Sex In The 90s:Kaiser Family Foundation/ABC Television 1998 National Survey of Americans on Sex and Sexual Health

Methodology:The Kaiser Family Foundation and ABC Television 1998 National Survey of Americans on Sex and Sexual Health is a random-sample telephone survey of 1,204 adults 18 and older living in the United States. It was designed by staff at the Foundation and Princeton Survey Research Associates (PSRA) and conducted by PSRA between April 24 and May 10, 1998. The margin of sampling error is plus or minus 3 percentage points.

Questionnaire and Toplines

INTRODUCTION: Hello, my name is _______ and I’m calling for Princeton Survey Research of Princeton, New Jersey. We are conducting a national opinion survey about some important social issues, like health and family.

First, I have some questions about some social issues in this country . . .

1. Unplanned pregnancy and sexually transmitted diseases are bigger problems in the United States than in many other Western countries, and people have many different explanations for why this is so. Please tell me whether YOU think each of the following contributes a lot, some, only a little or not at all to these problems in the U.S.

A lot Some Only a little Not at all DK/Ref. a. A lack of openness about sex and sexual issues 35 34 15 12 4 =100 b. Poverty and poor education 46 29 15 8 2 =100 c. A decline in moral values 65 20 8 5 2 =100 d. Too much casual sex in the movies and on TV 55 25 13 6 1 =100 e. Inadequate sex education in the schools 32 32 20 13 3 =100 2. Do you think the way TV programs show sex and nudity tends to ENCOURAGE irresponsible sexual behavior, DISCOURAGE irresponsible sexual behavior, or don’t you think it has much effect on people’s sexual behavior?

74 Encourages irresponsible sexual behavior 3 Discourages irresponsible sexual behavior 20 No effect 3 Don’t know/Refused 100 3. In your opinion, if TV characters in entertainment programs are talking about or engaging in sexual activity, should they talk about condoms or make other references to “safer sex,” or NOT?

77 Should 18 Should not 5 Don’t know/Refused 100

4. How well do you think the way sex is usually shown on TV and in the movies reflects your own sex life?Would you say . . .

3 Very well 16 Somewhat well 23 Not too well 50 Not well at all 8 Don’t know/Refused 100

5. To what extent do you think TV and movies send the message that. . . (INSERT). Do you think TV and movies send this message a lot, somewhat, only a little, or not at all?

A lot Some Only a little Not at all DK/Ref. a. To have a great sex life you must changepartners often 41 29 14 14 2 =100 b. You can have spontaneous sex without worryingabout the consequences 53 25 11 9 2 =100 c. Only thin, beautiful people can have great sex 53 22 8 14 3 =100 d. Older adults can have great sex 14 31 33 19 3 =100 e. To have a “normal” sex drive means alwaysbeing in the mood for sex 41 31 13 12 3 =100 READ: On a different topic . . .

6. Do you have any children — either adult children or children who are still growing up?

70 Yes, have children 30 No children * Refused 100

7. Are any of your children age 18 or under?

40 Yes, have children age 18 or under 30 No children under 18 0 Don’t know/Refused 30 Have no children at all/DK/Ref 100

8. Starting with the older, please tell me the ages of your children who are age 18 or under.RESULTS NOT REPORTED

AGE OF TARGET CHILD:

49 8-12 51 13-18 100 READ: Please answer the next few questions thinking about your (AGE) year old . . .

9. Have you ever had a conversation about a sexual issue with your (AGE) year old because of something one or both of you saw . . .

Based on parents with at least one child age 8 to 18, (target child chosen randomly for those with more than one child in age range); n=329

Yes No DK/Ref. a. On the news 63 36 1 =100 b. On a television show 70 30 0 =100

10. Thinking about the last time you had a conversation because of something you saw on television, which comes closer to how you felt …

Based on parents who had a conversation about a sexual topic with target child because of something on TV; n=257

65 It was a good opportunity for you and your child to talk about sexual issues 31 It raised a sexual issue you did not want to talk about with your child at that time 4 Don’t know/Refused 100 11. Thinking about sexual content on television. . . Have you ever (INSERT) because of sexual content you saw (on TV)?

Yes No DK/Ref. a. Q11a based on parents with at least one child age 18 or under; n=491Not allowed (one of your children/your child) to watch a certain show 76 24 * =100 b. Q11b-f based on totalTurned off the television 60 39 1 =100 c. Talked to a health care provider about a sexual topic 46 52 2 =100 d. Talked to a health care provider about a sexual topic 9 91 0 =100 e. Had a conversation with a sexual partner about a sexual topic 44 54 2 =100 f. Tried something new sexually 13 85 2 =100

READ: Next I have some questions about sex education . . .

12. In general would you say that young people today get information about sex and birth control at…

22 About the right time 24 Too soon 47 Too late 7 Don’t know/Refused 100

13. In general do you SUPPORT or OPPOSE sex education courses being taught to . . .

Support Oppose DK/Ref. a. High school age students — that is children age 15 to 18 85 12 3 =100 b. Junior high school age students — that is children age 12 to 14 76 21 3 =100 c. Elementary school age students — that is children 6 to 12 35 60 5 =100

14. If sex education is taught in HIGH SCHOOLS, do you think it should or should not…

Should Should Not DK/Ref. Sex education should not be taught at all a. Tell young people NOT to have sexualintercourse before marriage? 68 27 4 1 =100 b. Tell young people who ARE sexually activeto use protection, such as condoms, to prevent against pregnancy and disease? 92 5 2 1 =100 c. Teach the basic facts of human reproduction? 94 4 4 1 =100 d. Discuss how to know when you are readyto have sex? 74 19 6 1 =100 e. Discuss how to talk about sex with a partner? 74 21 4 1 =100

15. Some people believe that whether or not young people are sexually active, they should be given information to protect themselves from unplanned pregnancies and sexually transmitted diseases. Others believe that telling young people about birth control and sexually transmitted diseases only encourages them to have sex. Which come closer to your view?

83 They should be given information 14 Information only encourages them to have sex 3 Don’t know/Refused 100

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Sex In The 90s:Kaiser Family Foundation/ABC Television 1998 National Survey of Americanson Sex and Sexual Health:Survey Part One Part Two Part Three ABC Television

This paper examines Medicaid enrollment and its relation to the rise and fall of enrollment in Aid to Families with Dependent Children (AFDC) or Temporary Assistance to Needy Families (TANF) programs.

• Issue Paper
• Issue Paper

Part 5

Appendix Table 1: Medicaid Eligibility Levels for Pregnant Women and Children Pregnant Women, Infants and Children(as of May 20, 1998) Other Eligibility Categories Pregnant Women and Infants Children Under Age 6 Children Ages 6 to 14 Children Ages 14 to 19 Asset Test Required for Children (4) Max. AFDC Payments (7/16/96) (5) Medically Needy, 1996 (percent of Federal Poverty Level) United States 133 133 100 45 49 Alabama 133 133 100 100 No 15 N/A Alaska 133 133 100 90 No 76 N/A Arizona 140 133 100 30 No 32 N/A Arkansas (2,3,4) (133) (200) 200 200 200 Yes 19 25 California (1) 200 133 100 100 No 56 86 Colorado (1,4) 133 133 100 37 Yes 39 N/A Connecticut 185 185 185 185 No 81 71 Delaware 185 133 100 100 No 31 N/A District of Columbia 185 133 100 37 No 37 N/A Florida (1) 185 133 100 100 No 28 28 Georgia 185 133 100 100 No 39 35 Hawaii 185 133 100 100 No 57 57 Idaho (4) 160 160 160 160 Yes 29 N/A Illinois 200 133 130 133 No 35 45 Indiana 150 133 100 100 No 27 N/A Iowa (4) 185 133 100 37 Yes 39 52 Kansas 150 133 100 100 No 40 44 Kentucky 185 133 100 46 No 49 28 Louisiana 133 133 100 17 No 18 N/A Maine 185 133 125 125 No 51 42 Maryland (2) 185 185 185 33 No 34 40 Massachusetts (1) 185 133 133 133 No 52 72 Michigan 185 150 150 150 No 45 52 Minnesota (3) 275 275 275 275 No 49 66 Mississippi 185 133 100 32 No 34 N/A Missouri 185 133 100 100 No 27 N/A Montana (4) 133 133 100 48 Yes 41 46 Nebraska 150 133 100 100 No 34 45 Nevada (4) 133 133 100 31 Yes 32 N/A New Hampshire 300 185 185 185 No 51 60 New Jersey (1) 185 133 133 133 No 41 52 New Mexico 185 185 185 185 No 36 N/A New York (1) 185 133 100 51 No 61 76 North Carolina 185 133 100 100 No 50 34 North Dakota (4) 133 133 100 100 Yes 40 47 Ohio 150 150 150 30 No 32 N/A Oklahoma 185 185 185 185 No 28 42 Oregon (4) 133 133 100 100 Yes 43 57 Pennsylvania (1) 185 133 100 37 No 39 43 Rhode Island (3,4) 250 250 250 250 Yes 51 69 South Carolina 185 150 150 150 No 18 N/A South Dakota 133 133 100 100 No 47 N/A Tennessee (3) 400 400 400 400 No 54 23 Texas (4) 185 133 100 17 Yes 17 25 Utah (4) 133 133 100 100 Yes 53 53 Vermont (3) (200) (225) 225 225 225 No 59 81 Virginia 133 133 100 100 No 22 33 Washington (185) (200) 200 200 200 No 50 62 West Virginia 150 133 100 100 No 24 27 Wisconsin 185 185 100 45 No 48 64 Wyoming (4) 133 133 100 52 Yes 55 N/A SOURCE: Center on Budget and Policy Priorities. 1998 and National Governors’ Association. 1996 and 1997. N/A: No medically needy programNote: The 1998 Federal poverty guideline for a family of three was $13,650; for Alaska $17,070 and Hawaii $15,700.(1) The state operates separate child health insurance programs for children not eligible for Medicaid. Such Programs may provide benefits similar to Medicaid or they may provide a limited benefits package and may include premiums and cost-sharing.(2) Children covered under Medicaid expansion programs in Arkansas and Maryland receive reduced benefits package pursuant to federal waivers.(3) The Medicaid programs in AR, MN, RI, TN, and VT may impose some cost-sharing-premiums and/or co-payments for some children pursuant to federal waivers.(4) The states noted count assets, in addition to income, in determining Medicaid eligibility for children; Utah does not consider assets for young children. An assets test in NOT required in Arkansas for its Medicaid expansion program.(5) The United States figure represents the median maximum AFDC payment level.

