Section 18. Description of Other Major Federal Assistance Programs Not
       Within the Jurisdiction of the Committee on Ways and Means

    Several Federal programs outside of the jurisdiction of the
Committee on Ways and Means provide benefits to some share of
those people who also benefit from assistance programs that are
within the jurisdiction of the committee. This appendix
describes several such programs: food stamps; Medicaid; housing
assistance; school lunch and breakfast programs; the
supplemental food program for Women, Infants, and Children
(WIC); assistance provided under the Job Training Partnership
Act; Head Start; the Low-Income Home Energy Assistance Program
(LIHEAP); Veterans' Benefits and Services Programs; and
Workers' Compensation programs.
    Most families receiving AFDC would have incomes low enough
to qualify them--or particular members of their families--for
assistance under these programs. Unlike the principal
assistance programs under the jurisdiction of the Committee on
Ways and Means, participation in Head Start, LIHEAP, and other
programs are limited either by appropriations, or, in the case
of the school feeding programs, by the willingness of schools
to participate. Income received from AFDC is counted in
determining eligibility for these programs--as well as benefit
levels, in some cases. However, because these programs provide
in-kind rather than cash assistance, benefits received under
these programs are not counted in determining eligibility for
AFDC.
    Tables 18-1 and 18-2 describe the overlap in recipients
between programs within the jurisdiction of the Committee on
Ways and Means and other major Federal assistance programs.
Table 18-1 illustrates that 86.2 percent of AFDC recipient
households received food stamps some time during the first
quarter of 1992; 21.5 percent received WIC; 96.2 percent
received Medicaid, 55.5 percent received free or reduced-price
school meals; and 29.5 percent received housing assistance of
some form.
    Table 18-2 illustrates the reverse. For example, 47.5
percent of food stamp households received AFDC benefits at some
time during the first quarter of 1992; 24.8 percent of food
stamp households received SSI; and 6.4 percent of food stamp
households received unemployment compensation benefits.

  TABLE 18-1.--PERCENT OF RECIPIENTS IN PROGRAMS WITHIN THE JURISDICTION OF THE COMMITTEE ON WAYS AND MEANS
                     RECEIVING ASSISTANCE FROM OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS
                                       [Households, first quarter of 1992]
----------------------------------------------------------------------------------------------------------------
                                                                                 Social   Unemployment
                                                              AFDC       SSI    Security  compensation  Medicare
----------------------------------------------------------------------------------------------------------------
Number of households receiving benefits (in thousands)....     4,057     3,957    26,688       4,502      24,084
Percent receiving:
  Food stamps.............................................      86.2      46.2       7.3        10.4         6.6
  WIC.....................................................      21.5       4.3       0.8         4.0         0.7
  Free or reduced-price school meals......................      55.5      18.2       3.7        12.7         2.4
  Public or subsidized rental housing.....................      29.5      23.8       7.5         3.9         7.8
  Medicaid................................................      96.2      99.8      13.8        14.2        14.0
  VA compensation or pensions.............................       1.9       4.0       6.5         2.2         6.9
----------------------------------------------------------------------------------------------------------------
Note: Table reads that 86.2 percent of AFDC households, also receive food stamps. The 994,000 SSI recepients
  living in California receive a higher SSI payment in lieu of food stamps, and thus are not included in the
  food stamp percentages.

Source: U.S. Bureau of the Census, Survey of Income and Program Participation.


  TABLE 18-2.--PERCENT OF RECIPIENTS IN OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS RECEIVING ASSISTANCE UNDER
                    PROGRAMS WITHIN THE JURISDICTION OF THE COMMITTEE ON WAYS AND MEANS
                                       [Households, first quarter of 1992]
----------------------------------------------------------------------------------------------------------------
                                                                    Free or   Public or
                                                     Food           reduced  subsidized                  VA
                                                    stamps    WIC    school    rental     Medicaid  compensation
                                                                     meals     housing               or pensions
----------------------------------------------------------------------------------------------------------------
Number of households receiving benefits (in
 thousands).......................................   7,358   2,500    7,982     4,871       10,533      2,699
Percent receiving:
  AFDC............................................    47.5    34.8     28.2      24.6         37.0        2.8
  SSI.............................................    24.8     6.8      9.0      19.3         37.5        5.9
  Social Security.................................    26.4     8.8     12.5      40.9         34.9       64.6
  Unemployment compensation.......................     6.4     7.2      7.2       3.6          6.1        3.7
  Medicare........................................    21.5     6.3      7.1      38.7           32       61.8
----------------------------------------------------------------------------------------------------------------
Note: Table reads that 47.5 percent of food stamp recipient households receive AFDC. The 994,000 SSI recepients
  living in California receive a higher SSI payment in lieu of food stamps, and thus are not included in the
  food stamp percentages.

Source: U.S. Bureau of the Census, Survey of Income and Program Participation.

    Table 18-3 illustrates the percentage of households
receiving AFDC or SSI and also receiving assistance from other
programs for selected time periods. This table is constructed
from table 18-1 in previous editions of this document. As shown
in table 18-3, the number of households receiving AFDC and SSI
benefits in the first quarter of 1991 has increased
significantly in comparison to earlier years. In the first
quarter of 1992, the number of households receiving SSI
benefits had another significant increase, while the number of
AFDC households stayed relatively constant.
    The percentage of households receiving other benefits has
fluctuated over the period. For most types of benefits, there
is no discernible pattern, and the percentage has remained
consistently the same. The one exception to this general rule
is the percentage of AFDC households also receiving public or
subsidized rental housing. Between the second quarter of 1987
and the first quarter of 1990, the percentage of AFDC
households receiving housing benefits increased from 19.4
percent to 34.7 percent. The percentage had dropped down again
slightly by the first quarter of 1992.

 TABLE 18-3.--PERCENT OF HOUSEHOLDS RECEIVING AFDC OR SSI AND ALSO RECEIVING ASSISTANCE FROM OTHER PROGRAMS
                                         FOR SELECTED TIME PERIODS
----------------------------------------------------------------------------------------------------------------
                                                           1984    1986    1987    1988    1990    1991    1992
----------------------------------------------------------------------------------------------------------------
Quarter                                                        4       1       2       4       1       1       1
AFDC:
    Number of households receiving benefits (in
     thousands).........................................   3,585   3,617   3,527   3,329   3,434   4,051   4,057
    Percent receiving:
        Food Stamps.....................................    81.4    80.3    81.7    84.6    82.7    84.6    86.2
        WIC.............................................    15.3    15.1    18.6    19.1    18.7    16.3    21.5
        Free or reduced-price school meals..............    49.2    50.5    55.6    52.5    52.7    52.2    55.5
        Public or subsidized rental housing.............    23.0    24.8    19.4    31.3    34.7    31.5    29.5
        Medicaid........................................    93.2    95.2    95.5    95.6    97.6    96.9    96.2
        VA compensation or pensions.....................     2.8     1.7     1.9      .9     1.3     2.4     1.9
SSI:
    Number of households receiving benefits (in
     thousands).........................................   3,008   3,110   3,341   3,186   3,037   3,593   3,957
    Percent receiving:
        Food Stamps.....................................    46.5    44.7    39.7    42.2    41.3    44.3    46.2
        WIC.............................................     2.5     2.7     2.5     2.5     3.0     2.2     4.3
        Free or reduced-price school meals..............    12.7    14.7    11.9    15.5    15.3    17.5    18.2
        Public or subsidized rental housing.............    21.6    20.7    20.0    22.2    21.4    24.9    23.8
        Medicaid........................................   100.0   100.0    99.6    99.6    99.7    99.6    99.8
        VA compensation or pensions.....................     4.7     5.2     7.7     6.1     5.7     3.1     4.0
----------------------------------------------------------------------------------------------------------------
Note: The 994,000 SSI recepients living in California receive a higher SSI payment in lieu of food stamps, and
  thus are not included in the food stamp percentages.

                           FOOD STAMP PROGRAM

    Food stamps are designed primarily to increase the food
purchasing power of eligible low-income households to a point
where they can buy a nutritionally adequate low-cost diet.
Participating households are expected to be able to devote 30
percent of their counted monthly cash income to food
purchases.\1\ Food stamp benefits then make up the difference
between the household's expected contribution to its food costs
and an amount judged to be sufficient to buy an adequate low-
cost diet. This amount, the maximum food stamp benefit level,
is derived from the U.S. Department of Agriculture's lowest-
cost food plan (the Thrifty Food Plan), varied by household
size, and adjusted annually for inflation. Thus, a
participating household with no counted cash income receives
the maximum monthly allotment for its household size, intended
to enable it to purchase an adequate low-cost diet with its
food stamps alone, while one with some counted income receives
a lesser allotment, normally reduced from the maximum at the
rate of 30 cents for each dollar of counted income and intended
to enable it to purchase an adequate low-cost diet with a
combination of food stamps and its own cash.
---------------------------------------------------------------------------
    \1\Because not all of a household's income is actually counted when
determining its food stamp benefits, the program, in effect, assumes
that most participants are able to spend about 20 percent of their
total cash monthly income on food.
---------------------------------------------------------------------------

    Benefits are available to nearly all households that meet
Federal eligibility tests for limited monthly income and liquid
assets, as long as certain household members fulfill work
registration and employment and training program requirements.
In addition, recipients in the two primary Federal/State cash
welfare programs, the AFDC and SSI programs, generally are
automatically eligible for food stamps, as are recipients of
State general assistance payments, if the household is composed
entirely of AFDC, SSI, or general assistance beneficiaries.\2\

---------------------------------------------------------------------------
    \2\Except for SSI recipients in California, where a State-financed
adjustment to SSI benefits has replaced food stamp assistance, and
general assistance programs that do not meet certain Federal standards.
---------------------------------------------------------------------------

            ADMINISTRATION, PROGRAM VARIATIONS, AND FUNDING

    The regular Food Stamp program operates in all 50 States,
the District of Columbia, Guam, and the Virgin Islands. The
Federal Government is responsible for virtually all of the
rules that govern the program and, with limited variations for
Alaska, Hawaii, and the territories, these rules are nationally
uniform. States, the District of Columbia, and the territories
may choose to offer the program or not. However, if they do
offer food stamp assistance, it must be made available
throughout the jurisdiction and comply with Federal rules.
Sales taxes on food stamp purchases may not be charged, and
food stamp benefits do not affect other assistance available to
low-income households, nor are they taxed as income.
    Alternative programs are offered in Puerto Rico and the
Northern Mariana Islands, and program variations occur in a
number of demonstration projects and in those jurisdictions
that have elected to exercise the limited number of program
options allowed.
    Funding is overwhelmingly Federal, although the States and
other jurisdictions have financial responsibility for
significant administrative costs, as well as liability for
erroneous benefit determinations (as assessed under the food
stamp ``quality control'' system).

Federal administrative responsibilities

    At the Federal level, the program is administered by the
Agriculture Department's Food and Nutrition Service (FNS). The
FNS gives direction to welfare agencies through Federal
regulations that define eligibility requirements, benefit
levels, and administrative rules. It is also responsible for
(1) printing food stamp coupons and distributing them to
welfare agencies and (2) approving, and overseeing
participation by retail food stores and other outlets that may
accept food stamps. Other Federal agencies that have
administrative roles to play include: the Federal Reserve
System (through which food stamps are redeemed for cash, and
which has some jurisdiction over ``electronic benefit
transfer'' methods for issuing food stamp benefits), the Social
Security Administration (responsible for the social security
numbers recipients must have, provision of limited application
``intake'' services, and providing information to verify
recipients' income), the Internal Revenue Service (providing
assistance in verifying recipients' income and assets), and the
Immigration and Naturalization Service (helping welfare offices
confirm alien applicants' status).

State and local administrative responsibilities

    States, the District of Columbia, Guam, and the Virgin
Islands, through their local welfare offices, have primary
responsibility for the day-to-day administration of the Food
Stamp program. They determine eligibility, calculate benefits,
and issue food stamp allotments following Federal rules. They
also have a significant say about carrying out employment and
training programs and some administrative features of the
program (e.g., the extent to which verification of household
circumstances is pursued, the method by which food stamps are
issued). Most often, the Food Stamp program is operated through
the same welfare agency and staff that runs the Federal/State
AFDC and Medicaid programs.

Puerto Rico and the Northern Mariana Islands

    In addition to the regular Food Stamp program, the Food
Stamp Act directs funding for a nutrition assistance program in
the Commonwealth of Puerto Rico. Separate legislation
authorizes a variant of the Food Stamp program in the
Commonwealth of the Northern Mariana Islands.
    Since July 1982, Puerto Rico has operated a nutrition
assistance program of its own design, funded by an annual
Federal ``block grant.''\3\ The Commonwealth's nutrition
assistance program differs from the regular Food Stamp program
primarily in that: (1) funding is limited to an annual amount
specified by law;\4\ (2) the Food Stamp Act allows the
Commonwealth a great deal of flexibility in program design, as
opposed to the regular program's extensive Federal rules; (3)
benefits are paid in cash (checks) rather than food stamp
coupons; (4) income and liquid assets eligibility limits are
about half those used in the regular Food Stamp program; (5)
maximum benefit levels are about one-quarter less than in the
48 contiguous States and the District of Columbia; and (6)
different rules are used in counting income for eligibility and
benefit purposes. In fiscal year 1993, Puerto Rico's nutrition
assistance program aided approximately 1.44 million persons
each month with monthly benefits averaging $58 a person.
---------------------------------------------------------------------------
    \3\Prior to July 1982, the regular Food Stamp program operated in
Puerto Rico, although with slightly different eligibility and benefit
rules.
    \4\For fiscal year 1993, $1.051 billion was earmarked;
approximately $30 million of this amount was used to fund 2 special
projects--a cattle tick eradication program and a wage-subsidy program.
The block grant funds the full cost of benefits and half the cost of
administration.
---------------------------------------------------------------------------

    Under the terms of the 1976 Covenant with the Commonwealth
of the Northern Mariana Islands and implementing legislation
(P.L. 96-597), a variant of the Food Stamp program was
negotiated with the Commonwealth and began operations in July
1982. The program in the Northern Marianas differs primarily in
that: (1) it is funded entirely by Federal money, up to a
maximum grant of $3.7 million a year; (2) a portion of each
household's food stamp benefit must be used to purchase locally
produced food; (3) maximum allotments are about 20 percent
higher than in the 48 contiguous States and the District of
Columbia; and (4) income eligibility limits are about half
those in the regular program. In fiscal year 1993, the Northern
Marianas' program assisted some 2,900 people each month with
monthly benefits averaging $72 a person.

Program options

    The Food Stamp Act authorizes demonstration projects to
test program variations that might improve operations.\5\ In
addition, States are allowed to implement a few optional
aspects of the Food Stamp program. States may require ``monthly
reporting'' and ``retrospective budgeting'' for parts of their
food stamp caseload. They may disregard the first $50 a month
in child support payments, if they pay the benefit cost of
doing so. States or localities may choose to run ``workfare''
programs, and State welfare agencies exercise primary
responsibility in the design of food stamp employment and
training programs. And States can operate ``outreach''
programs, with Federal cost-sharing, to inform low-income
persons about food stamps.
---------------------------------------------------------------------------
    \5\At present, eight types of demonstration projects are underway:
(1) ``cashout'' projects for the elderly and SSI recipients, (2)
``electronic benefit transfer'' projects testing alternative methods of
benefit delivery, (3) projects providing cash benefits to very poor
households who are eligible for expedited service, (4) projects testing
simplified AFDC/FS application and benefit determination procedures,
(5) ``welfare reform'' demonstrations testing various combinations of
standardized AFDC/FS rules, cashing out food stamp benefits, and
merging AFDC/FS rules and benefits, (6) a project granting quarterly
(instead of monthly) benefit payments to SSI recipients eligible for
very small benefits, (7) demonstrations conforming the operations of
the AFDC JOBS program and the food stamp program's employment and
training activities, and (8) awards to nonprofit organizations to test
ways to improve program responsiveness to specific target groups in the
low-income population.
---------------------------------------------------------------------------

Funding

    The Food Stamp Act provides 100 percent Federal funding of
food stamp benefits. The Federal Government is also responsible
for its own administrative costs: overseeing program operations
(including oversight of participating food establishments),
printing and distributing food stamp coupons to welfare
agencies, redeeming food stamp coupons through the Federal
Reserve, and payments to the Social Security Administration for
certain intake services.
    In most instances, the Federal Government provides half the
cost of State welfare agency administration, including the cost
of optional outreach activities.\6\ The 50-percent Federal
share can be increased to as much as 60 percent where the State
has a very low rate of erroneous benefit determinations. And,
the cost of carrying out employment and training programs for
food stamp recipients is shared in two ways: (1) each State
receives a Federal grant for basic operating costs (a formula
share of $75 million a year) and (2) additional operating
costs, as well as expenses for support services to participants
(e.g., transportation, child care) are eligible for a 50-
percent Federal match.\7\ Finally, States are allowed to retain
a portion of improperly issued benefits that they recover
(other than those caused by welfare agency error): 25 percent
of recoveries in fraud cases and 10 percent in other
circumstances.
---------------------------------------------------------------------------
    \6\Until April 1994, the cost of certain activities was matched at
more than the 50-percent rate: costs associated with the development of
computer capability and fraud control activities were eligible for 63
and 75 percent Federal sharing, respectively; costs for implementing
the Systematic Alien Verification for Entitlements (SAVE) program were
fully reimbursed by the Federal Government.
    \7\The Federal 50-percent share for support services is limited.
Coverage extends to (1) dependent care costs up to $160 per dependent
per month and (2) other expenses (e.g., transportation) up to $25 per
participant per month. Beginning in September 1994, States will be
allowed to set their own limits on dependent care costs eligible for
Federal matching, so long as they are not higher than local market
rates.

        TABLE 18-4.--RECENT FOOD STAMP ACT EXPENDITURES
                        [In millions of dollars]
------------------------------------------------------------------------
                                              Administration\1\
                                            --------------------
         Fiscal year            Benefits\2\              State    Total
                                 (Federal)    Federal     and
                                                         local
------------------------------------------------------------------------
1979.........................        6,480        515       388    7,383
1980.........................        8,685        503       375    9,563
1981.........................       10,630        678       504   11,812
1982.........................       10,408        709       557   11,674
1983.........................       11,955        778       612   13,345
1984.........................       11,499        971       805   13,275
1985.........................       11,556      1,043       871   13,470
1986.........................       11,415      1,113       935   13,463
1987.........................       11,344      1,195       996   13,535
1988.........................       11,999      1,290     1,080   14,369
1989.........................       12,483      1,332     1,101   14,916
1990.........................       15,090      1,422     1,174   17,686
1991.........................       18,249      1,516     1,247   21,012
1992.........................       21,883      1,656     1,375   24,914
1993.........................       23,032      1,774     1,498   26,304
------------------------------------------------------------------------
\1\All Federal administrative costs associated with the Food Stamp
  program and Puerto Rico's block grant are included: Federal matching
  for the various administrative and employment and training expenses of
  States and other jurisdictions, and direct Federal administrative
  costs. Figures for Federal administrative costs beginning with fiscal
  year 1989 include only those paid out of food stamp appropriation and
  the food stamp portion of the general appropriation for food program
  administration. Figures for earlier years include estimates of food
  stamp related Federal administrative expenses paid out of other
  Agriculture Department accounts.
State and local costs are estimated based on the known Federal shares
  and represent an estimate of all administrative expenses of
  participating States and other jurisdictions (including Puerto Rico).
\2\All benefit costs associated with the Food Stamp program and Puerto
  Rico's block grant are included. The benefit amounts shown in the
  table reflect small downward adjustments for overpayments collected
  from recipients and, beginning in 1989, issued but unredeemed
  benefits. Over time, the figures reflect both changes in benefit
  levels and numbers of recipients.

Source: Budget documents prepared by the FNS. Compiled by the
  Congressional Research Service.

                              ELIGIBILITY

    The Food Stamp program has financial, employment/training-
related, and ``categorical'' tests for eligibility. Its
financial tests require that most of those eligible have
monthly income and liquid assets below limits set by food stamp
law. Under the employment/training-related tests, certain
household members must register for work, accept suitable job
offers, and fulfill work or training requirements (such as
looking or training for a job) established by State welfare
agencies. The limited number of categorical eligibility rules
make some automatically eligible for food stamps (most AFDC,
SSI, and general assistance recipients), and categorically deny
eligibility to others (e.g., strikers, illegal and temporarily
resident aliens, those living in institutional settings).
Applications cannot be denied because of the length of a
household's residence in a welfare agency's jurisdiction or
because it has no fixed mailing address or does not reside in a
permanent dwelling.

The food stamp household

    The basic food stamp beneficiary unit is the ``household.''
A food stamp household can be either a person living alone or a
group of individuals living together; there is no requirement
for cooking facilities. It is unrelated to recipient units in
other welfare programs (e.g., AFDC families with dependent
children, elderly or disabled individuals and couples in the
SSI program).
    Generally speaking, individuals living together constitute
a single food stamp household, if they customarily purchase
food and prepare meals in common. Members of the same household
must apply together, and their income, expenses, and assets
normally are aggregated in determining food stamp eligibility
and benefits. However, persons who live together can sometimes
be considered separate households for food stamp purposes, some
related co-residents are required to apply together, and
special rules apply to those living together in institutional
settings. Most often, persons living together receive larger
aggregate benefits if they are treated as more than one food
stamp household. In determining whether co-residents are
treated as separate households, the following rules are
applied.
    Unrelated co-residents may apply and be treated as separate
households if they purchase food and prepare meals separately
(this includes roomers and live-in attendants).
    As with unrelated persons, elderly or disabled adults
(together with their spouses)\8\ and parents of minor children
(together with their children) may apply and be treated
separately from any other related co-residents, if they
purchase food and prepare meals separately. Moreover, elderly
persons who live with others and cannot purchase food and
prepare meals separately because of a substantial disability
may apply and be treated separately from their co-residents, as
long as their co-residents' income is below prescribed limits.
---------------------------------------------------------------------------
    \8\In the Food Stamp program, ``elderly'' persons are those age 60
or older. The ``disabled'' generally are beneficiaries of governmental
disability-based assistance (e.g., social security or SSI disability
recipients, disabled veterans, certain disability retirement
annuitants, recipients of disability-based Medicaid or general
assistance).
---------------------------------------------------------------------------

    On the other hand, separate household treatment is barred
for certain related co-residents, regardless of how food is
purchased and meals are prepared:
  --Co-resident spouses may not apply and be treated
        separately;
  --Children under 18 and their co-resident parent(s) or
        caretaker(s) may not apply and be treated separately,
        although persons caring for foster children may opt to
        exclude the child(ren) from their household unit, and
        categorically ineligible parents (e.g., certain aliens)
        may apply on behalf of their otherwise eligible
        children;
  --Except for the elderly, disabled, and parents with minor
        children, closely related adult co-residents (i.e.,
        parents and their adult children, brothers and sisters)
        may not apply and be treated separately.
    Effective September 1994, the definition of a food stamp
household is revised to provide that persons who live together,
but purchase food and prepare meals separately, may apply
separately, except for: (1) spouses, (2) parents and their
children (21 years or younger), other than children who
themselves have a spouse or children, and (3) minors 18 years
or younger (excluding foster children) who live under the
parental control of a caretaker.
    Finally, although those living in institutional settings
generally are barred from food stamps, individuals in certain
types of group living arrangements may be eligible and are
automatically treated as separate households, regardless of how
food is purchased and meals are prepared. These arrangements
must be approved by State or local agencies and include:
residential drug addict or alcoholic treatment programs, small
group homes for the disabled, shelters for battered women and
children, and shelters for the homeless.
    Thus, different food stamp households can live together,
food stamp recipients can reside with nonrecipients, and food
stamp households themselves may be ``mixed'' (include
recipients and nonrecipients of other welfare benefits).

Income eligibility

    Except for households composed entirely of AFDC, SSI, or
general assistance recipients (who generally are automatically
eligible for food stamps), monthly cash income is the primary
food stamp eligibility determinant.\9\
---------------------------------------------------------------------------
    \9\Although they do not have to meet food stamp income and assets
tests, AFDC, SSI, and general assistance households must still have
their income calculated under food stamp rules to determine their food
stamp benefits.
---------------------------------------------------------------------------

    In establishing eligibility for households without an
elderly or disabled member, the Food Stamp program uses both
the household's basic (or ``gross'') monthly income and its
counted (or ``net'') monthly income.
    When judging eligibility for households with elderly or
disabled members, only the household's counted monthly income
is considered; in effect, this applies a more liberal income
test to elderly and disabled households.
    Basic (or gross) monthly income includes all of a
household's cash income, only excepting the following
``exclusions'' (disregards): (1) most payments made to third
parties (rather than directly to the household);\10\ (2)
unanticipated, irregular, or infrequent income, up to $30 a
quarter; (3) loans (deferred repayment student loans are
treated as student aid, see below); (4) income received for the
care of someone outside the household; (5) nonrecurring lump-
sum payments such as income tax refunds and retroactive lump-
sum social security payments (these are instead counted as
liquid assets); (6) energy assistance; (7) expense
reimbursements that are not a ``gain or benefit'' to the
household; (8) income earned by schoolchildren; (9) the cost of
producing self-employment income; (10) Federal postsecondary
student aid (e.g., Pell grants, student loans)\11\ (11) advance
payments of Federal earned income tax credits; (12) ``on-the-
job'' training earnings of dependent children under 19 in Job
Training Partnership Act (JTPA) programs, as well as JTPA
monthly ``allowances;'' (13) income set aside by disabled SSI
recipients under an approved ``plan to achieve self-
sufficiency'' (PASS); and (14) payments required to be
disregarded by provisions of Federal law outside the Food Stamp
Act (e.g., various payments under laws relating to Indians,
payments under the Older Americans Act employment program for
the elderly).
---------------------------------------------------------------------------
    \10\Some third-party (``vendor'') payments for normal living
expenses are not disregarded.
    \11\Postsecondary student aid other than Federal aid is disregarded
to the extent that it is used or earmarked for tuition, mandatory
school fees or expenses, loan origination fees, and miscellaneous
education-related expenses.
---------------------------------------------------------------------------

    Counted (or net) monthly income is computed by subtracting
certain ``deductions'' from a household's basic (or gross)
monthly income. It recognizes that not all of a household's
income is equally available for food purchases by disregarding
a standard portion of income, plus amounts representing work
expenses or excessively high non-food living expenses.
    For households without an elderly or disabled member,
counted monthly income equals their basic (gross) monthly
income less the following deductions:
  --an inflation-indexed (each October) ``standard deduction''
        set at $131 a month in fiscal year 1994, regardless of
        household size;\12\
---------------------------------------------------------------------------
    \12\Different standard deductions are used for Alaska ($223),
Hawaii ($185), Guam ($262), and the Virgin Islands ($115).
---------------------------------------------------------------------------

  --20 percent of any earned income, in recognition of taxes
        and work expenses;
  --out-of-pocket dependent care expenses, when related to work
        or training, up to $160 a month per dependent, rising
        to $200 a month for children under age 2 and $175 a
        month for other dependents in September 1994; and
  --any shelter expenses, to the extent they exceed 50 percent
        of counted income after all other deductions, up to a
        periodically adjusted ceiling standing at $207 a month
        from October 1993 through June 1994, and rising to $231
        in July 1994.\13\
---------------------------------------------------------------------------
    \13\Different ceilings prevail in Alaska, Hawaii, Guam, and the
Virgin Islands. Through June 1994, they are $359, $295, $251, and $152;
in July 1994, they will rise to $402, $330, $280, and $171.
---------------------------------------------------------------------------

    For households with an elderly or disabled member, counted
monthly income equals their basic (gross) monthly income less
the following deductions:
  --the same standard, earned income, and dependent care
        deductions noted above;
  --any shelter expenses, to the extent they exceed 50 percent
        of counted income after all other deductions, with no
        limit; and
  --any out-of-pocket medical expenses (other than those for
        special diets) that are incurred by an elderly or
        disabled household member, to the extent they exceed a
        ``threshold'' of $35 a month.
    Finally, during fiscal year 1995, States will implement a
newly enacted additional deduction: households will be allowed
to deduct any amounts paid as legally obligated child support.
    Except for those households comprised entirely of AFDC,
SSI, or general assistance recipients, in which case food stamp
eligibility generally is automatic, all households must have
counted (net) monthly income that does not exceed the Federal
poverty guidelines, as adjusted for inflation each October.
Households without an elderly or disabled member also must have
basic (gross) monthly income that does not exceed 130 percent
of the inflation-adjusted Federal poverty guidelines. Both
these income eligibility limits are uniform for the 48
contiguous States, the District of Columbia, Guam, and the
Virgin Islands; somewhat higher limits (based on higher poverty
guidelines) are applied in Alaska and Hawaii.

     TABLE 18-5.--COUNTED (NET) AND BASIC (GROSS) MONTHLY INCOME
                         ELIGIBILITY LIMITS
             [Effective October 1993 through September 1994]
------------------------------------------------------------------------
                                 48 States,
        Household size          D.C., and the    Alaska       Hawaii
                                 territories
------------------------------------------------------------------------


           COUNTED (NET) MONTHLY INCOME ELIGIBILITY LIMITS\1\

------------------------------------------------------------------------
1 person.....................            $581       $725            $670
2 persons....................             786        982             905
3 persons....................             991      1,239           1,140
4 persons....................           1,196      1,495           1,375
5 persons....................           1,401      1,752           1,610
6 persons....................           1,606      2,009           1,845
7 persons....................           1,811      2,265           2,080
8 persons....................           2,016      2,522           2,315
Each additional person.......            +205       +257            +235
------------------------------------------------------------------------


           BASIC (GROSS) MONTHLY INCOME ELIGIBILITY LIMITS\2\

------------------------------------------------------------------------
1 person.....................            $756       $943            $871
2 persons....................           1,022      1,277           1,177
3 persons....................           1,289      1,610           1,482
4 persons....................           1,555      1,944           1,788
5 persons....................           1,822      2,278           2,093
6 persons....................           2,088      2,611           2,399
7 persons....................           2,355      2,945           2,704
8 persons....................           2,621      3,279           3,010
Each additional person.......            +267       +334            +306
------------------------------------------------------------------------
\1\Set at the applicable Federal poverty guidelines, updated for
  inflation through calendar 1992.
\2\Set at 130 percent of the applicable Federal poverty guidelines,
  updated for inflation through calendar 1992.

