SSI—a federal income assistance program that provides monthly cash payments to needy aged, blind, or disabled persons—is administered by the Social Security Administration.The welfare reform law eliminated SSI eligibility for most aliens and tightened the eligibility criteria for children to qualify for disability assistance, with projected savings of more than $21 billion over a 6-year period, according to Congressional Budget Office estimates. States Generally Opted to Administer Medicaid as They Did Prior to Welfare Reform

Although the new welfare reform law provided states with certain choices regarding Medicaid eligibility and administration, the states that we visited chose welfare reform options that sustained Medicaid coverage for their previously eligible populations. Medicaid-related options involve income and resource criteria for determining eligibility, aspects of program administration, sanctions for noncompliance with TANF work requirements, and continued Medicaid coverage for certain aliens residing in the United States at the time of the law’s enactment. In the first year of welfare reform implementation, states generally chose to maintain the linkages formerly in place between their Medicaid and cash assistance programs. Four of the nine states we visited reported having separate income or resource standards for Medicaid and TANF. Welfare reform gave states the option to continue using a single agency to determine eligibility for Medicaid and TANF or to assign those duties to separate agencies. All nine states use a common application for the programs, and only Wisconsin has separate agencies for determining applicant eligibility. None of the nine states we visited denied Medicaid as a program sanction for noncompliance with state work rules. According to state estimates, about 350 aliens qualify for state-funded medical assistance. Medicaid Education and Enrollment Become Increasingly Important in Post-Welfare-Reform Era

Welfare reform poses additional Medicaid education and enrollment challenges for states. Although the welfare reform law preserved Medicaid eligibility for families who would have previously qualified for Medicaid, data show that eligible children in low-income families who do not receive cash assistance are much less likely to enroll in the Medicaid program than those who receive cash assistance. The other states did not have estimates of the number of Medicaid-eligible children who are—or are not—enrolled in their Medicaid programs. However, the states we visited made few structural changes to their Medicaid programs during the first full year of welfare reform, thereby demonstrating their desire to maintain Medicaid benefits already in place. To collect consistent information on (1) states’ Medicaid-related choices, (2) implications of those choices on Medicaid eligibles and state administrative procedures, and (3) steps states have taken or plan to take to educate and enroll Medicaid eligibles, we developed a standardized protocol. Nine States’ Income and Resource Standards

Income and resource standards were among the financial criteria that welfare officials used to determine applicant eligibility for AFDC and for Medicaid coverage that accompanied cash assistance. Two states—California and New Jersey—have more generous income standards for Medicaid than for their cash assistance programs.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Medicaid-related actions states have taken in the first year of welfare reform, focusing on: (1) the Medicaid related options the welfare reform law gave states and the approaches states have taken; (2) the implications of these states choices for Medicaid eligibles and for the states' administrative processes; and (3) steps states have taken or plan to take to educate and enroll Medicaid eligibles, in view of their changing eligibility for cash assistance programs.

What GAO Found

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.