Appendix Table 2: Expansion Population Eligibility in State Medicaid Programs Operating Under Statewide Section 1115 Demonstration Waivers*State ExpansionPopulation FamilyIncomeRequire-ment ResourceRequire-ment CategoricalRequire-mentWaived Premium/Cost-Sharing EnrollmentCap Alabama Children aged 6-19 < 133% FPL N/A Change in income requirement No premium/cost-sharing No Women for 24 months post-partum^a < 133% FPL Pregnancy Arizona Children up to age 14 < 100% FPL N/A Change in income requirement $1-5 copay, depending on service. No copay for prescription drugs, prenatal care, EPSDT care, nursing facility services, and primary care visits not scheduled by the patient. No Pregnant women and infants < 140% FPL N/A Change in income requirement Arkansas Children up to age 19 < 200% FPL No resource test Change in income requirement $5 copay for prescriptions, $10 copay for outpatient services, percentage copay for hospital per diem No Delaware Low-income children and adults < 100% FPL N/A Changes income requirement for children, waives requirement of pregnancy, disability, or dependent children No premium/cost-sharing No Hawaii Low-income children and adults < 300% FPL < $2,000 for single person, < $3,000 for couple Changes income requirement for children, waives requirement of pregnancy, disability, or dependent children All persons (except pregnant women) making over 100% FPL pay 100% of medical, dental, and catastrophic care premiums. Sliding payment scale for children under 200% FPL. No Kentucky No eligibility expansion Maryland No eligibility expansion Massachusetts Low-income employed < 200% FPL No resource test Dependent child, pregnancy, disability Cost-sharing on a sliding scale based on income No Low-income unemployed < 133% FPL No resource test Dependent child, pregnancy, disability Unemployed persons receiving state or federal unemployment benefits < 400% FPL No resource test Dependent child, pregnancy, disability State ExpansionPopulation FamilyIncomeRequire-ment ResourceRequire-ment CategoricalRequire-mentWaived Premium/Cost-Sharing EnrollmentCap Minnesota Pregnant women and children up to age 19 < 275% FPL No resource test Changes income requirement Premiums range from 1.5 to 8.8% gross income, $4/month premium for families with children < 150% FPL, non-pregnant adults pay 10% of inpatient hospital costs with $1,000 maximum No Planned extension to low-income adults N/A N/A Dependent child, pregnancy, disability New Jersey Low-income individuals < 200% FPL < $7,500 for individual, < $15,000 per family Dependent child, pregnancy, disability Individuals with income below 200% FPL receive fully subsidized care; individuals with income below 300% FPL receive partially subsidized care. No Low-income individuals < 300% FPL < $7,500 resources for individual, < $15,000 per family New York Home Relief population N/A Dependent child, pregnancy, disability No premium/cost-sharing No Women for 24 months post-partum^a< 185% FPL Pregnancy Ohio No eligibility expansion Oklahoma No eligibility expansion Oregon Low-income children and adults < 100% FPL < $5,000 Dependent child, pregnancy, disability Cost-sharing on sliding scale for adult, non-pregnant new eligibles. No Rhode Island Pregnant women and children under age 8 < 250% FPL N/A Change in income requirement Individuals with family incomes between 185-250% FPL subject to cost-sharing requirements. No Women for 24 months post-partum^a < 250% FPL Pregnancy Tennessee Uninsurable individuals N/A No resource test Dependent child, pregnancy Individuals with family incomes > 100% FPL subject to cost-sharing requirements on sliding scale based on income. Enrollment capped at 1,775,000^b Persons ineligible for employer- or government-sponsored health plans No resource test Dependent child, pregnancy, disability Vermont Low-income children and adults < 150% FPL N/A Dependent child, pregnancy, disability No premium/cost-sharing *Based on data collected by the George Washington University Center for Health Policy Research. N/A indicates that this information was not clear based on the information reviewed.a. Only family planning services are covered under this extension.b. Tennessee does not cap enrollment of traditional eligibles meeting the state’s 1993 Medicaid eligibility criteria and uninsurable persons. The enrollment of uninsured persons is limited by the difference between 1,775,000 and the sum of traditional eligibles and uninsurable persons.

¹ Thomas Selden, Jessica Banthin, and Joel Cohen, “Medicaid’s Problem Children: Eligible but not Enrolled,” Health Affairs. May/June 1998: 192-200.

² Medicaid eligibility policy vis-a-vis the disabled and the elderly will be the focus of subsequent analyses.

³ See Lake Snell Perry & Associates, Barriers to Medi-Cal Enrollment and Ideas for Improving Enrollment: Findings from Eight Focus Groups with Parents of Potentially Eligible Children. Kaiser Family Foundation, September 1998.

⁴ See Kaiser Commission on Medicaid and the Uninsured, “Medicaid Eligibility and Enrollment Projects,” September 1998; Donna Cohen Ross, Child Health Outreach Handbook , Center on Budget and Policy Priorities, July, 1998; Sarah Shuptrine, Vicki Grant, and Genny McKenzie, Southern Regional Initiative to Improve Access to Benefits for Low-income Families with Children, Southern Institute on Children and Families, February 1998.

⁵ Congressional Budget Office, Behind the Numbers: An Explanation of CBO’s January 1997 Medicaid Baseline, April 1997, p. 7.

⁶ For detailed state-by-state data on the number and type of beneficiaries covered, see David Liska, Brian Bruen, Alina Salganicoff, Peter Long, and Bethany Kessler, Medicaid Expenditures and Beneficiaries: National and State Profiles and Trends, 1990-1995, Third Edition, Kaiser Commission on the Future of Medicaid, November 1997.

⁷ Statement of Bruce C. Vladeck, Administrator, Health Care Financing Administration, “1998 Budget for Medicaid and Medicare Part B” presented to the House Commerce Committee, Subcommittee on Health and Environment, February 12, 1997.

⁸Choices Under the New State Child Health Insurance Program: What Factors Shape Cost and Coverage? Kaiser Commission on Medicaid and the Uninsured, January 1998.

⁹MCH Update: State Medicaid Coverage of Pregnant Women and Children, National Governors’ Association, September 1997, www.nga.org.

¹⁰ See David Super, Sharon Parrott, Susan Steinmetz, Cindy Mann, The New Welfare Law, Center on Budget and Policy Priorities, August 14, 1996, http://www.cbpp.org.

¹¹ For a discussion of eligibility rules relating to two-parent families, see Jocelyn Guyer and Cindy Mann, Taking the Next Step: States Can Now Take Advantage of Federal Medicaid Matching Funds to Expand Health Care Coverage to Low-Income Working Parents, Center on Budget and Policy Priorities, July 1998, www.cbpp.org.

¹² 63 Fed. Reg. 42270 (August 7, 1998.)

¹³ Jeff Harris and Jane Horvath, The Administrative Impact of the Medicaid Eligibility Resource Test, Kaiser Commission on the Future of Medicaid, April 1993.

¹⁴ Marilyn Moon, The Urban Institute, Asset Limits and Medicaid, Kaiser Commission on the Future of Medicaid, April 1993.

¹⁵ See Leighton Ku and Bethany Kessler, The Number and Cost of Immigrants on Medicaid: National and State Estimates, Urban Institute, December 1997. For a discussion of the impact of the welfare law changes on elderly legal immigrants, see Robert B. Friedland and Veena Pankaj, Welfare Reform and Elderly Legal Immigrants, Henry J. Kaiser Family Foundation, July, 1997. For a review of the options remaining to states with respect to coverage of this population through either federally-funded or state-funded programs, see Kelly Carmody, State Options to Assist Legal Immigrants Ineligible for Federal Benefits, Center on Budget and Policy Priorities, February 1998, http://www.cbpp.org.

¹⁶ Sara Rosenbaum, Medicaid and Migrant Farmworker Families: Analysis of Barriers and Recommendations for Change, National Association of Community Health Centers, 1991.

¹⁷ Guyer and Mann. July 1998.

¹⁸www.hcfa.gov/init/chip-map.cfm

¹⁹ Guyer and Mann. July 1998.

²⁰ For a summary of the expansion populations covered by some states under section 1115 waivers, see Sara Rosenbaum and Julie Darnell, Statewide Medicaid Managed Care Demonstrations under Section 1115 of the Social Security Act: A Review of the Waiver Applications, Letters of Approval, and Special Terms and Conditions, Kaiser Commission on the Future of Medicaid, May 1997.

²¹ Under section 1931 of the Social Security Act, States have the option of liberalizing their financial eligibility standards for adults in one-parent and certain two-parent families by adopting “less restrictive” income or resource methodologies. They do not, however, have the option to liberalize the non-financial eligibility rules. In order to receive federal Medicaid matching funds for the coverage of childless non-disabled adults who do not meet these family composition requirements, states must obtain a waiver from the Secretary of HHS under section 1115.

²² Schoen, C., B. Lyons, D. Rowland et al, “Insurance Matters for Low-Income Adults: Results from a Five-State Survey” Health Affairs, Sept/Oct 1997.

²³ Selden, Banthin, and Cohen, May/June 1998.

²⁴ See Alina Salganicoff and Patricia Seliger Keenan, Child Health Facts: National and State Profiles of Coverage, Kaiser Commission on Medicaid and Uninsured, January 1998. Return to top

Policy Brief Part 1 Part 2 Part 3 Part 4 Part 5Library Index

How Well Does the Employment-Based Health Insurance System Work for Low-Income Families?

September 1998

Most Americans receive health insurance coverage through the workplace. Unfortunately, however, many workers are left out, especially low-wage workers and their families. Being a low paid worker does not mean just that wages are low. It also means a lower likelihood of receiving health insurance protection on the job. Low-wage workers have never been as likely as the better paid to get coverage from their employers. And, as employers try to limit what they spend on coverage, the gap is growing worse. Although recent employer actions have reduced coverage for workers at all wage levels, low-wage workers have been the hardest hit.

Medicaid has made an enormous difference to health insurance protection for low-income families. But Medicaid eligibility is limited to the poorest of the poor, especially mothers and children. Although Medicaid has been expanded in recent years to reach near-poor pregnant women and children, many low-income working families have not been eligible for coverage. Employer protection is therefore critical for workers with low and modest incomes.

