An Evaluation of the 1981 AFDC Changes

In response to a congressional request, GAO evaluated the effect of changes in the Omnibus Budget Reconciliation Act of 1981 on the Aid to Families with Dependent Children (AFDC) program.

Several months after the act's changes, national AFDC caseloads and outlays had decreased. GAO estimated that 493,000 fewer cases were open during an average month, and outlays were $93 million less during an average month than before the enactment. Overall, the act affected working AFDC recipients disproportionately. Large percentages of AFDC earner cases were either closed or had their AFDC grants reduced. Many earners who lost AFDC reported that they simultaneously lost food stamp benefits. GAO found that most earners who lost AFDC benefits did not quit their jobs and return to AFDC. For nonearners, the pattern of AFDC use was generally the same before and after the enactment. All of the families interviewed were categorically eligible for Medicaid while they were receiving AFDC, but few were receiving Medicaid or any other form of government subsidized health care after they lost their AFDC benefits. Approximately half of the families which lost AFDC benefits had no health insurance coverage. The respondents in four sites reported the occurrence of various hardships, such as the need to borrow money and the lack of food, significantly more often after enactment.