Allowable assets

    Except for those households who are automatically eligible
for food stamps because they are composed entirely of AFDC,
SSI, or general assistance recipients, eligible households must
have counted ``liquid'' assets that do not exceed federally
prescribed limits. Households without an elderly member cannot
have counted liquid assets above $2,000. Households with an
elderly member cannot have counted liquid assets above $3,000.
    Counted liquid assets include cash on hand, checking and
savings accounts, savings certificates, stocks and bonds,
individual retirement accounts (IRAs) and ``Keogh'' plans (less
any early withdrawal penalties), and nonrecurring lump-sum
payments such as insurance settlements. Certain ``less liquid''
assets are also counted: a portion of the value of vehicles
(generally, the ``fair market value'' in excess of $4,500) and
the equity value of property not producing income consistent
with its value (e.g., recreational property).
    Counted assets do not include the value of the household's
residence (home and surrounding property), business assets,
personal property (household goods and personal effects), lump-
sum earned income tax credit payments, burial plots, the cash
value of life insurance policies and pension plans (other than
Keogh plans and IRAs), and certain other resources whose value
is not accessible to the household or are required to be
disregarded by other Federal laws.

Work registration and employment and training program requirements

    Unless exempt, adult applicants for food stamps must
register for work, typically with the welfare agency or a State
employment service office. To maintain eligibility, they must
accept a suitable job if offered one and fulfill any work,
``job search,'' or training requirements established by
administering welfare agencies. If the household head fails to
fulfill any of these requirements, the entire household is
disqualified, typically for 2 months; in other cases, failure
to comply disqualifies the noncomplying household member only.
    Those who are exempt by law from work registration, having
to accept a suitable job offer, and employment and training
program requirements (work, job search, training) include:
persons physically or mentally unfit for work, those under age
16 or age 60 or older, and individuals between 16 and 18 (if
they are not head of household or are attending school or a
training program); persons working at least 30 hours a week or
earning the minimum wage equivalent; persons caring for
dependents who are disabled or under age 6, and those caring
for children between ages 6 and 12 if adequate child care is
not available (this second exemption is limited to allowing
these persons to refuse a job offer if care is not available);
individuals already subject to and complying with another
assistance program's work, training, or job search requirements
(i.e., those in AFDC work, training, or job search programs or
fulfilling unemployment compensation job search requirements);
otherwise eligible postsecondary students; and residents of
drug addiction and alcoholic treatment programs.
    Those not exempted by one of the above-listed rules must,
at least, register for work and accept suitable job offers.
However, the main thrust of the food stamp employment and
training program is to ensure that nonexempt recipients
(``mandatory'' work registrants) also fulfill some type of
work, job search, or training obligation. To carry this out,
welfare agencies are required to operate an employment and
training program of their own design for work registrants whom
they designate. Welfare agencies may require all work
registrants to participate in one or more components of their
program, or limit participation (with the Agriculture
Department's approval) by further exempting additional
categories and individuals for whom participation is judged
``impracticable'' or not ``cost-effective.'' But they must
allow otherwise exempt recipients to participate as volunteers
and may set up special programs for them.
    Once the ``pool'' of work registrants who will be required
to participate in an employment or training program is
identified, welfare agencies must place at least 15 percent of
them in one or more program components. Program components can
include any or all of the following activities, at the welfare
agency's option: supervised job search or training for job
search, workfare, work experience or training programs,
education programs to improve basic skills, or any other
employment or training activity approved by the Agriculture
Department.
    Recipients who take part in an employment or training
activity beyond work registration cannot be required to work
more than the minimum wage equivalent of their household's
benefit, and total hours of participation (including both work
and any other required activity) cannot exceed 120 hours a
month. Welfare agencies also must provide participants support
for costs directly related to participation (e.g.,
transportation and child care). Agencies may limit this support
to $25 per participant per month for all support costs other
than dependent care, and to local market rates for necessary
dependent care.

Categorical eligibility rules and other limitations

    A few food stamp rules deny food stamp eligibility for
reasons other than financial need (limited income or liquid
assets) or compliance with work registration or employment and
training program requirements: (1) Where the head of household
has voluntarily quit a job without good cause, the household's
eligibility is barred for 90 days; (2) Households containing
members on strike are ineligible, unless eligible prior to the
strike; (3) Postsecondary students (in school half-time or
more) who are physically and mentally fit for work and between
ages 18 and 50 are ineligible unless they are assigned to
school by a JTPA or other employment and training program, are
employed at least 20 hours a week or participating in a
federally financed work-study program, are a parent with
responsibility for the care of a dependent child under age 6,
an AFDC recipient, responsible for a child between 6 and 12 and
do not have access to child care adequate to allow both work
and school, or are a full-time single parent student
responsible for a child under age 12; (4) Eligibility is barred
to illegal or temporarily resident aliens;\14\ (5) Eligibility
is denied persons living in institutional settings, except for
those in special SSI-approved small group homes for the
disabled, persons living in drug addiction or alcoholic
treatment programs, and persons in shelters for battered women
and children or shelters for the homeless; (6) Boarders are
ineligible unless they apply together with the household they
are boarding with; (7) Eligibility is denied those who transfer
assets for the purpose of qualifying for food stamps; (8) Those
who intentionally violate food stamp rules are disqualified for
specific time periods ranging from 6 months (on first
violation) to permanently (on a third violation); (9) Those
failing to provide social security numbers, or to cooperate in
providing information needed to verify eligibility or benefit
determinations, are ineligible.
---------------------------------------------------------------------------
    \14\In addition, a legal alien's sponsor's income and assets may
deny the alien eligibility.
---------------------------------------------------------------------------

                                BENEFITS

    Food stamp benefits are a function of a household's size,
its counted (net) monthly income, and maximum monthly benefit
levels (in some cases, adjusted for geographic location). An
eligible household's counted income is determined (as for
eligibility), its maximum benefit level is established
(depending on its size and location), and a benefit is
calculated by subtracting its expected contribution (30 percent
of its counted income) from its maximum allotment; maximum
allotments are available only to those with no counted monthly
income. Allotments are not taxable and food stamp purchases may
not be charged sales taxes. Receipt of food stamps does not
affect eligibility for or benefits provided by other welfare
programs, although some programs use food stamp participation
as a ``trigger'' for eligibility and others take into account
the general availability of food stamps in deciding what level
of benefits to provide. In fiscal year 1993, monthly benefits
averaged $68 a person and about $170 a household.

Maximum monthly allotments

    Maximum monthly food stamp allotments are tied to the cost
of purchasing a nutritionally adequate low-cost diet, as
measured by the Agriculture Department's Thrifty Food Plan
(TFP).\15\ Maximum allotments are set at: the monthly cost of
the TFP for a 4-person family consisting of a couple between
ages 20 and 50 and 2 school-age children, adjusted for family
size (using a formula reflecting economies of scale developed
by the HNIS), increased by 3 percent, and rounded down to the
nearest whole dollar. They are adjusted for food price
inflation annually, each October, to reflect the cost of the
TFP in the immediately previous June.
---------------------------------------------------------------------------
    \15\The TFP is the cheapest of four food plans designed by the
Agriculture Department's Human Nutrition Information Service (HNIS) and
is priced monthly (using data from price surveys done for the CPI-U).
---------------------------------------------------------------------------
    Maximum allotments are standard in the 48 contiguous States
and the District of Columbia; they are higher, reflecting
substantially different food costs, in Alaska, Hawaii, Guam,
and the Virgin Islands.

       TABLE 18-6.--MAXIMUM MONTHLY FOOD STAMP ALLOTMENTS
             [Effective October 1993 through September 1994]
------------------------------------------------------------------------
                             48
                           States                                 Virgin
     Household size         and     Alaska\1\   Hawaii    Guam   Islands
                            D.C.
------------------------------------------------------------------------
1 person................     $112       $147      $187     $166     $144
2 persons...............      206        271       343      304      265
3 persons...............      295        388       492      436      380
4 persons...............      375        492       625      553      483
5 persons...............      446        585       742      657      573
6 persons...............      535        702       890      789      688
7 persons...............      591        776       984      872      760
8 persons...............      676        887      1125      997      869
Each additional person..      +85       +111      +141     +125     +109
------------------------------------------------------------------------
\1\Maximum monthly allotments for designated urban areas of Alaska. Two
  separate higher allotment levels are applied in remote rural areas of
  Alaska. They are 29 and 56 percent higher than the urban allotments
  shown here.

Minimum and prorated benefits

    Eligible one- and two-person households are guaranteed a
minimum monthly food stamp allotment of $10. Minimum monthly
benefits for other household sizes vary from year to year,
depending on the relationship between changes in the income
eligibility limits and the adjustments to the cost of the TFP,
and in a few cases, benefits can be reduced to zero before
income eligibility limits are exceeded (making some households
eligible for no benefit). At present, minimum monthly
allotments for households of three or more persons range from
$2 to slightly over $80.
    In addition, a household's calculated monthly allotment can
be prorated (reduced) for one month. On application, a
household's first month's benefit is reduced to reflect the
date of application. If a previously participating household
does not meet eligibility recertification requirements in a
timely fashion, but does become certified for eligibility
subsequently, benefits for the first month of its new
certification period normally are prorated to reflect the date
when recertification requirements were met.

Application processing and issuing food stamps

    Food stamp benefits are normally issued monthly. The local
welfare agency must either deny eligibility or make food stamps
available within 30 days of initial application and must
provide food stamps without interruption if an eligible
household reapplies and fulfills recertification requirements
in a timely manner. Households in immediate need because of
little or no income and very limited cash assets, as well as
the homeless and those with extraordinarily high shelter
expenses, must be given expedited service (provision of
benefits within 5 days of initial application).
    Food stamp issuance is a welfare agency responsibility and
issuance practices differ among welfare agencies. Most food
stamp coupons are issued by: (1) providing (usually mailing)
recipients an authorization-to-participate (ATP) card that is
then turned in at a local issuance point (e.g., a bank or post
office) when picking up their monthly allotment, or (2) mailing
food stamp coupon allotments directly to recipients. However,
several pilot projects issue cash benefits, and in a small but
growing number of areas, electronic benefit transfer (EBT)
systems are used. EBT systems replace coupons with an ATM-like
card used to make food purchases at the point of sale by
deducting the purchase amount from the recipient's food stamp
benefit account.

Using food stamps

    Food stamp benefits are issued in the form of booklets of
coupons. The smallest coupon denomination is $1; if change of
less than $1 is due on a food stamp purchase, it is returned in
cash. Typically, participating households use their food stamps
in approved grocery stores to buy food items for home
preparation and consumption. However, the actual list of
approved uses for food stamps is more extensive, and includes:
(1) food for home preparation and consumption, not including
alcohol, tobacco, or hot foods intended for immediate
consumption; (2) seeds and plants for use in gardens to produce
food for personal consumption; (3) in the case of the elderly
and SSI recipients (and their spouses), meals prepared and
served through approved communal dining programs for the
elderly and disabled; (4) in the case of the elderly and those
who are disabled to an extent that they cannot prepare all of
their meals, home-delivered meals provided by programs for the
homebound; (5) meals prepared and served to residents of drug
addiction and alcoholic treatment programs, small group homes
for the disabled, shelters for battered women and children, and
shelters or other establishments serving the homeless; and (6)
where the household lives in certain remote areas of Alaska,
equipment for procuring food by hunting and fishing (e.g.,
nets, hooks, fishing rods, and knives). As noted earlier, sales
taxes may not be charged on food stamp purchases.

Quality control

    Since the early 1970s, the Food Stamp program, like other
welfare programs, has had a ``quality control'' system to
monitor the degree to which erroneous eligibility and benefit
determinations are made by welfare agencies. The system was
established by regulation in the1970s as an administrative tool
to enable welfare officials to identify problems and needed
corrective actions. Today, by legislative directive, it is also
used to calculate and impose fiscal liabilities (``sanctions'')
on States that have very high rates of erroneous benefit
payments (very high dollar ``error rates'').
    Under the quality control system, welfare agencies, with
Federal oversight, continuously sample their active food stamp
caseloads, as well as the correctness of decisions to deny or
end benefits, and perform in-depth investigations of the
eligibility and benefit status of randomly chosen cases in the
samples looking for errors in applying Federal rules and
otherwise erroneous benefit and eligibility outcomes. Over
90,000 cases are reviewed each year, and each State's sample is
designed to provide a statistically valid picture of erroneous
decisions and, in most instances, their dollar value in
benefits. The resulting error rate information is used by
program managers to chart needed changes in administrative
practices, and, by the Federal Government, to assess fiscal
sanctions on States with error rates above certain ``tolerance
levels,'' to reward States with error rates below a separate
lower tolerance level, and to review welfare agency plans for
action to correct procedures to control errors. Both error rate
findings and any assessed sanctions are subject to appeal
through administrative law judges and the Federal courts.
Sanctions may be reduced or waived if the State shows ``good
cause'' or if it is determined that the sanction amounts should
be ``invested'' in improved State administration. Interest may
be charged on outstanding sanction liabilities if the
administrative appeals process takes more than 1 year.
    Quality control reviews generate annual estimates of
caseload and dollar error rates: the proportion of cases in
which an error is found and the dollar value of the errors as a
proportion of total benefit dollars. Caseload and dollar error
rates are calculated for overpayments (including incorrect
payments to eligible and ineligible households) and
underpayments. The accuracy of welfare agency decisions denying
or terminating assistance also is measured, with an error rate
reflecting the proportion of denials and terminations that were
improper; no dollar value is calculated. The total national
weighted average dollar error rate for overpayments was
estimated at 8.2 percent in fiscal year 1992; this was up from
7 percent in 1991 (the all-time low) and was the highest rate
recorded since 1985. The fiscal year 1992 caseload error rate
for overpayments was estimated at 17.6 percent. Error rates for
underpayments have been relatively unchanged over time. In
fiscal year 1992, the national weighted average underpayment
dollar error rate was estimated at 2.5 percent, and the
underpayment caseload error rate was 9.9 percent. Finally, the
rate of denials and terminations found improper was 5.1 percent
in 1992.
    The dollar error rates reported through the food stamp
quality control system are used as the basis for assessing the
financial liability of States for overpaid and underpaid
benefits. Although well over $500 million in sanctions have
been assessed since the early 1980s, only approximately $5
million has been collected. The appeals process has delayed
collection, and sanctions have been forgiven or waived both by
Congress and the administration. In amending the rules
governing sanctions in 1988 and 1990, Congress forgave
accumulated sanctions, and, in late 1992, the administration
waived sanctions by allowing States to invest the amounts in
improved administration.
    Rules governing fiscal sanctions have changed a number of
times. Under the most recent revision (1993), sanctions are
assessed States with combined (overpayment and underpayment)
dollar error rates above the national weighted average combined
error rate for the year in question (10.7 percent in 1992).
Each State's sanction amount is determined by using a ``sliding
scale'' so that its penalty assessment equals an amount
reflecting the degree to which the State's combined error rate
exceeds the national average (the ``tolerance level''). For
example, if the tolerance level is 10 percent and a State's
error rate is 12 percent, the State would be assessed a
sanction of 0.4 percent of benefits paid in the State that
year: i.e., the State's error rate is 2 percentage points, or
20 percent, above the tolerance level, and it is assessed a
sanction representing 20 percent of the amount by which it
exceeds the tolerance level (2 percentage points x 0.2
= 0.4). A State with a combined error rate of 14 percent would
owe a penalty of 1.6 percent of benefits, or 40 percent of the
amount by which it exceeds the 10-percent tolerance level (4
percentage points x 0.4 = 1.6). Thus, the degree to
which a State is assessed sanctions increases as its error rate
rises, rather than having sanctions assessed equally on each
dollar above the tolerance level. In fiscal year 1992, 12
States had combined error rates above the 10.7 percent
tolerance level.
    States also can receive increased Federal funding for
administration if their error rates are below a second, much
lower threshold. States with a combined error rate below 6
percent are entitled to a larger-than-normal Federal share of
their administrative costs. The regular 50-percent Federal
match is, depending on the degree to which the State's error
rate is below 6 percent, raised to a maximum of 60 percent, as
long as the State's rate of improper denials and terminations
is below the national average. This ``enhanced'' administrative
funding has typically totaled $5-10 million a year; in fiscal
year 1992, six States had combined error rates below 6 percent.
    Finally, the quality control system also identifies the
various sources of error and requires that the majority of
States develop and carry out corrective action plans to improve
payment accuracy using the information gathered through quality
control reviews. These reviews generally show that the primary
``responsibility'' for overpayment errors is almost evenly
split between welfare agencies and clients, and the most common
errors are related to establishing food stamp expense
``deductions'' and households' income.

  TABLE 18-7.--FOOD STAMP QUALITY CONTROL ERROR RATES: FISCAL YEAR
                                1992
             [Percent of benefits paid or not paid in error]
------------------------------------------------------------------------
                                  Underpayment  Overpayment    Combined
              State                error rate    error rate   error rate
------------------------------------------------------------------------
Alabama.........................          1.76         6.47         8.23
Alaska..........................          1.20         7.12         8.32
Arizona.........................          3.19        10.16        13.35
Arkansas........................          2.23         5.25         7.47
California......................          3.71         7.00        10.71
Colorado........................          1.80         5.81         7.61
Connecticut.....................          2.47         5.65         8.12
Delaware........................          1.51         6.87         8.38
D.C.............................          3.10         7.46        10.56
Florida.........................          3.96        15.71        19.68
Georgia.........................          2.65         8.30        10.96
Guam............................          2.16         6.84         8.99
Hawaii..........................           .99         2.86         3.85
Idaho...........................          2.45         4.73         7.18
Illinois........................          2.42         7.55         9.97
Indiana.........................          3.23        10.33        13.56
Iowa............................          3.08         7.68        10.76
Kansas..........................          1.27         5.62         6.89
Kentucky........................          1.79         3.06         4.85
Louisiana.......................          1.82         7.33         9.15
Maine...........................          2.31         6.12         8.43
Maryland........................          2.00         6.99         8.99
Massachusetts...................          1.22         6.16         7.38
Michigan........................          1.97         7.08         9.05
Minnesota.......................          2.23         8.25        10.48
Mississippi.....................          1.80         8.28        10.08
Missouri........................          2.64         7.13         9.77
Montana.........................          1.99         6.68         8.75
Nebraska........................          2.52         6.69         9.21
Nevada..........................          1.35         5.49         6.83
New Hampshire...................          2.43         9.63        12.06
New Jersey......................          3.13         5.04         8.17
New Mexico......................          2.85         5.70         8.55
New York........................          2.97         8.23        11.20
North Carolina..................          2.34         6.55         8.89
North Dakota....................          1.58         4.30         5.89
Ohio............................          1.88        11.31        13.19
Oklahoma........................          2.64         6.28         8.92
Oregon..........................          1.74         7.47         9.21
Pennsylvania....................          1.95         6.18         8.13
Rhode Island....................          1.30         3.10         4.40
South Carolina..................          1.99         7.01         9.00
South Dakota....................           .92         3.60         4.52
Tennessee.......................          2.53        10.59        13.12
Texas...........................          2.22         9.61        11.83
Utah............................          1.41         5.71         7.12
Vermont.........................          1.59         4.74         6.33
Virginia........................          2.65         6.26         8.91
Virgin Islands..................          2.33         3.32         5.64
Washington......................          2.12         9.61        11.73
West Virginia...................          1.83         8.82        10.64
Wisconsin.......................          2.57         6.74         9.32
Wyoming.........................          2.73         5.92         8.65
                                 =======================================
U.S. average....................          2.50         8.19        10.69
------------------------------------------------------------------------
Note: Underpayment and overpayment rates may not add to combined rates
  due to rounding.

Source: Food Stamp Quality Control Annual Report, Fiscal Year 1992.

               INTERACTION WITH CASH ASSISTANCE PROGRAMS

    The Food Stamp program is intertwined with cash assistance
in two ways: it is administratively linked to cash welfare aid
at the State and local levels, and its recipient population is
made up largely of recipients of other government benefits.
    At the State and local levels, the Food Stamp program is
administered by the same welfare offices and personnel that
administer cash assistance such as AFDC and general assistance.
And joint food stamp/cash welfare application and interview
procedures are the general rule. This coadministration does not
apply for most elderly or disabled persons, whose SSI cash
assistance is typically administered through Social Security
Administration offices, although these offices do provide
limited intake services for the Food Stamp program.
    For most persons participating in the Food Stamp program,
food stamp aid represents a second or third form of government
payment. Fewer than 20 percent of food stamp households rely
solely on nongovernmental sources for their cash income,
although over 25 percent have some income from these sources
(e.g., earnings, private retirement income). According to
quality control data, the AFDC program contributes to the
income of about 41 percent of food stamp households, and for
almost all of them AFDC is their only cash income. SSI benefits
go to some 19 percent of food stamp households, and almost one-
third have no other income. About 20 percent of food stamp
households receive social security or veterans benefits. And
nearly 15 percent are paid general assistance, unemployment
insurance, or workers' compensation benefits.

                                         TABLE 18-8.--CHARACTERISTICS OF FOOD STAMP HOUSEHOLDS: 1980-91
                                                                      [In percent]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Year and month survey was conducted
                                           -------------------------------------------------------------------------------------------------------------
      Food stamp recipient households                1981
                                             1980   (Aug.)   1982    1983    1984     1985      1986      1987      1988      1989      1990      1991
                                            (Aug.)          (Aug.)  (Feb.)  (Aug.)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)
--------------------------------------------------------------------------------------------------------------------------------------------------------
With gross monthly income:
    Below the Federal poverty levels......      87      90      95      93      93       94        93        94        92        92        92        91
    Between the poverty levels and 130
     percent of the poverty levels........      10       9       5       7       6        6         6         6         8         8         8         9
    Above 130 percent of the poverty
     levels...............................       2       1       *       *       1        *         *         *         *         *         *         *
With earnings.............................      19      20      18      20      19       20        21        21        20        20        19        20
With public assistance income\1\..........      65      69      69      75      71       68        69        74        72        73        73        70
    With AFDC income......................      NA      40      42      50      42       39        38        41        42        42        43        41
    With SSI income.......................      18      19      18      18      18       19        18        21        20        21        19        19
With children.............................      60      56      58      68      61       59        61        61        61        60        61        61
    And female heads of household.........      NA      43      45      52      47       46        48        50        50        50        51        51
With elderly members\2\...................      23      21      20      18      22       21        20        21        19        20        18        17
    With elderly female heads of
     household\2\.........................      NA      14      14      12      16       16        15        15        14        14        11        10
                                           =============================================================================================================
Average household size....................     2.8     2.7     2.8     2.9     2.8      2.7       2.7       2.7       2.6       2.6       2.6       2.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Public assistance income includes AFDC, SSI, and general assistance.
\2\Elderly members and heads of household include those age 60 or older.
*Less than 0.5 percent.

Source: U.S. Department of Agriculture (Food and Nutrition Service) surveys of the characteristics of food stamp households.

Compiled by the Congressional Research Service.

                      FOOD STAMP RECIPIENCY RATES

    Table 18-9 shows gross food stamp participation or
recipiency rates using three different measures for the United
States from 1975 to 1993. The actual number of food stamp
participants has fluctuated widely over the last 18 years,
reaching its highest average monthly level of 27 million (not
including Puerto Rico) in 1993. As a percentage of the total
U.S. resident population, food stamp participation rose
significantly from a rate of 8.1 participants per 100 persons
in 1975 to 10.4 percent in 1993. In the poor and pretransfer
poor populations, the food stamp participation rates in 1991
were 63.3 and 59.3 percent respectively. ``Pretransfer poor''
is defined as income including Social Security and other social
insurance benefits but not including means-tested benefits in
relationship to the poverty thresholds.
    A recent report by the U.S. Department of Agriculture,
entitled ``Food Stamp Program Participation Rates: January
1989,'' provides a more refined analysis of Food Stamp program
participation rates and the extent to which the program is
serving its target population. The report estimates that 59
percent of individuals eligible for food stamps participated,
and that 56 percent of eligible households participated. Those
households received 66 percent of benefits payable if all
eligible households had been enrolled. In addition, particular
subgroups of the eligible population participated at different
rates. Among groups defined by monthly income levels,
participation rates were highest for those with the lowest
income and declined as income levels rose. Participation rates
were 81 percent for those with income below half the Federal
poverty guidelines, 68 percent for those with income between
half the guidelines and the guidelines themselves, and 17
percent for those with incomes above the poverty thresholds.
Demographic groups also showed different participation rates.
Eligible elderly households participated at a rate of 29
percent, while households composed of single adult females with
children were enrolled the at rate of 78 percent and 90 percent
of eligible disabled nonelderly adult households participated.

               TABLE 18-9.--FOOD STAMP PARTICIPATION RATES IN THE UNITED STATES, 1975-93
----------------------------------------------------------------------------------------------------------------
                                                                     Food stamp participation as percent of--
                                                      Number of  -----------------------------------------------
                                                     food stamp                                    Pre-transfer
                       Year                         participants       Total           Poor            poor
                                                         (in      population\1\   population\2\   population\3\
                                                     millions)
----------------------------------------------------------------------------------------------------------------
1975..............................................         16.3            7.6            63.0              NA
1976..............................................         17.0            7.9            68.1              NA
1977..............................................         15.6            7.2            63.1              NA
1978..............................................         14.4            6.5            58.8              NA
1979..............................................         15.9            7.1            61.0            57.1
1980..............................................         19.2            8.4            65.6            60.7
1981..............................................         20.6            9.0            64.7            60.8
1982..............................................         20.4            8.8            59.3            56.3
1983..............................................         21.6            9.2            61.2            58.5
1984..............................................         20.9            8.8            62.0            58.5
1985..............................................         19.9            8.3            60.2            56.6
1986..............................................         19.4            8.0            59.9            56.2
1987..............................................         19.1            7.8            59.1            55.6
1988..............................................         18.7            7.6            58.9            55.2
1989..............................................         18.8            7.6            59.6            55.6
1990..............................................         20.0            8.0            59.6            55.7
1991..............................................         22.6            9.0            63.3            59.3
1992..............................................         25.4           10.0            68.9            64.0
1993..............................................         27.0           10.4              NA              NA
----------------------------------------------------------------------------------------------------------------
\1\Total U.S. resident population was 258.4 million at the end of fiscal year 1993.
\2\Data on the U.S. poor population can be found in appendix J, table 3.
\3\Data on the U.S. pretransfer poor population can be found in appendix J, table 15, and previous editions of
  the Green Book. ``Pretransfer'' is defined as after social insurance income (including Social Security) but
  before receipt of any means-tested transfers.
NA--not available.

Note: Puerto Rico not included in table.

    Table 18-10 shows the number of people (in thousands) who
received food stamp benefits in each State, including the
District of Columbia, Puerto Rico, and the territories, for
selected fiscal years between 1975 and 1993. The number of
recipients varies greatly by State; in 1993, the number of
beneficiaries ranged from 13,000 to 18,000 in the territories
and 34,000 in Wyoming to 2.9 million in California. In nearly
all States, there was a significant increase between 1975 and
1993. This is reflected in the total number of enrollees, which
increased from 17.4 million persons (plus 1.8 million in Puerto
Rico) in 1975, to 27 million people (plus 1.4 million in Puerto
Rico) in 1993.\16\
---------------------------------------------------------------------------
    \16\The 17.4 million person enrollment for food stamps in 1975
differs from the 16.3 million person participation level noted in table
9 because it represents year-end enrollment as opposed to annual
average participation. The same is true for 1979, for which table 10
shows enrollment of 17.1 million persons (excluding Puerto Rico), and
table 9 shows 15.9 million persons. State-by-State participation for
1975 and 1979 is not available on an annual average basis.
---------------------------------------------------------------------------


                 TABLE 18-10.--FOOD STAMP RECIPIENTS, BY STATE: SELECTED YEARS, 1975-93
                                             [Thousands of persons]
----------------------------------------------------------------------------------------------------------------
                                                               Fiscal years
          State          ---------------------------------------------------------------------------------------
                           1975\1\    1979\2\    1985\3\    1989\3\    1990\3\    1991\3\    1992\3\    1992\3\
----------------------------------------------------------------------------------------------------------------
Alabama.................        393        525        588        436        449        504        550        560
Alaska..................         12         25         22         26         25         30         38         43
Arizona.................        166        129        206        264        317        388        457        489
Arkansas................        268        277        253        227        235        258        277        285
California..............      1,517      1,334      1,615      1,773      1,936      2,212      2,558      2,866

Colorado................        162        145        170        211        221        241        260        273
Connecticut.............        189        155        145        114        133        171        202        215
Delaware................         39         45         40         30         33         41         51         58
District of Columbia....        112        100         72         58         62         72         82         87
Florida.................        767        828        630        668        781      1,021      1,404      1,500

Georgia.................        569        559        567        485        536        648        751        807
Hawaii..................         84         96         99         78         77         83         94        103
Idaho...................         39         47         59         61         59         65         72         79
Illinois................        948        837      1,110        990      1,013      1,096      1,156      1,178
Indiana.................        255        275        406        285        311        375        448        497

Iowa....................        118        117        203        168        170        180        192        196
Kansas..................         63         73        119        128        142        156        175        188
Kentucky................        449        405        560        447        458        496        529        530
Louisiana...............        502        523        644        725        727        742        779        779
Maine...................        151        121        114         84         94        116        133        138

Maryland................        273        299        291        249        254        304        343        375
Massachusetts...........        560        429        337        314        347        397        429        443
Michigan................        685        706        985        874        917        978        994      1,022
Minnesota...............        191        143        228        245        263        286        309        317
Mississippi.............        390        452        495        493        499        520        536        537

Missouri................        299        280        362        404        431        490        549        591
Montana.................         38         33         58         56         57         61         66         70
Nebraska................         50         55         94         92         95         99        107        113
Nevada..................         34         27         32         41         50         63         80         93
New Hampshire...........         66         44         28         22         31         47         58         60

New Jersey..............        565        524        464        353        381        441        495        531
New Mexico..............        154        159        157        151        157        188        221        244
New York................      1,398      1,704      1,834      1,463      1,546      1,717      1,885      2,045
North Carolina..........        537        517        474        390        419        517        597        627
North Dakota............         19         20         33         39         39         41         46         48

Ohio....................        924        760      1,133      1,068      1,078      1,171      1,251      1,269
Oklahoma................        184        184        263        261        267        296        346        370
Oregon..................        208        160        228        213        216        240        265        283
Pennsylvania............        893        923      1,032        916        954      1,052      1,137      1,186
Rhode Island............        104         80         69         57         64         78         87         92

South Carolina..........        421        369        373        272        299        329        369        394
South Dakota............         31         37         48         50         50         52         55         56
Tennessee...............        435        531        518        500        527        608        702        774
Texas...................      1,085      1,027      1,263      1,636      1,880      2,155      2,454      2,659
Utah....................         50         44         75         95         99        110        123        133

Vermont.................         46         40         44         34         38         47         54         58
Virginia................        293        320        360        333        346        414        495        535
Washington..............        239        205        281        283        337        385        432        462
West Virginia...........        204        182        278        259        262        281        310        322
Wisconsin...............        163        171        363        291        286        294        334        337

Wyoming.................         11         11         27         27         28         31         33         34
Guam....................         21         18         20         13         12         11         20         13
Northern Marianas.......         NA         NA          4          4          4          2          2          3
Puerto Rico.............      1,800      1,822      1,480      1,460      1,480      1,490      1,480      1,440
Virgin Islands..........         25         34         32         16         18         15         16         18
                         ---------------------------------------------------------------------------------------
      Total.............     19,199     18,926     21,385     20,232     21,510     24,105     26,888     28,426
----------------------------------------------------------------------------------------------------------------
\1\Yearend participation, July 1975. Total does not match totals in other tables, which are annual average
  participation.
\2\Yearend participation, September 1979. Total does not match totals in other tables, which are annual average
  participation. During fiscal year 1979, and into 1980, participation increases were largely due to the
  elimination of the food stamp purchase requirement. Figures for Alabama and Mississippi are estimates.
\3\Annual average participation.