The purpose of this Issue Paper is to describe the nature of employer coverage; its decline, especially among low-wage workers and low-income families; and the factors that are undermining its reach. In summary, this paper documents the following:

Low wage workers are least likely to have employer coverage.

• Whether they work in large or small firms, low-wage workers are far less likely than the better paid to have employer coverage. Although 90% of the highest wage workers had employment-based health insurance in 1996, only 42% of the lowest wage workers were covered.
• The primary reason low-wage workers lack coverage is that their employers do not offer them health insurance benefits. Despite substantial costs, most low-wage workers (76% in 1996) participate in employer plans to which they have access.

As coverage has declined, the gap between high wage and low wage workers has grown.

• Between 1987 and 1996, the proportion of workers with employer coverage fell by 3 percentage points, with the decline in coverage concentrated on the lowest wage workers. Coverage declined by 12 percentage points among the lowest wage workers, while coverage among the top wage earners increased by 3 percentage points. As a result, the gap in coverage between high-wage and low-wage workers has grown.

The decline in coverage for low-wage workers is a function of the decline in employer offerings and participation.

• The proportion of low-wage workers with access to employer coverage declined 5 percentage points between 1987 and 1996 and the participation rate dropped by 13 percentage points. By contrast, access for high-wage workers improved.
• The fall in participation for the lowest wage workers coincided with the deterioration in wages for these workers. From 1989 to 1996, the real hourly wage of the typical (median) worker fell 5.2%. Among low-wage men (20th percentile), wages declined even more- by 6.4%. Increases in employees’ contributions to premiums have therefore had a disproportionate effect on low wage workers.

Who’s Covered and Who’s Left Out? The large majority of Americans have some kind of private or public health insurance, but more than 41 million nonelderly Americans are uninsured. Since almost all Americans over age 65 are covered by Medicare, lack of insurance is primarily a problem for working age adults and for children. In 1995, about 72% of the nonelderly had private health insurance (mostly employer coverage and some private, nongroup coverage) and 12% were covered by Medicaid. Approximately 16% of the nonelderly were uninsured [Figure 1].¹

Whether individuals have any insurance coverage and what kind of insurance they have are closely related to family income. Over half of the uninsured are in families with incomes below 200% of poverty. In 1995, 88% of individuals in families with incomes above 200% of poverty had private (primarily employer-sponsored) health insurance and only 11% were uninsured. Not surprisingly, health insurance coverage for poor families looks very different. Only a small proportion of poor families (with incomes below 100% of the federal poverty level) have employer coverage. A large proportion are covered by Medicaid, but a substantial proportion remain uninsured. In 1995, 55% of individuals in poor families were covered by Medicaid and only 22% had private insurance. Despite Medicaid’s substantial contribution, however, 23% of the poor lacked health insurance [See Figure 1].

Near-poor families (those with incomes between 100-199% of poverty) are somewhat worse off than poor families with respect to health insurance coverage. Affordable private health insurance is only available to individuals in near-poor families if it is employer-sponsored. Only 55% of individuals in near-poor families had private (primarily employer-sponsored) insurance in 1995, compared to 88% of individuals in families with incomes above 200% of poverty. For certain groups, such as pregnant women and children, Medicaid has played a strong role, but Medicaid’s income and categorical restrictions result in limited coverage of the near-poor–only 17% of individuals in near-poor families had Medicaid coverage. As a result, 27% were uninsured [See Figure 1].

Lack of insurance does not mean that the poor and near-poor are not working. Rather, the vast majority of the uninsured are workers or are in working families. In 1995, most uninsured adults and children–79 percent–lived in families where there was at least one full-time worker. Another 11% lived in families where there was at least one part-time worker. Only 10% of the uninsured lived in families where there were no employed adults [Figure 2]. The same is true even of the poor and near-poor uninsured. Among the near-poor, the proportion of uninsured who are in full-time workers’ families (83 percent) is nearly as high as among higher income workers (92 percent). The differences in their insurance coverage are therefore not explained by substantially different levels of employment.

Although Medicaid’s coverage of the near-poor is limited by its eligibility criteria, many working families do qualify for Medicaid. About half of Medicaid’s nonelderly beneficiaries (low-income, working age adults and children) are in working families. In 1995, 18% of Medicaid’s nonelderly beneficiaries were in families where the family head worked full-time and full-year, while 34% were in families where at least one adult worked part-time or part-year [Figure 3].

Why Don’t Low-Income Families Have Employer Coverage?

Since most of the uninsured and half of low-income adults and children with Medicaid coverage are in working families, an important question is why so many low-income working families lack employer coverage. There are a number of factors associated with jobs without health care coverage, but a key factor is low wages. Figure 4 presents data on employer coverage rates for workers differentiated by wage.² These data show there is a strong positive relationship between wages and health insurance coverage. In 1996, 90% of workers who earned more than $15 per hour had employer coverage, while only 42% of workers who earned less than $7 per hour had employment-related health insurance.

The primary problem for low-wage workers is that their employers not only pay them low wages, but they also offer them lower nonwage compensation-including health insurance and pensions.³ In 1996, only 43% of workers who earned less than $7 per hour were offered health benefits by their employer, compared to 93% of workers who earned more than $15 per hour [Figure 5].

Uninsured low wage workers, like all uninsured workers, are in large as well as small firms, and are in firms that offer coverage to none of their workers as well as firms that offer coverage to some. Although data make it difficult to distinguish precisely between these categories, an estimate from available data suggests that uninsured workers are about equally split between firms that do not offer coverage and firms that offer coverage to some workers.⁴

Unfortunately, many low-wage employees offered limited benefits do not have alternative access to employment-based coverage through a spouse or other family member. Even when other sources of insurance are taken into account, the gap between low and high-wage workers is still quite large. In 1996, 55% of low-wage workers had access (through their own employer or a family member’s employer) to employer coverage, compared to 96% of high-wage workers [See Figure 5].

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How Well Does the Employment-Based Health Insurance System Work for Low-Income Families?Policy Brief Part 1 Part 2 Part 3

Medicaid Eligibility for Families and Children

September 1998

Measured by enrollment, Medicaid is the largest health insurer in the country. According to the Urban Institute’s estimates, Medicaid covered 41.3 million Americans in 1996; Medicare, in comparison, covered 38 million. Moreover, millions of low-income Americans without private health insurance coverage are eligible for Medicaid but are not enrolled in the program. For example, researchers at the Agency for Health Care Policy Research recently estimated that in 1996 about 4.7 million uninsured children were eligible for Medicaid but not enrolled.¹ If all of these children were enrolled in Medicaid, the number of children without some form of health insurance coverage would drop by 40 percent.

There are numerous reasons why Medicaid does not cover all of the children or adults who qualify. This Issue Paper focuses on one of those reasons: the complexity of Medicaid eligibility policy. This complexity makes the program difficult for low-income Americans to understand and for state Medicaid officials to administer. Yet within this complexity are options that enable states, if they so choose, to use their Medicaid programs as a policy tool to reduce — potentially dramatically — the number of children and adults without basic health care coverage.

This paper begins with an overview of Medicaid eligibility policy. It then turns to two groups of Americans — low-income children and nondisabled adults under 65 — and summarizes the statutory and regulatory “pathways” to Medicaid eligibility available to individuals to them.² The paper concludes with a discussion of policy options available to states under current law for increasing Medicaid eligibility for these two groups. It also reviews the policy options available to the federal government for altering current law to expand Medicaid eligibility.

The complexity of Medicaid eligibility policy is just one reason why Medicaid does not cover all of the children or adults who qualify. Other reasons include burdensome application forms and procedures, lack of outreach efforts, and negative perceptions of Medicaid among low-income families.³ These issues are the subject of other analyses and are being explored in related Kaiser Commission projects.⁴

As CBO has recognized, states have Aa great deal of flexibility in operating the Medicaid program.⁵ For this reason, Medicaid eligibility policy, like Medicaid coverage policy and Medicaid payment policy, varies from state to state. This paper does not attempt to describe Medicaid eligibility policy in each state.⁶ Instead, the focus is on the federal policies that structure the eligibility choices that states make.

I. Overview of Medicaid Eligibility Policy

Medicaid eligibility policy reflects the basic structure of the program. Medicaid is a means-tested, federal-state, individual entitlement program with historical ties to the Aid to Families with Dependent Children (AFDC) and Supplemental Security Income (SSI) cash assistance programs. Medicaid’s policy premise of means-testing explains much about its income and resource rules. Medicaid’s association with AFDC and SSI has guided Medicaid’s historical eligibility categories. Finally, because Medicaid is an individual entitlement, both the states and the federal government have relied on eligibility policy as a tool for limiting their financial exposure for the cost of covered benefits.

Medicaid’s role is to cover basic health and long-term care services for low-income Americans. However, being poor does not assure Medicaid coverage. As shown in Figure 1, Medicaid in 1995 covered only about 55 percent of the nonelderly poor, earning less than $12,590 for a family of three. Medicaid’s reach to individuals with incomes just above the poverty line is even more limited, covering only 17 percent of the near-poor. Despite Medicaid, low-income people are considerably more likely to be uninsured than those with higher incomes. While a portion of the low-income uninsured are eligible for Medicaid but not enrolled, a substantial share are excluded from Medicaid coverage by program eligibility rules that reflect policy choices at both the federal and state level.

At the federal level, eligibility policy choices are reflected in the authorization of federal Medicaid matching funds (on an open-ended basis) for the costs incurred by a state in paying for covered services on behalf of certain low-income individuals. Federal Medicaid matching funds are available to states for the costs of covering some categories of individuals but not others. If federal matching funds are not available for a particular category, it is unlikely that a state will extend Medicaid coverage to those categories of individuals, because the state would then bear the costs of care entirely at its own expense.

At the state level, eligibility policy choices are reflected in state decisions as to which optional eligibility categories and which income and resource criteria to adopt. There are certain eligibility groups — for example, pregnant women with family incomes at or below 133 percent of the federal poverty level ($1,513 per month for a family of three in 1998) — that all states opting to participate in Medicaid must cover. In addition, there are other categories for which states may receive federal matching funds if they choose to extend Medicaid coverage. However, the availability of federal matching funds for a particular category of individuals does not necessarily mean that a state will cover that category, since the state must still contribute its own matching funds toward the costs of coverage.

