Medicaid

During the first year of welfare reform, the nine states GAO reviewed chose welfare reform options that generally sustained Medicaid coverage for their previously eligible populations. The options available to states included establishing different income and resource standards for their Medicaid and cash assistance programs, running the two programs separately, imposing Medicaid-related penalties for welfare recipients not complying with state work rules, and discontinuing Medicaid coverage for aliens. Four of the nine states had separate income or resource standards for their Medicaid and cash assistance programs. To foster administrative efficiencies, all nine states chose to continue using a common application for their welfare and Medicaid programs, and eight chose to continue using a single agency at the local level to determine applicant eligibility. No state chose to withhold Medicaid as a sanction for noncompliance with state work rules or to discontinue Medicaid coverage for most aliens. The initial choices that these states made resulted in little structural change to their Medicaid programs. Welfare reform poses new challenges for states' Medicaid beneficiary education and enrollment efforts. Even before welfare reform, large numbers of children--3.4 million in 1996--were eligible for Medicaid but not enrolled. Welfare reform increases the number of Medicaid eligibles who do not receive cash assistance--persons who are often hard to identify and enroll in Medicaid. Some states are beginning to modify their education and enrollment strategies to reach these people.

GAO noted that: (1) during the first full year of welfare reform, the nine states GAO reviewed chose welfare reform options that generally sustained Medicaid coverage for their previously eligible populations; (2) the options provided to states included establishing different income and resource (asset) standards for their Medicaid and cash assistance programs, administering the two programs separately, imposing Medicaid-related penalties for welfare recipients not complying with state work rules, and discontinuing Medicaid coverage for aliens; (3) four of the nine states GAO visited had separate income or resource standards for their Medicaid and cash assistance programs; (4) according to officials in these states, eligibility standards had been separated as part of state welfare reform; (5) consistent with the options offered states by the welfare reform law, these separate standards often provided more generous income or resource limits for Medicaid than for welfare recipients, thus protecting eligibility for medical assistance; (6) to foster administrative efficiencies for states and public assistance applicants, all nine states chose to continue using a common application for their welfare and Medicaid programs and eight chose to continue using a single agency at the local level to determine applicant eligibility; (7) while the welfare reform law offered states the option of witholding Medicaid as a sanction for noncompliance with state work rules, as well as discontinuing Medicaid coverage for most aliens, none of the nine states chose to do so; (8) the intial choices that these states made resulted in little structural change in their Medicaid programs; (9) there were initially some concerns that new Supplemental Security Income (SSI) eligibility restrictions for certain aliens and disabled children would affect their Medicaid eligibility; (10) however, subsequent legislation modified and reversed, to some extent, the provisions that restricted SSI eligibility for these populations; (11) welfare reform also poses new challenges for states' Medicaid beneficiary education and enrollment activities; (12) even prior to welfare reform, significant numbers of children were eligible for Medicaid but not enrolled; and (13) welfare reform increases the number of Medicaid eligibles who do not receive cash assistance--individuals who are often difficult to identify and enroll in Medicaid.