Source: U.S. Department of Agriculture, Food and Nutrition Service.

                              LEGISLATION

    In the early 1980s, Congress enacted major revisions to the
food stamp program to hold down costs and tighten
administrative rules. The Omnibus Budget Reconciliation Act of
1981, the Agriculture and Food Act of 1981, and the Omnibus
Budget Reconciliation Act of 1982 all contained amendments that
the Congressional Budget Office has estimated held food stamp
spending for fiscal years 1982 through 1985 nearly $7 billion
(13 percent) below what would have been spent under pre-1981
law. These laws delayed various inflation indexing adjustments,
reduced the maximum benefit guarantee by 1 percent (restored in
1984), established income eligibility ceilings at 130 percent
of the Federal poverty levels, initiated prorating of first-
month benefits, replaced the food stamp program in Puerto Rico
with a nutrition assistance block grant, reduced benefits for
those with earnings and high shelter expenses, ended
eligibility for most postsecondary students and strikers, and
raised fiscal penalties for States with high rates of erroneous
benefit and eligibility determinations.
    In 1985, the Food Security Act (P.L. 99-198) reauthorized
food stamp appropriations through fiscal year 1990 and reversed
the earlier trend, significantly liberalizing food stamp rules.
Major new initiatives included: a requirement for States to
implement employment and training programs for food stamp
recipients, automatic food stamp eligibility for AFDC and SSI
recipients, and a prohibition on collection of sales taxes on
food stamp purchases. Benefits were raised for some disabled
and those with earnings, high shelter costs, and dependent care
costs. Puerto Rico's nutrition assistance block grant was
increased. Eligibility standards were liberalized, primarily by
increasing and easing limits on assets. This was followed by
several laws in 1986 and 1987 that opened up access to and
increased benefits for the homeless, liberalized treatment of
student aid, energy assistance, and income received from
employment programs for the elderly and charitable
organizations, further added to benefits for those with high
shelter costs, and allowed Washington State to operate a
special AFDC/food stamp demonstration project (followed by
similar authorization for Minnesota in 1989).
    Legislation expanding eligibility and benefits continued
into 1988 and 1989. The Hunger Prevention Act of 1988 (P.L.
100-435) increased food stamp benefits across the board,
liberalized several eligibility and benefit rules, eased
program access and administrative rules, and restructured the
employment and training program and quality control system. The
across-the-board benefit increase in maximum benefits (above
normal inflation adjustments) called for by the act was 0.65
percent in fiscal year 1989, 2.05 percent in fiscal year 1990,
and 3 percent in later years. Eligibility and benefit
liberalizations included higher benefits for those with
dependent care expenses, extension of liberal treatment for
disabled applicants and recipients to new categories of
disability, addition of a new income disregard for earned
income tax credits, and liberalized treatment for farm
households. Major provisions pertaining to program access and
administration authorized 50-percent Federal cost sharing for
State-option outreach activities, required coordination with
cash welfare program application procedures, loosened rules
governing monthly reporting and retrospective budgeting,
allowed training of community volunteers to help screen
applicants, and required, in some instances, issuance of the
first 2 months' worth of benefits in a single allotment.
Employment and training rules were revised by allowing some
expansion in the types of activities supported (e.g., basic
skills education), requiring increased support for
participants' dependent care expenses, and mandating new
performance standards for States. Finally, the food stamp
quality control system was completely revamped to substantially
reduce fiscal sanctions on States for erroneous benefit
determinations, retroactively to fiscal year 1986.
    The 1990 Food, Agriculture, Conservation, and Trade Act
(P.L. 101-624) reauthorized food stamp appropriations through
fiscal year 1995. Although early versions of this act would
have significantly liberalized food stamp eligibility and
benefit rules, budget constraints dictated minimal expansions:
limited revisions for postsecondary students, forgiveness of
most pre-1986 quality control fiscal sanctions on States, a few
changes in administrative rules to open up program access and
strengthen penalties for trafficking, and new pilot projects
and study commissions for welfare program coordination. In
addition, other laws eliminated a special requirement for
single food stamp/SSI applications for those about to be
discharged from institutions and barred the food stamp program
from counting (as a liquid asset) lump-sum earned income tax
credit payments.
    Most recently, the Mickey Leland Childhood Hunger Relief
Act (incorporated in the 1993 Omnibus Budget Reconciliation
Act, P.L. 103-66) increased food stamp benefits and eased
eligibility rules by: increasing and then removing the limit on
special benefit adjustments (deductions) for households with
very high shelter expenses, ending a practice of reducing
benefits when there are short ``procedural'' breaks in
enrollment, disregarding child support payments as income to
the payor, increasing the degree to which vehicles are
disregarded as assets in judging eligibility, revising the
definition of a food stamp household to allow more persons who
live together to apply separately, increasing the degree to
which dependent care expense deductions can be claimed,
expanding the degree to which Earned Income Tax Credits are
disregarded as assets and State/local general assistance is
disregarded as income, and boosting Puerto Rico's block grant.
The Act also lowered the Federal share of some State
administrative expenses (to 50 percent), reduced quality
control fiscal penalties on States with high rates of erroneous
benefit and eligibility determinations, and liberalized the
appeals process for those penalties. Finally, it expanded
support for employment and training programs for food stamp
recipients, added a new method for collecting claims against
recipients, and increased penalties related to trafficking in
food stamps. The net cost of the 1993 amendments was estimated
at $2.5 billion over fiscal years 1994-98.

                             TABLE 18-11.--HISTORICAL FOOD STAMP STATISTICS
----------------------------------------------------------------------------------------------------------------
                                    Total Federal spending                     Average monthly
                                       (in millions)\1\        Average      benefits (per person)     4-person
                                   ------------------------    monthly    ------------------------    maximum
            Fiscal year                          Constant   participation               Constant      monthly
                                     Current      (1993)     (in millions   Current      (1993)     allotment\2\
                                     dollars    dollars\3\   of persons)    dollars    dollars\3\
----------------------------------------------------------------------------------------------------------------
1972\4\...........................     $1,871      $6,242          11.1       $13.50      $45.00          $108
1973..............................      2,211       6,865          12.2        14.60       45.00           112
1974..............................      2,843       7,370          12.9        17.60       45.20           116
1975\5\...........................      4,624      10,922          17.1        21.40       50.10           150
1976..............................      5,692      12,718          18.5        23.90       52.80           162
Transition quarter\6\.............      1,367       3,000          17.3        24.40       52.90           166
1977..............................      5,469      11,707          17.1        24.70       52.40           166
1978..............................      5,573      10,947          16.0        26.80       52.00           170
1979\7\...........................      6,995      12,326          17.7        30.60       53.20           182
1980..............................      9,188      14,883          21.1        34.40       55.40           204
1981..............................     11,308      16,824          22.4        39.50       58.50           209
1982\8\...........................     11,117      15,947          22.0        39.20       56.10           233
1983\8\...........................     12,733      17,985          23.2        43.00       60.60           253
1984\8\...........................     12,470      16,989          22.4        42.70       58.10           253
1985\8\...........................     12,599      16,893          21.4        45.00       60.30           264
1986\8\...........................     12,528      16,412          20.9        45.50       59.60           268
1987\8\...........................     12,539      15,710          20.6        45.80       57.30           271
1988\8\...........................     13,289      16,106          20.1        49.80       60.30           290
1989\8\...........................     13,815      15,664          20.2        51.90       58.60           300
1990\8\...........................     16,512      17,739          21.5        59.00       63.10           331
1991\8\...........................     19,765      20,589          24.1        63.90       65.80           352
1992\8\...........................     23,539      24,027          26.9        68.50       69.90           370
1993\8\...........................     24,806      24,806          28.4        68.00       68.00           375
----------------------------------------------------------------------------------------------------------------
\1\Spending for benefits and administration, including Puerto Rico.
\2\For the 48 contiguous States and the District of Columbia, as in effect at the beginning of the fiscal year
  in current dollars.
\3\Constant dollar adjustments were made using the overall Consumer Price Index for All Urban Consumers (CPI-U)
  for administrative costs and the CPI-U ``food at home'' component for benefits.
\4\The first fiscal year in which benefit and eligibility rules were, by law, nationally uniform and indexed for
  inflation.
\5\The first fiscal year in which food stamps were available nationwide.
\6\July through September 1976.
\7\The fiscal year in which the food stamp purchase requirement was eliminated, on a phased in basis.
\8\Includes funding for Puerto Rico's nutrition assistance grant; earlier years include funding for Puerto Rico
  under the regular food stamp program. Participation figures include enrollment in Puerto Rico (averaging 1.4
  to 1.5 million persons a month under the nutrition assistance grant and higher figures in earlier years).
  Average benefit figures do not reflect somewhat lower benefits in Puerto Rico under its nutrition assistance
  grant.

Note: Figures in this table have been revised from similar tables presented in earlier versions of this print to
  reflect more recent spending information and more precise inflation adjustments for constant dollar amounts.

Source: Compiled by the Congressional Research Service.

                              MEDICAID\17\

    Medicaid, authorized under title XIX of the Social Security
Act, is a Federal-State matching entitlement program providing
medical assistance for low-income persons who are aged, blind,
disabled, members of families with dependent children and
certain other pregnant women and children. Within Federal
guidelines, each State designs and administers its own program.
Thus there is substantial variation among the States in terms
of persons covered, types and scope of benefits offered, and
amounts of payments for services.
---------------------------------------------------------------------------
    \17\For further information on the Medicaid program see: U.S.
Congress, House Committee on Energy and Commerce, Medicaid Source Book:
Background Data and Analysis (A 1993 Update), Energy and Commerce
Committee Print 103-A. U.S. Govt. Print. Off. January 1993.
---------------------------------------------------------------------------

    Medicaid eligibility is generally linked to eligibility
under programs within the jurisdiction of the Committee on Ways
and Means, namely AFDC and SSI. Further, some poor aged persons
are covered under both the Medicare and Medicaid programs.

                              ELIGIBILITY

    Eligibility for Medicaid has traditionally been linked to
actual or potential receipt of cash assistance under the Aid to
Families with Dependent Children (AFDC) or Supplemental
Security Income (SSI) programs. Legislation in the last decade
has gradually extended coverage to low-income pregnant women
and children who have no ties to the welfare system, and has
provided partial coverage for new groups of low-income Medicare
beneficiaries.
    Medicaid is available to two broad classes of eligible
persons: the ``categorically needy'' and the ``medically
needy.'' The two terms once distinguished between welfare-
related beneficiaries and those qualifying only under special
Medicaid rules. However, nonwelfare groups have been added to
the ``categorically needy'' list over the years. As a result,
the terms are no longer especially helpful in sorting out the
various populations for whom mandatory or optional Medicaid
coverage has been made available, and some analysts believe
they should be abandoned. However, the distinction between the
categorically and medically needy is still an important one,
because the scope of covered services that States must provide
to the categorically needy is much broader than the minimum
scope of services for the medically needy.
    All States must cover certain mandatory groups of
categorically needy individuals.\18\ Coverage of additional
categorically needy groups is optional, as is coverage of the
medically needy. The following discussion describes the
mandatory and optional categorically eligible groups within
each of the two basic populations served by Medicaid: families
with children and the aged, blind, and disabled. The medically
needy are discussed separately at the end of this section.
---------------------------------------------------------------------------
    \18\Arizona does not operate a traditional Medicaid program. Since
1982 it has operated a federally assisted medical assistance program
for low-income persons under a demonstration waiver.
---------------------------------------------------------------------------

                         FAMILIES AND CHILDREN

AFDC-related groups

    Mandatory.--States must provide Medicaid to all persons
receiving cash assistance under AFDC, as well as to additional
AFDC-related groups who are not actually receiving cash
payments. These groups include: persons who do not receive a
payment because the amount would be less than $10; persons
whose payments are reduced to zero because of recovery of
previous overpayments; certain work supplementation
participants; certain children for whom adoption assistance
agreements are in effect or for whom foster care payments are
being made under title IV-E of the Social Security Act; and
persons ineligible for AFDC because of a requirement that may
not be imposed under Medicaid.
    States are required to continue Medicaid for specified
periods for certain families losing AFDC benefits after
receiving them in at least 3 of the preceding 6 months. If the
family loses AFDC benefits because of increased income from
earnings or hours of employment, Medicaid coverage must be
extended for 12 months. (During the second 6 months a premium
may be imposed, the scope of benefits may be limited, or
alternate delivery systems may be used.) If the family loses
AFDC because of increased child or spousal support, coverage
must be extended for 4 months. States are also required to
furnish Medicaid to certain two-parent families whose principal
earner is unemployed and who are not receiving cash assistance
because the State is one of those permitted (under the Family
Support Act of 1988) to set a time limit on AFDC coverage for
such families.
    Optional.--States are permitted, but not required, to
provide coverage to additional AFDC-related groups. The most
important of these are the ``Ribicoff children,'' whose income
and resources are within AFDC standards but who do not meet the
definition of ``dependent child.'' States may cover these
children up to a maximum age of 18, 19, 20, or 21, at the
State's option, and may limit coverage to reasonable subgroups,
such as children in privately subsidized foster care, or those
who live in certain institutional settings. States may also
furnish Medicaid to persons who would receive AFDC if the
State's AFDC program were as broad as permitted under Federal
law.

Non-AFDC pregnant women and children

    Beginning in 1986, Congress has extended Medicaid to groups
of pregnant women and children who are defined in terms of
family income and resources, rather than in terms of their ties
to the AFDC program.
    Mandatory.--States are required to cover pregnant women and
children under age 6 with family incomes below 133 percent of
the Federal poverty income guidelines. (The State may impose a
resource standard that is no more restrictive than that for
SSI, in the case of pregnant women, or AFDC, in the case of
children.) Coverage for pregnant women is limited to services
related to the pregnancy or complications of the pregnancy;
children receive full Medicaid coverage.
    Since July 1, 1991, States have been required to cover all
children who are under age 19, who were born after September
30, 1983, and whose family income is below 100 percent of the
Federal poverty level. (Coverage of such children through age 7
has been optional since OBRA 1987.) The 1983 start date means
that coverage of 18-year-olds will take effect during fiscal
year 2002.
    Optional.--States are permitted, but not required, to cover
pregnant women and infants under one year old with incomes
below a State-established maximum that is above 133 percent of
the poverty level but no more than 185 percent. As of July
1993, 34 States had made use of this option; 25 had set their
income limits at the maximum of 185 percent.

                       AGED AND DISABLED PERSONS

SSI-related groups

    Mandatory.--States are generally required to cover
recipients of SSI. However, States may use more restrictive
eligibility standards for Medicaid than those for SSI if they
were using those standards on January 1, 1972 (before the
implementation of SSI). States that have chosen to apply at
least one more restrictive standard are known as ``section
209(b)'' States, after the section of the Social Security
Amendments of 1972 (Public Law 92-603) that established the
option. These States may vary in their definition of
disability, or in their standards related to income or
resources. There are 12 section 209(b) States:

Connecticut          Minnesota             North Dakota
Hawaii               Missouri              Ohio
Illinois             New Hampshire         Oklahoma
Indiana              North Carolina        Virginia

    States using more restrictive income standards must allow
applicants to deduct medical expenses from income (not
including SSI or State supplemental payments, SSP) in
determining eligibility. This process is known as
``spenddown.'' For example, if an applicant has a monthly
income of $400 (not including any SSI or SSP) and the State's
maximum allowable income is $350, the applicant would be
required to incur $50 in medical expenses before qualifying for
Medicaid. As will be discussed below, the spenddown process is
also used in establishing medically needy eligibility.
    States must continue Medicaid coverage for several defined
groups of individuals who have lost SSI or SSP eligibility. The
``qualified severely impaired'' are disabled persons who have
returned to work and have lost eligibility as a result of
employment earnings, but still have the condition that
originally rendered them disabled and meet all non-disability
criteria for SSI except income. Medicaid must be continued if
such an individual needs continued medical assistance to
continue employment and the individual's earnings are
insufficient to provide the equivalent of SSI, Medicaid, and
attendant care benefits the individual would qualify for in the
absence of earnings. States must also continue Medicaid
coverage for persons who were once eligible for both SSI and
Social Security payments and who lose SSI because of a cost of
living adjustment (COLA) in their Social Security benefits.
Similar Medicaid continuations have been provided for certain
other persons who lose SSI as a result of eligibility for or
increases in Social Security or veterans' benefits. Finally,
States must continue Medicaid for certain SSI-related groups
who received benefits in 1973, including ``essential persons''
(persons who care for a disabled individual).
    Optional.--States are permitted to provide Medicaid to
individuals who are not receiving SSI but are receiving State-
only supplementary cash payments.

Qualified Medicare beneficiaries and related groups

    Mandatory.--Effective January 1, 1991, States must provide
limited Medicaid coverage for ``qualified Medicare
beneficiaries'' (QMBs). These are aged and disabled persons who
are receiving Medicare, whose income is below 100 percent of
the Federal poverty level, and whose resources do not exceed
twice the allowable amount under SSI. States must pay Medicare
part B premiums (and, if applicable, part A premiums) for QMBs,
along with required Medicare coinsurance and deductible
amounts.
    Effective January 1, 1993, all States must pay part B
premiums (but not part A premiums or part A or B coinsurance
and deductibles) for beneficiaries who would be QMBs except
that their incomes are between 100 percent and 110 percent of
the poverty level; the upper limit rises to 120 percent on
January 1, 1995.
    States are also required to pay part A premiums, but no
other expenses, for ``qualified disabled and working
individuals.'' These are persons who formerly received Social
Security disability benefits and hence Medicare, have lost
eligibility for both programs, but are permitted under Medicare
law to continue to receive Medicare in return for payment of
the part A premium. Medicaid must pay this premium on behalf of
such individuals who have incomes below 200 percent of poverty
and resources no greater than twice the SSI standard.
    Optional.--States are permitted to provide full Medicaid
benefits, rather than just Medicare premiums and cost-sharing,
to QMBs who meet a State-established income standard that is no
higher than 100 percent of the Federal poverty level.

Institutionalized persons and related groups (all optional)

    States may provide Medicaid to certain otherwise ineligible
groups of persons who are in nursing facilities or other
institutions, or who would require institutional care if they
were not receiving alternative services at home or in the
community.
    States may establish a special income standard for
institutionalized persons, not to exceed 300 percent of the
maximum SSI benefits payable to a person who is living at home
and has no other resources. States may also provide Medicaid to
persons who would qualify for SSI but for the fact that they
are in an institution.
    A State may obtain a waiver under section 2176 of OBRA 1981
to provide home and community-based services to a defined group
of individuals who would otherwise require institutional care.
Persons served under such a waiver may receive Medicaid
coverage if they would be eligible if in an institution. Such
individuals may also be covered in a State that terminates its
waiver program in order to take advantage of a new, no-waiver
home and community-based services option created by OBRA 1990.
    A State may also provide Medicaid to several other classes
of persons who need the level of care provided by an
institution and would be eligible if they were in an
institution. These include children who are being cared for at
home, persons of any age who are ventilator-dependent, and
persons receiving hospice benefits in lieu of institutional
services.

                   THE MEDICALLY NEEDY (ALL OPTIONAL)

    Forty-one States and other jurisdictions provide Medicaid
to at least some groups of ``medically needy'' persons. These
are persons who meet the nonfinancial standards for inclusion
in one of the groups covered under Medicaid, but who do not
meet the applicable income or resource requirements for
categorically needy eligibility. The State may establish higher
income or resource standards for the medically needy. In
addition, individuals may spend down to the medically needy
standard by incurring medical expenses, in the same way that
SSI recipients in section 209(b) States may spend down to
Medicaid eligibility. For the medically needy, spenddown may
involve the reduction of assets, as well as of income.
    The State may set its separate medically needy income
standard for a family of a given size at any level up to 133\1/
3\ percent of the maximum payment for a similar family under
the State's AFDC program. States may limit the groups of
individuals who may receive medically needy coverage. If the
State provides any medically needy program, however, it must
include all children under 18 who would qualify under one of
the mandatory categorically needy groups, and all pregnant
women who would qualify under either a mandatory or optional
group, if their income or resources were lower.
    As of October 1, 1993, the following States covered some
groups of the medically needy:

American Samoa         Maryland                    Pennsylvania
Arkansas               Massachusetts               Puerto Rico
California             Michigan                    Rhode Island
Connecticut            Minnesota                   Tennessee
District of Columbia   Montana                     Texas
Florida                Nebraska                    Utah
Georgia                New Hampshire               Vermont
Hawaii                 New Jersey                  Virgin Islands
Illinois               New York                    Virginia
Iowa                   North Carolina              Washington
Kansas                 North Dakota                West Virginia
Kentucky               Northern Mariana Islands    Wisconsin
Louisiana              Oklahoma
Maine                  Oregon


                         MEDICAID AND THE POOR

    In 1992, Medicaid covered 11.2 percent of the total U.S.
population (excluding institutionalized persons) and 47 percent
of those with incomes below the Federal poverty level. Because
categorical eligibility requirements for children are less
restrictive than those for adults, poor children are much more
likely to receive coverage. Table 18-12 shows Medicaid
eligibility by age and income status in 1992, as reported in
the March 1993 Current Population Survey (CPS) conducted by the
Census Bureau. Note that persons shown as receiving Medicaid
may have had other health coverage as well. Nearly all the
elderly, for example, have Medicare and/or private coverage.
    Children under age 6 with family incomes below poverty are
most likely to be covered. Coverage rates drop steadily with
age and income until age 65.

 TABLE 18-12.--MEDICAID COVERAGE BY AGE AND INCOME STATUS, 1992
                     [All numbers are in thousands]
------------------------------------------------------------------------
                                                               Percent
               Age                   Medicaid      Total         with
                                                               Medicaid
------------------------------------------------------------------------
Poor:
    0 to 5.......................        4,458        6,046         73.7
    6 to 18......................        5,419        9,220         58.8
    19 to 44.....................        4,988       13,201         37.8
    45 to 64.....................        1,349        4,431         30.4
    65 and over..................        1,205        3,983        30.2
                                  --------------------------------------
      Total......................       17,419       36,880         47.2
                                  ======================================
Family income between 100 and 133
 percent of poverty:
    0 to 5.......................          726        1,693         42.9
    6 to 18......................          865        3,246         26.6
    19 to 44.....................          968        5,708         17.0
    45 to 64.....................          412        2,176         18.9
    65 and over..................          564        3,004         18.8
                                  --------------------------------------
      Total......................        3,534       15,827         22.3
                                  ======================================
Family income between 133 percent
 and 185 percent of poverty:
    0 to 5.......................          737        2,690         27.4
    6 to 18......................          706        5,251         13.4
    19 to 44.....................          891        9,847          9.0
    45 to 64.....................          293        3,619          8.1
    65 and over..................          426        4,644          9.2
                                  --------------------------------------
      Total......................        3,053       26,051         11.7
                                  ======================================
Family income greater than 185
 percent of poverty:
    0 to 5.......................          888       13,079          6.8
    6 to 18......................          966       28,879          3.3
    19 to 44.....................        1,363       74,489          1.8
    45 to 64.....................          468       39,524          1.2
    65 and over..................          720       19,240          3.7
                                  --------------------------------------
      Total......................        4,405      175,211          2.5
                                  ======================================
All individuals:
    0 to 5.......................        6,809       23,508         29.0
    6 to 18......................        7,956       46,596         17.1
    19 to 44.....................        8,210      103,245          8.0
    45 to 64.....................        2,522       49,750          5.1
    65 and over..................        2,914       30,870          9.4
                                  --------------------------------------
      Total......................       28,411      253,969         11.2
------------------------------------------------------------------------
Source: Current Population Survey (CPS), Annual March Income Supplement.
  Table prepared by CRS. The table excludes persons in institutions and
  approximately 300,000 children under age 15 whose income was not
  reported. The Medicaid counts are lower than those reported by HCFA,
  because some beneficiaries fail to report their coverage on the CPS.
  Some may also underreport their income. In addition, the income used
  to determine poverty status in this table includes cash welfare, while
  Medicaid eligibility is based on income prior to the receipt of
  welfare benefits.

                                SERVICES

    States are required to offer the following services to
categorically needy recipients under their Medicaid programs:
inpatient and outpatient hospital services; laboratory and X-
ray services; nursing facility (NF) services for those over age
21; home health services for those entitled to NF care; early
and periodic screening, diagnosis, and treatment (EPSDT) for
those under age 21; family planning services and supplies;
physicians' services, and nurse-midwife services. OBRA 1989
required States to provide ambulatory services offered by
federally qualified health centers, effective April 1, 1990,
and services furnished by certified family or pediatric nurse
practitioners, effective July 1, 1990. States may also provide
additional medical services such as drugs, eyeglasses,
inpatient psychiatric care for individuals under age 21 or over
65 (see table 25). OBRA 1990 added two new optional services:
home and community-based services for the functionally disabled
elderly and community supported living arrangement services for
the developmentally disabled. Total expenditures under these
services are capped. States are permitted to establish
limitations on the amount of care provided under a service
category (such as limiting the number of days of covered
hospital care or number of physicians' visits). Certain
services to children may not be limited.
    Federal law establishes the following requirements for
coverage of the medically needy: (1) if a State provides
medically needy coverage to any group it must provide
ambulatory services to children and prenatal and delivery
services for pregnant women; (2) if a State provides
institutional services for any medically needy group it must
also provide ambulatory services for this population group; and
(3) if the State provides medically needy coverage for persons
in intermediate care facilities for the mentally retarded (ICF/
MRs) or institutions for mental diseases, it must offer to all
groups covered in its medically needy program the same mix of
institutional and noninstitutional services as required under
prior law (that is, either all of the mandatory services or
alternatively the care and services listed in 7 of the 25
paragraphs in the law defining covered services).

                               FINANCING

    The Federal Government helps States share in the cost of
Medicaid services by means of a variable matching formula which
is adjusted annually. The matching rate, which is inversely
related to a State's per capita income, can range from 50
percent to 83 percent though currently the highest rate is
78.85 percent. Federal matching for the territories is set at
50 percent with a maximum dollar limit placed on the amount
each territory can receive. The Federal share of administrative
costs is 50 percent for all States except for certain items
where the authorized rate is higher.

                          REIMBURSEMENT POLICY

    States establish their own service reimbursement policies
within general Federal guidelines. OBRA 1989 codified the
regulatory requirement that payments must be sufficient to
enlist enough providers so that covered services will be
available to Medicaid beneficiaries at least to the extent they
are available to the general population in a geographic area.
Beginning April 1, 1990, States are required to submit to the
Secretary their payment rates for pediatric and obstetrical
services along with additional data that will assist the
Secretary in evaluating the State's compliance with this
requirement.
    Until 1980, States were required to follow Medicare rules
in paying for institutional services. The Boren amendment,
enacted with respect to nursing homes in 1980 and extended to
hospitals in 1981, authorized States to establish their own
payment systems, as long as rates were reasonable and adequate
to meet the costs of efficiently and economically operated
facilities. Rates for hospitals must also be sufficient to
assure reasonable access to inpatient services of adequate
quality. A Supreme Court ruling in 1990, Wilder v. Virginia
Hospital Association, affirmed that hospitals have the right
under this rule to seek Federal court review of State
reimbursement levels. Suits alleging inadequate hospital and
nursing home payment have been filed in a number of States.
    In addition to meeting general adequacy tests, State
hospital reimbursement systems must provide for additional
payments to facilities serving a disproportionate share of low-
income patients. Unlike the comparable Medicare payments,
Medicaid payments must follow a formula that considers a
hospital's charity patients as well as its Medicaid caseload.
    OBRA 1990 established new rules for Medicaid reimbursement
of prescription drugs. The law denies Federal matching funds
for drugs manufactured by a firm that has not agreed to provide
rebates. Under amendments made by the Veterans Health Care Act
of 1992, a manufacturer is not deemed to have a rebate
agreement unless the manufacturer has entered into a master
agreement with the Secretary of Veterans Affairs. Rebate
amounts vary depending on the nature of the drug. The minimum
rebate is 11 percent of the average price. OBRA 1990
established a 4-year moratorium on reductions in most payment
rates for pharmacists.
    Practitioners and providers are required to accept payments
under the program as payment in full for covered services
except where nominal cost-sharing charges may be required.
States may generally impose such charges with certain
exceptions. They are precluded from imposing such charges on
services for children under 18, services related to pregnancy,
family planning or emergency services, HMO services for the
categorically needy, and services provided to NF inpatients who
are required to spend all of their income for medical care
except for a personal needs allowance.