The terms on which federal Medicaid matching funds are available to states include five broad requirements relating to eligibility: categorical; income; resources; immigration status; and residency. Two of these broad requirements — income and resources — are financial in nature. The other three — categorical, immigration status, and residency — are non-financial. In order to qualify for Medicaid, an individual must meet both its financial and non-financial requirements.

Within each of these five broad requirements are “mandatory” and “optional” elements. It is important to understand the context in which these terms are used. State participation in Medicaid is voluntary, not mandatory. The federal government makes Medicaid matching funds available on an open-ended, entitlement basis to states that elect to participate in the program. In order to participate, states must offer coverage for basic benefits to certain populations — e.g., medically necessary physician and hospital services to certain low-income families and children.

States receive federal Medicaid matching funds for at least 50 percent and as much as 80 percent of the costs of this mandatory coverage, depending on the state. In exchange, states are also able to draw down federal Medicaid matching funds at the same rate for optional populations and services such as the low-income elderly and disabled at risk of nursing home and other expensive long-term care services. Similarly, within each of the five major eligibility requirements there are minimum policies states must follow and there are more expansive policies that states may adopt. According to the Health Care Financing Administration, 55 percent of all Medicaid spending paid for optional populations or optional services.⁷

A child or adult who establishes Medicaid eligibility is not, on the basis of that initial determination, entitled to maintain eligibility indefinitely. Federal Medicaid regulations require that states redetermine eligibility of a Medicaid beneficiary at least once every 12 months. This redetermination, like the original determination, is designed to ensure that a beneficiary continues to meet each of the financial and non-financial requirements for eligibility. Those beneficiaries, who due to a change in income, resources, or family composition no longer meet the eligibility requirements of their state through any pathway, lose their entitlement to Medicaid. There are some limited exceptions for certain categories such as pregnant women, who are entitled to continue Medicaid coverage for 60 days post-partum regardless of any change in financial or non-financial circumstances.

Fluctuations in monthly income are common among low-income families. These changes can lead to the loss of Medicaid coverage by a child or family whose income may spike during one part of the year but spends most of the year earning under the federal poverty level. This occurs commonly in states that use 1-month, 3-month, and 6-month redetermination periods. To address eligibility “churning,” the Balance Budget Act of 1997 gave states the option of extending Medicaid coverage with federal matching funds to children under 19 for a period of up to 12 months after the initial determination of eligibility regardless of any change in financial or non-financial circumstances that would otherwise make them ineligible. This option does not extend to low-income adults with dependent children.

Medicaid does not require that an individual who meets its categorical, income, resource, immigration status, and residency requirements also be uninsured. Medicaid treats insurance coverage as a payment source, not as an eligibility criterion. More specifically, private insurance coverage under Medicaid is a type of “third party liability” that the program uses to reduce its costs of coverage. In most cases, when a Medicaid beneficiary also has private coverage, the private insurer must pay first. Then Medicaid will pay for Medicaid-covered services for which the private insurer is not obligated to pay. This policy stands in sharp contrast to the approach taken under the new Child Health Insurance Program (CHIP), under which states are expressly prohibited from using federal CHIP matching funds to pay for services to children with private health insurance.⁸

Unlike employer-based insurance coverage, Medicaid eligibility is not directly tied to employment for many of the Medicaid coverage categories. For example, a pregnant woman whose income is equal to or less than 133 percent of the federal poverty level is eligible for Medicaid coverage in every state whether or not she worked before or during her pregnancy. On the other hand, as a result of the 1996 welfare law, a state has the option to deny Medicaid eligibility to non-pregnant women with dependent children with respect to whom the state has terminated cash assistance for refusal to work (states are not permitted to terminate Medicaid coverage to children for this reason).

The earnings flowing to an individual or a family from work will affect income eligibility for Medicaid. At income levels near Medicaid eligibility thresholds, a small increase in earnings can result in a loss in Medicaid eligibility even though the increase in earnings may not be sufficient to enable the worker to afford private health insurance coverage. To mitigate this disincentive to work or to increase the hours worked, states are required to extend “transitional” Medicaid coverage for up to one year to women (and their dependent children) who lose cash assistance due to earnings.

Figure 2: Major Medicaid Eligibility Pathways for Selected GroupsMandatory Coverage Optional Coverage Low-income Children Primary Pathways Infants under age 1 with income < 133% FPL Infants under age 1 with income < 185% FPL Children age 1 to 6 with income < 133% FPL Children age 1 to 6 with income < 185% FPL Children age 6 to 15 with income < 100% FPL Children age 6 to 15 with income < 133% or 185% FPL Section 1931 children Targeted low-income children (CHIP children) Children in welfare-to-work families Transitional coverage for children in welfare-to-work families Title IV-E foster care children Non-Title IV-E foster care children Title IV-E adoption assistance children Non-Title IV-E adoption assistance children Other Pathways Medically needy Ribicoff children Children with Disabilities Primary Pathways Supplemental Security Income (SSI) recipients Katie Beckett children Home or community-based waiver children Other Pathways SSI recipients as of 8/22/96 Medically needy Pregnant Women Primary Pathways Pregnant women with income < 133% FPL Pregnant women with income < 185% FPL Other Pathways Medically needy Low-Income Adults Primary Pathways Certain adults in low-income families with children Adults in two-parent households with dependent children Other Pathways Medically needy COBRA continuation beneficiaries Return to top

Medicaid Eligibility for Families and ChildrenPolicy Brief Part 1 Part 2 Part 3 Part 4 Part 5

The Decline In Medicaid Spending Growth In 1996:Why Did It Happen?

September 1998

Medicaid spending grew by only 2.3 percent in 1996, the lowest rate of growth in the history of the program. After a period of explosive growth between 1988 and 1992, averaging over 20 percent per year, Medicaid spending slowed to 9-10 percent per year between 1992 and 1995.¹ In 1996, Medicaid financed acute and long-term care services for 41.3 million people at a cost of $155.4 billion. Spending growth in 1996 was extremely low, and slow growth seems to have continued in 1997. The primary reason for the low rate of growth in 1996 was a nearly 20 percent drop in disproportionate share hospital (DSH) payments. A reduction in adult and children enrolled through cash assistance in response to state welfare reforms and an improving economy as well as moderation in enrollment growth of elderly and disabled beneficiaries also contributed to the slowdown.

Medicaid spending growth has slowed to unprecedented levels and, for the first time in the program’s history, enrollment has fallen. This policy brief updates earlier analyses conducted for the Kaiser Commission on Medicaid and the Uninsured by researchers at the Urban Institute. It critically examines Medicaid enrollment and spending trends from 1990 to 1996, highlighting periods of extensive growth between 1990 and 1992, moderate growth between 1992 and 1995, and limited growth between 1995 and 1996. It then reviews the primary factors contributing to the dramatic slowdown in both spending and enrollment growth between 1995 and 1996. The final section presents preliminary estimates of spending for 1997 and projects Medicaid spending growth over the next five years.

Medicaid Spending: 1990 to 1992

Between 1990 and 1992, Medicaid grew at an extraordinary 27.1 percent annual growth rate, with expenditures increasing from $73.7 billion to $119.9 billion in just two years. During the same period, Medicaid spending on the elderly and disabled increased by 16.7 and 17.6 percent per year, respectively, while expenditures on adults and children increased by 21.4 and 23.8 percent per year, respectively (Table 1). Disproportionate share payments increased by over 250 percent per year. There were several reasons for these high growth rates.

Table 1 Medicaid Expenditures by Group and Type of Service, 1990-1996 Year Average Annual Growth 1990 1992 1995 1996 1990-96 1990-92 1992-95 1995-96 Total Expenditures (billions) $73.7 $119.2 $157.4 $161.0 13.9% 27.1% 9.7% 2.3% Benefits Only By Service $69.2 $97.7 $133.1 $140.3 12.5% 18.8% 10.9% 5.4% Acute Care 37.0 55.3 79.4 84.7 14.8 22.3 12.8 6.6 Long-Term Care 32.3 42.4 53.7 55.6 9.5 14.6 8.2 3.5 By Group $69.2 $97.7 $133.1 $140.3 12.5% 18.8% 10.9% 5.4% Elderly 23.6 32.1 40.9 42.4 10.3 16.7 8.4 3.7 Blind and Disabled 25.9 35.8 52.1 56.6 13.9 17.6 13.3 8.6 Adults 8.8 13.0 16.8 16.9 11.5 21.4 9.1 0.6 Children 11.0 16.8 21.4 23.3 14.2 23.8 11.4 4.5 DSH $1.3 $17.7 $18.8 $15.1 49.7% 263.4% 2.0% -19.6% Administration $3.2 $3.8 $5.4 $5.6 10.0% 9.8% 12.8% 2.3% Source: Urban Institute estimates based on data from HCFA-2082 and HCFA-64 reports.Note: Does not include the U.S. Territories or accounting adjustments. Acute care services include inpatient, physician, lab and x-ray, outpatient, clinic, EPSDT, dental, vision, other practicioners, payments to managed care organizations, payments to Medicare, and all other unspecified care services. Long-term care includes nursing facilities, intermediate care facilities for the mentally retarded, mental health services, and home health services. DSH refers to disproportionate share hospital payments. Payments to Medicare are distributed among aged, blind, and disabled enrollees. Payments to managed care are primarily distributed.

The major reason is the aggressive use of DSH payments often financed by provider taxes and donations. The DSH payments grew at an average annual rate of 263 percent, accounting for about $1.3 billion in 1988 and growing to more than $17 billion by 1992. A second reason was the high rate of inflation in health care prices (8.3 percent per year between 1990 and 1992), which affects Medicaid provider payment rates. States became increasingly adept at shifting services previously financed by other programs into Medicaid. This allowed states to use federal matching funds to replace programs previously funded entirely by the state.

