urban Institute and others that only about
one-fourth of parents moving from welfare to work have employer-sponsored
health insurance so it is fair to assume that the vast majority
of parents who lost Medicaid are now uninsured. Many of these
parents should have received Transitional Medicaid (TMA) for at least six months
if they left Medicaid due to increased earnings. If they did not have increased
earnings, then they are most likely still eligible under the Section 1931 family
coverage category. For far too many parents, the reward for moving from welfare
to work is the loss of their health insurance coverage?
I would like to turn now to ways these problems could be addressed at
the federal and state levels. As you know, the Health Care
Financing Administration (HCFA) issued guidance on April 7th to the states about
reinstatement of erroneously terminated families, requirements related to the
redetermination process, and the need to fix computer systems that have not been
properly delinked. We believe that HCFA should enforce this guidance and the
requirements of Section 1931 aggressively, and we urge Members of Congress to
communicate with their Governors that they expect the federal law to be upheld.
States must also move aggressively to fix problems associated with
delinking cash assistance from Medicaid. With prodding from advocates, a few
states--namely Washington, Pennsylvania, and Maryland--have developed
comprehensive plans to reinstate families wrongfully terminated and to fix
problems in their computer systems that are causing illegal terminations. We
believe that Washington State, in particular, is a good model for other states
to look to as they develop their plans to comply with the HCFA guidance.
Washington State, as I mentioned, had a significant problem with erroneous
terminations, but after negotiating with advocates, agreed to reinstate these
families and alter their computer systems to prevent the problem from
reoccurring.
Money is already available to the states to fix many of
these problems. Last year Congress extended the life of the so-called
"Medicaid-TANF delinking fund" which was created in the welfare reform
legislation to help states cover costs associated with delinking. These funds
can be used by states to pay for reprogramming computer systems, training
caseworkers, and doing outreach. Most states still have considerable sums
remaining in their allotments, and most activities are funded at a 90/10
federal/state match.
States must also turn their attention to
simplifying and streamlining outreach and enrollment procedures in their Section
1931 family coverage Medicaid category as they have done in their child-only
Medicaid category. In general, states' requirements for enrollment in
family-coverage Medicaid are significantly more onerous than requirements for
child-only Medicaid. For example, only 8 states still have an assets test for
their child-only Medicaid category, but 40 have an assets test in their Section
1931 category. This creates a barrier for parents and their children who are
enrolling through the Section 1931 family-coverage category.
The good
news is that many simplification efforts for children and their parents do not
require changes in federal law; states are able to do so already.
Also,
states should take advantage of the opportunity created by Section 1931 to
expand their eligibility levels for low-income parents. Currently eligibility
levels for parents are extremely low. In almost two-thirds (32) of the states,
parents are deemed to have too much income to qualify for Medicaid if they are
working full time at the minimum wage ($5.15 per hour). The
median state eligibility standard for parents is at 61 percent of the poverty
level. Nine states have already expanded eligibility, and others are currently
considering similar expansions. Beyond the obvious benefit of allowing parents
to remain eligible as they move to low-paying jobs, these expansions also
effectively break the historical link between Medicaid and welfare. And research
has shown that covering parents will result in more children getting covered.
Finally, while the statutory requirements of Section 1931 are clear, we
believe there is much more Congress can do to ameliorate the situation and
create incentives for families to go to work. The first is to extend and
simplify Transitional Medicaid, which is due to expire on September 30, 2001.
Current statutory reporting and eligibility requirements are complex, burdensome
on families, and confusing. We believe that the best way to reform TMA would be
to require 12 months of continuous coverage when a family leaves Section 1931
Medicaid due to increased earnings. This would ease state administration and
greatly simplify outreach and education efforts. An additional year of
health coverage is the least we can do for families making the
difficult transition from welfare to work.
Second, Congress should
extend certain options, like 12-month continuous eligibility, to parents.
Currently, states are only permitted to offer 12-month continuous eligibility to
children. This would allow a state to enroll the whole family for 12 months with
no separate redetermination for parents needed.
And finally, we believe
that the high levels of uninsurance among low- wage working families will not be
addressed until Congress takes action to extend coverage to all families below
200 percent of poverty. Employment-based coverage for low-wage working families
is often not offered and, if it is, it is often unaffordable. Only 43 percent of
employees working for $7 or less per hour are offered
health benefits by their employer. And in firms where the
typical wage is less than $7 per hour, the average monthly
employee contribution for the lowest-cost employer plan is $130
per month as compared to firms where the typical wage is more than
$15 a hour where the average monthly employee contribution
required is $84.Covering these families would be most
efficiently accomplished through an expansion of the Medicaid and CHIP programs
similar to the FamilyCare proposal in the President's budget this year. We urge
you to consider such an expansion to provide essential support to low-wage
working families who are struggling to make ends meet.
FOOTNOTES:
1 "Thousands Owed Medicaid," Spokesman Review. Spokane, WA, September
15, 1999.
2 P.L. 104-193 created the Section 1931 eligibility category
for families based on income and resource standards established by each state
and that eligibility is unaffected by the receipt of cash assistance.
3
The only scenario under which a parent could properly lose their Medicaid,
because of a TANF sanction, is in a state that has elected to terminate coverage
for parents who fail to meet work requirements. Only 13 states have adopted this
work sanction. Children cannot be sanctioned in any situation.
END
LOAD-DATE: May 17, 2000 
