SECTION 16. OTHER PROGRAMS *
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    * The Personal Responsibility and Work Opportunity Reconciliation 
Act of 1996 changed several of these programs; see appendix L for 
details.
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                                CONTENTS

Overview
Food Stamp Program
  Administration, Program Variations, and Funding
  Eligibility
  Benefits
  Quality Control (QC)
  Interaction with Cash Assistance Programs
  Recipiency Rates
  Legislative History
Medicaid
  Eligibility
  Optional Coverage: The Medically Needy
  Medicaid and the Poor
  Services
  Financing
  Reimbursement Policy
  Administration
  Medicaid and Managed Care
  Legislative History
  Program Data
Federal Housing Assistance
School Lunch and Breakfast Programs
Special Supplemental Nutrition Program for Women, Infants, and 
        Children (WIC)
Job Training Partnership Act
Head Start
Low-Income Home Energy Assistance Program (LIHEAP)
  Background
  Program Components
  Allotments to States
  Eligibility and Types of Assistance
  Planning and Administration
Veterans Benefits and Services
Workers' Compensation
References

                                OVERVIEW

    A wide variety of Federal programs outside the jurisdiction 
of the Committee on Ways and Means provide benefits to 
individuals and families that also receive assistance from 
programs within the committee's jurisdiction (see appendix K). 
This section describes several such programs: food stamps; 
Medicaid; housing assistance; school lunch and breakfast 
programs; the Special Supplemental Food Program for Women, 
Infants, and Children (WIC); the Job Training Partnership Act; 
Head Start; the Low-Income Home Energy Assistance Program 
(LIHEAP); Veterans' benefits and services; and workers' 
compensation.
    Most families receiving Aid to Families with Dependent 
Children (AFDC) or Supplemental Security Income (SSI) 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 is limited by appropriations. Income 
received from AFDC is counted in determining eligibility and 
benefit levels for these programs. However, because these 
programs provide in-kind rather than cash assistance, benefits 
are not counted in determining eligibility for AFDC.
    Tables 16-1 and 16-2 describe the overlap in recipients 
between programs within the jurisdiction of the Committee on 
Ways and Means and other major Federal assistance programs. 
Table 16-1 illustrates that 87.2 percent of AFDC recipient 
households received food stamps during the first quarter of 
1995; 24.7 percent received WIC; 97.2 percent received 
Medicaid; 63.1 percent received free or reduced-price school 
meals; and 31.1 percent received housing assistance.

    TABLE 16-1.--PERCENT OF RECIPIENTS IN PROGRAMS WITHIN THE JURISDICTION OF THE COMMITTEE ON WAYS AND MEANS   
                     RECEIVING ASSISTANCE FROM OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS, 1995                    
----------------------------------------------------------------------------------------------------------------
                                                                      Ways and Means assistance program         
                                                           -----------------------------------------------------
                 Other assistance program                                        Social   Unemployment          
                                                              AFDC       SSI    Security  compensation  Medicare
----------------------------------------------------------------------------------------------------------------
  Food stamps.............................................      87.2      50.0       7.7         9.1         7.4
  WIC.....................................................      24.7       5.6       1.0         4.4         0.6
  Medicaid................................................      97.2     100.0      14.0        16.2        14.3
  Free or reduced-price school meals......................      63.1      25.2       4.0        16.5         2.6
  Public or subsidized rental housing.....................      31.1      24.1       6.8         4.1         7.2
  VA compensation or pensions.............................       0.8       3.6       5.3         1.7         5.6
Number of households receiving benefits (in thousands)....     4,652     4,580    27,654       2,246      25,271
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Note.--Table shows number of households in the first quarter of 1995. Table reads that 87.2 percent of AFDC     
  households, also receive food stamps. SSI recipients 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.                                                                              

    Table 16-2 presents the percentage of recipients of other 
means-tested programs who are participating in programs under 
Ways and Means jurisdiction. For example, 48.9 percent of food 
stamp households received AFDC benefits at some time during the 
first quarter of 1995; 27.6 percent received SSI; 25.6 percent 
received Social Security; 2.5 percent received unemployment 
benefits; and 22.5 percent received Medicare.