Expenditures also seem to have grown during this period because of significant increases in health care utilization. Medicaid began covering a population with greater needs, including pregnant women, AIDS patients, and people with problems with drugs and alcohol. In addition, states increased the provision of Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) services to children.The final reason is a large increase in the number of beneficiaries. In the late 1980s, Congress enacted a series of expansions of coverage for pregnant women, infants and children. By 1990, Medicaid programs were required to cover all pregnant women, infants, and children under age 6 with family incomes up to 133 percent of the Federal Poverty Level (FPL), and they were given the option to expand coverage to pregnant women and infants up to 185 percent of the FPL. States were also required to cover children below the FPL born after September 30, 1983; in effect, older children were scheduled to be phased in one year at a time until all children through age 18 are covered by the year 2002.² In addition, states were required to cover Medicare premiums and cost sharing for all Medicare-eligible persons with incomes below the FPL and to cover premiums for Medicare-eligibles with incomes between 100 and 120 percent of poverty. Finally, the SSI program grew for a number of reasons, particularly as a result of court decisions and Congressional mandates that extended coverage to learning-disabled children.Medicaid Spending: 1992 to 1995

Medicaid spending growth fell after 1992, increasing by only 9.7 percent per year on average between 1992 and 1995 (Table 1). There were three principal reasons for the reduction in the rate of growth: slower enrollment growth, slower growth of spending per enrollee, and a leveling off of DSH payments. First, enrollment growth among adults and children declined because of improving state economies and tougher AFDC work requirements imposed by states. In addition, the Medicaid expansions to pregnant women and children were more fully phased in and began to experience lower rates of growth. Growth rates among the blind and disabled also declined, because the court decisions and coverage changes responsible for the increases in enrollment of disabled children in the 1988 to 1992 period were fully phased in. Finally, enrollment growth among the elderly also declined because of a slowdown in enrollment of Qualified Medicare Beneficiaries (QMBs) as well as a decline in the number of elderly receiving cash assistance through SSI.

Table 2 Medicaid Expenditures, Enrollment, and Expenditures per Enrollee, 1990-1996 Year Average Annual Growth 1990 1992 1995 1996 1990-96 1990-92 1992-95 1995-96 Total Expenditures Benefits Only (billions) $69.2 $97.7 $133.1 $140.3 12.5% 18.8% 10.9% 5.4% Total Enrollment (millions) 28.9 35.8 41.7 41.3 6.2% 11.3% 5.3% -1.0% Elderly 3.4 3.8 4.1 4.1 3.1 5.1 2.9 0.0 Blind and Disabled 4.0 4.9 6.4 6.7 8.8 9.8 9.3 5.2 Adults 6.7 8.3 9.6 9.2 5.5 11.4 5.0 -4.1 Children 14.7 18.8 21.6 21.3 6.4 13.1 4.8 -1.6 Expenditures per Enrollee $2,400 $2,732 $3,192 $3,397 6.0% 6.7% 5.3% 6.4% Elderly 6,906 8,504 9,965 10,336 7.0 11.0 5.4 3.7 Blind and Disabled 6,410 7,348 8,182 8,447 4.7 7.1 3.6 3.2 Adults 1,312 1,557 1,750 1,837 5.8 8.9 4.0 5.0 Children 747 897 1,078 1,145 7.4 9.5 6.3 6.2 Source: Urban Institute estimates based on data from HCFA-2082 and HCFA-64 reports.Note: Does not include the U.S. Territories. Expenditures shown do not include disproportionate share hospital payments, administrative costs, or accounting adjustments. States are not consistent in the way they report payments to Medicare or to managed care organizations (MCOs). For states where reported data are either missing or appear unreliable, formulas were used to distribute these payments to appropriate enrollee groups. Payments to Medicare are distributed among aged, blind, and disabled enrollees. Payments to MCOs are primarily distributed to adults and children. Enrollees are people who sign up for the Medicaid program for any length of time in a given fiscal year.

Second, spending per enrollee also declined from 6.7 percent to 5.3 percent per year (Table 2). There are a number of possible explanations, including the reduction in health care inflation (5.1 percent between 1992 and 1995). Another factor explaining the lower growth in spending per enrollee could be rapid growth in Medicaid managed care which may have achieved at least short-term savings in several states in these years. Finally, DSH payments began to level off due to 1991 and 1993 legislation restricting the use of these payments. The 1991 legislation banned the use of private donations, and severely restricted the kind of provider taxes the state could employ. The 1991 legislation also limited the growth of DSH payments to that of overall program expenditures and also capped DSH payments at 12 percent of program expenditures. The 1993 legislation made it illegal for states to pay a hospital more than what the hospital was losing through uncompensated care or through low Medicaid reimbursement rates. This severely restricted states’ ability to pay large amounts of money to specific hospitals, which in turn reduced Medicaid expenditures in some states.

The Projected Slowdown

In 1997, both the Urban Institute (UI) and the Congressional Budget Office (CBO) projected that Medicaid spending growth would continue to slow down. They projected that Medicaid spending would increase by 7.5 percent (UI) and 7.7 percent (CBO), through the year 2002. However, the most recent experience for 1993 was 2.3 percent and recent evidence suggests that future spending will continue to slow. There were three principal reasons for these lower projected rates of expenditure growth. First, enrollment growth was likely to slow down for a number of reasons. One is that the majority of mandated expansions of coverage for pregnant women and children had already been implemented and had achieved relatively high participation. In addition, cash assistance AFDC rolls were expected to decline due to the rapidly growing economy, state efforts to reduce welfare program participation, and the recent enactment of the Temporary Assistance to Needy Families (TANF) program, which promised to cut welfare enrollment even further. Finally, the number of disabled beneficiaries was expected to grow, but at a slower rate, reflecting the lower rate of increase in SSI enrollment. Since the disabled are a high-cost population, slower growth in enrollment could have a significant effect on expenditures.

Second, spending per enrollee was expected to moderate due to the increased use of managed care and low health care inflation. Long-term care spending was likely to remain low because of limits on the rate of growth in nursing home beds and the use of community-based alternatives to nursing home care, particularly for the disabled. Third, the 1991 and 1993 DSH legislation seemed to have successfully restricted states’ ability to expand DSH payments. For these reasons, both the Urban Institute and the CBO projected Medicaid spending to grow by about 7.5 percent through 2002.Return to top

The Decline In Medicaid Spending Growth In 1996:Why Did It Happen?Policy Brief Part 1 Part 2 Part 3

Participation in Welfare and Medicaid Enrollment

September 1998

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.

This paper:

• 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 EnrollmentPolicy Brief Part 1 Part 2

Part 2

In addition to the state exit studies,²⁴ another source of evidence about the impacts of loss of cash assistance can be found in the set of evaluations of the impacts of welfare-work initiatives. Several program evaluations contain data which may suggest that one unintended consequence of state efforts to increase employment among families receiving assistance could be a decline in health care coverage:

• The National JOBS Program Evaluation measured the impacts of employment efforts at a set of sites around the country using experimental design, where one set of families were subject to program participation requirements and another set were not. Three sites operated a “labor force attachment” model, focusing on rapid job placements. In those sites, two years after families entered the study, the employment rates were higher for the experimental group (42.5% versus 34.4% for a control group) but the percent covered by Medicaid or private health insurance during the month before the survey was lower for the experimental group (77.4% versus 82.7% for the control group.) Thus, the focus on rapid employment had led to an eight percentage point increase in the number of families with employment, but a five percentage point decline in the number covered by either Medicaid or private health insurance.²⁵
• In Florida’s Project Independence, 45% of a sample of those subject to Project Independence requirements were employed at some point in a two-year period and their most recent job did not provide health benefits; for the control group, the comparable figure was 37%.²⁶
• The Riverside County GAIN Program has often been recognized for its large impacts in raising employment rates among those subject to its requirements. The evaluation of the program found that in a survey interview two to three years after orientation, 27% of those subject to program requirements (as compared with 18% of members of a control group) reported that Medicaid or other health insurance did not personally cover them.²⁷

Thus, in each of these instances, the program was successful in raising employment entries, but one unintended consequence was a decline in health care coverage for affected families.

3. Findings from State Benefit Termination/Sanction Studies Concerning Medicaid Consequences of Loss of AFDC/TANF

Another set of studies focus specifically on families losing assistance due to sanctions. As noted, until fairly recently, state sanction policies only terminated assistance to the parent rather than to the entire family when a single parent failed to comply with program requirements, but in the last years of AFDC, states began to make use of full-family terminations, and under TANF, such policies have become widespread. The use of full-family terminations has raised many questions about the impacts of such policies on the well-being of parents and children, though to date, there are only a handful of studies that expressly look at the impacts of such terminations.

When a sanction occurs, it is possible that the parent’s Medicaid coverage is being terminated as a matter of sanction policy, but under the law applicable both before and after TANF, the imposition of the penalty on the parent should not have affected the childrens’ Medicaid coverage.

One of the first indications that loss of cash assistance might be associated with loss of Medicaid came in a review issued by the General Accounting Office of early state experiences with benefit terminations. At the time of the report (May 1997) most states did not have significant numbers of benefit terminations for noncompliance with program rules. Three states with early experiences were Massachusetts, Iowa, and Wisconsin. In each of these three states, the level of Medicaid coverage fell substantially after benefit termination. Surveys conducted in the range of two to five months after termination of benefits showed:

• in Massachusetts, the share of families in which at least one family member received Medicaid fell from 100% to 58.5%;
• in Wisconsin, the share of families in which at least one family member received Medicaid fell from 100% to 53.5%;
• in Iowa, the share of families in which at least one family member received Medicaid fell from 86.3% to 54.4%.

Declines were also seen in food stamp receipt. The GAO noted that “officials in all three states expressed surprise at the amount of the decline in receipt of food stamps and Medicaid among households losing AFDC benefits.”²⁸

Iowa engaged in a more detailed study of families whose assistance was denied or terminated for failure to comply with requirements to enter into or follow through with a Family Investment Agreement (FIA).²⁹ Data in that study suggests that in about one-third of sanctioned families, neither the parent nor children were receiving Medicaid, and that in about 28% of sanctioned families, neither the parent nor children were receiving either Medicaid or employer-based coverage. As Iowa’s program was originally designed, a family that did not comply with requirements would enter into a “Limited Benefit Plan,” in which the family would receive the same level of assistance for a three month period, receive reduced assistance for another three months, and then enter into a six month period of ineligibility; during this time, the family should have remained Medicaid-eligible if financially eligible, although families entering employment while subject to a Limited Benefit Plan (LBP) would not qualify for transitional Medicaid. The evaluation included a survey of families in Months 10 or 11. By that point, most (52.6%) families whose assistance was terminated under the LBP rules had been employed at least once since losing cash assistance. For those who had been employed, their most recent job had offered health insurance in 36% of the cases, though only 11% of the employed had actually received employer-based insurance.³⁰ In total, then, about 5.6% of respondents (10.6% of the 52.6% who had entered employment) were receiving employer-based health coverage, and a total of 66.4% of respondents were receiving Medicaid. Thus, it appears that about 28% of those under sanction were not receiving either Medicaid or employer-based health care coverage.