                             ADMINISTRATION

    Medicaid is a State-administered program. At the Federal
level, the Health Care Financing Administration (HCFA) of the
Department of Health and Human Services is responsible for
overseeing State operations.
    Federal law requires that a single State agency be charged
with administration of the Medicaid program. Generally, that
agency is either the State welfare agency, the State health
agency, or the umbrella human resources agency. The single
State agency may contract with other State entities to conduct
some program functions. Further, States may process claims for
reimbursement themselves or contract with fiscal agents or
health insuring agencies to process these claims.

                       RECENT LEGISLATIVE CHANGES

    The following is a summary of the major Medicaid changes
enacted as part of the Omnibus Budget Reconciliation Act of
1990 (OBRA 1990), Public Law 101-508:
    1. Reimbursement for prescribed drugs.--The law requires
manufacturers of prescription drugs to provide rebates to State
Medicaid programs. States will be required to cover all the
drugs manufactured by a firm entering into a rebate agreement.
The minimum rebate is 10 percent of the average manufacturer
price for the product. Beginning in 1993, States are required
to have prospective (i.e., point-of-sale) and retrospective
drug utilization review (DUR) programs, to assure that
prescriptions are appropriate and medically necessary. Until
the end of 1993, enhanced Federal matching payments are
provided for State administrative costs related to the rebate
and DUR programs. The law establishes a 4-year moratorium on
reductions in most payment rates for pharmacists.
    2. Required payment of premiums and cost-sharing for
enrollment under group health plans where cost-effective.--
Effective January 1, 1991, the law requires States to pay
premiums for group health plans for which Medicaid
beneficiaries are eligible, when it is cost-effective to do so.
Guidelines for determining cost-effectiveness are to be issued
by the Secretary. States will pay any cost-sharing required by
a plan and continue to furnish any Medicaid benefits not
covered under the plan. Providers under group health plans will
be required to accept plan payment as payment in full for
Medicaid enrollees.
    3. Protection of low-income Medicare beneficiaries.--The
law accelerates phase-in of the requirement that States pay
Medicare premiums and cost-sharing for QMBs, Medicare
beneficiaries with incomes below 100 percent of the Federal
poverty level; for all but 5 States, the requirement was
effective January 1, 1991. All States must pay part B premiums
(but not part A premiums or cost-sharing) for beneficiaries
with incomes below 110 percent of the poverty level in 1993 and
below 120 percent in 1995.
    4. Child health provisions.--Effective July 1, 1991, all
States are required to cover children under age 19 who were
born after September 30, 1983, and whose family income is below
100 percent of the Federal poverty level. States are required
to accept Medicaid applications for mothers and children at
locations other than welfare offices, and are required to
continue benefits for pregnant women until 2 months after the
end of the pregnancy, and for infants through the first year of
life. States are required to make additional payments for
outlier cases and are prohibited from imposing durational
limits on coverage for patients who are under age 1 in any
hospital or under age 6 in a disproportionate share hospital.
    5. Home and community-based care as optional service.--The
law permits States to provide home and community-based services
to functionally disabled Medicaid beneficiaries aged 65 or
over, effective the later of July 1, 1991, or 30 days after the
publication of interim rules. States will be permitted to limit
eligibility for the services without waivers and thus to
provide the services without meeting cost-effectiveness tests.
Federal matching payments cannot exceed 50 percent of what it
would have cost to provide Medicare nursing facility care to
the same group of beneficiaries. Total Federal expenditures
will be limited to $580 million over the period fiscal years
1991 to 1995.
    6. Community supported living arrangements.--The law
permits between two and eight States to provide community
supported living arrangement services to developmentally
disabled individuals who live with their families or in small
community residential settings, effective the later of July 1,
1991, or 30 days after the publication of interim rules.
Services will include personal assistance, training and
habilitation, and other services needed to help with activities
of daily living. Total Federal expenditures will be limited to
$100 million over the period fiscal years 1991 to 1995.
    7. Payments for COBRA continuation coverage.--The
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA,
Public Law 99-272) provides that employees or dependents
leaving an employee health insurance group in a firm with 20 or
more employees must be offered an opportunity to continue
buying insurance through the group for 18 to 36 months
(depending on the reason for leaving the group). OBRA 1990
permits State Medicaid programs to pay for COBRA continuation
coverage, when it is cost effective to do so, effective January
1, 1991. States may pay premiums for individuals with incomes
below 100 percent of poverty and resources less than twice the
SSI limit who are eligible for continuation coverage under a
group health plan offered by an employer with 75 or more
employees.
    8. Miscellaneous.--The law establishes demonstration
projects in three to four States to test the effect of
providing Medicaid to families with incomes below 150 percent
of the Federal poverty level that do not meet categorical
eligibility requirements, and projects in two States to provide
Medicaid coverage for early intervention services for HIV-
infected individuals who do not meet disability criteria. The
law also includes new measures to ensure the quality of
physician services under Medicaid, technical corrections in
nursing home reform provisions, and numerous other technical
and miscellaneous amendments.
    The following is a summary of the major changes enacted in
the Medicaid Voluntary Contribution and Provider-Specific Tax
Amendments of 1991, Public Law 102-234.
    1. Voluntary contributions and provider-specific taxes.--
The law caps Federal matching payments for State Medicaid
spending that is financed with revenues from provider donations
or taxes. Generally effective January 1, 1992, before the
Federal share is computed, a State's expenditures for Medicaid
are reduced by revenues received by a State or local government
from provider-related donations, and health care related taxes
that are not broad based. Broad based taxes are those that are
uniformly imposed on all providers in a class, or all business
in a class furnished by the providers. States with non-broad
based taxes in effect or approved as of November 22, 1991, are
permitted to continue them temporarily, but the taxes may not
be increased. States with voluntary contribution programs in
effect or reported as of September 30, 1991, for States' fiscal
year 1992, may continue them temporarily but may not increase
them. During fiscal year 1993-95, Federal matching funds for
revenue from voluntary contributions, provider specific taxes,
and broad based taxes will be limited to the greater of 25
percent of the State share of Medicaid expenditures or the
amount of donations and taxes collected in the State in fiscal
year 1992.
    Federal matching funds are allowable for certain donations.
These are bona fide provider donations that are not related to
Medicaid payments to the provider, and donations in the form of
payment for outstationing Medicaid eligibility workers.
Beginning in fiscal year 1993, the latter type of donations
will be limited to 10 percent of a State's Medicaid
administrative costs.
    2. Payments for disproportionate share hospitals.--The law
places an aggregate national cap of 12 percent of Medicaid
expenditures on payment adjustments for disproportionate share
hospitals (DSH). Beginning with fiscal year 1993, a national
DSH payment limit is projected, and each State receives a DSH
allotment for the fiscal year; Federal matching payments will
be denied for DSH payments that exceed a State's annual
allotment. For the part of fiscal year 1992 beginning on or
after January 1, 1992, Federal matching payments will be made
only for DSH adjustments paid in accordance with a State plan
in effect or submitted by September 30, 1991, or November 26,
1991, if the State has used specific criteria to designate a
hospital as DSH. Higher payments are permitted if necessary to
meet the minimum adjustments required by Medicaid law.
    Two 1991 acts concern enrollment in two health maintenance
organizations. The law specifies that no more than 75 percent
of the enrollees of an HMO may be Medicaid or Medicare
beneficiaries. Public Law 102-276 authorized a waiver of this
requirement for the Dayton Area Health Plan. Public Law 102-317
authorized a similar waiver for the Tennessee Primary Care
Network.
    The following is a summary of major Medicaid changes
enacted in the Veterans Health Care Act of 1992, Public Law
102-585, pertaining to Medicaid reimbursement policies for
prescription drugs.
    1. Calculation of best price.--The law excludes certain
prices from calculation of best price (the lowest price
available from a manufacturer) for Medicaid drug rebates. The
law excludes the prices charged to the Indian Health Service,
the Department of Veterans Affairs, veterans' State homes, the
Department of Defense, the Public Health Service and certain
private and nonprofit hospitals, as well as any prices charged
under the Federal Supply Schedule of the General Services
Administration or under State pharmaceutical assistance
programs.
    2. Rebate amounts.--The law changes the minimum basic
rebates for brand name drugs to 15.7 percent of the average
manufacturer price (AMP) in calendar year 1993, 15.4 percent of
the AMP in 1994, 15.2 percent of the AMP in 1995, and 15.1
percent of the AMP thereafter. In each calendar year, the basic
rebate is the greater of the percentage stated, or the
difference between the AMP and the best price.
    The following is a summary of major Medicaid changes
enacted in the Omnibus Budget Reconciliation Act of 1993 (OBRA
93), Public Law 103-66.
    1. Medicaid Fraud Control Units.--The law changed the State
option to a requirement that each State operate a Medicaid
fraud and abuse control unit unless the State demonstrates that
effective operation of a unit would not be cost-effective and
that, in the absence of a unit, beneficiaries will be protected
from abuse and neglect.
    2. Prescription drug formularies.--States have been
prohibited from using drug formularies (lists of covered and
excluded drug products) and from imposing restrictions on new
drug products for 6 months after a drug is approved by the Food
and Drug Administration. Effective October 1, 1993, OBRA 93
allows States to use formularies to cover only the State's
designated drug(s) in a class of therapeutic alternatives and
impose certain requirements on prescriptions for new drugs.
    3. Asset and trust provisions.--Some individuals must spend
their assets down to a State-established level before Medicaid
pays for nursing facility and other medical care. To try to
ensure that these persons apply their assets to the cost of
their care and do not give them away in order to gain Medicaid
eligibility sooner than they otherwise would, Medicaid
prohibits persons from transferring assets for less than fair
market value.
    OBRA 93 amends Medicaid law to close ``loopholes'' that
allow individuals to shelter or divest assets in order to
become eligible for Medicaid-covered long-term care. States are
required to provide for a delay in Medicaid eligibility for
institutionalized persons or their spouses who dispose of
assets for less than fair market value. A transfer that
occurred during the 36-month period prior to an application for
coverage would trigger a period of ineligibility beginning with
the month the assets were transferred. Under the OBRA 93
amendments, the period of ineligibility is determined by
comparing the cost of care and the fair market value of the
assets transferred.
    The law requires that States seek recovery of Medicaid
expenditures from the estate of a deceased beneficiary who
received certain Medicaid benefits. Amounts paid by Medicaid
for nursing facility services, home and community-based care,
and related hospital and prescription drug services must be
recovered from the estates of individuals who were over age 55
when such services were received.
    OBRA 93 provides for exemptions to these asset transfer and
recovery provisions if application of the law would result in
``undue hardship'' according to criteria established by the
Secretary.
    4. Child support enforcement.--A child who is covered by
Medicaid may also be covered by private health insurance that
is carried by a noncustodial parent. To improve medical support
for children, Medicaid law is amended to mandate that States
have laws in effect to require the cooperation of employers and
insurers in obtaining parental coverage.
    5. Disproportionate share hospitals (DSH).--OBRA 93 law
prohibits States from designating a hospital as a DSH unless
Medicaid beneficiaries account for at least 1 percent of the
hospital's impatient days. In addition, the law requires that
DSH payments to a State or locally owned or operated facility
cannot exceed the costs the facility incurs in furnishing
inpatient or outpatient service to Medicaid beneficiaries or
uninsured patients. For this purpose, a facility's cost is net
of payments received from Medicaid (other than DSH payments)
and from uninsured individuals.
    6. Physician referral.--OBRA 93 limits Medicaid payments
for designated health services (including clinical laboratory,
physical and occupational therapy, radiology, or other
diagnostic services, home health and other services) if such
services are furnished upon referral from a physician who has a
specified financial relationship with the provider furnishing
the service.
    7. Childhood immunization.--OBRA 93 established a new
entitlement program under which States are entitled to receive
vaccines purchased by the Federal government for federally
eligible children up to age 18. Providers registered in a
State's immunization program are entitled to receive free
vaccines for children covered under the new law. Children
eligible to receive federally-purchased vaccines are Medicaid-
eligible, American Indian or Alaska Native, children whose
health insurance does not cover the cost of vaccines, and
children who receive immunization at federally qualified health
centers or rural health clinics.
    8. Tuberculosis-related services.--OBRA 93 permits States
to provide Medicaid coverage for outpatient tuberculosis-
related services to tuberculosis-infected individuals who meet
the income and resource limits that apply to disabled persons.

                              PROGRAM DATA

    Under current law, Federal Medicaid outlays are projected
to reach $96.2 billion in fiscal year 1995, a 12 percent
increase over the $85.8 billion projected for fiscal year 1994.
Medicaid program data are presented in the following tables 18-
13 to 18-24.

                            TABLE 18-13.--HISTORY OF MEDICAID PROGRAM COSTS
----------------------------------------------------------------------------------------------------------------
                                      Total                       Federal                       State
                          --------------------------------------------------------------------------------------
       Fiscal year           Dollars  (in    Percent      Dollars  (in    Percent      Dollars (in     Percent
                             millions)       increase      millions)      increase      millions)      increase
----------------------------------------------------------------------------------------------------------------
1966\1\..................           1,658  ...........             789  ...........             869  ...........
1967\1\..................           2,368         42.8           1,209         53.2           1,159         33.4
1968\1\..................           3,686         55.7           1,837         51.9           1,849         59.5
1969\1\..................           4,166         13.0           2,276         23.9           1,890          2.2
1970\1\..................           4,852         16.5           2,617         15.0           2,235         18.3

1971.....................           6,176         27.3           3,374         28.9           2,802         25.4
1972\2\..................           8,434         36.6           4,361         29.3           4,074         45.4
1973.....................           9,111          8.0           4,998         14.6           4,113          1.0
1974.....................          10,229         12.3           5,833         16.7           4,396          6.9
1975.....................          12,637         23.5           7,060         21.0           5,578         26.9

1976.....................          14,644         15.9           8,312         17.7           6,332         13.5
TQ\3\....................           4,106           NA           2,354           NA           1,752           NA
1977.....................          17,103      \4\16.8           9,713      \4\16.9           7,389      \4\16.7
1978.....................          18,949         10.8          10,680         10.0           8,269         11.9
1979.....................          21,755         14.8          12,267         14.9           9,489         14.8
1980.....................          25,781         18.5          14,550         18.6          11,231         18.4

1981.....................          30,377         17.8          17,074         17.3          13,303         18.4
1982.....................          32,446          6.8          17,514          2.6          14,931         12.2
1983.....................          34,956          7.7          18,985          8.4          15,971          7.0
1984.....................          37,569          7.5          20,061          5.7          17,508          9.6
1985\5\..................          40,917          8.9       \6\22,655         12.9       \6\18,262          4.3

1986.....................          44,851          9.6          24,995         10.3          19,856          8.7
1987.....................          49,344         10.0          27,435          9.8          21,909         10.3
1988.....................          54,116          9.7          30,462         11.0          23,654          8.0
1989.....................          61,246         13.2          34,604         13.6          26,642         12.6
1990.....................          72,492         18.4          41,103         18.8          31,389         17.8
1991.....................          91,519         26.2          52,532         27.8          38,987         24.2
1992.....................         118,166         29.1          67,827         29.1          50,339         29.1
1993.....................         132,010         11.7          75,774         11.7          56,236         11.7
1994 (current law
 estimate)...............         152,371         15.4          87,156         15.0          65,215         16.0
1995 (current law
 estimate)...............         168,806         10.8          96,388         10.6          72,418         11.0
----------------------------------------------------------------------------------------------------------------
\1\Includes related programs which are not separately identified, though for each successive year a larger
  portion of the total represents Medicaid expenditures. As of Jan. 1, 1970, Federal matching was only available
  under Medicaid.
\2\Intermediate care facilities (ICFs) transferred from the cash assistance programs to Medicaid effective
  January 1, 1972. Data for prior periods do not include these costs.
\3\Transitional quarter (beginning of Federal fiscal year moved from July 1 to Oct. 1).
\4\Represents increase over fiscal year 1976, i.e., five calendar quarters.
\5\Includes transfer of function of State fraud control units to Medicaid from Office of Inspector General.
\6\Temporary reductions in Federal payments authorized for fiscal years 1982-84 were discontinued in fiscal year
  1985.

Note: Totals may not add due to rounding.

Source: ``Budget of the U.S. Government'' fiscal years 1969-95, and Health Care Financing Administration,
  Division of Budget.


 TABLE 18-14.--UNDUPLICATED NUMBER OF MEDICAID RECIPIENTS BY ELIGIBILITY CATEGORY, FISCAL YEARS 1972-92
                                              [Number in thousands]
----------------------------------------------------------------------------------------------------------------
                                                                                         Adults in
                                                               Permanent    Dependent     families
     Fiscal year           Total       Aged 65 or  Blindness   and total     children       with     Other Title
                                         over                 disability    under age    dependent       XIX
                                                                               21        children
----------------------------------------------------------------------------------------------------------------
1972..................        17,606        3,318        108        1,625        7,841        3,137        1,576
1973..................        19,622        3,496        101        1,804        8,659        4,066        1,495
1974..................        21,462        3,732        135        2,222        9,478        4,392        1,502
1975..................        22,007        3,615        109        2,355        9,598        4,529        1,800
1976..................        22,815        3,612         97        2,572        9,924        4,774        1,836
1977\1\...............        22,832        3,636         92        2,710        9,651        4,785        1,959
1978..................        21,965        3,376         82        2,636        9,376        4,643        1,852
1979..................        21,520        3,364         79        2,674        9,106        4,570        1,727
1980\2\...............        21,605        3,440         92        2,819        9,333        4,877        1,499
1981\2\...............        21,980        3,367         86        2,993        9,581        5,187        1,364
1982\2\...............        21,603        3,240         84        2,806        9,563        5,356        1,434
1983\2\...............        21,554        3,371         77        2,844        9,535        5,592        1,129
1984\2\...............        21,607        3,238         79        2,834        9,684        5,600        1,187
1985\2\...............        21,814        3,061         80        2,937        9,757        5,518        1,214
1986\2\...............        22,515        3,140         82        3,100       10,029        5,647        1,362
1987\2\...............        23,109        3,224         85        3,296       10,168        5,599        1,418
1988\2\...............        22,907        3,159         86        3,401       10,037        5,503        1,343
1989\2\...............        23,511        3,132         95        3,496       10,318        5,717        1,175
1990..................        25,255        3,202         83        3,635       11,220        6,010        1,105
1991..................        28,280        3,359         85        3,983       13,415        6,778          658
1992..................        30,926        3,742         84        4,378       15,104        6,954          664
----------------------------------------------------------------------------------------------------------------
\1\Fiscal Year 1977 began in October 1976 and was the first year of the new Federal fiscal cycle. Before 1977,
  the fiscal year began in July.
\2\Beginning in fiscal year 1980, recipients' categories do not add to the unduplicated total due to the small
  number of recipients that are in more than one category during the year.
Source: HCFA, BDMS, OPS, Division of Medicaid Statistics, Fiscal Years 1972-91, Office of the Actuary, Fiscal
  years 1993 and beyond. December 22, 1993.


          TABLE 18-15.--MEDICAID RECIPIENTS BY BASIS OF ELIGIBILITY BY STATE: FISCAL YEAR 1992
----------------------------------------------------------------------------------------------------------------
                               Total                                             AFDC        AFDC        Other
          State            recipients\1\     Aged        Blind     Disabled    children     adults     Title XIX
----------------------------------------------------------------------------------------------------------------
Alabama.................       466,918        69,882       1,586     100,187     198,418      91,022       4,574
Alaska..................        57,540         3,388          81       4,633      32,479      16,959           0
Arizona.................       402,212        23,258         693      43,696     236,155      98,410           0
Arkansas................       320,875        51,489       1,289      67,511      97,549      70,969      32,068
California..............     4,485,743       491,686      24,306     609,612   2,008,346   1,256,752      60,350
Colorado................       258,690        30,621         157      34,254     125,026      65,065       3,567

Connecticut.............       316,278        55,102         281      37,836     146,719      76,340           0
Delaware................        60,696         5,358         105       8,461     31,687,      13,558       1,325
District of Columbia....       108,514        11,541           5      16,731      55,304      24,812         121
Florida.................     1,537,926       186,180       3,403     204,373     811,973     294,157      37,840
Georgia.................       863,670        99,625       4,722     139,095     412,087     198,838       1,112

Hawaii..................        99,666        13,817          15      10,239      47,368      26,111           0
Idaho...................        86,924         8,783          52      12,480      44,224      20,758         627
Illinois................     1,313,140       105,955       1,359     213,951     669,474     303,931      18,470
Indiana.................       506,829        52,433       1,172      70,558     252,765     127,264           0
Iowa....................       278,828        38,333         619      39,000     116,983      68,277      14,868

Kansas..................       226,991        25,268         115     27,057,     108,272      53,397           0
Kentucky................       583,089        61,052       1,924     113,316     257,105     136,641       1,882
Louisiana...............       702,264        96,403       1,797     111,025     345,662     147,377           0
Maine...................       162,441        22,332         207      27,281      69,082      37,367       5,567
Maryland................       377,075        49,749         306      61,045     182,487      77,702       5,786

Massachusetts...........       686,235       105,314      10,362     122,202     295,507     152,849           0
Michigan................     1,129,023        84,998       2,212     167,448     565,350     309,015           0
Minnesota...............       406,491        57,801         461      41,697     195,047      99,891      11,594
Mississippi.............       486,861        65,989       1,634      92,784     321,010       3,973       1,471
Missouri................       554,477        78,916       1,127      76,338     258,573     137,413           2

Montana.................        60,186         8,115          76      12,618      20,690       3,434      13,740
Nebraska................       150,791        19,939         223      17,612      67,553      31,793      13,671
Nevada..................        77,525         9,091         415       9,998      36,551      18,840       1,584
New Hampshire...........        71,179        13,882         486       9,442      33,815      13,224           0
New Jersey..............       697,083        78,663       1,200     107,949     327,381     175,240           0

New Mexico..............       211,805        14,106         560      25,446     128,312      43,381           0
New York................     2,557,701       339,784       3,732     370,858   1,141,711     516,124     185,492
North Carolina..........       785,043       120,599       1,047      91,385     368,882     203,130           0
North Dakota............        57,068        10,713          28       7,067      24,213      12,488       2,189
Ohio....................     1,442,289       152,083         957     162,159     777,458     345,594       4,038

Oklahoma................       360,039        55,955         670      42,863     178,902      80,951         698
Oregon..................       295,320        29,138       1,190      34,906     150,943      79,143           0
Pennsylvania............     1,174,779       136,293         942     195,284     562,049     237,670      41,807
Rhode Island............       213,388        39,660         521      40,936      87,193      43,452       1,629
South Carolina..........       431,083        72,339       1,812      67,685     198,972      90,212          63

South Dakota............        64,230         9,751         149      10,045      31,097      13,188           0
Tennessee...............       785,231        93,455       2,574     156,723     367,193     153,950      11,336
Texas...................     2,024,554       265,254       3,921     189,471   1,100,136     465,772           0
Utah....................       137,264         8,814         117      14,305      72,860      39,726          24
Vermont.................        77,502        10,643          94      10,546      34,342      21,058         455
Virginia................       515,064        78,411       1,146      76,752     244,340     114,415           0

Washington..............       568,673        50,639         365      81,049     232,246     156,546      46,259
West Virginia...........       308,034        31,609         272      49,168     131,024      93,117       2,844
Wisconsin...............       440,136        66,845       1,189      87,560     161,587      78,107      40,657
Wyoming.................        42,401         3,086           8       3,890      23,523      11,023         570
Puerto Rico.............       885,405       127,011         469      48,779     709,146           0           0
Virgin Islands..........        13,221         1,143           6         889       7,265       3,403         515
                         ---------------------------------------------------------------------------------------
      United States.....    30,027,764     3,614,140      83,684   4,328,527  14,387,625   6,950,426     568,280
      All jurisdictions.    30,926,390     3,742,294      84,159   4,378,195  15,104,036   6,953,829     568,795
----------------------------------------------------------------------------------------------------------------
\1\Total recipients include unknowns which are not reflected in this table.

Source: HCFA, BDMS, Office of Programs Systems, data from Division of Medicaid Statistics December 22, 1993.


                             TABLE 18-16.--MEDICAID EXPENDITURES BY BASIS OF ELIGIBILITY BY STATE: FISCAL YEAR 1992
                                                                [In millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                      Aged,
                                                                                                                                    blind and     AFDC
                                                                                                                                     disabled   children
                    State                             Total          Aged      Blind     Disabled     AFDC       AFDC      Other       as a       as a
                                                 expenditures\2\                                    children    adults   title XIX   percent    percent
                                                                                                                                     of total   of total
                                                                                                                                       exp.       exp.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.......................................          1,056           352          4        392        148        149          9       70.9       14.0
Alaska........................................            187            37      (\1\)         48         53         48          0       46.0       28.5
Arizona.......................................            209            13          1         63         96         35          0       37.3       45.8
Arkansas......................................            885           266          6        367         87         85         74       72.2        9.9
California....................................          8,692         2,251         96      2,983      1,309      1,860        129       61.3       15.1
Colorado......................................            814           233          4        303        129        128         17       66.4       15.9

Connecticut...................................          1,663           797          4        570        163        129          0       82.4        9.8
Delaware......................................            219            62          1         96         32         25          3       72.3       14.7
District of Columbia..........................            499           140      (\1\)        212         92         54      (\1\)       70.7       18.4
Florida.......................................          3,518         1,074         14      1,160        756        457         57       63.9       21.5
Georgia.......................................          2,149           538         28        735        356        471          1       60.6       16.6

Hawaii........................................            270           112      (\1\)         64         44         48          0       65.4       16.3
Idaho.........................................            275            72      (\1\)        118         42         41          1       69.3       15.4
Illinois......................................          4,070           872          9      1,995        651        486         56       70.7       16.0
Indiana.......................................          2,225           557          9        930        401        322          0       67.2       18.0
Iowa..........................................            855           238          2        332        119        133         29       67.0       13.9

Kansas........................................            620           187      (\1\)        225        100         86          0       66.6       16.2
Kentucky......................................          1,543           361          8        609        279        279          1       63.3       18.1
Louisiana.....................................          2,479           532         10        972        533        433          0       61.0       21.5
Maine.........................................            642           240          1        235         76         76         13       74.1       11.8
Maryland......................................          1,612           445          2        644        276        193         52       67.7       17.1

Massachusetts.................................          3,248         1,256         88      1,224        372        308          0       79.1       11.5
Michigan......................................          2,802           652         10      1,232        459        449          0       67.6       16.4
Minnesota.....................................          1,750           713          6        631        196        183         21       77.1       11.2
Mississippi...................................            881           264          5        317        289          2          4       66.5       32.8
Missouri......................................          1,350           472          5        461        234        175      (\1\)       69.4       17.3

Montana.......................................            217            77      (\1\)         95         17          5         15       79.6        7.9
Nebraska......................................            468           168          2        153         63         50         33       69.0       13.4
Nevada........................................            282            64          3        100         49         52          7       59.4       17.4
New Hampshire.................................            340           167          7        112         33         20          0       84.2        9.8
New Jersey....................................          2,802           912          8      1,163        311        400          0       74.3       11.1

New Mexico....................................            478            93          4        160        148         73          0       53.8       30.9
New York......................................         15,281         6,214        102      5,710      1,766      1,207        283       78.7       11.6
North Carolina................................          2,083           647          9        673        414        341          0       63.8       19.9
North Dakota..................................            253            99      (\1\)         98         30         22          2       78.2       11.9

Ohio..........................................          4,308         1,535          4      1,374        853        541          1       67.6       19.8
Oklahoma......................................          1,004           288          2        299        272        141          1       58.7       27.1
Oregon........................................            748           201         20        288        137        103          0       68.0       18.3
Pennsylvania..................................          3,547         1,368          3      1,265        513        345         54       74.3       14.5
Rhode Island..................................            774           283          3        346         72         64          6       81.6        9.3
South Carolina................................          1,151           329          6        414        218        184      (\1\)       65.0       19.0

South Dakota..................................            231            85          1         90         34         20          0       76.3       14.9
Tennessee.....................................          1,735           441          7        646        354        255         32       63.1       20.4
Texas.........................................          4,407         1,402         16      1,228        976        785          0       60.0       22.1
Utah..........................................            365            64          1        139         72         88      (\1\)       55.8       19.6
Vermont.......................................            222            75      (\1\)         93         22         30          1       75.6       10.1
Virginia......................................          1,511           486          6        525        273        222          0       67.3       18.0

Washington....................................          1,347           420          2        423        184        286         32       62.7       13.6
West Virginia.................................            795           200          1        276        111        175         32       60.0       13.9
Wisconsin.....................................          1,677           663          8        693        124        102         62       81.4        7.4
Wyoming.......................................            114            34      (\1\)         33         26         21          1       58.1       22.6
Puerto Rico...................................            158            23      (\1\)          9        127          0          0       19.9       80.1
Virgin Islands................................              5             1      (\1\)          1          2          1      (\1\)       35.2       34.6
      United States...........................         90,651        29,054        530     33,316     14,363     12,184      1,032       69.4       15.8
      All jurisdictions.......................         90,814        29,078        530     33,326     14,491     12,185      1,032       69.3      16.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Denotes expenditures of less than $500,000.
\2\Total expenditures include unknowns which are not reflected in this table.

Source: HCFA, BDMS, Office of Programs Systems, data from Division of Medicaid Statistics, December 22, 1993.