    TABLE 16-2.--PERCENT OF RECIPIENTS IN OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS RECEIVING ASSISTANCE UNDER    
                    PROGRAMS WITHIN THE JURISDICTION OF THE COMMITTEE ON WAYS AND MEANS, 1995                   
----------------------------------------------------------------------------------------------------------------
                                                                      Other assistance program                  
                                                   -------------------------------------------------------------
                                                                    Free or   Public or                         
         Ways and Means assistance program           Food           reduced  subsidized                  VA     
                                                    stamps    WIC    school    rental     Medicaid  compensation
                                                                     meals     housing               or pensions
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  AFDC............................................    48.9    41.7     30.3      28.7         35.6        1.6   
  SSI.............................................    27.6     9.3     11.9      22.0         36.1        6.7   
  Social Security.................................    25.6     9.9     11.4      37.6         30.6       59.3   
  Unemployment compensation.......................     2.5     3.6      3.8       1.8          2.9        1.6   
  Medicare........................................    22.5     5.8      6.8      36.2         28.4       57.7   
Number of households receiving benefits (in                                                                     
 thousands).......................................   8,298   2,757    9,681     5,031       12,685      2,465   
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Note.--Table shows households in the first quarter of 1995. Table reads that 48.9 percent of food stamp         
  recipient households receive AFDC. SSI recipients 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.                                                                              

    Table 16-3 shows the percentage of households receiving 
AFDC or SSI and also receiving assistance from other programs 
for selected time periods. The figures at the bottom of the 
AFDC and SSI portions of the table show that the number of 
households receiving AFDC increased rapidly between 1990 and 
1994 and then declined somewhat in 1995. The AFDC rolls 
increased by nearly one-third over the entire period. The 
number of households receiving SSI declined slightly in 1990 
and 1993, but otherwise increased throughout the period between 
1984 and 1995. The rolls increased by more than 50 percent over 
this period.
    The percentage of AFDC and SSI households receiving other 
benefits fluctuated somewhat over the period, but the general 
trend was toward increased coverage for all benefits except VA 
compensation or pensions. The percentage of AFDC households 
receiving food stamps, for example, increased from 81 percent 
in 1984 to 87 percent in 1995; receipt of Medicaid over the 
same period increased from 93 to 97 percent of households. 
Similarly, the percentage of SSI households receiving food 
stamps increased from 46 to 50 percent while Medicaid coverage 
held at or very near 100 percent over the period. The 
percentage of AFDC and SSI households receiving WIC, school 
meals, and housing also increased over the period 1984-95.

 TABLE 16-3.--PERCENT OF HOUSEHOLDS RECEIVING AFDC OR SSI AND ALSO RECEIVING ASSISTANCE FROM OTHER PROGRAMS FOR 
                                              SELECTED TIME PERIODS                                             
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                                                                                   Year                         
                   Assistance program                    -------------------------------------------------------
                                                           1984    1987    1990    1992    1993    1994    1995 
----------------------------------------------------------------------------------------------------------------
AFDC:                                                                                                           
    Food stamps.........................................    81.4    81.7    82.7    86.2    88.9    88.3    87.2
    WIC.................................................    15.3    18.6    18.7    21.5    18.5    21.4    24.7
    Free or reduced-price school meals..................    49.2    55.6    52.7    55.5    56.9    57.5    63.1
    Public or subsidized rental housing.................    23.0    19.4    34.7    29.5    33.1    30.3    31.1
    Medicaid............................................    93.2    95.5    97.6    96.2    97.6    96.4    97.2
    VA compensation or pensions.........................     2.8     1.9     1.3     1.9     1.1     1.1     0.8
        Number of households receiving benefits (in                                                             
         thousands).....................................   3,585   3,527   3,434   4,057   4,831   4,906   4,652
SSI:                                                                                                            
    Food stamps.........................................    46.5    39.7    41.3    46.2    48.0    50.1    50.0
    WIC.................................................     2.5     2.5     3.0     4.3     3.7     5.4     5.6
    Free or reduced-price school meals..................    12.7    11.9    15.3    18.2    21.3    23.8    25.2
    Public or subsidized rental housing.................    21.6    20.0    21.4    23.8    23.9    24.9    24.1
    Medicaid............................................   100.0    99.6    99.7    99.8    99.5   100.0   100.0
    VA compensation or pensions.........................     4.7     7.7     5.7     4.0     4.5     3.9     3.6
        Number of households receiving benefits (in                                                             
         thousands).....................................   3,008   3,341   3,037   3,957   3,861   4,223   4,580
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Note.--SSI recipients 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.                                                                              