An even larger drop in Medicaid receipt after sanctioning was found in Michigan. Michigan conducted a study examining the first 168 cases that received full-family sanctions when Michigan began to implement such sanctions in April 1996. Of the cases, almost a quarter (24%) were either reopened or in pending status. However, of those still closed, 41% were not active for Medicaid.³¹ Michigan officials note, however, that the sanction population may be significantly different from the overall population receiving cash assistance, and that the growth in the average number of individuals receiving Medicaid through Michigan’s transitional Medicaid program and Healthy Kids program in 1998 substantially exceeds the reduction in the number of individuals receiving TANF assistance.

C. Why would exiters lose Medicaid?

The exit/sanction studies make clear that a substantial share of children and parents leaving AFDC/TANF lose Medicaid, either immediately or in a short period of time. The studies do not, however, offer any explanation of why this Medicaid drop occurs. There are several possible explanations and different explanations may apply to different states or even to different offices. In addition, whatever the reasons for the drops in enrollment under prior law, a state wishing to prevent this result can, to a significant extent, prevent comparable drops under TANF through the state’s choices in implementing Section 1931 eligibility.

Some of the possible reasons for the drop in Medicaid enrollment after leaving AFDC/TANF are:

• Family members may no longer be eligible. This is less likely to be the explanation for younger children, though it may explain some of the drop for parents and older children. As noted, the principal pathway to continued eligibility for parents and older children has been transitional Medicaid. However, under AFDC, transitional Medicaid would only have been available to those leaving AFDC due to employment or child or spousal support, and families often exit for other reasons. If the family did not exit due to employment, the family’s subsequent employment would not be sufficient to result in eligibility for transitional Medicaid. Even if the family exited AFDC due to employment, the family might not have qualified for transitional Medicaid if, for example, the family had not received AFDC for at least three of the last six months before exiting due to employment. And, once the family begins receiving transitional Medicaid, the family may lose eligibility for various reasons.³²
• Family members may not seek transitional Medicaid because they do not know about it. In South Carolina’s most recent exit study, 84% of respondents knew that children could continue to get Medicaid after leaving welfare but only 55% knew that adults who left welfare for work might continue to get Medicaid. Under the law, a state has an obligation to determine continuing eligibility even if the family does not request it, but a parent who does not know about transitional Medicaid may not understand the importance of reporting that she is leaving assistance due to employment.
• States may not code families as leaving assistance due to employment although that is the reason for the exit. For example, in Maryland’s exit study (which does not provide information on health care coverage), 11.2% of a sample of closed cases had been coded as closed because “payee started work or has higher earnings” while state employment and wage data indicated that at least half of payees were working in the quarter in which they left assistance.³³
• State procedures may erroneously terminate Medicaid or not provide for an effective mechanism to determine continuing eligibility. For example, North Carolina officials recently announced their intention to investigate whether local social services workers erroneously cut off Medicaid for 24,000 children who were no longer receiving Medicaid two months after their family stopped receiving TANF.³⁴
• Parents may be discouraged or confused after loss of TANF assistance. Several researchers who were involved in conducting exit studies raised the possibility that after TANF assistance was terminated, families might fail to provide needed information for Medicaid redeterminations or choose not to do so because they wanted no further contact with the state or might even be confused as to whether Medicaid for family members had been terminated. A recent review of the impact of federal welfare changes on Medicaid noted that several states had acknowledged that problems in the redetermination process could be impacting Medicaid continuations.³⁵

Whatever the reasons under prior law, it is important to appreciate that at least some of the drop-off in Medicaid enrollment can be prevented through attention to state administrative procedures and by state choices in implementing the Section 1931 eligibility criteria.

In attending to administrative procedures, a state can focus on outreach efforts and on attention to those stages at which drop-off or non-enrollment is most likely to occur. For example:

• Massachusetts indicates that in the last two years, the state has expanded automatic enrollment of closed AFDC/TANF cases into the MassHealth (Medicaid) Program to extend to all closed AFDC/TANF case closings. In addition, the state indicates that it has undertaken an extensive marketing campaign to inform low income families about the availability of health insurance through the MassHealth Program, and has begun an automated outreach process to recipients denied eligibility for TANF at the point of application for assistance.
• South Carolina indicates that after becoming aware of initial evidence of problems in ensuring uninterrupted Medicaid coverage, the state took measures to improve receipt of Medicaid for eligible families. The agency began showing a videotape to recipients to explain how and when support services continue after closure of the welfare case. Case managers were instructed to question clients who request voluntary closure of assistance cases to determine if the client had become employed; if earnings were verified, the case would be closed for earnings rather than voluntary closure so that the family could qualify for transitional benefits. The state’s efforts may have resulted in increased awareness of the availability of continued Medicaid benefits; in quarterly surveys, the share of respondents indicating awareness that children could continue to get Medicaid after leaving welfare increased from 79% to 84% between the first and third surveys; the share indicating awareness that adults leaving welfare for work may continue to get Medicaid increased from 40% to 55%.³⁶
• Indiana indicates that it has initiated an extensive outreach effort for Medicaid-eligible children that includes efforts to enroll children through sites such as health clinics, day care centers, schools, hospitals, and that the state has begun planning a strong media campaign for its outreach.³⁷

As noted earlier, under Section 1931, a family’s Medicaid eligibility no longer is based on whether the family receives TANF and a state is free to broaden the effective income and resource rules that determine eligibility under Section 1931.³⁸ Thus, if a state wishes to ensure that family members continue to be eligible for Medicaid after entering low-wage employment, the state may do so under Section 1931. A continuation of Section 1931 eligibility for those entering low-wage jobs would address some of the problems presented by the eligibility restrictions and administrative requirements of transitional Medicaid.³⁹ Moreover, it could help to address the problems presented by the limited receipt of employer-based health care for families exiting TANF due to employment.

The TANF exit studies underscore the importance of using Section 1931 to broaden Medicaid eligibility for working poor families. Without such a broadening of eligibility, it seems likely that one consequence of TANF implementation will be fewer families receiving TANF, more families engaged in employment, and yet reduced health care coverage for poor parents and children.

This paper was prepared for the Kaiser Commission on Medicaid and the Uninsured by Mark Greenberg, Center for Law and Social Policy. The author would like to thank the Kaiser Family Foundation for their support of this project and Cindy Mann, Jocelyn Guyer, and all state officials who reviewed and commented on this paper.

¹ A set of eligibility rules limited when and how long families could qualify for transitional Medicaid. Among the most significant, the family must have received AFDC for three of the last six months before exiting due to hours of employment, earnings, or loss of AFDC earnings disregards; and, in order to receive transitional Medicaid for the entire twelve months, the family would need to meet quarterly reporting requirements, maintain employment and have earnings not exceeding 185% of poverty. For a detailed discussion of transitional Medicaid rules under AFDC, see Greenberg, The JOBS Program: Answers and Questions (2nd ed., Center for Law and Social Policy, 1992), pp. 245-263.

² More precisely, the income and resource requirement is that the individual must meet the income and resource standards for determining AFDC eligibility under the State AFDC Plan in effect on July 16, 1996, using the income and resource methodologies under that plan. The family composition rules are the AFDC definition of “dependent child” and the AFDC listing of the relatives living with a dependent child who could qualify for assistance. As a practical matter, single parent families and two-parent families that met prior AFDC-UP or AFDC-Incapacity rules will meet the family composition rules States wishing to broaden the circumstances under which two-parent families meet the family composition rules may do so by modifying the definition of when a two-parent family is considered to be “unemployed.” See 63 Fed. Reg. 42270-75 (August 7, 1998).

³ The law allows a state to: lower its income standards, but not below the standards applicable under its AFDC state plan on May 1, 1988; increase its income or resource standards by an amount not exceeding the Consumer Price Index; use “less restrictive” income and resource methodologies than those used under the plan as of July 16, 1996; and if the state had had an AFDC waiver that had the effect of expanding Medicaid eligibility, the state may elect to continue that policy for Section 1931 purposes even after the time that the waiver would have expired.

⁴ See Peller and Shaner, Medicaid Eligibility Standards for Low-Income Families and Children: State Implementation of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (American Public Welfare Association, May 1998).

⁵ For example, a study of the caseload decline in Alabama concluded that the most important variable in explaining the decline was a reduction in the percentage of applications that were approved for assistance, with the percentage of approvals falling from 63% to 46% over an eighteen month period. Dawson, Demystifying the Caseload Reduction (Alabama Arise, 1997).

⁶ The HHS Temporary Assistance for Needy Families (TANF) Program First Annual Report to Congress (August 1998) reports that in recent years, the likelihood that an AFDC/TANF adult would be employed in the next year has increased. Of adults receiving AFDC in 1991, 18.8% were employed in March 1992; the share of previous-year recipients who were employed the next March increased each subsequent year, reaching 24.6% in 1996 and then increased to 31.5% in 1997.

⁷ Gallagher, et al., One Year After Federal Welfare Reform: A Description of State Temporary Assistance for Needy Families (TANF) Decisions as of October 1997 (Urban Institute, May 1998), p. V-6.

⁸ South Carolina Department of Social Services, Division of Program Quality Assurance, Survey of Former Family Independence Clients: Cases Closed During April through June 1997 (June 1998), p 11.

⁹ The South Carolina figures reported for this most recent period reflect an improvement in health care coverage as compared to earlier periods in which the same questions were asked. South Carolina’s survey is the third in a series of surveys looking at the circumstances of a sample of families after leaving cash assistance. In the first study (focusing on exiters from October-December 1996), 66% of children were covered by Medicaid and 81% had some form of coverage; in the second study (focusing on exiters from January-March 1997), 71% of children were covered by Medicaid and 81% had some form of coverage. As to adults, in the first study, 28% were covered by Medicaid and 47% had some form of coverage; in the second study, 27% were covered by Medicaid and 37% had some form of coverage. See South Carolina Department of Social Services, Division of Program Quality Assurance, Survey of Former Family Independence Clients: Cases Closed During October through December, 1996 (November 1997) and Survey of Former Family Independence Clients: Cases Closed During January through March 1997 (March 1998).

¹⁰ Bureau of Business and Economic Research, University of New Mexico, Survey of the New Mexico Closed-Case AFDC Recipients, July 1996 to June 1997 (September 1997).

¹¹ Fein, The Indiana Welfare Reform Evaluation: Who Is On and Who is Off? (Abt Associates, September 1997) at pp. 7-9.