TABLE 18-17.--TOTAL AND PER CAPITA MEDICAID PAYMENTS FOR CATEGORICALLY NEEDY AND MEDICALLY NEEDY, PRELIMINARY ESTIMATES, FISCAL YEARS 1975, 1981 AND
                                                                        1992
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         1975                          1981                          1992                Percent change
                                            ------------------------------------------------------------------------------------------      1975-92
                                                Total    Percent              Total    Percent              Total    Percent          ------------------
                                               amount       of      Per      amount       of      Per      amount       of      Per      Total     Per
                                             (millions)   total    capita  (millions)   total    capita  (millions)   total   capita   spending   capita
--------------------------------------------------------------------------------------------------------------------------------------------------------
Categorically needy:
    Receiving cash payments................     $7,188      58.7     $431     $14,534     53.4     $861     $41,742     46.0   $2,238    $480.7   $419.3
        Aged...............................      1,341      11.0      555       2,480      9.1    1,270       5,795      6.4    3,778     332.1    580.7
        Blind..............................         61        .5      717         109       .4    1,527         334      0.4    4,669     447.5    551.2
        Disabled...........................      2,042      16.7    1,094       5,616     20.6    2,490      19,863     21.9    6,097     872.7    457.3
        AFDC children......................      1,850      15.1      222       3,002     11.0      361       8,376      9.2      891     352.8    301.4
        Adults in AFDC families............      1,895      15.5      478       3,328     12.2      769       7,374      8.1    1,682     289.1    251.9
    Not receiving cash payments............      1,753      14.3    1,261       4,736     17.4    2,641      16,064     17.7    4,243     816.4    236.5
        Aged...............................      1,275      10.4    2,331       3,143     11.6    5,273       7,085      7.8   11,658     455.7    400.1
        Blind..............................         12        .1    1,094          19       .1    2,785          80      0.1   15,310     566.7  1,299.5
        Disabled...........................        353       2.9    1,854       1,214      4.5    5,146       5,065      5.6   11,913   1,334.8    542.6
        AFDC children......................         61        .5      152         153       .6      302       1,764      1.9    1,156     791.8    660.5
        Adults in AFDC families............         27        .2      144          87       .3      298       1,428      1.6    1,606   5,188.9  1,015.3
        Other title XIX....................         25        .2      463         120       .4      734         643      0.7    1,927   2,472.0    316.2
                                            ------------------------------------------------------------------------------------------------------------
          Total, categorically needy.......      8,941      73.0      495      19,270     70.8    1,032      57,807     63.7    2,577     546.5    420.6
                                            ============================================================================================================
Medically needy:
    Aged...................................      1,742      14.2    2,672       4,303     15.8    5,260       8,927      9.8   11,724     412.5    338.8
    Blind..................................         20        .2    1,472          27       .1    3,132          71      0.1   21,865     255.0    940.0
    Disabled...............................        657       5.4    2,202       2,471      9.1    4,924       5,243      5.8   13,876     698.0    530.2
    AFDC children..........................        274       2.2      324         353      1.3      460       1,592      1.8      943     481.0    191.0
    Adults in AFDC families................        140       1.1      368         348      1.3      613       1,265      1.4    1,930     803.6    424.5
    Other title XIX........................        467       3.8      267         433      1.6      360         268      0.3    1,844     -42.6    590.6
                                            ------------------------------------------------------------------------------------------------------------
      Total, medically needy...............      3,301      27.0      838       7,935     29.2    2,145      17,367     19.1    4,782     426.1    470.6
                                            ============================================================================================================
      Grand total..........................     12,242     100.0      556      27,205    100.0    1,216      90,814    100.0    2,936     641.8    428.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Totals may not add due to rounding. Fiscal year 1975 ends in June; fiscal years 1981 and 1988 end in September. Total includes other coverage
  groups and unknowns. Other categories not shown in the total for 1991 are: Other coverage pre-88, $6,799; coverage from 88, $4,070; and mass unknown,
  $220.

Source: HCFA, BDMS, OPS. Division of Medicaid Statistics, December 22, 1993.


        TABLE 18-18.--MEDICAID RECIPIENTS AND PAYMENTS BY BASIS OF ELIGIBILITY,   FISCAL YEAR 1992
----------------------------------------------------------------------------------------------------------------
                                                                      Percent   Recipients  Percent
                                                          Amount (in     of        (in         of     Per capita
                                                          millions)    total    thousands)   total     payments
----------------------------------------------------------------------------------------------------------------
Age 65 and over........................................     29,077.6     32.0      3,742.3     12.1      7,770.0
Blind..................................................        530.0      0.6         84.2      0.3      6,297.7
Disabled...............................................     33,325.8     36.7      4,378.2     14.2      7,611.8
Dependent children under age 21........................     14,491.0     16.0     15,104.0     48.8        959.4
Adults in families with dependent children.............     12,185.2     13.4      6,953.8     22.5      1,752.3
Other title XIX........................................      1,031.9      1.1        568.8      1.8      1,814.3
                                                        --------------------------------------------------------
      Total............................................     90,813.5    100.0     30,926.4    100.0      2,936.4
----------------------------------------------------------------------------------------------------------------
Note: Recipients and payments totals include unknowns which are not shown in this table.

Source: HCFA, BDMS, Office of Programs Systems. Data from Division of Medicaid Statistics, December 22, 1993.


             TABLE 18-19.--MEDICAID PAYMENTS AND PER CAPITA PAYMENTS BY BASIS OF ELIGIBILITY, FISCAL YEARS 1975, 1981, AND 1984-92
                                                            [Amounts in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                 Percent
                                              1975     1981     1984     1985     1986     1987     1988     1989     1990     1991      1992    change,
                                                                                                                                                 1975-92
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          In Nominal Dollars
Payments:
    Age 65 and over.......................    4,358    9,926   12,815   14,096   15,097   16,037   17,135   18,558   21,508   25,453     29,078    567.3
    Blind.................................       93      154      219      249      277      309      344      409      434      475        530     47.6
    Disabled..............................    3,052    9,301   11,758   13,203   14,635   16,507   18,250   20,476   23,969   27,798     33,326    991.8
    Dependent children under age 21.......    2,186    3,508    3,979    4,414    5,135    5,508    5,848    6,892    9,100   11,690     14,491    562.9
    Adults in families with dependent
     children.............................    2,062    3,763    4,420    4,746    4,880    5,592    5,883    6,897    8,590   10,439     12,185    491.0
    Other title XIX.......................      492      552      700      798      980    1,078    1,198    1,137    1,051      973      1,032    109.9
                                           -------------------------------------------------------------------------------------------------------------
      Total...............................   12,242   27,204   33,891   37,508   41,005   45,050   48,710   54,500   64,859   77,048     90,814    641.8
Per capita payment:
    Age 65 and over.......................    1,205    2,948    3,957    4,605    4,808    4,975    5,425    5,926    6,717    7,577      7,770    544.6
    Blind.................................      850    1,784    2,766    3,104    3,401    3,644    4,005    4,319    5,212    5,572      6,298    641.0
    Disabled..............................    1,296    3,108    4,149    4,496    4,721    5,008    5,366    5,858    6,595    6,979      7,612    487.3
    Dependent children under age 21.......      228      366      411      452      512      542      583      668      811      871        959    321.2
    Adults in families with dependent
     children.............................      455      725      789      860      864      999    1,069    1,206    1,429    1,540      1,752    248.9
    Other title XIX.......................      273      405      590      658      719      761      891      967    1,062    1,732      1,814    564.2
      Total, per capita payment...........      556    1,238    1,569    1,719    1,821    1,949    2,126    2,318    2,568    2,725      2,936    427.9
                                           =============================================================================================================

                                                                                      In Constant 1992 Dollars
Payments:
    Age 65 and over.......................   11,723   15,584   17,300   18,466   19,173   19,886   20,391   21,156   23,229   26,217     29,078    148.0
    Blind.................................      250      242      296      326      352      383      409      466      469      489        530    112.0
    Disabled..............................    8,210   14,603   15,873   17,296   18,586   20,469   21,718   23,343   25,887   28,632     33,326    305.9
    Dependent children under age 21.......    5,880    5,508    5,372    5,782    6,521    6,830    6,959    7,857    9,828   12,041     14,491    146.4
    Adults in families with dependent
     children.............................    5,547    5,908    5,967    6,217    6,198    6,934    7,001    7,863    9,277   10,752     12,185    119.7
    Other title XIX.......................    1,323      867      945    1,045    1,245    1,337    1,426    1,296    1,135    1,002      1,032    -22.0
                                           -------------------------------------------------------------------------------------------------------------
      Total\1\............................   32,931   42,710   45,753   49,135   52,076   55,862   57,965   62,130   70,048   79,359     90,814    175.8
Per capita payment:
    Age 65 and over.......................    3,241    4,628    5,342    6,033    6,106    6,169    6,456    6,756    7,254    7,804      7,770    139.7
    Blind.................................    2,287    2,801    3,734    4,066    4,319    4,519    4,766    4,924    5,629    5,739      6,298    173.4
    Disabled..............................    3,486    4,880    5,601    5,890    5,996    6,210    6,386    6,678    7,123    7,188      7,612    118.4
    Dependent children under age 21.......      613      575      555      592      650      672      694      762      876      897        959     56.4
    Adults in families with dependent
     children.............................    1,224    1,338    1,065    1,127    1,097    1,239    1,272    1,375    1,543    1,586      1,752     43.1
    Other title XIX.......................      734      636      797      862      913      944    1,060    1,102    1,147    1,784      1,814    147.1
                                           -------------------------------------------------------------------------------------------------------------
      Total, per capita payment...........    1,496    1,944    2,118    2,252    2,313    2,417    2,530    2,643    2,773    2,807      2,936     96.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Data exclude unknowns.

Note: Total may not add due to rounding. Fiscal year 1975 ends in June; all other fiscal years end in September. Nominal dollars converted to constant
  dollars using CPI-U price index. Total expenditures includes other coverage groups and unknowns for fiscal year 1992.

Source: HCFA, BDMS, OPS, Division of Medicaid Statistics, December, 1993, and Congressional Research Service.


         TABLE 18-20.--MEDICAID PAYMENTS BY SERVICE CATEGORY, FISCAL YEARS 1975, 1981, 1990-92
                                 [Amounts in millions of constant 1990 dollars]
----------------------------------------------------------------------------------------------------------------
                               1975                1981                1990                1992          Average
                       --------------------------------------------------------------------------------  annual
                                                                                                         percent
                         Amount    Percent   Amount    Percent   Amount    Percent   Amount    Percent   change
                                                                                              of total   1975-92
----------------------------------------------------------------------------------------------------------------
Inpatient hospital....    $9,396      30.9   $11,693      29.7   $18,388      28.4   $23,743      28.3       5.6
    General...........     8,389      27.6    10,423      26.4    16,674      25.7    21,715      25.9       5.8
    Mental............     1,007       3.3     1,271       3.2     1,714       2.6     2,029       2.4       4.2
Skilled nursing
 facilities...........  \1\6,052      19.9     5,846      14.8     8,026      12.4    21,752      25.9       7.8
Intermediate care
 facilities...........     5,632      18.5    10,870      27.6    17,021      26.2     (\1\)     (\1\)     (\1\)
    Intermediate care
     facilities for
     the mentally
     retarded.........       945       3.1     4,341      11.0     7,354      11.3     7,853       9.4       2.0
    Other.............     4,687      15.4     6,530      16.6     9,667      14.9     (\1\)  ........     (\1\)
Physician.............     3,046      10.0     3,044       7.7     4,018       6.2     5,638       6.7       3.7
Dental................       843       2.8       787       2.0       593       0.9       786       0.9      -0.4
Other practitioner....       316       1.0       330       0.8       372       0.6       497       0.6       2.7
Outpatient hospital...       927       3.0     2,041       5.2     3,324       5.1     4,877       5.8      10.3
Clinic................       967       3.2       540       1.4     1,688       2.6     2,604       3.1       6.0
Lab and X-ray.........       313       1.0       213       0.5       721       1.1       956       1.1       6.8
Home health...........       174       0.6       620       1.6     3,404       5.2     4,514       5.4      21.1
Prescribed drugs......     2,026       6.7     2,224       5.6     4,420       6.8     6,250       7.4       6.9
Family planning.......       167       0.5       201       0.5       265       0.4       462       0.6       6.2
Early and periodic
 screening\2\.........     (\2\)       0.0        97       0.2       198       0.3       478       0.6     (\1\)
Rural health clinic\2\     (\2\)       0.0         6       0.0        34       0.1       125       0.1     (\1\)
Other.................       579       1.9       897       2.3     2,385       3.7     3,317       4.0      10.8
                       -----------------------------------------------------------------------------------------
      Total...........    30,440     100.0    39,414     100.0    64,859     100.0    83,904       100       6.1
----------------------------------------------------------------------------------------------------------------
\1\Prior to fiscal year 1991, there were two categories of Medicaid nursing home care: skilled nursing
  facilities or intermediate nursing facilities.    \2\1975 data not available.    Note: Totals may not add due
  to rounding. Fiscal year 1975 ends in June; all other fiscal years end in September. Spending amounts put in
  constant dollars using the Consumer Price Index (CPI-U). Data exclude unknowns.    Source: HCFA, BDMS, Office
  of Programs Systems. Data from Division of Medicaid Statistics. December 22, 1993.


      TABLE 18-21.--MEDICAID RECIPIENTS BY SERVICE CATEGORY, FOR FISCAL YEARS 1975, 1981, 1989-92
                                                 [In thousands]
----------------------------------------------------------------------------------------------------------------
                                                                                Fiscal year--
                                                           -----------------------------------------------------
                                                              1975     1981     1989     1990     1991     1992
----------------------------------------------------------------------------------------------------------------
Inpatient hospital:
    General...............................................    3,432    3,703    4,171    4,593    5,137    5,768
    Mental................................................       67       90       90       92    5,072       77
Nursing facilities\1\.....................................    1,312    1,385    1,452    1,461    1,499    1,573
Intermediate care facilities for the mentally retarded....       69      151      148      147      146      151
Physician.................................................   15,198   14,403   15,686   17,078   19,321   21,627
Dental....................................................    3,944    5,173    4,214    4,552    5,209    5,700
Other practitioner........................................    2,673    3,582    3,555    3,873    4,282    4,711
Outpatient hospital.......................................    7,437   10,018   11,344   12,370   14,137   15,120
Clinic....................................................    1,086    1,755    2,391    2,804    3,511    4,115
Laboratory & X ray........................................    4,738    3,822    7,759    8,959   10,505   11,804
Home health...............................................      343      402      609      719      813      925
Prescribed drugs..........................................   14,155   14,256   15,916   17,294   19,602   22,030
Family planning...........................................    1,217    1,473    1,564    1,752    2,185    2,550
Early and periodic screening..............................    (\2\)    1,969    2,524    2,952    3,957    4,982
Rural health clinics......................................    (\2\)       81      166      224      405      743
Other.....................................................    2,911    2,344    4,583    5,126    5,957   6,702
                                                           -----------------------------------------------------
      Unduplicated total..................................   22,007   21,980   23,511   25,255   28,280   30,926
----------------------------------------------------------------------------------------------------------------
\1\Prior to fiscal year 1991, there were 2 categories of Medicaid nursing home care: skilled nursing facilities
  or intermediate nursing facilities.
\2\1975 data not available.

Source: HCFA, BDMS, Office of Programs Systems, Division of Medicaid Statistics, December 1993.


   TABLE 18-22.--MEDICAID MEDICAL VENDOR PAYMENTS BY BASIS OF ELIGIBILITY AND TYPE OF SERVICE: FISCAL YEAR
                                                    1992
----------------------------------------------------------------------------------------------------------------
                                                                        AFDC
   Type of service         Aged        Blind       Disabled  -------------------------- Other title     Total
                                                                Children      Adults        XIX
----------------------------------------------------------------------------------------------------------------
                                                        [In millions of dollars]

Inpatient hospital
 services............      1,869.9         86.1      8,927.4      6,554.6      5,480.8        466.1     23,384.9
Mental hospital
 services for the
 aged................        908.5           .4         57.2          2.5          1.9          2.5        973.0
SNF/ICF mental health
 services for the
 aged................        114.4           .0          5.1          0            0            0          119.5
Inpatient psychiatric
 services, age <22...           .3           .4        344.9        617.4         11.4        126.9      1,101.3
Intermediate care
 facility for the
 mentally retarded...        519.6        130.9      7,837.9         37.6         14.2          4.7      8,545.0
Nursing facility
 services............     19,596.5        107.5      3,762.0         15.1         45.7          8.3     23,535.0
Physician's services.        399.6         24.1      1,485.0      1,946.9      2,138.9         94.1      6,088.5
Dental services......         52.0          1.6        133.2        417.0        225.3         21.8        850.8
Other practitioners'
 services............         66.1          2.6        199.3        136.7        126.0          7.1        537.8
Outpatient hospital
 services............        310.8         19.4      1,600.9      1,736.1      1,521.3         84.4      5,272.8
Clinic services......        174.1         18.0      1,555.6        572.5        414.8         79.0      2,814.0
Home health services.      2,249.6         55.1      2,383.7        121.4         55.5         19.6      4,885.0
Family planning
 services............          1.1           .5         25.8         57.3        408.5          6.6        499.7
Lab and x ray
 services............         53.1          4.0        310.6        221.6        432.0         11.3      1,032.7
Prescribed drugs.....      2,190.9         48.9      2,873.7        806.3        805.2         37.0      6,762.0
Early and periodic
 screening...........           .1           .3         36.2        449.1         16.8         13.5        516.0
Rural health clinic
 services............          4.4           .3         20.1         61.0         46.8          1.8        134.4
Other care...........        565.8         30.1      1,764.8        737.5        440.0         47.0      3,585.1
Unknown..............           .9          0            2.7           .4           .1          0            4.1
                      ------------------------------------------------------------------------------------------
      Total..........     29,077.6        530.0     33,325.8     14,491.0     12,185.2      1,031.9     90,641.6


                                                              [In percent]
Inpatient hospital
 services............          6.4         16.2         26.8         45.2         45.0         45.2         25.8
Mental hospital
 services for the
 aged................          3.1           .1           .2          0            0             .2          1.1
SNF/ICF mental health
 services for the
 aged................           .4          0            0            0            0            0             .1
Inpatient psychiatric
 services, age <22...          0             .1          1.0          4.3           .1         12.3          1.2
Intermediate care
 facility for the
 mentally retarded...          1.8         24.7         23.5           .3           .1           .5          9.4
Nursing facility
 services............         67.4         20.3         11.3           .1           .4           .8         26.0
Physician's services.          1.4          4.5          4.5         13.4         17.6          9.1          6.7
Dental services......           .2           .3           .4          2.9          1.8          2.1           .9
Other practitioners'
 services............           .2           .5           .6           .9          1.0           .7           .6
Outpatient hospital
 services............          1.1          3.7          4.8         12.0         12.5          8.2          5.8
Clinic services......           .6          3.4          4.7          4.0          3.4          7.7          3.1
Home health services.          7.7         10.4          7.2           .8           .5          1.9          5.4
Family planning
 services............          0             .1           .1           .4          3.4           .6           .6
Lab and x ray
 services............           .2           .8           .9          1.5          3.5          1.1          1.1
Prescribed drugs.....          7.5          9.2          8.6          5.6          6.6          3.6          7.5
Early and periodic
 screening...........          0             .1           .1          3.1           .1          1.3           .6
Rural health clinic
 services............          0             .1           .1           .4           .4           .2           .1
Other care...........          1.9          5.7          5.3          5.1          3.6          4.6          4.0
Unknown..............          0            0            0            0            0            0            0
                      ------------------------------------------------------------------------------------------
      Total..........        100.0        100.0        100.0        100.0        100.0        100.0        100.0
----------------------------------------------------------------------------------------------------------------
Source: HCFA, BDMS, Office of Programs Systems. Data from Division of Medicaid Statistics, December 22, 1993.


   TABLE 18-23.--AVERAGE EXPENDITURE PER RECIPIENT BY BASIS OF ELIGIBILITY BY STATE: FISCAL YEAR 1992
----------------------------------------------------------------------------------------------------------------
                                                                                                          Other
                     State                        Total     Aged    Blind   Disabled    AFDC      AFDC    title
                                                                                      Children   Adults    XIX
----------------------------------------------------------------------------------------------------------------
    United States..............................   $3,019   $8,039   $6,332    $7,697      $998   $1,753   $1,816
                                                ----------------------------------------------------------------
    All jurisdictions..........................    2,936    7,770    6,298     7,612       959    1,752    1,814
                                                ----------------------------------------------------------------
Alabama........................................    2,262    5,042    2,785     3,915       746    1,636    1,966
Alaska.........................................    3,248   10,934    6,068    10,467     1,640    2,806        0
Arizona........................................      520      579    1,870     1,446       406      359        0
Arkansas.......................................    2,758    5,163    4,653     5,430       896    1,192    2,320
California.....................................    1,938    4,579    3,959     4,894       652    1,480    2,137
Colorado.......................................    3,145    7,618   25,435     8,845     1,033    1,961    4,691

Connecticut....................................    5,258   14,458   14,836    15,070     1,111    1,691        0
Delaware.......................................    3,611   11,515    5,914    11,369     1,014    1,842    2,170
District of Columbia...........................    4,595   12,171    5,493    12,658     1,658    2,187    2,603
Florida........................................    2,288    5,770    4,133     5,676       932    1,553    1,495
Georgia........................................    2,488    5,405    6,019     5,283       865    2,369    1,106

Hawaii.........................................    2,706    8,115    2,701     6,282       929    1,831        0
Idaho..........................................    3,159    8,154    6,587     9,481       955    1,979    1,534
Illinois.......................................    3,099    8,233    6,983     9,327       972    1,599    3,045
Indiana........................................    4,390   10,627    7,635    13,181     1,585    2,531        0
Iowa...........................................    3,065    6,206    3,972     8,522     1,015    1,952    1,981

Kansas.........................................    2,730    7,410    4,076     8,322       928    1,619        0
Kentucky.......................................    2,647    5,908    4,139     5,374     1,085    2,039      582
Louisiana......................................    3,530    5,514    5,470     8,755     1,541    2,937        0
Maine..........................................    3,950   10,751    3,918     8,604     1,094    2,044    2,420
Maryland.......................................    4,276    8,942    7,577    10,553     1,512    2,484    9,015

Massachusetts..................................    4,733   11,925    8,495    10,015     1,259    2,015        0
Michigan.......................................    2,482    7,674    4,345     7,359       811    1,454        0
Minnesota......................................    4,306   12,339   12,384    15,130     1,007    1,829    1,839
Mississippi....................................    1,809    4,005    2,870     3,416       899      575    2,754
Missouri.......................................    2,435    5,975    4,149     6,043       906    1,276      333

Montana........................................    3,599    9,500    3,507     7,543       832    1,564    1,118
Nebraska.......................................    3,103    8,421    7,586     8,710       926    1,560    2,397
Nevada.........................................    3,635    7,035    7,971    10,018     1,343    2,753    4,447
New Hampshire..................................    4,779   12,040   14,507    11,883       986    1,501        0
New Jersey.....................................    4,019   11,592    6,471    10,776       950    2,281        0

New Mexico.....................................    2,259    6,622    6,847     6,301     1,153    1,682        0
New York.......................................    5,975   18,288   27,316    15,396     1,547    2,338    1,525
North Carolina.................................    2,654    5,368    8,314     7,359     1,121    1,679        0
North Dakota...................................    4,430    9,275    6,169    13,891     1,238    1,765    1,095
Ohio...........................................    2,987   10,090    3,815     8,474     1,098    1,564      340

Oklahoma.......................................    2,788    5,156    3,095     6,976     1,521    1,747    1,022
Oregon.........................................    2,532    6,906   16,468     8,237       905    1,298        0
Pennsylvania...................................    3,019   10,038    3,435     6,477       912    1,451    1,295
Rhode Island...................................    3,628    7,128    5,864     8,458       825    1,480    3,572
South Carolina.................................    2,670    4,549    3,235     6,112     1,097    2,039    2,419

South Dakota...................................    3,597    8,755    3,517     9,006     1,109    1,530        0
Tennessee......................................    2,210    4,723    2,831     4,121       964    1,655    2,818
Texas..........................................    2,177    5,284    4,193     6,481       887    1,685        0
Utah...........................................    2,662    7,318    7,532     9,694       985    2,206    4,962
Vermont........................................    2,863    7,013    4,580     8,792       653    1,428    2,420

Virginia.......................................    2,934    6,204    4,869     6,841     1,116    1,936        0
Washington.....................................    2,368    8,301    4,784     5,214       791    1,825      689
West Virginia..................................    2,580    6,312    4,433     5,618       844    1,880   11,274
Wisconsin......................................    3,811    9,922    7,143     7,915       768    1,301    1,533
Wyoming........................................    2,685   10,894    2,418     8,357     1,093    1,875    1,512

Puerto Rico....................................      178      178      177       178       178        0        0
Virgin Islands.................................      372      611       86     1,161       234      388      314
----------------------------------------------------------------------------------------------------------------
Source: HCFA, BDMS, Office Program Systems, Data from Division of Medicaid Statistics, December 22, 1993.


  TABLE 18-24.--OPTIONAL MEDICAID SERVICES AND NUMBER OF STATES\1\
             OFFERING EACH SERVICE AS OF OCTOBER, 1993
------------------------------------------------------------------------
                                                    States
                                     States        offering
                                    offering      service to
            Service                service to        both        Total
                                 categorically  categorically
                                  needy only    and medically
                                                    needy
------------------------------------------------------------------------
Podiatrists' services..........           14             33           47
Optometrists' services.........           16             35           51
Chiropractors' services........            7             20           27
Psychologists' services........            8             23           31
Medical social workers'
 services......................            2              5            7
Nurse Anesthetists' services...           11             16           27
Private duty nursing...........            7             20           27
Clinic services................           17             37           54
Dental services................           16             34           50
Physical therapy...............           15             30           45
Occupational therapy...........           12             25           37
Speech, hearing and language
 disorder......................           16             27           43
Prescribed drugs...............           17             39           56
Dentures.......................           11             30           41
Prosthetic devices.............           18             37           55
Eyeglasses.....................           16             33           49
Diagnostic services............            9             24           33
Screening services.............            8             23           31
Preventive services............            7             23           30
Rehabilitative services........           14             37           51

Services for age 65 or older in
 mental institution:
    A. Inpatient hospital
     services..................           16             24           40
    B. SNF services............           13             20           33
    C. ICF/MR services.........           22             28           50
Inpatient psychiatric services
 for under age 21..............           13             28           41
Christian Science nurses.......            3              2            5
Christian Science sanitoria....            6              9           15
SNF for under age 21...........           23             29           52
Emergency hospital services....           14             30           44
Personal care services.........           10             22           32
Transportation services........           16             39           55
Case management services.......           12             33           45
Hospice services...............           10             25           35
Respiratory care services......            5             11           16
------------------------------------------------------------------------
\1\Includes the territories. Thus the maximum number is 53.

Source: Health Care Financing Administration, Office of Prepaid Health
  Care, Medicaid Bureau, Office of Intergovernmental Affairs.

                     FEDERAL HOUSING ASSISTANCE\19\

    A number of Federal programs administered by the Department
of Housing and Urban Development (HUD) and the Farmers Home
Administration (FmHA) address the housing needs of lower-income
households. Housing assistance has never been provided as an
entitlement to all households that qualify for aid. Instead,
each year the Congress has appropriated funds for a number of
new commitments. Because these commitments generally run from 5
to 50 years, the appropriation is actually spent gradually,
over many years. These additional commitments have expanded the
pool of available aid, thus increasing the total number of
households that can be served. They have also contributed to
growth in Federal outlays in the past and have committed the
Government to continuing expenditures for many years to come.
---------------------------------------------------------------------------
    \19\This discussion draws directly from a CBO Study entitled
``Current Housing Problems and Possible Federal Responses,'' December
1988. For this report, CBO has updated all figures with 5 additional
years of data.
---------------------------------------------------------------------------

    This section describes recent trends in the number and mix
of new commitments, as well as trends in expenditures.

                  TRENDS IN FEDERAL HOUSING ASSISTANCE

    The Federal Government has traditionally provided housing
aid directly to lower-income households in the form of rental
subsidies and mortgage-interest subsidies. Recent legislation,
the 1990 Cranston-Gonzalez National Affordable Housing Act
(hereafter referred to as the 1990 Housing Act), authorized a
new, indirect approach in the form of housing block grants to
State and local governments, which may use these funds for
various housing assistance activities specified in the law.
Over the past decade, both the number of households receiving
aid and total federal expenditures have increased each year,
but the growth in assisted households has slowed during the
1980s.

