Medicaid and Welfare Reform: States’ Use of the $500 Million Federal Fund

This report reviews how states have responded to the $500 million federal fund that was created by the federal welfare reform legislation in 1996 to help states maintain Medicaid coverage for individuals affected by welfare reform. State Medicaid officials were asked whether they have drawn down federal funds from the $500 million fund; to describe the factors that influenced their decision; and what activities they are supporting with the additional federal monies. The paper describes the current status of the $500 million fund and highlights how states are using this new funding.