¹² At the time of the survey, 64% of respondents not receiving TANF were working, and of those working 62% reported that they were in jobs offering health insurance. However, the survey does not indicate what share of families were actually receiving employment-based health insurance. Fein, The Indiana Welfare Reform Evaluation: Who Is On and Who is Off? (Abt Associates, September 1997) at pp. 7-9.

¹³ Management Reports and Data Analysis, DSHS Economic Services Administration, Washington’s TANF Single Parent Families Shortly After Welfare: Survey of Families Which Exited TANF between December 1997 and March 1998 (July 1998), supplemented by unpublished responses to survey questions.

¹⁴ Some part of the difference between these two figures may be attributable to the possibility that respondents gave different responses to different questions; some part may be attributable to the difference between coverage in current employment and coverage in employment at some point in the prior twelve months.

¹⁵ Management Reports and Data Analysis, DSHS Economic Services Administration, Washington’s TANF Single Parent Families Shortly After Welfare: Survey of Families Which Exited TANF between December 1997 and March 1998 (July 1998), supplemented by unpublished responses to survey questions.

¹⁶ Among those reporting being worse off, 49% reported no adult heath coverage, and 30% reported no child coverage. Among those reporting being about the same, 36% reported no adult health coverage and 21% reported no child coverage. Among those reporting being better off, 30% reported no adult health coverage and 16% reported no child coverage. Overall, 60% reported being better off, 22% reported being about the same, and 18% reported being worse off. Of those saying they were worse off 52% said they were likely to return to welfare within the next six months.

¹⁷ DSHS Economic Services Administration, A Baseline Analysis of TANF One-Parent Families: Findings from 1997 Client Survey (February 1998), at p.6.

¹⁸ DSHS Economic Services Administration, A Baseline Analysis of TANF One-Parent Families: Findings from 1997 Client Survey (February 1998), at p.6.

¹⁹ ancoske, Kemp and Lindhorts, Exiting Welfare: The Experiences of Families in Metro New Orleans (Welfare Reform Research Project, School of Social Work, Southern University at New Orleans, June 1998).

²⁰ Mancoske, Kemp and Lindhorts, Exiting Welfare: The Experiences of Families in Metro New Orleans (Welfare Reform Research Project, School of Social Work, Southern University at New Orleans, June 1998).

²¹ Pawasarat, Employment and Earnings of Milwaukee County Single Parent AFDC Families: Establishing Benchmarks for Measuring Employment Outcomes Under “W-2” (University of Wisconsin-Milwaukee, Employment and Training Institute).

²² Pawasarat, Employment and Earnings of Milwaukee County Single Parent AFDC Families: Establishing Benchmarks for Measuring Employment Outcomes Under “W-2” (University of Wisconsin-Milwaukee, Employment and Training Institute). The actual level of non-receipt may be somewhat higher because Medicaid status is not available for 20% of cases in which the family had ceased receiving AFDC and was still receiving Food Stamps. Also, note that the family was coded as receiving Medicaid if any family member received Medicaid.

²³ Summary of Surveys of Welfare Recipients Employed or Sanctioned for Noncompliance (March 1998) prepared for Tennessee Department of Human Services by Bureau of Business and Economic Research/Center for Manpower Studies, University of Tennessee, Memphis, Tennessee (March 1998).

²⁴ One additional state study of exiters, from Kentucky, found that almost half of children were reported to have no health care coverage, though the low survey response rate and possible ambiguities in the wording of questions make it difficult to be confident of the survey results. Cummings and Nelson, From Welfare to Work: Welfare Reform in Kentucky (Center for Policy Research and Evaluation, Urban Studies Institute, University of Louisville, January 1998). A telephone survey was conducted in December 1997 of former TANF recipients who had been discontinued between January and November 1997. The response rate was low: only 17% (560 respondents out of 3225 attempts). About half (49%) of respondents reported that they had left assistance because they got a job. The survey asked “Are your children covered by health insurance?” According to respondents, almost half (48%) of children were not covered by health insurance; 49.5% of children were covered. However, there may be some ambiguity as to whether respondents whose children were covered by Medicaid would answer yes to the question. Another question included Medicaid on the list in a question, “Do you currently receive any of the following benefits…?” Only 28.4% of respondents responded yes, but the question could have been interpreted as being directed only at the adult respondent.

²⁵ Executive Summary, The JOBS Evaluation: Early Findings on Program Impacts in Three Sites (U. S. Dept. Of Health and Human Services, 1995), Table ES-1. In sites emphasizing a “human capital development” approach, at the two-year point, the employment impacts were smaller and not statistically significant (35.1% of experimentals and 32.4% of controls were employed); there was also a small, and not statistically significant, difference in the percent covered by Medicaid or private health insurance in the prior month (79.2% of experimentals, 81.8% of controls. A subsequent report provides additional information on employment and other impacts in the JOBS evaluation sites, but the subsequent report does not provide further information on Medicaid/health coverage impacts. See Hamilton, et al., National Evaluation of Welfare-to-Work Strategies, Two-Year Findings on the Labor Force Attachment and Human Capital Development Programs in Three Sites (U.S. Department of Health and Human Services and U.S. Department of Education, December 1997).

²⁶ Kemple, Friedlander, and Fellerath, Florida’s Project Independence: Benefits, Costs, and Two-Year Impacts of Florida’s JOBS Program (Manpower Demonstration Research Corp., 1995), p. 106.

²⁷ Riccio, Friedlander, and Freedman, GAIN: Benefits, Costs, and Three-Year Impacts of a Welfare-to-Work Program (Manpower Demonstration Research Corporation, 1994), p.178.

²⁸ GAO/HEHS-97-74, Welfare Reform: States’ Early Experiences with Benefit Termination (May 1997), pp. 42-43.

²⁹ Fraker, Nixon, Losby, Prindle, and Else, Iowa’s Limited Benefit Plan (Mathematica Policy Research, May 1997), at p. 74. FIA describes the agreement between the individual and state specified goals, activities, and time frames for enacting these goals and the ultimate goal of self-sufficiency.

³⁰ Of the 36.4% who had had health insurance available in their most recent job, 10.^% received the insurance, 10.6% did not receive the insurance due to its costs; and 15.2% did not receive it for another reason. Fraker, Nixon, Losby, Prindle, and Else, Iowa’s Limited Benefit Plan (Mathematica Policy Research, May 1997), at p. 74.

³¹ Colville, Moore, Smith and Smucker, A Study of AFDC Case Closures Due to JOBS Sanctions, April 1996 AFDC Case Closures (Michigan Family Independence Agency, May 1997).

³² For example, Kentucky officials note that they recently conducted a review of all cases discontinued effective March 1998 for a reason that would result in transitional Medicaid eligibility; 706 cases were identified, and transitional Medicaid had been established in each case. The next month, 51 of those cases were identified as losing transitional Medicaid eligibility, and a review of a random sample of half of those cases found the terminations to be valid, with the most frequent reasons being recipient request for termination, recipient having moved out-of-state, and reinstatement of TANF eligibility.

³³ Born, Life After Welfare: Second Interim Report (School of Social Work, University of Maryland, March 1998)., pp. 18-19.

³⁴ See Children’s Loss of Medicaid Probed, Raleigh News & Observer, June 12, 1998.

³⁵ Ellwood and Ku, Welfare and Immigration Reforms: Unintended Side Effects for Medicaid (Health Affairs, May/June 1998, pp. 137, 141).

³⁶ See South Carolina Department of Social Services, Division of Program Quality Assurance, Survey of Former Family Independence Clients: Cases Closed During April through June 1997 (June 1998), p. 20.

³⁷ Most other states responding to a preliminary draft of this report also emphasized ongoing or newly initiated outreach efforts.

³⁸ Technically, the mechanism that a state could use would be to adopt a “less restrictive methodology” for calculating income eligibility for Section 1931-based Medicaid. A state wishing to ensure that low-wage working families retained Medicaid eligibility might provide, for example, that the first $500 (or some other figure) from earnings would not be counted in determining whether the family met the income standards applicable to Section 1931 eligibility. The practical effect of this less restrictive methodology would be a broadening of the circumstances where low-wage working families qualified for Section 1931 Medicaid. For a more detailed discussion of state options in expanding coverage through use of Section 1931, see Guyer and Mann, Taking the Next Step: States Can Now Expand Health Coverage to Low-Income Working Parents Through Medicaid (Center on Budget and Policy Priorities, July 1998), http://www.cbpp.org/702mcaid.html.

³⁹ For example, Washington State has implemented a more generous earned income disregard (50% of gross earnings), more liberal treatment of assets, and broader eligibility for two-parent families under TANF, and has extended those same standards to Section 1931 eligibility. Return to top

Policy Brief Part 1 Part 2Library Index

Part 3

What Explains the Coverage Decline?

Rapidly rising health care costs-or, more precisely, employers’ responses to costs-have contributed to the widespread erosion of employer coverage. As employers have shifted costs to workers, participation has dropped. Low-wage workers have been disproportionately affected by rising costs, losing access to coverage as well as finding participation more difficult. Their problems have been exacerbated by structural changes in labor markets, which have weakened the tie between jobs and health insurance.⁹

Constrained Employer Spending. A key factor behind the decline in employer coverage has been the rapid rise in health care costs. The cost of health insurance grew rapidly in the 1980s and early 1990s, far exceeding the growth in consumer prices generally. Between 1988 and 1996, the average premium for family coverage rose 9.8% per year, the premium for individual coverage increased 7.5% per year, while prices overall increased about 4% annually.¹⁰

Employers’ primary response to rapidly rising health care costs has not been to drop health care coverage for full-time workers. However, employers have constrained spending by requiring workers to pay a larger share of health insurance premiums, by tightening eligibility requirements for part-time workers (whose coverage has long been restricted) and, increasingly, in recent years, by replacing regular full-time employees with part-time and contingent workers.¹¹

Workers’ average monthly contributions for single and family coverage rose steadily between 1988 and 1996 as workers paid a larger share of higher premiums.¹² In fact, as shown in Figure 9, workers’ contributions rose more rapidly than premiums as employers shifted more of the costs of health insurance to workers, especially for non-family coverage. While average premiums for non-family coverage rose an average of 7.5% per year between 1988 and 1996, employees’ contributions rose much more rapidly–increasing by 18.3% per year.¹³

As employers have shifted costs to workers, some workers have dropped coverage, while those who have kept coverage are paying more. As shown in Figure 10, the proportion of workers participating in employer plans to which they had access fell from 93% in 1987 to 89% in 1996. Access to employer coverage was basically unchanged over this period–about 82 percent. Although the fact remains that most (about 70 percent) of the working uninsured lack access to coverage, the decline in coverage between 1987 and 1996 mostly reflects a drop in participation.¹⁴

This overall pattern obscures a worsening of access, as well as participation, for low-wage workers. Although participation rates have dropped most rapidly for the lowest wage workers, access to employer coverage has also declined for these workers. For example, among workers earning more than $15 per hour, the proportion with access to employer coverage increased from 92% in 1987 to 96% in 1996. In contrast, the proportion of low-wage workers (those earning less than $7 per hour) with access to employer coverage declined 5 percentage points over this same time period, from 60% to 55% [Table 2]. The large drop in coverage rates for the lowest wages workers is thus explained by a combination of declining participation and a decline in employer offerings.