Types of housing assistance

    A number of different housing assistance programs have
evolved in response to changing housing policy objectives. The
primary purpose of housing assistance has always been to
improve housing quality and to reduce housing costs for lower-
income households. Other goals have included promoting
residential construction, expanding housing opportunities for
disadvantaged groups and groups with special housing needs,
promoting neighborhood preservation and revitalization,
increasing homeownership, and, most recently, empowering the
poor to become self-sufficient.
    New housing programs have been developed over time because
of shifting priorities among these objectives--as housing-
related problems changed--and because of the relatively high
federal costs associated with some approaches. Other programs
have become inactive in that the Congress stopped appropriating
funds for new assistance commitments through them. Because
housing programs traditionally have involved multiyear
contractual obligations, however, these so-called inactive
programs continue to play an important role today by serving a
large number of households through commitments for which funds
were appropriated some time ago.
    Traditional rental assistance.--Most Federal housing aid is
now targeted to very-low-income renters through the rental
assistance programs administered by HUD and the FmHA.\20\
Rental assistance is provided through two basic approaches: (1)
project-based aid, which is typically tied to projects
specifically produced for lower-income households through new
construction or substantial rehabilitation; and (2) household-
based subsidies, which permit renters to choose standard
housing units in the existing private housing stock. Some
funding is also provided each year to modernize units built
with federal aid.
---------------------------------------------------------------------------
    \20\For more detailed description of the various types of programs,
see Congressional Research Service, HUD Housing Assistance Programs:
Their Current Status, 93-222E (February, 1993); and Congressional
Research Service, Housing Assistance in the United States, 91-872E
(December 1991).
---------------------------------------------------------------------------

    Rental assistance programs generally reduce tenants' rent
payments to a fixed percentage--currently 30 percent--of their
income after certain deductions, with the Government paying the
remaining portion of the contract rents.
    Almost all project-based aid is provided through
production-oriented programs, which include the public housing
program, the section 8 new construction and substantial
rehabilitation program, and the section 236 mortgage-interest-
subsidy program--all administered by HUD--and the section 515
mortgage-interest-subsidy program administered by the FmHA.\21\
New commitments are being funded through three of the four--the
public housing program, a modified version of the section 8 new
construction program for elderly and disabled families only,
and the section 515 program. Some assistance has also been
funded annually under two small HUD programs authorized in
1983--the rental housing development grants (HoDAG) and the
rental rehabilitation block grant programs.\22\ These programs
distributed funds through a national competition and by
formula, respectively, to units of local government that meet
eligibility criteria established by statute.
---------------------------------------------------------------------------
    \21\A small number of renters continue to receive project-based
subsidies through the now inactive section 221(d)(3) below-market
interest rate (BMIR) and rent supplement programs.
    \22\The Housing and Community Development Act of 1987 terminated
the HoDAG program at the end of fiscal year 1989, and the 1990 Housing
Act repealed the rental rehabilitation block grant program at the end
of fiscal year 1991.
---------------------------------------------------------------------------

    Some project-based aid is also provided through several
components of HUD's section 8 existing-housing program, which
tie subsidies to specific units in the existing-housing stock,
many of which have received other forms of aid or mortgage
insurance through HUD. These components--all of which are
currently active--include the section 8 loan management set-
aside (LMSA) and property disposition (PD) components, which
are designed to improve cash flows in selected financially
troubled projects that are or were insured by the Federal
Housing Administration (FHA); the section 8 conversion
assistance component, which subsidizes units that were
previously aided through other programs; and the section 8
moderate rehabilitation program, which provides subsidies tied
to units that are brought up to standard by the owner.\23\
---------------------------------------------------------------------------
    \23\The 1990 Housing Act repealed the section 8 moderate
rehabilitation program at the end of fiscal year 1991, except for
single-room occupancy units for the homeless.
---------------------------------------------------------------------------

    Household-based subsidies are provided through two other
components of the section 8 existing-housing program--section 8
rental certificates and vouchers. These programs, both of which
are currently active, tie aid to households, who choose
standard units in the private housing stock. Certificate
holders generally must occupy units whose rents at initial
occupancy are within guidelines--the so-called fair market
rents (FMRs)--established by HUD. Voucher recipients, however,
are allowed to occupy units with rents above the HUD
guidelines, provided that they pay the difference.
    Traditional homeowners' assistance.--Each year, the Federal
Government also assists some lower- and moderate-income
households in becoming homeowners by making long-term
commitments to reduce their mortgage interest.\24\ Most of this
aid has been provided through the section 502 program
administered by the FmHA, which supplies direct mortgage loans
at low interest rates roughly equal to the long-term Government
borrowing rates or provides guarantees for private loans whose
interest rates may not exceed those set by the Department of
Veterans Affairs. Many homebuyers, however, receive much deeper
subsidies through the interest-credit component of this
program, which reduces their effective interest rate to as low
as 1 percent. A number of homebuyers have received aid through
the section 235 program administered by HUD, which provides
interest subsidies for mortgages financed by private lenders.
New commitments are now being made only through the section 502
program, but a small number of homeowners continue to receive
aid from prior commitments made under the section 235
program.\25\ Both programs generally reduce mortgage payments,
property taxes, and insurance costs to a fixed percentage of
income, ranging from 20 percent for the FmHA program to 28
percent for the latest commitments made under the HUD program.
Households with relatively low incomes generally would have to
pay larger shares, however, since mortgage payments must cover
a minimum interest rate--currently 1 percent and 4 percent for
the FmHA and HUD programs, respectively. Starting in 1991,
however, the FmHA may allow some very-low-income households, to
defer up to 25 percent of their monthly payments, subject to
later repayment.
---------------------------------------------------------------------------
    \24\In addition, a small number of very-low-income homeowners
receive grants or loans each year from the FmHA for housing repairs.
    \25\The Housing and Community Development Act of 1987 terminated
the section 235 program at the end of fiscal year 1989.
---------------------------------------------------------------------------

    New directions in housing assistance.--The 1990 Housing
Act, enacted in November 1990, authorizes several new housing
assistance approaches. The major initiatives of the 1990 act
are: the HOME investment partnerships block grant program, the
homeownership and opportunity for people everywhere (HOPE)
program, and the national homeownership trust demonstration.
For 1994, funds were appropriated for both the HOME and HOPE
programs but not for the homeownership trust demonstration.
    The HOME investment partnerships program is designed to
increase the supply of housing affordable to low-income
families through the provision of Federal grants to State and
local governments. Funds may be used for tenant-based rental
assistance or for acquisition, rehabilitation or, in limited
circumstances, construction of both rental and ownership
housing. Participating jurisdiction must provide matching
contributions for HOME funds--25 percent for funds used for
rental assistance or rehabilitation, including substantial
rehabilitation; and 30 percent for funds used for new
construction.
    The multifaceted homeownership and opportunity for people
everywhere (HOPE) program is designed to increase homeownership
opportunities among low-income households, to combine
traditional housing assistance programs for certain homeless
people with supportive services, and to preserve certain
federally assisted rental housing units for low-income use. To
increase ownership opportunities, HOPE grants are provided to
private nonprofits, cooperatives, public agencies, and
instrumentalities to enable low-income households to become
owners of units in public and Indian housing and other
multifamily or single-family properties that are owned or whose
mortgages are held by various Federal agencies, State or local
governments, or by the Resolution Trust Corporation. To address
the needs of homeless individuals with mental illness,
substance abuse problems, or AIDS, the shelter plus care
component of HOPE provides funds for section 8-like rental
assistance, to be combined with supportive services funded at
the State or local level. Finally, to address the potential
loss of low-income rental housing projects whose owners are
eligible to terminate the low-income use through prepaying
their mortgages, HOPE provides funds for incentives to owners
not to prepay; to assist residents or other qualified
organizations in purchasing the projects; and for vouchers to
assist tenants adversely affected by prepayment.
    The national homeownership trust demonstration is designed
to lower the cost of ownership for moderate-income, first-time
homebuyers by establishing a trust fund to help buy down the
maximum mortgage interest rate on eligible properties to 6
percent. An eligible property would be a single-family
residence or cooperative unit for which the mortgage amount
does not exceed the limits established for FHA insurance.

Trends in commitments for housing assistance

    Although the Federal Government has been subsidizing the
shelter costs of lower-income households since 1937, more than
half of all currently outstanding commitments were funded over
the past 18 years. Between 1977 and 1994, about 2.7 million net
new commitments were funded to aid lower-income renters.
Another 1.0 million new commitments were provided in the form
of mortgage assistance to lower- and moderate-income
homebuyers. Between 1977 and 1983, the number of net new rental
commitments funded each year declined steadily, however, from
375,000 to 78,000. Trends have been somewhat erratic since
1983. Over the 18-year period, commitments for new homebuyers
generally decreased, ranging from a high of 140,000 in 1980 to
a low of less than 24,000 in 1991 (see table 18-25).

       TABLE 18-25.--NET NEW COMMITMENTS FOR RENTERS AND NEW COMMITMENTS FOR HOMEBUYERS, 1977-94
----------------------------------------------------------------------------------------------------------------
                                                                Net new commitments for renters
                                                            ----------------------------------------     New
                        Fiscal year                                            New                   commitments
                                                               Existing   construction     Total         for
                                                               housing                               homebuyers
----------------------------------------------------------------------------------------------------------------
1977.......................................................      127,581       247,667      375,248      112,234
1978.......................................................      126,472       214,503      340,975      112,214
1979.......................................................      102,669       231,156      333,825      107,871
1980.......................................................       58,402       155,001      213,403      140,564
1981.......................................................       83,520        94,914      178,434       74,636
1982.......................................................       37,818        48,157       85,975       66,711
1983.......................................................       54,071        23,861       77,932       54,550
1984.......................................................       78,648        36,719      115,367       44,409
1985.......................................................       85,741        42,667      128,408       45,387
1986.......................................................       85,476        34,375      119,851       25,479
1987.......................................................       72,788        37,247      110,035       24,132
1988.......................................................       65,295        36,456      101,751       26,200
1989.......................................................       68,858        30,049       98,907       25,264
1990.......................................................       61,309        23,491       84,800       24,968
1991.......................................................       55,900        28,478       84,378       23,879
1992\1\....................................................       62,595        38,324      100,919       25,690
1993\1\....................................................       50,593        34,065       84,658       30,982
1994 (estimate)\1\.........................................       64,791        35,861      100,652       42,230
----------------------------------------------------------------------------------------------------------------
\1\Figures are not adjusted for units for which funds were deobligated because data were unavailable.

Note: Net new commitments for renters represent net additions to the available pool of rental aid and are
  defined as the total number of commitments for which new funds are appropriated in any year. To avoid double-
  counting, these numbers are adjusted for the number of commitments for which such funds are deobligated or
  canceled that year (except where noted otherwise); the number of commitments for units converted from one type
  of assistance to another; in the FmHA Section 515 program, the number of units that receive more than one
  subsidy; starting in 1985, the number of commitments specifically designed to replace those lost because
  private owners of assisted housing opt out of the programs or because public housing units are demolished;
  and, starting in 1989, the number of commitments for units whose section 8 contracts expire.
New commitments for homebuyers are defined as the total number of new loans that the FmHA or HUD makes or
  subsidizes each year. This measure of program activity is meant to indicate how many new homebuyers can be
  helped each year and is therefore not adjusted to account for homeowners who leave the programs in any year
  because of mortgage repayments, prepayments, or foreclosures. Thus, it does not represent net additions to the
  total number of assisted homeowners and therefore cannot be added to net new commitments for renters.

Source: Congressional Budget Office based on data provided by the Department of Housing and Urban Development
  and the Farmers Home Administration.

    The production-oriented approach in rental programs has
been sharply curtailed in recent years in favor of the less
costly section 8 existing-housing and voucher programs. Between
1977 and 1982, commitments through programs for new
construction and substantial rehabilitation ranged annually
from 53 percent to 73 percent of the total; since then,
however, they have ranged between 28 percent and 40 percent of
all additional rental commitments.
    The total number of households receiving assistance has
increased substantially, from 3.2 million at the beginning of
fiscal year 1977 to an estimated 5.8 million at the beginning
of fiscal year 1994--an increase of more than 80 percent (see
table 27). This increase results largely from net new
commitments over the past 18 years, but also from commitments
made before 1977 that have been processed during this period.
The number of households receiving rental subsidies increased
from 2.1 million to 5.0 million. The number of homeowners
receiving assistance in a given year rose from less than 1.1
million in 1977 to over 1.2 million in 1983, but then declined
steadily to less than 0.8 million by 1994. The latter pattern
reflects commitments for newly assisted households being more
than offset by loan repayments, prepayments, and foreclosures
among previously assisted households, and by sales of 141,000
loans by the FmHA to provide investors. (Although these 141,000
families continued to benefit from these loans, even after the
transfer to the private sector, data are not readily available
on the attrition of these loans between 1988 and 1994). Thus,
the proportion of all assisted households that receives
homeownership assistance has declined from 34 percent at the
beginning of 1977 to 13 percent at the beginning of 1994. Among
rental assistance programs, the shift away from production-
oriented programs toward existing housing is reflected in the
increasing proportion of renters receiving aid through the
latter approach, from 13 percent at the beginning of fiscal
year 1977 to 40 percent at the beginning of 1994, with the
proportion of renters receiving household-based subsidies
increasing from 8 percent to 28 percent.

            TABLE 18-26.--TOTAL HOUSEHOLDS RECEIVING ASSISTANCE BY TYPE OF SUBSIDY, 1977-94
                                            [Households in thousands]
----------------------------------------------------------------------------------------------------------------
                                                 Assisted renters
                              ------------------------------------------------------                    Total
                                     Existing housing                                Total assisted    assisted
                              ------------------------------      New        Total    homeowners\1\   homeowners
                               Household  Project            construction  assisted                      and
                                 based     based   Subtotal                 renters                   renters\1\
----------------------------------------------------------------------------------------------------------------
Beginning of fiscal year:
    1977.....................       162       105       268       1,825       2,092        1,071         3,164
    1978.....................       297       126       423       1,977       2,400        1,082         3,482
    1979.....................       427       175       602       2,052       2,654        1,095         3,749
    1980.....................       521       185       707       2,189       2,895        1,112         4,007
    1981.....................       599       221       820       2,379       3,012        1,127         4,139
    1982.....................       651       194       844       2,559       3,210        1,201         4,411
    1983.....................       691       265       955       2,702       3,443        1,226         4,668
    1984.....................       728       357     1,086       2,836       3,700        1,219         4,920
    1985.....................       749       431     1,180       2,931       3,887        1,193         5,080
    1986.....................       797       456     1,253       2,986       3,998        1,176         5,174
    1987.....................       893       473     1,366       3,047       4,175        1,126         5,301
    1988.....................       956       490     1,446       3,085       4,296          918         5,213
    1989.....................     1,025       509     1,534       3,117       4,402          892         5,295
    1990.....................     1,090       527     1,616       3,141       4,515          875         5,390
    1991.....................     1,137       540     1,678       3,180       4,613          853         5,465
    1992.....................     1,166       554     1,721       3,204       4,680          826         5,506
    1993.....................     1,326       574     1,900       3,196       4,851          774         5,625
    1994.....................     1,392       593     1,985       3,213       5,008          751         5,759
----------------------------------------------------------------------------------------------------------------
\1\Starting 1988, figures reflect a one-time decrease of 141,000 in the number of assisted homeowners because of
  asset sales by the FmHA to private investors.

Note: Figures for total assisted renters have been adjusted since 1980 to avoid double-counting households
  receiving more than one subsidy.

Source: Congressional Budget Office based on data provided by the Department of Housing and Urban Development
  and the Farmers Home Administration.


          BUDGET AUTHORITY AND OUTLAYS FOR HOUSING ASSISTANCE

    Funding for most additional commitments for housing
assistance is provided each year through appropriations of
long-term budget authority for subsidies to households and
through appropriations of budget authority for grants, direct
loans and loan guarantees to public housing agencies,
homebuyers, and developers of rental housing.
    Annual appropriations of new budget authority for housing
assistance have been cut dramatically during the 1980s. These
cuts reflect four underlying factors: the previously mentioned
reduction in the number of newly assisted households; the shift
toward cheaper existing-housing assistance; a systematic
reduction in the average term of new commitments from more than
24 years in 1977 to about 8 years in 1994; and the changes in
the method for financing the construction and modernization of
public housing (since 1987) and the construction of housing for
the elderly and the disabled (since 1991).\26\ For HUD's
programs alone, appropriations of budget authority declined (in
1994 dollars) from a high of $71.5 billion in 1978 to a low of
$10.7 billion in 1989 (see table 18-27). The increased levels
of budget authority since 1990 reflect for a large part the
cost of renewing expiring section 8 contracts. Similarly, new
lending authority for FmHA's direct loan and loan guarantee
programs decreased (in 1994 dollars) from a high of $7.7
billion in 1979 to a low of $2.1 billion in 1991, increasing
somewhat to $3.2 billion in 1994.
---------------------------------------------------------------------------
    \26\Before 1987, new commitments for the construction and
modernization of public housing were financed over periods ranging from
20 to 40 years, with the appropriations for budget authority reflecting
both the principal and interest payments for this debt. Starting in
1987, these activities are financed with up-front grants, which reduces
their budget authority requirements by between 51 percent and 67
percent. Similarly, prior to 1991, housing for the elderly and the
disabled was financed by direct federal loans for the construction,
coupled with 20-year-section 8 rental assistance, which helped repay
the direct loan. Starting in 1991, the loans have been replaced by
grants, which has reduced the amount of budget authority required for
annual rental assistance.

   TABLE 18-27.--NET BUDGET AUTHORITY APPROPRIATED FOR HOUSING AID
                    ADMINISTERED BY HUD, 1977-94
                [In millions of current and 1994 dollars]
------------------------------------------------------------------------
                                               Net budget authority
                                         -------------------------------
               Fiscal year                    Current
                                              dollars      1994 dollars
------------------------------------------------------------------------
1977....................................          28,579          67,622
1978....................................          32,169          71,496
1979....................................          25,123          51,274
1980....................................          27,435          50,385
1981....................................          26,022          43,429
1982....................................          14,766          23,028
1983....................................          10,001          14,934
1984....................................          11,425          16,369
1985....................................          11,071          15,298
1986....................................          10,032          13,526
1987....................................           8,979          11,768
1988....................................           8,592          10,815
1989....................................        \1\8,879          10,668
1990....................................       \1\10,557          12,084
1991....................................       \1\19,239          20,962
1992....................................       \1\18,855          19,944
1993....................................       \1\20,236          20,773
1994 (estimate).........................       \1\19,371          19,371
------------------------------------------------------------------------
\1\Includes $99 million, $1,164 million, $8,814 million, $7,585 million,
  $6,926 million, and $5,278 million for renewing expiring section 8
  contracts in 1989, 1990, 1991, 1992, 1993, and 1994 respectively.

Note: All figures are net of funding rescissions, exclude
  reappropriations of funds, but include supplemental appropriations.
  Totals include funds appropriated for public housing operating
  subsidies, and, starting in 1992, for HOME and HOPE grants. Excludes
  budget authority for HUD's section 202 loan fund and for programs
  administered by the Farmers Home Administration.

Source: Congressional Budget Office, based on data provided by the
  Department of Housing and Urban Development.


TABLE 18-28.--OUTLAYS FOR HOUSING AID ADMINISTERED BY HUD, 1977-94
                [In millions of current and 1994 dollars]
------------------------------------------------------------------------
                                                         Outlays
                                               -------------------------
                  Fiscal year                     Current        1994
                                                  dollars      dollars
------------------------------------------------------------------------
1977..........................................        2,928        6,924
1978..........................................        3,592        7,981
1979..........................................        4,189        8,550
1980..........................................        5,364        9,852
1981..........................................        6,733       11,233
1982..........................................        7,846       12,238
1983..........................................        9,419       14.065
1984..........................................       11,000       15,750
1985..........................................       25,064       34,630
1986..........................................       12,179       16,420
1987..........................................       12,509       16,390
1988..........................................       13,684       17,223
1989..........................................       14,466       17,381
1990..........................................       15,690       17,960
1991..........................................       16,897       18,411
1992..........................................       18,242       19,200
1993..........................................       20,487       21,030
1994 (estimate)...............................       21,816       21,810
------------------------------------------------------------------------
Note: The bulge in outlays in 1985 is caused by a change in the method
  of financing public housing, which generated close to $14 billion in
  one-time expenditures. This amount paid off--all at once--the capital
  cost of public housing construction and modernization activities
  undertaken between 1974 and 1985, which otherwise would have been paid
  off over periods of up to 40 years. Because of this one-time
  expenditure, however, future outlays for public housing will be lower
  than they would have been otherwise.

Source: Congressional Budget Office based on data provided by the
  Department of Housing and Urban Development.

    On the other hand, with the continuing increase in the
number of households served, total outlays (expenditures on
behalf of all households actually receiving aid in a given
year) for all of HUD's housing assistance programs combined
have risen steadily (in 1994 dollars), from $6.9 billion in
fiscal year 1977 to an estimated $21.8 billion in fiscal year
1994, an increase of 215 percent (see table 18-28). Moreover,
despite measures to contain costs, and the increase in
household contributions from 25 percent to 30 percent of
adjusted income, average Federal outlays per unit for all
programs combined have generally continued to rise in real
terms, from around $2,750 in 1977 to an estimated $4,540 in
1994--an increase of 65 percent (see table 18-29).\27\
---------------------------------------------------------------------------
    \27\The change in the method for financing the construction and
modernization of public housing caused a large one-time expenditure in
1985, when most of the outstanding debt incurred since 1974 for
construction and modernization was paid off (see table 29). Without
that bulge in expenditures, average outlays per unit in 1985 would have
been about $3,950 in 1994 dollars.
---------------------------------------------------------------------------
    Several factors have contributed to this growth. First,
rents in assisted housing have probably risen faster than the
income of assisted households, causing subsidies to rise faster
than the inflation index used here--the revised Consumer Price
Index, for all urban consumers (CPI-U-X1).\28\ Second, the
number of households that occupy units completed under the
section 8 new construction program has risen. These recently
constructed units require larger subsidies compared with the
older units that were built some time ago under the mortgage-
interest subsidy programs and the public housing program.
Third, the share of households receiving less costly
homeownership assistance has decreased. Fourth, housing aid is
being targeted toward a poorer segment of the population,
requiring larger subsidies per assisted household.
---------------------------------------------------------------------------
    \28\For example, between 1980 and 1990, the CPI-U-X1 increased 59
percent. Over the same period, median household income of renters and
the Consumer Price Index for residential rents increased by 70 percent
and 71 percent, respectively, but the maximum rents allowed for section
8 existing-housing rental certificates--the so-called fair market
rents--rose 85 percent.

 TABLE 18-29.--PER UNIT OUTLAYS FOR HOUSING AID ADMINISTERED BY HUD,
                              1977-94
                      [In current and 1994 dollars]
------------------------------------------------------------------------
                                                    Per unit outlays
                                               -------------------------
                  Fiscal year                     Current        1994
                                                  dollars      dollars
------------------------------------------------------------------------
1977..........................................        1,160        2,750
1978..........................................        1,310        2,910
1979..........................................        1,430        2,910
1980..........................................        1,750        3,210
1981..........................................        2,100        3,510
1982..........................................        2,310        3,600
1983..........................................        2,600        3,890
1984..........................................        2,900        4,150
1985..........................................        6,420        8,870
1986..........................................        3,040        4,090
1987..........................................        3,040        3,980
1988..........................................        3,270        4,110
1989..........................................        3,390        4,070
1990..........................................        3,610        4,130
1991..........................................        3,830        4,180
1992..........................................        4,060        4,300
1993..........................................        4,450        4,570
1994 (estimate)...............................        4,540        4,540
------------------------------------------------------------------------
Note: The peak in outlays per unit in 1985 of $8,870 is attributable to
  the bulge in 1985 expenditures associated with the change in the
  method for financing public housing. Without this change, outlays per
  unit would have amounted to around $3,950 in 1994 dollars.

Source: Congressional Budget Office based on data provided by the
  Department of Housing and Urban Development.

                  SCHOOL LUNCH AND BREAKFAST PROGRAMS

    The National School Lunch Program (NSLP) and the School
Breakfast Program (SBP) provide Federal cash and commodity
support to participating public and private schools and
nonprofit residential institutions that serve meals to
children. Each program has a three-tiered reimbursement system
that allows children from households with incomes at or below
130 percent of the poverty line to receive free meals, permits
children with incomes between 130 percent and 185 percent of
poverty to receive meals at a reduced price, and provides a
small subsidy for the meals of children who do not apply for,
or whose family income does not qualify them for free or
reduced price meals.\29\ Children in AFDC or food stamp
families are automatically eligible to receive free breakfast
and lunch. An estimated 56 percent of households receiving AFDC
also receive free or reduced-price meals.\30\
---------------------------------------------------------------------------
    \29\For example, in the 1993-94 school year, the NSLP schools
receive Federal cash subsidies of $1.73, $1.33, and $0.17,
respectively, for each free, reduced-price, or ``full-price'' lunch
served to children from these three income categories. An additional 14
cents worth of commodity assistance is mandated for all lunches. The
corresponding levels of Federal subsidies in the SBP are $0.96, $0.66,
and $0.19. Additional subsidies are available for ``severe need''
schools, and ``bonus'' commodity assistance is also offered if Federal
commodity stocks are available.
    \30\Other programs that provide nutritional assistance to children
include the Child Care Food Program, the Summer Food Service Program,
and the Special Milk Program.
---------------------------------------------------------------------------

    The NSLP provides subsidized lunches to children in most
schools. During fiscal year 1993, the average daily
participation was 24.8 million students. More than 4.1 billion
meals were served at a total Federal program cost of $4.7
billion (see table 18-30). In fiscal year 1993, 93,000
elementary and secondary schools participated in the NSLP.
Nearly 44 million children were enrolled in these schools, and
58 percent of these students participated in the program. Just
over half of the meals subsidized by the NSLP go to children
from lower income families although nearly 90 percent of
Federal funding is used for these children's lunches. In fiscal
year 1993, 47 percent of the children receiving NSLP lunches
received free lunches, 7 percent received reduced-price
lunches, and the remaining 46 percent paid full price for their
meals.
    The SBP serves far fewer students than does the NSLP. In
fiscal year 1993, the program had an average daily
participation of 5.4 million students, with total Federal
program costs of $868 million (see table 18-31). The program
operated in 55,000 schools, or just over half of the schools
participating in the school lunch program. Nearly 27 million
children were enrolled in these schools, of whom 20 percent
participated in the program. The SBP also differs from the NSLP
in that most of the schools that offer the program are in low-
income areas, and the children who participate in the program
are predominantly from low- and moderate-income families. In
fiscal year 1993, 88 percent of the SBP participants received
free or reduced-price breakfasts.

 TABLE 18-30.--THE NATIONAL SCHOOL LUNCH PROGRAM: PARTICIPATION AND FEDERAL COSTS, FISCAL YEARS 1977-93
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                       Participation 9 month average (in
                                                                 millions)\1\                            Federal
                                                  ------------------------------------------            costs in
                   Fiscal year                                           Full-                Federal   constant
                                                     Free    Reduced-    price    Total\3\    costs\4\    1993
                                                     meals     price   meals\2\                         dollars
                                                              meals
----------------------------------------------------------------------------------------------------------------
1977.............................................      10.5       1.3       14.5       26.3   $2,111.1  $5,066.6
1978.............................................      10.3       1.5       14.9       26.7    2,293.6   5,160.6
1979.............................................      10.0       1.7       15.3       27.0    2,659.0   5,424.4
1980.............................................      10.0       1.9       14.7       26.6    3,044.9   5,450.4
1981.............................................      10.6       1.9       13.3       25.8    2,959.5   4,764.8
1982.............................................       9.8       1.6       11.5       22.9    2,611.5   3,917.3
1983.............................................      10.3       1.5       11.2       23.0    2,828.6   3,101.5
1984.............................................      10.3       1.5       11.5       23.3    2,948.2   4,098.0
1985.............................................       9.9       1.6       12.1       23.6    3,034.4   4,096.4
1986.............................................      10.0       1.6       12.2       23.8    3,160.2   4,139.9
1987.............................................      10.0       1.6       12.4       24.0    3,245.6   4,154.4
1988.............................................       9.8       1.6       12.8       24.2    3,383.7   4,162.0
1989.............................................       9.7       1.6       12.7       24.2    3,479.4   4,070.0
1990.............................................       9.9       1.6       12.8       24.1    3,676.4   4,117.6
1991.............................................      10.3       1.8       12.1       24.2    4,072.9   4,317.3
1992.............................................      11.1       1.7       11.7       24.5    4,474.5   4,608.7
1993.............................................      11.8       1.7       11.3       24.8    4,663.8   4,663.8
----------------------------------------------------------------------------------------------------------------
\1\In order to reflect participation for the actual school year (September through May), these estimates are
  based on 9 month averages of October through May, plus September, rather than averages of the 12 months of the
  fiscal year (October through September).
\2\The Federal Government provides a small subsidy for these meals.
\3\Details may not sum to total because of rounding.
\4\Includes cash payments and entitlement commodities and cash in lieu of commodities; does not include value of
  bonus commodities.

Note: Constant dollars were calculated using the fiscal year CPI-U.

Sources: U.S. Department of Agriculture, Food and Nutrition Service, ``Annual Historical Review of FNS Programs:
  Fiscal Year 1988, ``Food Program Update fiscal year 1990 (January 1991), and ``Review of FNS Food Assistance
  Program Activity, fiscal year 1991 (December 1991), and fiscal year 1992 (December 1992).
For fiscal year 1993, ``Program Information Report'' (January 1994).


   TABLE 18-31.--THE SCHOOL BREAKFAST PROGRAM: PARTICIPATION AND FEDERAL COSTS, FISCAL YEARS 1977-93
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                       Participation 9 month average (in
                                                                 millions)\1\                            Federal
                                                  ------------------------------------------            costs in
                   Fiscal year                                           Full-                Federal   constant
                                                     Free    Reduced-    price    Total\3\    costs\4\    1993
                                                     meals     price   meals\2\                         dollars
                                                               meals
----------------------------------------------------------------------------------------------------------------
1977.............................................       2.0       0.1        0.4        2.5     $148.6    $356.6
1978.............................................       2.2        .2         .4        2.8      181.2     407.7
1979.............................................       2.6        .2         .5        3.3      231.0     471.2
1980.............................................       2.8        .2         .6        3.6      287.8     515.2
1981.............................................       3.0        .2         .5        3.8      331.7     534.0
1982.............................................       2.8        .2         .4        3.3      317.3     476.0
1983.............................................       2.9        .1         .3        3.4      343.8     498.5
1984.............................................       2.9        .1         .4        3.4      364.0     506.0
1985.............................................       2.9        .2         .4        3.4      379.3     512.1
1986.............................................       2.9        .2         .4        3.5      406.3     532.3
1987.............................................       3.0        .2         .4        3.7      446.8     571.9
1988.............................................       3.0        .2         .5        3.7      482.0     592.9
1989.............................................       3.1        .2         .5        3.8      507.0     593.2
1990.............................................       3.3        .2         .5        4.0      589.1     659.8
1991.............................................       3.6        .2         .6        4.4      677.2     717.8
1992.............................................       4.0        .3         .6        4.9      782.6     806.1
1993.............................................       4.4        .3         .7        5.4      868.4     868.4
----------------------------------------------------------------------------------------------------------------
\1\In order to reflect participation for the actual school year (September through May), these estimates are
  based on 9 month averages of October through May, plus September, rather than averages of the 12 months of the
  fiscal year (October through September).
\2\The Federal Government provides a small subsidy for these meals.
\3\Details may not sum to totals due to rounding.
\4\Does not include the value of any USDA bonus commodities donated to the program for no charge.

Note: Constant dollars were calculated using the fiscal year CPI-U.

Sources: U.S. Department of Agriculture, Food and Nutrition Service: ``Annual Historical Review of FNS Programs,
  Fiscal Year 1988,'' ``Food Program Update, fiscal year 1990'' (January 1991), and ``Review of FNS Food
  Assistance Program Activity, fiscal year 1991'' (December 1991) and fiscal year 1992 (December 1992). For
  fiscal year 1993, ``Program Information Report'' (January 1994).

