http://www.nytimes.com/library/politics/041299workfare-healthcare.html

By ROBERT PEAR, New York Times, April 12, 1999

WASHINGTON -- Hundreds of thousands of low-income people have lost health insurance as an unintended consequence of the 1996 welfare law, federal and state officials and health policy experts say.

The law created strong incentives for people to move from welfare to work, and in theory, most people who worked their way off welfare were supposed to be able to keep their Medicaid coverage. But in practice, many people leaving welfare have lost Medicaid and become uninsured, health care experts say.

Many welfare recipients have taken low-wage jobs with no health benefits. Even when employers offer benefits, low-wage workers are often unable to pay for them.

Thus, President Clinton's decision to sign the 1996 welfare law has unexpectedly undermined his goal of increasing the number of Americans with health insurance -- a goal shared by Congress.

Sen. John H. Chafee, R-R.I., the main author of the provision of the law meant to preserve health benefits for people who lose cash assistance, said: "I'm deeply concerned about the reports I've heard that people are losing their Medicaid coverage. This directly contradicts the intent of the 1996 welfare law and could very well undermine states' future success in helping people become self-sufficient."

Stan Dorn, director of the Health Consumer Alliance, a consumer help group for low-income people in California, said: "We are seeing substantial losses in Medicaid coverage resulting directly from welfare reform, despite the best intentions of Congress to make sure that did not happen. The administration hopes its legacy will be expanded health insurance coverage for children. But the unintended fallout of welfare reform threatens to swamp the significant benefits of new legislation to cover children."

The possibility that some welfare recipients might lose health insurance was recognized in 1996. But in the last month, several authoritative studies -- by the Rockefeller Institute of government in Albany, N.Y., the Center for Health Policy Research at George Washington University and the Urban Institute -- have documented the pervasive problem.

Federal law says that when a state cuts off a family's welfare payments because of increased earnings, it must include a Medicaid card or other document authorizing the family to continue receiving Medicaid. This law, adopted in 1988, was strengthened by the 1996 law, which provided additional protection for people losing welfare benefits.

State officials boast that they have transformed the culture and philosophy of welfare agencies, so they now focus on finding jobs rather than issuing checks. Besides cutting off Medicaid for many people who find jobs, some caseworkers have erroneously told poor people that they must search for work as a precondition for getting Medicaid.

Before the 1996 law, people who received cash assistance were automatically enrolled in Medicaid, and many welfare recipients said they stayed on welfare to keep their health insurance. Congress severed the link between the two programs in 1996, but federal officials said there was still a widespread perception that Medicaid eligibility depended on whether a person received welfare.

The 1996 law requires most welfare recipients to work as a condition of getting cash assistance, sets a five-year limit on the receipt of federal welfare benefits and imposes many other restrictions on cash welfare.

Vernon K. Smith, a former Medicaid director in Michigan who has studied the interaction between welfare and Medicaid nationwide, said: "Many people believe incorrectly that the tough new welfare policies apply to Medicaid. The stigma associated with welfare is often attached to Medicaid as well."

Matt D. Salo, a health policy expert at the National Governors' Association, said it was difficult for caseworkers to reconcile two contradictory messages implicit in the 1996 law: "Medicaid is good, everyone should stay on Medicaid. But welfare is bad, everyone should stay off welfare."

In New York, the number of people on Medicaid has dropped by 265,348, or 9 percent, since Clinton signed the welfare law in August 1996.

Frances E. Tarlton, a spokeswoman for the New York state Health Department, said: "We are concerned about the drop in the Medicaid rolls. People who no longer qualify for cash assistance need to be informed that they are still probably eligible for Medicaid and should sign up for it. But for some reason, we are not seeing this happen."

In January, a federal district judge ruled that New York City had improperly denied applications for Medicaid from needy individuals, on the ground that they had failed to comply with the work requirements of the city's welfare program. The city has vowed to improve its procedures, but the plaintiffs say the city's plans are inadequate. The judge will hear arguments this month.

In New Jersey, the number of people on Medicaid has declined by 54,261, or 8 percent. In Connecticut, which made a major effort to find eligible people, the number enrolled in Medicaid rose by 3,258, or 1 percent.

In Oregon, the number of Medicaid recipients has dropped by 43,000, or 11 percent. In Texas, it has dropped by 306,890, or 15 percent, even though the state has expanded eligibility for Medicaid.

The number of people on Medicaid has dropped by 213,614, or 13 percent, in Pennsylvania; by 453,640, or 8 percent, in California, and by 58,899, or 4 percent, in Florida.

Patricia Redmond, health director of Philadelphia Citizens for Children and Youth, a child advocacy group, said: "When parents leave welfare for work, they and their children still qualify for Medicaid. That's the theory. In reality, it often doesn't happen.

"Time after time, children and parents who are legally entitled to Medicaid end up without it because of misinformation and burdensome reporting requirements. The main message they hear is, 'Go to work.' They are not told what they need to do to keep their Medicaid."

Chris Jennings, the health policy coordinator at the White House, said there were "unacceptable barriers" to getting and keeping Medicaid in some states. "It isn't necessarily intentional," he said, "but it has the same effect. People lose out on access to affordable coverage they desperately need."

Diane Ross, assistant director of the Arizona Medicaid program, said: "When people get a job, they think they're not eligible for welfare or medical assistance, so they don't seek a redetermination of their eligibility for Medicaid. They just call and drop out of both programs."

The coverage available to people leaving welfare is sometimes called transitional Medicaid, because it helps them make the transition from welfare to work. When welfare rolls shrink, as they have in most states, the number of people using this form of Medicaid would be expected to increase. But that does not always happen.

In Arizona, the number of people getting both welfare and Medicaid dropped by 45 percent, to 81,106 last month from 147,890 in August 1996. But contrary to the expectations of state officials, the number of Arizonans with transitional Medicaid fell in the same period, to 19,105 from 23,426.

In deciding who gets Medicaid, states must use eligibility criteria at least as generous as those in effect in July 1996, just before passage of the welfare law. Families with incomes low enough to qualify for Medicaid under the old standards are thus supposed to be eligible today, regardless of whether they receive welfare.

Karen Czapanskiy, a law professor at the University of Maryland, said she and her students had represented many welfare recipients who were deprived of Medicaid when they lost welfare.

"Typically, if our clients get jobs, they call their caseworkers to stop cash benefits," Ms. Czapanskiy said. "The caseworker rarely mentions that transitional medical assistance is available. Or the caseworker requires extraordinarily burdensome documentation."

Dr. Martin P. Wasserman, the secretary of health and mental hygiene in Maryland, acknowledged that this could happen. "Sometimes," he said, "as you're going through the busy pace of the day, if somebody calls in and says, 'I'm going off welfare,' the eligibility worker doesn't have a chance to explain that Medicaid and other benefits are still available."