Changes in Low-wage Labor Markets. For low-wage workers, costs and employer cost containment are not the only factors producing this deterioration. Structural changes in labor markets, that have occurred throughout the 1980s and 1990s, have contributed to the decline in coverage.

The main change in the labor market over the past two decades has been the widespread deterioration of wages, especially for those workers who initially had low wages, were without a college degree, were in blue collar or service occupations, or were in younger age brackets.¹⁵ From 1989 to 1996, the real hourly wage of the typical (median) worker fell 5.2%, while the wages of high-wage workers (90th percentile) increased 0.4%, and wages for low-wage workers (20th percentile) declined by 2.3%. Among low-wage men, the wage declines were even greater. Wages for low-wage men fell 6.4% between 1989-96.¹⁶ That is, wages for workers at the middle and at the bottom of the pay scale have not only failed to keep up with health care costs, they have declined in real terms. The large drop in participation rates for the lowest wage workers is understandable in light of the deterioration in wages for these workers. Employer actions that have led to coverage declines for all workers have thus had a disproportionate effect on the lowest wage workers.

Table 2 Change in Access, Family Take-up and Coverage, by Wage1987-1996 Wage Level 1987 1996 Change 1987-96

Coverage $15 87 90 +3

Access to Employer Coverage* $15 92 96 +4

Family Take-Up Rate** $15 94 94 0 * Percent of workers with access to job-based insurance through their own employer or a family member s employer.** Percent of workers with access to job-based insurance who are actually covered by it.Source: Cooper and Schone, 1997.

The decline in access for low-wage workers also is rooted in structural labor market changes. Shifts in employment to low-paying sectors may account for most of this decline in access. As jobs have shifted from high-paying industries like manufacturing to low-paying sectors like retail trade and services, health insurance coverage has declined.¹⁷ In addition, the proportion of the workforce in “nontraditional” work arrangements–such as regular part-time work, contingent work, and self-employment–has grown in the past decade. The expansion of employment in these jobs is not large enough to explain much of the decline in coverage; nevertheless, since these jobs are less likely to come with health insurance benefits, the expansion of nontraditional work has contributed to the overall decline in coverage.¹⁸

Conclusion

Over the past decade, there has been a decline in employment-based health insurance coverage. The fall in coverage is a widespread phenomenon that goes beyond low-income families. However, often overlooked is that low-wage workers and low-income families–who started out at a disadvantage, with low rates of coverage–have borne the brunt of the decline. The gap in coverage between low-wage and high-wage workers has grown between 1987 and 1996 because the decline in coverage has been greatest for low-wage workers. Although Medicaid plays an important role in providing insurance coverage for many low-income families, including working families, Medicaid’s eligibility levels are constrained. Workers without children are, for the most part, precluded from coverage. Beyond Medicaid’s reach, therefore, many low-income working families are likely to be uninsured.

This paper was prepared for the Kaiser Commission on Medicaid and the Uninsured by Ellen O’Brien and Judith Feder, Institute for Health Care Research and Policy, Georgetown University.

Notes

¹ In this Issue Paper, we rely on Current Population Survey estimates of employer health coverage and trends. Estimates of the proportion of families with various sources of insurance by income level are based on the Urban Institute’s TRIM-II model, which produces a different total estimate because it adjusts for the undercount of Medicaid beneficiaries in the CPS.

² Workers ages 21-64 who are not self-employed.

³ The tax treatment of employment-based health insurance provides an incentive for employers to provide compensation to workers in the form of health coverage rather than in the form of wages subject to current taxation. The tax preference that the exclusion provides is substantial and has resulted in widespread access to health coverage. Yet, despite this fact–as this Paper describes–coverage rates for the lowest wage workers have traditionally been quite low and have declined significantly in the past two decades. The specific provisions of the exclusion provide a partial explanation. To qualify for the exclusion of employer-provided health coverage, employers’ health plans do not need to cover all workers. Although the tax code requires “non-discrimination”–a self-insured health plan may not discriminate in favor of highly compensated individuals as to ability to participate–employees who have not completed three years of service, those under age 25, and part-time or seasonal employees may be excluded from consideration. Moreover, insured health plans, as opposed to self-insured plans, are generally not subject to non-discrimination rules.

⁴ According to the Employee Benefits Supplement to the Current Population Survey, 51 million of the nearly 89 million private wage and salary workers in 1993 (or about 57% of private industry workers) had health care coverage through their employer. Of the 38 million workers without such coverage, about 50% were in firms that did not offer coverage, and 40% were in firms that offered benefits to at least some employees. (Information on whether the employer sponsored a health plan was not available for the remaining 10% of workers). See tabulations of the CPS Employee Benefits Supplement in U.S. Department of Labor. Report on the American Workforce (Washington, DC: GPO, 1995).

⁵ Based on an average premium for family coverage of $5,349 in 1996. KPMG Peat Marwick data cited in AFL-CIO, Paying More and Losing Ground: How Employer Cost-Shifting is Eroding Coverage of Working Families (Washington, DC: AFL-CIO,1998), p. 16.

⁶ These are “family take-up rates.” They measure the proportion of workers who take-up any employer plan available to them — through their own employer or through a family member’s employer. Workers’ participation rates in their own employer plans are lower (63% of the lowest wage workers and 85% of the highest wage workers participated in own employer plans they were offered) since some workers turn down their employer’s plan and choose to be covered under a family member’s plan.

⁷ Because of changes to the survey beginning with the March 1995 CPS, however, the estimates of employer coverage rates for 1994-96 are not comparable to data for prior years. The observed increase in employer coverage rates may be an artifact of changes in the survey questions.

⁸ John Holahan, Colin Winterbottom, and Shruti Rajan, “A Shifting Picture of Health Insurance Coverage,” Health Affairs 14(Winter 1995): 253-264.

⁹ On the more rapid drop in coverage for less educated workers see Peter Gottschalk, Trends in Wages and Health Insurance Status of Less Educated Workers. Menlo Park, CA: The Henry J. Kaiser Family Foundation; and Sherry Glied and Mark Stabile, “Graduation to Health Insurance Coverage: 1981-1996,” Working Paper 6276. (Cambridge, MA: National Bureau of Economic Research, 1997). Other studies of the decline in employer coverage include: Richard Kronick, “Health Insurance 1979-1989: The Frayed Connection between Employment and Insurance,” Inquiry 28(Winter 1991): 318-332; Deborah Chollet, “Employer-Based Health Insurance in a Changing Workforce,” Health Affairs 13(Spring 1, 1994): 315-26; Gregory Acs, “Trends in Health Insurance Coverage Between 1988 and 1991,” Inquiry 32(Spring 1995): 102-110; and Stephen Long and Joel Rogers, “Do Shifts Toward Service Industries, Part-time Work, and Self-Employment Explain the Rising Uninsured Rate?” Inquiry 32(Spring 1995): 111-117; and Paul Fronstin and Sarah Snider, “An Examination of the Decline in Employer Sponsored Health Insurance Between 1988 and 1993,” Inquiry 33(Winter 1996/1997): 317-325.

¹⁰ Data from KPMG Peat Marwick and Health Insurance Association of America, cited in General Accounting Office. “Private Health Insurance: Continued Erosion of Coverage Linked to Cost Pressures.” GAO/HEHS-97-122 (Washington, DC: GPO, 1997).

¹¹ See Arne Kalleberg, Edith Rassell, and Ken Hudson, et. al., Nonstandard Work, Substandard Jobs (Washington, DC: Economic Policy Institute, 1997) and Thomas Rice, Nadereh Pourat, Rebecka Levan, et. al., “Trends in Job-Based Health Insurance Coverage.” (Los Angeles, CA: UCLA Center for Health Policy Research, June 1998).

¹² The total nonfederal employer premium contribution fell from 85.1% to 83.9% between 1990 and 1996. In 1996 alone, this 1.2-percentage-point decrease in the employer’s share would represent a cost-shift of $3.6 billion to employees enrolled in employer-sponsored health plans. See Katherine R. Levit, Helen C. Lazenby, Bradley R. Braden, et. al. “National Health Spending Trends in 1996,” Health Affairs 17(January/February 1998), p. 46.

¹³ KPMG Peat Marwick data for 1991-1996 and HIAA data for 1988-1990 cited in AFL-CIO, “Paying More and Losing Ground: How Employer Cost-Shifting is Eroding Coverage of Working Families” (Washington, DC: AFL-CIO,1998), p. 16.

¹⁴ Philip Cooper and Barbara Schone. “More Offers, Fewer Takers for Employment Based Health Insurance: 1987 and 1996,” Health Affairs 16(November/December 1997): 142-149.

¹⁵ Lawrence Mishel, Jared Bernstein, and John Schmitt. The State of Working America, 1996-97 (Armonk, NY: M.E. Sharpe, 1997), p. 139.

¹⁶ Lawrence Mishel, Jared Bernstein, and John Scmitt. “Finally Real Wage Gains.” Issue Brief #127, July 17, 1998. Washington, DC: Economic Policy Institute.

¹⁷ See especially Chollet (1994).

¹⁸ See Arne Kalleberg, Edith Rassell, and Ken Hudson, et. al., Nonstandard Work, Substandard Jobs (Washington, DC: Economic Policy Institute, 1997). Return to top

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This paper provides an overview of Medicaid spending growth in 1996. It updates earlier analyses conducted by the Kaiser Commission on Medicaid and the Uninsured.

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