THE SPECIAL SUPPLEMENTAL FOOD PROGRAM FOR WOMEN, INFANTS, AND CHILDREN
                                 (WIC)

    The Special Supplemental Food Program for Women, Infants,
and Children (WIC) provides food assistance and nutritional
screening to low-income pregnant and postpartum women and their
infants, as well as to low-income children up to age 5.
Participants in the program must have incomes at or below 185
percent of poverty, and must be nutritionally at risk. Under
the Child Nutrition Act of 1966, nutritional risk is defined as
detectable abnormal nutritional conditions; documented
nutritionally-related medical conditions; health-impairing
dietary deficiencies; or conditions that predispose people to
inadequate nutrition or nutritionally related medical problems.
    Beneficiaries of the special supplemental food program for
women, infants, and children (WIC) receive supplemental foods
each month in the form of actual food items or, more commonly,
vouchers for purchases of specific items in retail stores. The
law requires that the WIC program provide foods containing
protein, iron, calcium, vitamin A, and vitamin C. Among the
items that may be included in a food package are milk, cheese,
eggs, infant formula, cereals, and fruit or vegetable juices.
U.S. Department of Agriculture (USDA) regulations require
tailored food packages that provide specified types and amounts
of food appropriate for six categories of participants: (1)
infants from birth to 3 months, (2) infants from 4-12 months,
(3) women and children with special dietary needs, (4) children
from 1-5 years of age, (5) pregnant and nursing mothers, and
(6) postpartum nonnursing mothers. In addition to food
benefits, recipients also must receive nutrition education.
    The cost of providing WIC benefits varies widely depending
on the recipient category, type of package and foods contained
in it, as well as by regional differences in food and
administrative costs. The USDA estimated that in fiscal year
1993 the national average monthly cost of a WIC food package
was $29.82 per participant, and the average monthly per
participant administrative cost was $9.77. Thus, the total
average cost of serving each WIC participant in fiscal year
1993 was estimated at $39.59 per month or $475 annually.
    The WIC program has categorical, income, and nutritional
risk requirements for eligibility. Only pregnant and postpartum
women, infants, and children under age 5 may participate.
Income eligibility is set by each State. Regulations permit
States to use either the income cutoff level set for the
reduced-price school lunch program (185 percent of the poverty
income guideline, currently $26,548 for a family of four), or
the income level that is used for free and reduced-price health
care, as long as this is not higher than 185 percent of the
poverty level. States are prohibited by regulation from using
income criteria that are lower than 100 percent of the poverty
level. Most States use 185 percent as the cut-off level for WIC
income eligibility. South Dakota uses 175 percent statewide.
WIC applicants also must show evidence of health or nutrition
risk, medically verified by a health professional, in order to
qualify for the program.
    WIC participants receive benefits for a specified period of
time, and in some cases must be recertified during this time
period to show continued need. Pregnant women may continue
benefits throughout their pregnancy and for up to 6 months
after childbirth without recertification. Nursing mothers are
certified at 6-month intervals ending with their infant's first
birthday.
    WIC, which is federally funded, but administered by State
and local agencies, does not serve all who are eligible. In
fiscal year 1993, Federal costs totaled $2.8 billion and the
program served over 5.9 million women, infants, and children
(see table 18-32). In July of 1987, the USDA released a report
of the WIC eligibility study (``Estimation of Eligibility for
the WIC Program'') which found that in 1984, an estimated 9.6
million persons were income-eligible for the WIC program, and
7.5 million of those were estimated to be at nutritional risk
and, thus, fully eligible for the WIC program.
    In 1991, the Congressional Budget Office (CBO) updated and
revised USDA reestimates to reflect more recent Census data on
income and population growth. Using slightly higher assumptions
of nutritional risk than the USDA, CBO estimated that a total
of 8.5 million persons were eligible for WIC in fiscal year
1991. In that year, the program served some 4.8 million
recipients, or 56 percent of those estimated to be eligible by
CBO. Another USDA study released in February 1992 ``Study of
WIC Participant and Program Characteristics, 1990,'' indicated
that in 1990 nearly three-quarters (73 percent) of WIC
participants had incomes at or below the poverty level. The CBO
has projected that in fiscal year 1994 some 9.6 million mothers
and children will be eligible for WIC, and that 7.6 million of
them would apply for the program and receive benefits if
sufficient funds were available to fully fund the program.

    TABLE 18-32.--THE SUPPLEMENTAL FOOD PROGRAM FOR WOMEN, INFANTS, AND CHILDREN (WIC): PARTICIPATION AND
                                    FEDERAL COSTS, FISCAL YEARS 1977-93
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                          Participation (in thousands)                   Federal
                                                   -----------------------------------------            costs in
                    Fiscal year                                                               Federal   constant
                                                      Women    Infants  Children   Total\1\   costs\2\    1992
                                                                                                         dollars
----------------------------------------------------------------------------------------------------------------
1977..............................................     165.0     213.0     471.0      848.0     $255.9    $597.1
1978..............................................     240.0     308.0     633.0    1,181.0      379.6     827.5
1979..............................................     312.0     389.0     782.0    1,483.0      525.4   1,039.6
1980..............................................     411.0     507.0     995.0    1,913.0      724.7   1,261.9
1981..............................................     446.0     585.0   1,088.0    2,119.0      874.4   1,370.1
1982..............................................     478.0     623.0   1,088.0    2,189.0      948.2   1,384.5
1983..............................................     542.0     730.0   1,265.0    2,537.0    1,123.1   1,583.5
1984..............................................     657.0     825.0   1,563.0    3,045.0    1,386.3   1,876.7
1985..............................................     665.0     874.0   1,600.0    3,138.0    1,488.9   1,945.6
1986..............................................     712.0     945.0   1,655.0    3,312.0    1,580.5   2,014.3
1987..............................................     751.0   1,019.0   1,660.0    3,429.0    1,663.6   2,061.7
1988..............................................     815.0   1,095.0   1,683.0    3,593.0    1,802.4   2,145.9
1989..............................................     951.8   1,259.6   1,907.0    4,118.4    1,929.4   2,192.2
1990..............................................   1,035.0   1,412.5   2,069.4    4,516.9    2,125.9   2,301.0
1991..............................................   1,120.1   1,558.8   2,213.8    4,892.6    2,301.1   2,370.9
1992..............................................   1,221.5   1,684.1   2,505.2    5,410.8    2,566.5   2,566.5
1993..............................................   1,364.9   1,741.9   2,813.4    5,920.3     2819.5   2,737.0
----------------------------------------------------------------------------------------------------------------
\1\Details may not sum to totals due to rounding.
\2\Includes funding for WIC studies, surveys, and pilot projects.

Note: Constant dollars were calculated using the fiscal year CPI-U.

Sources: U.S. Department of Agriculture, Food and Nutrition Service, ``Annual Historical Review of FNS Programs:
  Fiscal Year 1986,'' and U.S. Department of Agriculture, Food and Nutrition Service, ``Food Program Updates for
  Fiscal Year 1990'' (January 1991), and ``Food Program Update. A Review of FNS Food Assistance Program
  Activity. Fiscal Year 1993'' (December 1993).

                      JOB TRAINING PARTNERSHIP ACT

    Title II of the Job Training Partnership Act of 1982 (JTPA)
provides block grants to States to fund training and related
services for economically disadvantaged youths and adults.
    Title II consists of three programs: the II-A adult
training program, the II-B summer youth employment and training
program, and the II-C youth training program. Prior to the 1992
amendments to JTPA, which became effective July 1, 1993--the
beginning of program year 1993--Title II-A provided services to
both adults and youth. (Since data for program year 1993 will
not be available until sometime after June 30, 1994, the end of
the program year, the title II-A data presented here are for
both adults and youth.)
    The title II JTPA programs are administered by States and
localities, which select participants and design projects
within Federal guidelines.
    The programs are intended to increase participants' future
employment and earnings and reduce their dependence on welfare.
Services authorized under title II-A include institutional and
on-the-job training, work experience, job search assistance,
counseling, and other work-related assistance. In general,
participants must be economically disadvantaged, which is
defined as being a member of a family whose total income for
the 6-month period prior to application (exclusive of
unemployment compensation, child support payments, and welfare
payments) does not exceed the higher of the poverty line or 70
percent of the Bureau of Labor Statistics' lower living
standard. Members of families receiving Aid to Families With
Dependent Children (AFDC) or other cash welfare payments and
those eligible for food stamps are also defined as economically
disadvantaged.
    As shown in table 18-33, of title II-A participants who
terminated during program year 1992, 46 percent were white, 33
percent were black and 18 percent were Hispanic. Fifty percent
were younger than 22. Of participants who terminated, 52
percent entered employment, and the average hourly wage for
terminees who entered employment was $5.79.
    Since the program was implemented in 1983, about one-fifth
of the participants terminating activities authorized by title
II-A were AFDC recipients at the time that they enrolled--27
percent in program year 1991 (July 1991-June 1992).
    Among title II-A terminees who were AFDC recipients at the
time of enrollment in program year 1991, women comprised 79
percent of the total, as compared with 47 percent of title II-A
participants who did not receive AFDC. Among AFDC recipients,
34 percent were school dropouts, compared with 26 percent of
those JTPA participants who were not AFDC recipients. AFDC
recipients were more likely to be placed in classroom training
(57 percent) than non-AFDC recipients (39 percent), and were
less likely to participate in on-job-training (9 percent) than
non-AFDC recipients (17 percent). The average entered
employment rate in program year 1991 for AFDC recipients in
JTPA was 39 percent, compared with an average entered
employment rate of 54 percent for those JTPA participants who
did not receive AFDC. The average hourly starting wage for AFDC
recipients entering employment was $5.64, compared with $5.81
for non-AFDC recipients.

TABLE 18-33.--CHARACTERISTICS OF JTPA TITLE II-A TERMINEES, SELECTED
                       PROGRAM YEARS, 1988-92
------------------------------------------------------------------------
                                         Program Years
       Selected        -------------------------------------------------
   Characteristics        1988      1989       990      1991      1992
------------------------------------------------------------------------
Total terminees.......   734,600   692,300   565,200   549,700   510,652
Sex:
    Male..............        47        45        43        44        44
    Female............        53        55        57        56        56
Minority status:
    White (excluding
     Hispanic)........        53        53        52        50        46
    Black (excluding
     Hispanic)........        31        32        33        34        33
    Hispanic..........        12        12        12        12        18
    Other.............         3         3         4         4         4
Age at enrollment:
    Younger than 19...        25        25        25        28     (\2\)
    19-21.............        16        15        16        15     (\2\)
    Adults, age 22-54.        54        55        54        52        49
    55 and older......         5         5         5         5         1
Economically
 disadvantaged........        95        93        93        93        NA
Receiving AFDC........        21        22        24        27        27
Receiving public
 assistance (including
 AFDC)................        42        43        46        50        30
U.C. claimant.........         4         4         5         6         7
Education status:
    School dropout....        29        29        28        28        24
    Student (HS or
     less)............        17        18        19        21        27
    High school
     graduate (or
     more)............        53        53        53        51        49
Program activity:
    Classroom
     training, basic..        11        11        14     \1\44        NA
    Classroom
     training, other..        23        24        26     \1\44        NA
    On-the-job
     training.........        22        22        18        15        NA
    Job search
     assistance.......        15        17        16        15        NA
    Work experience...         8         7         7         6        NA
    Other services....        21        18        19        20        NA
Median length of stay
 (in days)............     103.7     110.3     128.8     138.0     \3\27
Average entered
 employment rate......        67        61        55        50        52
Average hourly wage at
 termination..........     $5.01     $5.29     $5.54     $5.78     $5.79
------------------------------------------------------------------------
\1\Basic and other classroom training combined.
\2\The Job Training Annual Status Report, used for 1992, differs in its
  methodology from the Job Training Quarterly Survey used for 1988
  through 1991. In 1992, 50 percent of the terminees were age 21 or
  younger.
\3\The 1992 data are in weeks rather than days. In 1992, the median
  length of stay was 27 weeks.
Source: JTQS Special Paper No. 10, ``Review of JTPA Participant
  Characteristics and Program Outcomes Program Years 1984 through
  1989.'' Department of Labor, October 1991; Job Training Quarterly
  Survey. ``JTPA Title II A and III Enrollments and Terminations During
  Program Year 1990,'' Department of Labor, January 1992, Job Training
  Quarterly Survey. ``JTPA Title II-A and III Enrollments and
  Terminations During Program Year 1991,'' Department of Labor, February
  1993. Job Training Annual Status Report 1992, Department of Labor,
  February 1994.

    In fiscal year 1993, an estimated $1.7 billion is expected
to be spent for JTPA II-A and II-C grants, providing training
and other services to about 566,000 new enrollees. Data on
participation (new enrollees) and budget authority for recent
fiscal years are provided in table 18-34 below. Fiscal Year
1994 figures are estimates based on assumptions of continued
spending.

   TABLE 18-34.--JOB TRAINING PROGRAMS\1\ FOR THE DISADVANTAGED: NEW ENROLLEES, FEDERAL APPROPRIATIONS AND
                                       OUTLAYS, FISCAL YEARS 1975-93
----------------------------------------------------------------------------------------------------------------
                                                                                           Budget
                                                                 Budget                  authority    Outlays in
                  Fiscal year                        New       authority     Outlays    in constant    constant
                                                  enrollees    (millions)   (millions)      1990         1990
                                                                                          dollars      dollars
----------------------------------------------------------------------------------------------------------------
1975...........................................    1,126,000       $1,580       $1,304       $3,755       $3,099
1976...........................................    1,250,000        1,580        1,697        3,515        3,775
1977...........................................    1,119,000        2,880        1,756        5,964        3,636
1978...........................................      965,000        1,880        2,378        3,658        4,627
1979...........................................    1,253,000        2,703        2,547        4,829        4,550
1980...........................................    1,208,000        3,205        3,236        5,154        5,203
1981...........................................    1,011,000        3,077        3,395        4,493        4,958
1982...........................................        (\2\)        1,594        2,277        2,175        3,107
1983...........................................        (\2\)        2,181        2,291        2,846        2,990
1984...........................................      716,200        1,886        1,333        2,361        1,669
1985...........................................      803,900        1,886        1,710        2,279        2,066
1986...........................................    1,003,900        1,783        1,911        2,101        2,252
1987...........................................      960,700        1,840        1,880        2,108        2,154
1988...........................................      873,600        1,810        1,902        1,991        2,092
1989...........................................      823,200        1,788        1,868        1,877        1,961
1990...........................................      630,000        1,745        1,803        1,745        1,803
1991...........................................   \3\603,900        1,779        1,746        1,694        1,676
1992...........................................   \3\602,300        1,774        1,767        1,637        1,632
1993\3\........................................      566,000        1,692        1,747        (\2\)        (\2\)
1994\3\........................................      556,400        1,647        1,616        (\2\)        (\2\)
----------------------------------------------------------------------------------------------------------------
\1\Figures shown in years 1975 through 1983 are for training activities under the Comprehensive Employment and
  Training Act (CETA); public service employment under CETA is not included. Figures shown in years 1984 through
  1992 are for activities under title II-A of the Job Training Partnership Act. Fiscal year 1993 through 1994
  reflect figures for titles II-A and of the amended Job Training Partnership Act.
\2\Comparable figures are not available for these years.
\3\Estimate.

Source: Employment and Training Administration, Department of Labor (DOL), Employment and Training Reports of
  the President, Job Training Quarterly Survey data, budget briefing documents, conversation with DOL officials.

    Title II-B of JTPA authorizes a summer employment and
training program for economically disadvantaged youngsters,
aged 14-21. Services include a full range of remedial
education, classroom and on-job-training, as well as work
experience for which participants are paid minimum wage. The
summer program is administered through the nationwide network
of local service delivery areas.
    Approximately $849 million was appropriated for the summer
of 1993 with an estimated 614,600 participants served. For the
summer of 1994, $876.7 has been appropriated to date to serve
an estimated 623,300 individuals.
    In the summer of 1993, 41 percent of title II-B enrollees
were ages 14 and 15, and 59 percent were between the ages of 16
and 21. During that summer, 5 percent of enrollees were
dropouts, while 86 percent were students and 8 percent were
high school graduates. Black youth comprised 42 percent of
summer enrollees, while 29 percent were white and 25 percent
were Hispanic. Eight percent had limited English-speaking
ability, and 15 percent of summer youth had disabilities.
    Table 18-35 presents a funding and participation history of
the summer program.

  TABLE 18-35.--SUMMER YOUTH EMPLOYMENT PROGRAM: FEDERAL APPROPRIATIONS, OUTLAYS, AND PARTICIPATION LEVELS,
                                          FISCAL YEARS 1984-94\1\
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                         Outlays
                                                          Appropriations    Outlays       (1990     Participants
                                                                                         dollars)
----------------------------------------------------------------------------------------------------------------
1984....................................................         $824.5        $583.8       $730.7       767,600
1985....................................................          724.5         776.3        938.0       785,000
1986....................................................          636.0         746.1        879.2       634,400
1987....................................................          750.0         722.7        828.1       722,900
1988....................................................          718.1         707.1        777.7       604,500
1989....................................................          709.4         697.4        732.1       632,700
1990....................................................          699.8         699.5        699.5       538,000
1991....................................................          682.9         697.8        663.0    \2\771,903
1992....................................................       \3\995.2         957.8        649.6    \2\614,600
1993....................................................     \4\1,024.9         914.9        (\5\)    \2\623,300
1994....................................................       \6\888.3         990.8        (\5\)    \2\623,200
----------------------------------------------------------------------------------------------------------------
\1\Because JTPA is an advance-funded program, appropriations for the summer youth program in a particular fiscal
  year are generally spent the following summer. For example, fiscal year 1984 appropriations were spent during
  the summer of 1985.
\2\Estimate.
\3\Includes $500 million supplemental appropriation for summer 1992. The remaining $495.2 million is for summer
  1993.
\4\Includes $354.2 million for summer 1993 and $670.7 for summer 1994.
\5\Not available.
\6\Includes $206.0 million for summer 1994 and $682.3 million for summer 1995.

Source: Employment and Training Administration, Department of Labor (DOL), appropriations justifications
  documents, telephone conversation with DOL officials.

    Job Corps, authorized by title IV-B of JTPA, serves
economically disadvantaged youth, ages 14-24, who demonstrate
both the need for, and the ability to benefit from, an
intensive and wide range of services provided in a residential
setting. The program is administered directly by the Federal
Government through contractors and currently operates at 108
centers around the country. Services include basic education,
vocational skill training, work experience, counseling, health
care, and other supportive services.
    Labor Department data for program year 1992 (July 1, 1992-
June 30, 1993) indicate that about 61 percent of Job Corps
enrollees are male, 50 percent are black, 31 percent are white,
and 13 percent are Hispanic. Eighty percent are high school
dropouts, and 72 percent have never worked full-time. Forty-two
percent of Job Corps enrollees come from families on public
assistance.
    The average length of stay for Job Corps enrollees in
program year 1991 was 7.8 months, and the Labor Department
estimates that 54 percent of terminees entered employment after
leaving the program, while another 11 percent either continued
their education or entered another training program, for a
total positive termination rate in 1991 of 65 percent.
    Table 18-36 provides a funding and participation history of
Job Corps since 1982. The program was first authorized in the
mid-1960's by the Economic Opportunity Act and has been
authorized under JTPA since 1982.

   TABLE 18-36.--JOB CORPS: FEDERAL APPROPRIATIONS, OUTLAYS, AND PARTICIPATION, FISCAL YEARS 1982-94
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                                          Outlays
                                                           Appropriations    Outlays       (1990         New
                                                                                          dollars)    enrollees
----------------------------------------------------------------------------------------------------------------
1982.....................................................         $589.6        $595.0       $811.8       53,581
1983.....................................................          618.0         563.3        735.1       60,465
1984.....................................................          599.2         580.6        726.7       57,386
1985.....................................................          617.0         593.0        716.5       63,020
1986.....................................................          612.5         594.5        700.6       64,964
1987.....................................................          656.4         630.6        722.6       65,150
1988.....................................................          716.1         688.5        757.3       68,068
1989.....................................................          741.8         689.5        723.8       62,550
1990.....................................................          802.6         739.6        739.6       61,453
1991.....................................................          867.5         769.4        769.0       62,205
1992.....................................................          919.5         834.1        789.1    \1\64,917
1993.....................................................          966.1      \1\936.4         N.A.    \1\60,419
1994.....................................................        1,040.5    \1\1,000.0         N.A.    \1\60,472
----------------------------------------------------------------------------------------------------------------
\1\Estimate.

Source: Department of Labor (DOL) budget documents, telephone conversation with D.O.L. officials.

                               HEAD START

    Head Start began operating in 1965 under the general
authority of the Economic Opportunity Act of 1964. Head Start
provides a wide range of services to primarily low-income
children, ages 0 to 5, and their families. Its goals are to
improve the social competence, learning skills, and health and
nutrition status of low-income children so that they can begin
school on an equal basis with their more advantaged peers. The
services provided include cognitive and language development,
medical, dental, and mental health services (including
screening and immunizations); and nutritional and social
services. Parental involvement is extensive, through both
volunteer participation and employment of parents as Head Start
staff. Formal training and certification as child care workers
is provided to some parents through the Child Development
Associate program.
    Head Start's eligibility guidelines require that at least
90 percent of the children served come from families with
incomes at or below the poverty line. At least 10 percent of
the enrollment slots in each local program must be available
for children with disabilities. In fiscal year 1993 713,903
children were served in Head Start programs, at a total Federal
cost of $2.776 billion. Approximately 55 percent of Head Start
children in families receiving AFDC benefits. Table 18-37
provides historical data on participation in and funding of the
Head Start program, while table 18-38 provides characteristics
of children enrolled in the program.

 TABLE 18-37.--HEAD START: PARTICIPATION AND FEDERAL FUNDING, FISCAL
                           YEARS 1965-94
                          [Dollars in millions]
------------------------------------------------------------------------
               Fiscal year                  Enrollment    Appropriations
------------------------------------------------------------------------
1965 (summer only)......................         561,000           $96.4
1966....................................         733,000           198.9
1967....................................         681,400           349.2
1968....................................         693,900           316.2
1969....................................         663,600           333.9
1970....................................         477,400           325.7
1971....................................         397,500           360.0
1972....................................         379,000           376.3
1973....................................         379,000           400.7
1974....................................         352,800           403.9
1975....................................         349,000           403.9
1976....................................         349,000           441.0
1977....................................         333,000           475.0
1978....................................         391,400           625.0
1979....................................         387,500           680.0
1980....................................         376,300           735.0
1981....................................         387,300           818.7
1982....................................         395,800           911.7
1983....................................         414,950           912.0
1984....................................         442,140           995.8
1985....................................         452,080         1,075.0
1986....................................         451,732         1,040.0
1987....................................         446,523         1,130.5
1988....................................         448,464         1,206.3
1989....................................         450,970         1,235.0
1990....................................         548,470      \1\1,552.0
1991....................................         583,471         1,951.8
1992....................................         621,078         2,201.8
1993....................................         713,903         2,776.3
1994 (est.).............................         750,000         3,326.0
------------------------------------------------------------------------
\1\After sequestration.
\2\Projected enrollment.


           LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM (LIHEAP)

    The predecessor to the Low-Income Home Energy Assistance
Program (LIHEAP) was created by title III of the Crude Oil
Windfall Profit Tax Act of 1980 (P.L. 96-223). The purpose of
LIHEAP is to help low-income households meet their energy-
related expenses. In fiscal year 1981, $1.85 billion was
appropriated for the program.
    In 1981, title XXVI of the Omnibus Budget Reconciliation
Act (OBRA) (Public Law 97-35), the Low-Income Home Energy
Assistance Act of 1981, authorized the Secretary of Health and
Human Services to make LIHEAP allotments to States for fiscal
years 1982-84. The Act permitted States to provide three types
of energy assistance. States can: (1) help eligible households
pay their home heating or cooling bills, (2) use up to 15
percent of their LIHEAP allotment for low-cost weatherization,
and (3) provide assistance to households during energy-related
emergencies.

                    TABLE 18-38.--CHARACTERISTICS OF CHILDREN ENROLLED IN HEAD START
                                                  [In percent]
----------------------------------------------------------------------------------------------------------------
                                         Age of children enrolled                   Enrollment by race
                                  ------------------------------------------------------------------------------
           Fiscal year             Disabled  5 and                Under   Native
                                   children  older    4      3      3    American  Hispanic  Black  White  Asian
----------------------------------------------------------------------------------------------------------------
1980.............................     11.9      21     55     24      0        4        19      42     34      1
1982.............................     12.0      17     55     26      2        4        20      42     33      1
1984.............................     11.9      16     56     26      2        4        20      42     33      1
1986.............................     12.2      15     58     25      2        4        21      40     32      3
1988.............................     12.7      11     63     23      3        4        22      39     32      3
1990.............................     13.5       8     64     25      3        4        22      38     33      3
1991.............................     13.1       7     63     27      3        4        22      38     33      3
1992.............................     13.4       7     63     27      3        4        23      37     33      3
1993.............................     13.0       6     64     27      3        4        24      36     33      3
----------------------------------------------------------------------------------------------------------------
Source: Health and Human Services.


    The Human Services Reauthorization Act of 1984 (Public Law
98-558) amended the Low-Income Home Energy Assistance Act of
1981 and authorized appropriations for fiscal years 1985 and
1986. Appropriations for fiscal years 1982, 1983, and 1984 were
$1.875, $1.975, and $2.075 billion, respectively. Public Law
98-619 appropriated $2.1 billion for fiscal year 1985. Public
Law 99-178 appropriated $2.1 billion for fiscal year 1986.\31\
---------------------------------------------------------------------------
    \31\The Balanced and Emergency Deficit Control Act of 1985, as
reaffirmed by Public Law 99-366, required the cancellation of $90.3
million of fiscal year 1986 budget authority.
---------------------------------------------------------------------------

    The Human Services Reauthorization Act of 1986, Public Law
99-425, amended the Act and extended the appropriations
authorization through fiscal year 1990. Authorized
appropriations levels are: $2.050 billion for fiscal year 1987;
$2.132 billion for fiscal year 1988; $2.218 billion for fiscal
year 1989; and $2.307 billion for fiscal year 1990. The
appropriations for fiscal years 1987, 1988, 1989 and 1990 were
$1.825 billion, $1.532 billion, $1.383 billion, and $1.443
billion, respectively.\32\
---------------------------------------------------------------------------
    \32\Funding for Federal administration is not included beginning
with fiscal year 1988; these funds are now appropriated through a
separate budget account. The fiscal year 1989 appropriation for
allotments to States and territories (and training and technical
assistance) was reduced from $1.4 billion to $1.383 billion (1.2
percent) under the terms of Public Law 100-436.
---------------------------------------------------------------------------

    The Augustus F. Hawkins Human Services Reauthorization Act
of 1990, Public Law 101-501, amended the act and extended the
appropriations authorization through fiscal year 1994. The
National Institutes of Health Revitalization Act, Public Law
103-43, extended the appropriation authorization through fiscal
year 1995. Major amendments in the 1990 Act included permission
for grantees to request waivers to spend up to 25 percent of
their allotment on weatherization activities, a reduction in
the percentage of allotments that can be carried over from year
to year, elimination of authority to transfer funds to other
block grants (beginning in fiscal year 1994), provision for
forward funding based on a July-June ``program year,'' and
establishment of a new ``leveraging incentive'' grant award
program. Under the leveraging incentive program grantees are to
be rewarded for adding their own or other funds to the LIHEAP
or finding other ways to stretch Federal dollars (e.g.,
purchasing fuel in bulk at discount rates); the program was
authorized at $25 million for fiscal year 1992 and $50 million
a year for fiscal years 1993, 1994, and 1995. Overall
authorized appropriations levels were: $2.150 billion for
fiscal year 1991; $2.230 billion for fiscal year 1992, and such
sums as are necessary for fiscal years 1993, 1994, and 1995.
The fiscal year 1991 appropriation was $1.610 billion,
including a $195 million energy emergency ``contingency fund''
that was distributed to States in late January 1991 in response
to large increases in home heating oil prices. For fiscal year
1992, $1.5 billion was appropriated, including $406 million
that was not made available to grantees until September 30,
1992. In fiscal year 1993, $1.346 billion was appropriated,
$682 million of which was not made available to grantees until
September 30, 1993. The fiscal year 1993 appropriation included
$1.437 billion in ``advance funding'' for the first three
quarters of fiscal year 1994, October 1993/June 1994 (this
represented the first step in the process of converting the
LIHEAP from a fiscal year funding cycle to a ``program year''
cycle, under which grantees know their allocations before the
heating season begins. An additional $600 million ``contingency
fund'' is available in 1994 if requested by the Administration
because of emergency needs. In February 1994 $300 million of
this fund was released to 23 States hit by unusually harsh
winter weather. LIHEAP received $1.475 billion in advance
funding for program year 1995 (October 1994/June 1995) as part
of the fiscal year 1994 Labor/HHS/Education Appropriation.
    The Human Services Reauthorization Act of 1994, Public Law
103-252, amended the act and extended appropriations
authorization for LIHEAP and the leverage incentive program
through fiscal year 1999. LIHEAP appropriations are authorized
at $2.0 billion for fiscal years 1995 through 1999; authorized
appropriation levels for the leveraging incentive program are
$50 million for fiscal year 1996 and 1997 and such sums as may
be necessary for fiscal years 1998 and 1999. Major amendments
to the act include: a permanent authorization of $600 million
in each of the fiscal years to meet additional home energy
needs arising from a natural disaster or other emergency;
allowing for the targeting of such emergency funds to
individual States; permitting States to give priority to
households with the highest home energy burden in relation to
household income, emphasizing households with young children,
elderly, or disabled members; and the establishment of the
Residential Energy Assistance Challenge Option (R.E.A.Ch.), an
incentive grant program designed to increase efficient energy
use, minimize health and safety risks, and prevent hopelessness
among low-income families with high energy burdens. Up to 25
percent of leveraging incentive monies may be used to fund
R.E.A.Ch. demonstrations.

                        ALLOTMENTS TO STATES\33\

    The maximum amount of LIHEAP funds that a State can carry
over to the next fiscal year is 10 percent. This provision
applies to a State's allotment after adjustments have been made
for tribal set aside. States must explain why funds are held
over until the next fiscal year and what types of assistance
the funds will provide. The amount carried over does not affect
the State's subsequent fiscal year allocation. Amounts above 10
percent that are not spent by the State must be reallocated by
the Secretary of Health and Human Services. Special allotment
and set-aside rules apply to grants for Indian tribes and the
territories.
---------------------------------------------------------------------------
    \33\As the result of court settlements of oil price overcharges
under the Emergency Petroleum Allocation Act of 1973, substantial
additional funding has been made available to States to supplement
Federal LIHEAP appropriations; in fiscal year 1991, an estimated $109
million of these supplemental funds were used for the LIHEAP.
---------------------------------------------------------------------------

    Table 18-39 shows State allotments for 1981 and selected
recent fiscal years, and table 18-40 illustrates the number of
households receiving benefits from the single largest program
component, heating assistance, average heating benefits and
total dollars spent on heating assistance.

                  ELIGIBILITY AND TYPES OF ASSISTANCE

    States have considerable discretion to determine
eligibility criteria for LIHEAP and the types of energy
assistance to be provided. At State option, LIHEAP payments can
be made to households, based on categorical eligibility, where
one or more persons are receiving: Supplemental Security
Income, Aid to Families with Dependent Children, food stamps,
or needs-tested veterans' benefits. States can also elect to
make payments to households with incomes that are up to 150
percent of the Federal poverty income guidelines or 60 percent
of the State's median income, whichever is greater. Individuals
who are denied benefits are entitled to an administrative
hearing. The term ``household'' is defined as any individual or
group of individuals who are living together as one economic
unit and for whom residential energy is customarily purchased
in common, or who make undesignated payments for energy in the
form of rent. States cannot establish an income eligibility
ceiling that is below 110 percent of the poverty level, but may
give priority to those households with the highest energy costs
in relation to household income, taking into consideration the
presence of very young children, frail elderly, or persons with
disabilities. States also are prohibited from treating
categorically eligible and income eligible households
differently with respect to LIHEAP. However, Public Law 103-185
permits States to reduce benefits to tenants of federally
assisted housing if it is determined that such a reduction is
reasonably related to any utility allowance they may receive.
LIHEAP benefits cannot be used to calculate income or
resources, or affect other benefits, under Federal or State
law, including public assistance programs.
    States are required to give assurances that the largest
benefits go to those households that have the lowest income and
highest energy costs relative to their income, taking into
account family size. In addition, States are to conduct
outreach activities aimed at making households with elderly or
handicapped individuals aware that energy assistance is
available. These outreach services may include: toll-free
information hotlines, special application periods,
transportation to LIHEAP application offices, and home visits.
Section 607(a) of Public Law 98-558 directs the Department of
Health and Human Services to collect annual data, including
information on the number of LIHEAP households in which at
least one household member is 60 years old or handicapped.
    States also have considerable discretion in the methods
they have available to provide assistance to eligible
households. Methods vary by State and program. A list of
methods that are used includes cash payments, vendor payments,
two-party checks, vouchers/coupons, and payments directly to
landlords. When paying home energy suppliers directly, States
are required to give assurances that suppliers will charge the
eligible households the difference between the amount of the
assistance and the actual cost of home energy. Also, States may
use Federal funds to provide tax credits to energy suppliers
who supply home energy to low-income households at reduced
rates.

                      PLANNING AND ADMINISTRATION

    States are required to submit an application for funds to
the Secretary of Health and Human Services. As part of the
annual application, the chief executive officer of the State is
required to make several assurances related to eligibility
requirements, anticipated use of funds, as well as to satisfy
planning and administrative requirements. States are prohibited
from using more than 10 percent of their total LIHEAP allotment
for planning and administrative costs.
    States must provide for public participation and public
hearings in the development of the State plan, including making
it, and any substantial revisions, available for public
inspection and allowing public comment on the plan. Public Law
98-558 requires States to engage an independent person or
organization to prepare an audit at least once every 2 years.
However, the Single Audit Act of 1984 (P.L. 98-502) supersedes
this requirement in most instances, and requires grantees to
conduct an annual audit of all Federal financial assistance
received. The law also contains two other related provisions.
First, the Comptroller General is directed to evaluate, at
least once every 3 years, whether a State's LIHEAP expenditures
are consistent with law. Second, the Department of Health and
Human Services is to develop regulations to prevent waste,
fraud, and abuse in LIHEAP.

                                    TABLE 18-39.--LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM STATE ALLOTMENTS
                                                                [In thousands of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Fiscal year--
                            States                            ------------------------------------------------------------------------------------------
                                                                 \1\1981        1985         1990         1991        1992          1993         1994
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama......................................................       15,674       18,234       11,961       15,856       12,664       11,344       12,127
Alaska.......................................................        7,505        7,247        7,635        9,594        8,034        7,241        7,741
Arizona......................................................        6,426        8,150        5,785        6,200        6,125        5,486        5,865
Arkansas.....................................................       11,960       13,973        9,127       11,069        9,663        8,656        9,253
California...................................................       84,088       97,894       64,168       68,764       67,940       60,855       65,056

Colorado.....................................................       29,319       33,299       22,373       23,419       23,688       21,218       22,683
Connecticut\2\...............................................       38,247       43,440       29,187       35,541       30,902       27,680       34,986
Delaware\2\..................................................        5,077        5,931        3,874        5,471        4,102        3,674        4,214
District of Columbia.........................................        5,940        6,940        4,533        5,269        4,799        4,299        4,595
Florida......................................................       25,921       28,970       18,926       21,731       20,039       17,950       19,188

Georgia......................................................       19,609       22,910       14,964       17,439       15,844       14,191       15,171
Hawaii.......................................................        1,975        2,243        1,507        1,531        1,596        1,429        1,528
Idaho........................................................       11,181       12,877        8,727        9,493        9,240        8,277        8,848
Illinois\2\..................................................      105,862      123,679       80,784       85,711       85,533       76,614       93,921
Indiana\2\...................................................       47,431       55,371       36,577       41,069       38,727       34,689       39,408

Iowa\2\......................................................       29,470       38,581       25,922       28,719       27,466       24,584       34,335
Kansas.......................................................       15,515       18,211       11,905       12,901       12,605       11,290       12,069
Kentucky\2\..................................................       24,943       29,141       19,034       22,537       20,153       18,052       24,639
Louisiana....................................................       16,024       18,867       12,228       13,203       12,947       11,597       12,398
Maine\2\.....................................................       27,513       27,914       18,908       23,550       20,020       17,932       27,275

Maryland\2\..................................................       29,285       34,214       22,348       29,361       23,662       21,194       29,288
Massachusetts\2\.............................................       82,707       86,878       58,383       69,364       61,815       55,369       73,071
Michigan\2\..................................................      111,598      113,951       76,697       86,099       81,206       72,738      126,605
Minnesota\2\.................................................       72,409       82,239       55,256       62,063       58,504       52,404       93,421
Mississippi..................................................       13,930       15,683       10,255       12,391       10,858        9,725       10,397

Missouri.....................................................       37,885       48,026       32,268       35,779       34,165       30,603       32,715
Montana......................................................       11,350       12,298       10,236       10,938       10,838        9,708       10,378
Nebraska.....................................................       13,799       19,032       12,820       13,851       13,573       12,158       12,997
Nevada.......................................................        3,560        4,151        2,717        3,214        2,877        2,577        2,754
New Hampshire\2\.............................................       14,481       16,447       11,051       13,648       11,700       10,480       14,352

New Jersey\2\................................................       71,025       82,849       54,200       66,929       57,386       51,402       61,894
New Mexico...................................................        8,867        9,973        7,242        8,123        7,668        6,868        7,342
New York\2\..................................................      231,907      263,291      176,970      214,983      187,373      167,835      240,880
North Carolina...............................................       34,561       40,378       26,374       35,612       27,924       25,013       26,739
North Dakota\2\..............................................        7,995       14,612       11,120       12,503       11,773       10,546       19,376

Ohio\2\......................................................       93,651      109,413       71,465       78,365       75,666       67,776       96,381
Oklahoma.....................................................       15,998       16,004       10,995       12,250       11,641       10,427       11,147
Oregon.......................................................       22,723       25,808       17,340       19,298       18,360       16,445       17,580
Pennsylvania\2\..............................................      124,568      141,479       95,059      107,475      100,647       90,152      116,857
Rhode Island\2\..............................................       12,594       14,220        9,610       11,572       10,175        9,114       11,471

South Carolina...............................................       13,822       14,544        9,500       12,451       10,058        9,009        9,631
South Dakota\2\..............................................       10,241       11,434        9,031       10,691        9,562        8,565       11,150
Tennessee....................................................       25,267       29,520       19,281       21,652       20,415       18,286       19,548
Texas........................................................       41,261       48,206       31,487       36,455       33,337       29,861       31,922
Utah.........................................................       13,289       14,827       10,397       11,062       11,008        9,860       10,541

Vermont\2\...................................................       10,854       12,328        8,283        9,813        8,770        7,855       13,197
Virginia\2\..................................................       39,019       41,677       27,222       36,051       28,822       25,817       28,277
Washington...................................................       33,104       40,896       28,522       31,495       30,199       27,050       28,917
West Virginia\2\.............................................       16,507       19,285       12,596       13,676       13,337       11,946       16,503
Wisconsin\2\.................................................       61,679       74,027       49,738       56,987       52,662       47,171       65,147
Wyoming......................................................        3,561        6,195        4,163        4,605        4,407        3,948        4,220
                                                              ------------------------------------------------------------------------------------------
  U.S. total.................................................    1,813,177    2,077,577    1,390,749    1,607,819    1,472,503    1,318,961    1,709,998
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Includes reallocation of funds and crisis intervention funds. Source: Low Income Energy Assistance Program; Report to Congress for Fiscal Year 1981;
  U.S. Department of Health and Human Services.
\2\Includes $300 million in LIHEAP contingency funds released in February 1994 to states hit by unusually harsh winter weather under the 1994 Emergency
  Supplemental Appropriations Act, Public Law 103-211.

Note: Columns may not add due to rounding. The table includes payments to Indian tribal organizations and excludes funding for Federal Administrative
  costs, payments to commonwealths and territories, and ``leveraging'' incentive grants.

Source: U.S. Department of Health and Human Services.


   TABLE 18-40.--HEATING ASSISTANCE BENEFITS, NUMBER OF HOUSEHOLDS
               ASSISTED, AND AVERAGE BENEFIT BY STATE
                           [Fiscal year 1993]
------------------------------------------------------------------------
                                             Estimated       Estimated
                              Heating        number of        average
          State             assistance      households      benefit (in
                            benefits\1\      assisted        dollars)
------------------------------------------------------------------------
  Total.................    $954,484,219       5,403,664              NA
                         -----------------------------------------------
Alabama.................       4,480,459          36,132             124
Alaska..................       4,652,490          13,370             348
Arizona\2\..............       3,906,462          26,941             145
Arkansas................       5,265,738          53,536              98
California\2\...........      35,189,243         380,460              92

Colorado................      23,358,952          70,811             330
Connecticut.............      29,104,137          73,052             475
Delaware................       3,288,026          14,141             233
District of Columbia....       3,308,603          15,081             219
Florida\2\..............      10,403,596         111,867              93

Georgia.................       9,637,845          60,194             160
Hawaii\2\...............       1,002,076           6,300             200
Idaho...................       5,227,737          28,842             182
Illinois................      54,888,350         234,512             245
Indiana.................      29,592,410         112,895             254

Iowa....................      15,610,411          66,320             235
Kansas..................       5,184,191          30,350             171
Kentucky................      17,421,342         155,548             112
Louisiana...............       4,529,551          50,328              90
Maine...................      15,470,441          55,574             290

Maryland................      21,662,246          89,461             242
Massachusetts...........      51,347,839         143,367             360
Michigan................      67,600,000         362,000             187
Minnesota...............      39,362,933         109,367             360
Mississippi.............       5,992,297          40,220             149

Missouri................      26,041,474         128,553             203
Montana.................       4,754,242          21,216             224
Nebraska................       6,500,000          35,600             182
Nevada..................       1,791,182           9,794             183
New Hampshire...........      9,751,5900          24,740             394

New Jersey..............      49,908,052         165,000             283
New Mexico..............       5,445,385          69,000             117
New York................     103,270,642         922,059             112
North Carolina..........      20,625,239         193,481             106
North Dakota............       7,812,043          17,201             454

Ohio....................      35,173,467         328,994             107
Oklahoma................       7,359,553          75,750              96
Oregon..................      12,529,063          58,730             201
Pennsylvania............      51,561,008         311,009             166
Rhode Island............       9,770,578          25,604             381

South Carolina..........       7,428,422          83,311              90
South Dakota............       6,935,609          19,016             319
Tennessee...............      12,778,314          63,829             200
Texas...................       6,927,484          75,000              92
Utah....................       7,948,771          36,969             215

Vermont.................       6,379,014          15,800             402
Virginia................      24,317,772         124,763             195
Washington..............      14,335,672          64,330             216
West Virginia...........       6,217,484          53,599             116
Wisconsin...............      38,604,000         128,333             300
Wyoming.................       2,830,784          11,314             250
------------------------------------------------------------------------
\1\State estimates of heating assistance obligations for fiscal year
  1993 from the following available funds: fiscal year 1992 LIHEAP funds
  carried over for use in fiscal year 1993; ``oil overcharge'' funds
  made available by States for use in LIHEAP; Federal LIHEAP allotments
  (net of set-asides for Indian tribes); and any State or other funds
  made available for LIHEAP heating assistance.
\2\Benefits for heating and cooling assistance combined.

Source: U.S. Department of Health and Human Services, March 1994. Data
  compiled from telephone interviews with State offices conducted in
  September 1993.

                    VETERANS' BENEFITS AND SERVICES

    The Department of Veterans Affairs (DVA) offers a wide
range of benefits and services to eligible veterans, members of
their families, and survivors of deceased veterans. The DVA
programs include veterans compensation and veterans pensions--
the main cash-assistance entitlement programs--readjustment and
rehabilitation benefits, education and job training programs,
medical care services, and the housing and loan guaranty
programs. Also, the DVA provides life insurance, burial
benefits, and special counseling and outreach programs. In
fiscal year 1993, Federal outlays for veterans' benefits and
services were $35.7 billion.

             VETERANS' COMPENSATION AND VETERAN'S PENSIONS

    Service-connected compensation is paid to veterans who have
incurred injuries or illnesses while in service. The amounts of
the monthly payments are determined by disability ratings that
are based on presumed average reductions in earnings capacities
caused by the disabilities. Disability ratings generally range
from 10 percent to 100 percent in 10-percent intervals;
multiple injuries may result in combined-degree ratings,
however, and some injuries are compensable at a zero-percent
rating. Death compensation or dependency and indemnity
compensation is paid to survivors of veterans who died as a
result of service-connected causes. In 1993, about 2.2 million
disabled veterans and 311,748 survivors received $13.4 billion
in compensation payments.
    Veterans pensions are means-tested cash benefits paid to
war veterans who have become permanently and totally disabled
from non-service-connected causes, and to survivors of war
veterans. Under the current or ``improved law'' program,
benefits are based on family sizes, and the pensions provide a
floor of income: for 1994, the basic benefit before subtracting
other income sources is $10,240 for a veteran with one
dependent ($7,818 for a veteran living alone). Somewhat less
generous benefits are available to survivors; a surviving
spouse with no children could receive two-thirds of the basic
benefit amount given a single veteran. About 895,596 persons
received $3.5 billion in veterans pension payments in 1993.

             READJUSTMENT, EDUCATION, AND TRAINING BENEFITS

    Several DVA programs support readjustment, education, and
job training for veterans and military personnel who meet
certain eligibility criteria. In 1992, the largest of these
programs was the Montgomery GI bill (MGIB). The MGIB provides
an entitlement to basic educational assistance to most persons
who are, or have been, members of the Armed Forces or the
Selected Reserve for specified periods of time after June 30,
1985. The purposes of the MGIB are to provide educational
assistance to help in the readjustment to civilian life, to aid
in recruitment and retention of qualified personnel in the
Armed Forces, and to develop a more highly educated and
productive work force.
    Under the MGIB, contributions are required, and veterans
can receive a basic educational benefit of up to $400 per month
for 36 months while in an educational program.
    There are also several employment and training programs for
veterans, including transition assistance for service persons
scheduled for separation from active duty and programs for
veterans who have been unable to find employment following
military service.
    Net outlays from the DVA account in 1993 for all education
and training programs came to $826 million.

                            MEDICAL PROGRAMS

    The DVA provides inpatient and outpatient medical and
health-related services, and operates 172 hospital centers, 128
nursing homes, 37 domiciliaries, and 353 outpatient clinics.
The DVA extends free priority care to service-connected
disabled veterans, to veterans in special categories, and to
needy nonservice-connected veterans--in 1994, those with
incomes $23,896 or less if married with one dependent, plus
$1,330 for each additional dependent, or $19,912 or less if
single. Veterans eligible under these criteria are called
``mandatory care'' veterans, and they are entitled to hospital
care. As facilities and other resources permit, the DVA
provides care to non-service-connected veterans with incomes
that exceed the mandatory care income limits. Medical care for
these veterans requires copayments. DVA-operated nursing home
care is augmented by DVA-supported care under contract in
private community nursing homes and with per diem payments for
veterans in State-run homes for veterans.
    The DVA operates a nationwide health system. In 1993,
approximately 2.8 million different veterans were VA patients
of which almost all received outpatient care and 500,000
received inpatient care. Construction and modernization of
facilities, as well as medical research and training programs,
are also funded through DVA appropriations. In 1993, DVA
medical programs cost the Federal Government $14.8 billion (see
table 43).

       TABLE 18-41.--EXPENDITURES FOR VETERANS BENEFITS AND SERVICES, FOR SELECTED FISCAL YEARS 
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                                Other
                                                                                              veterans
                                        Compensation  Readjustment,     Medical     Housing   benefits
              Fiscal year                    and        education,    programs\2\   loans\3\     and      Total
                                         pensions\1\  job training                            services

----------------------------------------------------------------------------------------------------------------
1975..................................       7,860          4,593         3,665           24       458    16,599
1980..................................      11,688          2,342         6,515          -23       665    21,185
1981..................................      12,909          2,254         6,965          201       662    22,991
1982..................................      13,710          1,947         7,517          102       682    23,958
1983..................................      14,250          1,625         8,272            3       696    24,846
1984..................................      14,400          1,359         8,861          244       751    25,614
1985..................................      14,714          1,059         9,547          214       758    26,292
1986..................................      15,031            526         9,872          114       813    26,356
1987..................................      14,962            454        10,266          330       769    26,782
1988..................................      15,963            454        10,842        1,292       877    29,428
1989..................................      16,544            459        11,343          878       843    30,066
1990..................................      15,241            278        12,134          517       943    29,112
1991..................................      16,961            427        12,889           85       987    31,349
1992..................................      17,296            783        14,091          901     1,067    34,138
1993..................................      17,758            826        14,812        1,299     1,025   35,720
----------------------------------------------------------------------------------------------------------------
\1\Primarily compensation and pension benefits. Includes small amounts for insurance and burial benefits.
\2\Medical program expenditure data include outlays for direct medical services, medical research and training,
  and construction programs.
\3\Numbers provided for expenditures under housing loans are not comparable to program expenditures in the other
  columns because they are revolving funds with loan outlays and repayments.

Source: Department of Veterans Affairs.


    TABLE 18-42.--NUMBER OF RECIPIENTS OF VETERANS BENEFITS AND SERVICES, FOR SELECTED FISCAL YEARS
                                                 [In thousands]
----------------------------------------------------------------------------------------------------------------
                                                                        Readjustment,
                       Fiscal year                        Compensation    education,      Medical      Housing
                                                          and pensions   job training   programs\1\     loans
----------------------------------------------------------------------------------------------------------------
1975....................................................         4,855         2,804          1,985          290
1980....................................................         4,646         1,232          2,671          297
1981....................................................         4,535         1,074          2,765          188
1982....................................................         4,407           900          2,720          103
1983....................................................         4,286           755          2,933          245
1984....................................................         4,123           629          3,026          252
1985....................................................         4,005           491          2,963          179
1986....................................................         3,900           388          2,942          314
1987....................................................         3,850           312          2,900          479
1988....................................................         3,762           273          2,922          235
1989....................................................         3,686           330          3,344          190
1990....................................................         3,614           329          3,018          196
1991....................................................         3,546           275          2,963          181
1992....................................................         3,462           318          2,927          266
1993....................................................         3,397           362          2,800         383
----------------------------------------------------------------------------------------------------------------
\1\Reprints are the number of applicants during the year.

Source: Department of Veterans Affairs.

                       WORKERS' COMPENSATION\34\

    Workers' compensation programs provide cash and medical
benefits to persons with job-related disabilities and
survivors' benefits to dependents of those whose death resulted
from a work-related accident or illness. In 1991, workers'
compensation laws protected approximately 93.6 million workers
in 51 jurisdictions, including the District of Columbia.
Although the laws vary from State to State, the underlying
principle is that employers should assume the costs of
occupational disabilities without regard to fault. Prior to the
enactment of workers' compensation laws (the first of which was
in 1908), a worker was only protected in cases where employer
negligence could be proven as the cause of injury or death. By
1949, all States had enacted laws to cover workers and their
dependents in any case of occupational disability or death.
---------------------------------------------------------------------------
    \34\Drawn from William J. Nelson, Jr., ``Workers' Compensation:
Coverage, Benefits, and Costs, 1989,'' Social Security Bulletin, Spring
1992/Vol. 55, No. 3, pp. 51-56, and ``Workers' Compensation: Coverage,
Benefits, and Costs, 1990-91,'' Social Security Bulletin, Fall 1993/
Vol. 56, No. 3, pp. 68-74.
---------------------------------------------------------------------------

    Workers' compensation benefits are paid by insurance
companies, special State insurance funds, or by employers
acting as self-insurers. State programs are administered by
industrial commissions or special units within State
departments of labor. The Federal programs (except for a part
of the Black Lung benefit program) are administered by the U.S.
Department of Labor.
    Three-fourths of all compensable claims for workers'
compensation benefits and one-fourth of all such cash benefits
paid involve a temporary total disability; i.e., an employee is
unable to work at all while he or she is recovering from the
injury, but is expected to recover fully. Most States will pay
benefits for the duration of the disability as long as the
condition continues to improve with medical treatment. If the
temporary total disability becomes permanent, most State laws
provide for weekly benefits either for life or as long as the
disability lasts.
    If a worker becomes permanently disabled (less than 1
percent of all claims), he or she may be eligible for cash
benefits under both workers' compensation and the Social
Security Disability Insurance (DI) program. The 1965 Amendments
to the Social Security Act stipulate a reduction in Social
Security payments so that total benefits under both programs do
not exceed the higher of 80 percent of a workers' former
earnings or the total family benefit under Social Security
before the offset.
    The remaining disability claims filed under workers'
compensation involve permanent partial disabilities of either
major or minor severity. Benefits are paid to cover the cost of
the injury (including permanent loss of function and handicap)
and to compensate for future reduction in earnings due to the
disability.

Coverage

    Coverage is compulsory for most private employers except in
New Jersey, South Carolina and Texas. If employers reject
coverage in these States, they lose the use of common-law
defenses against suits by employees. Many State programs exempt
employees of nonprofit, charitable, or religious institutions,
as well as very small employers, domestic and agricultural
employment, and casual labor. The coverage of State and local
public employees differs widely from one State program to
another.
    In 1991, the proportion of covered workers was 87 percent,
the same as it was in 1990. Wages and salaries of covered
workers (total covered payroll) totaled $2,300 billion,
representing 84 percent of all civilian wage and salary
payments in that year and a 2.2 percent increase over 1990.

Benefits

    Benefit levels are established by State formulas and are
usually calculated as a percentage of weekly earnings at the
time of injury or death (generally 66\2/3\ percent). Each State
(and Federal Government for Federal workers) sets a maximum
benefit level, which is periodically adjusted. Most often,
maximum benefits range between two-thirds and 100 percent of
the State's average weekly wage. As of January 1993, the
maximum weekly benefit varied from $236 in Mississippi, to $769
in Connecticut and $1,249 for Federal employees. Workers'
compensation benefits are calculated as a proportion of gross
pre-injury or death earnings (in most cases) and are not
subject to income taxes.
    Approximately $42.2 billion was provided in 1991 by
workers' compensation programs in total benefit payments,
including medical care and hospitalization benefits. This
represents an increase of 10.3 percent over 1990. Increases in
wages, medical costs, and the number of workers have all
contributed the rise in payments, as well as rising maximum
benefit levels. Benefit levels also are affected by changes in
the incidence and severity of occupational injuries and
diseases. Bureau of Labor Statistics' survey data indicate that
the rate of on-the-job injuries and illnesses per 100 full-time
workers was 8.4 in 1991, down from 8.8 in 1990. However, the
number of workdays lost per case was 22.2, the highest in more
than 50 years of collecting data (some of this may be due to
improved record keeping and monitoring).
    Although occupational disease claims currently account for
only about 2 percent of workers' compensation claims, the
amendment and interpretation of State laws that cover illnesses
with long latency periods is expected to increase this ratio.
In addition, medical advances and improved technology are
leading to the identification of different types of disorders.
For example, circulation trauma disorder, caused by constant
repetitive motion, pressure or vibration, was deemed the cause
of 48 percent of all occupational illnesses in 1987, nearly
double the rate 5 years before.

Types of payments

    Payments for medical and hospital care for work-related
injuries and illnesses totalled more than $16.8 billion in
1991, about 40 percent of the $42.2 billion paid under all
workers' compensation programs. Cash compensation payments
accounted for the remaining 60 percent of total expenditures.
Of the $25.3 billion in such payments, more than 92 percent was
paid to disabled workers, with the remainder going to workers'
survivors. Black Lung benefit payments totaled $1.4 billion in
1991, which is a 25 percent decrease from the peak year of
1980. As older beneficiaries of Black Lung payments die and
fewer new claimants enter the program, the payment level will
continue to decline.

Types of insurers

    Generally, employers insure against their workers'
compensation liability through commercial insurance companies.
However, they also may self-insure by providing proof of
financial ability to carry their own risk (normally, large
employers), purchase their insurance through a State ``fund''
(essentially, a State-run insurance company), or buy insurance
commercially through a State-established ``high-risk''
insurance pool. Nearly half the States have ``competitive''
State funds, and employers may buy private insurance, self-
insure, or buy from the State fund. In 2 States, employers must
insure through an ``exclusive'' State fund, and in 4 States
employers must self-insure or buy insurance from their
exclusive State fund. In 1991, about 58 percent of all benefits
were paid by private insurers, 23 percent by State funds or
federally supported funding (Federal workers and black lung
benefits), and 19 percent by self-insurers.

Employer costs

    The cost to employers to provide workers' compensation to
employees was $55.2 billion in 1991, a 4 percent increase over
the 1990 figure. These costs include the benefits paid,
administration of the insurance operation, claims processing,
rehabilitation costs, profits, taxes, and reserves for future
benefits. The insurance premium paid by employers varies with
the risk involved and the employer's industrial classification
with regards to the hazards of a particular industry, which may
at times be modified by experience rating. In 1991, the
components of employer costs were as follows:
  --$35.7 billion paid to private carriers;
  --$10.8 billion paid to State funds and for Federal programs
        (the Federal employee program and that part of the
        Black Lung benefits program financed by employers); and
  --$8.7 billion in the cost of self-insurance (benefits paid
        by self-insurers plus estimated administrative
        expenses).
    Rising employer costs for workers' compensation now
represent $590 for each worker protected by workers'
compensation programs, compared with $296 in 1982. Employers'
costs per $100 of covered payroll also have grown: in 1991,
they averaged $2.40 per $100 of payroll, up from $1.75 in 1982.

Program data

    Table 18-43 shows the estimated number of workers covered
and the total annual payroll in covered employment for selected
years between 1948 and 1991. Over that time period, the number
of workers covered in an average month increased from 36.0 to
93.6 million, and the amount of total payroll in covered
employment increased from $105 billion to $2,300 billion.
    Table 18-44 illustrates the benefit payment amounts under
workers' compensation by type of benefit for years 1987, 1988,
1989, 1990, and 1991. In 1991, total benefits paid equaled
$42,169 million, of which $40,778 was paid in regular benefits
and $1,391 for the Black Lung benefit program.

   TABLE 18-43.--ESTIMATED NUMBER OF WORKERS COVERED IN AVERAGE MONTH AND TOTAL ANNUAL PAYROLL IN COVERED
                                 EMPLOYMENT, BY SELECTED YEARS, 1948-91\1\
----------------------------------------------------------------------------------------------------------------
                                                        Workers covered in average    Total payroll in covered
                                                                  month                      employment
                                                      ----------------------------------------------------------
                                                                       Percent of                    Percent of
                        Year                             Number  (in    employed      Amount  (in  civilian wage
                                                         millions)      wage and      billions)      and salary
                                                                         salary                    disbursements
                                                                       workers\2\
----------------------------------------------------------------------------------------------------------------
1948.................................................           36.0          77.0           $105           79.9
1953.................................................           40.7          80.0            154           81.5
1958.................................................           42.5          80.2            192           83.1
1963.................................................           47.3          80.5            254           83.7
1968.................................................           56.8          83.8            376           83.0
1973.................................................           66.3          86.3            578           84.2
1978.................................................           75.6          86.7            922           84.3
1983.................................................           78.0          85.6          1,382           84.6
1988.................................................           91.3          87.0          2,000           84.2
1990.................................................           95.1          87.0          2,250           84.0
1991.................................................           93.6          87.0          2,300           84.0
----------------------------------------------------------------------------------------------------------------
\1\Before 1963, excludes Alaska and Hawaii.
\2\Beginning 1968, excludes those under age 16 and includes certain workers previously classified as self-
  employed.

Source: Social Security Bulletin, March 1991 and Fall 1993, Social Security Administration.


    TABLE 18-44.--ESTIMATED WORKERS' COMPENSATION BENEFIT PAYMENT
                AMOUNTS, BY TYPE OF BENEFIT, 1987-91
                              [In millions]
------------------------------------------------------------------------
   Type of benefit        1987      1988      1989      1990      1991
------------------------------------------------------------------------
      Regular Program.   $25,773   $29,234   $32,837   $36,804   $40,778
                       -------------------------------------------------
Medical and
 hospitalization......     9,794    11,401    13,299    15,067    16,715
Compensation..........    15,979    17,833    19,538    21,737    24,063
    Disability........    15,046    16,956    18,553    20,635    22,840
    Survivor..........       933       877       985     1,102     1,223
                       =================================================
      Black Lung
       Program........     1,545     1,499     1,479     1,434     1,391
                       -------------------------------------------------
Medical and
 hospitalization......       118       117       125       120       117
Compensation..........     1,426     1,381     1,354     1,314     1,274
    Disability........       698       657       618       577       533
    Survivor..........       729       725       736       737       741
                       =================================================
      Total (Regular
       and Black Lung)    27,318    30,733    34,316    38,238    42,169
Medical and
 hospitalization......     9,912    11,518    13,424    15,187    16,832
Compensation..........    17,406    19,215    20,892    23,051    25,337
    Disability........    15,775    17,613    19,171    21,212    23,373
    Survivor..........     1,631     1,602     1,721     1,839     1,964
------------------------------------------------------------------------
Source: Social Security Bulletin, March 1991 and Fall 1993, Social
  Security Administration.