                           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 while a household 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.
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    \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.
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    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, when imposed, 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\
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    \2\ Except for (1) SSI recipients in California, where a State-
financed adjustment to SSI benefits has replaced food stamp assistance; 
and (2) general assistance programs that do not meet minimum Federal 
standards.
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            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, the 
Northern Mariana Islands, and American Samoa, 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 Consumer Service (FCS). The 
FCS gives direction to welfare agencies through Federal 
regulations that define eligibility requirements, benefit 
levels, and administrative rules. It is also responsible for 
arranging for printing food stamp coupons and distributing them 
to welfare agencies and for 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 providing the Social 
Security numbers recipients must have, for providing limited 
application ``intake'' services, and for providing information 
to verify recipients' income), the Internal Revenue Service 
(providing assistance in verifying recipients' income and 
assets), the Immigration and Naturalization Service (helping 
welfare offices confirm alien applicants' status), and the 
Secret Service and the Agriculture Department's Inspector 
General (responsible for counterfeiting and trafficking 
investigations).
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 voice in carrying out employment and 
training programs and in determining some administrative 
features of the program (e.g., the extent to which verification 
of household circumstances is pursued). 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, the Northern Mariana Islands, and American Samoa
    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 and another in American Samoa. 
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 1995, Puerto Rico's nutrition 
assistance program aided approximately 1.37 million persons 
each month with monthly benefits averaging $66 a person.
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    \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 1995, $1.143 billion was earmarked. The block 
grant funds the full cost of benefits and half the cost of 
administration.
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    Under the terms of the 1976 Covenant with the Commonwealth 
of the Northern Mariana Islands and implementing legislation 
(Public Law 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 $5.1 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 1995, the Northern 
Marianas' program assisted some 4,200 people each month with 
monthly benefits averaging $77 a person.
    As with the Northern Marianas, American Samoa operates a 
variant of the regular Food Stamp Program. Under the Secretary 
of Agriculture's authority to extend Agriculture Department 
programs to American Samoa (Public Law 96-597) and a 1996 
amendment to the Food Stamp Act made by the Federal Agriculture 
Improvement and Reform Act (Public Law 104-127), American Samoa 
receives an annual grant of up to $5.3 million to operate a 
Food Stamp Program limited to low-income elderly and disabled 
persons. In fiscal year 1995 (the first full fiscal year of 
operations), the program aided about 2,700 persons a month with 
average monthly benefits of about $100 a person.
Program options
    The Food Stamp Act authorizes demonstration projects to 
test program variations that might improve operations, so long 
as benefits are not reduced and the projects are cost neutral. 
At present, five types of demonstration projects are underway: 
(1) a limited number of projects that ``cash out'' food stamp 
benefits (these projects cash out food stamps for the elderly 
and SSI recipients, very poor households that are eligible for 
expedited service, and households that are part of State 
welfare reform efforts); (2) some 20 welfare reform 
demonstrations in which food stamp rules are changed to support 
AFDC reform efforts (e.g., food stamps are used as a wage 
supplement or cashed out; food stamps are consolidated with 
AFDC benefits; food stamp income and asset rules are changed to 
encourage employment); (3) demonstrations conforming the 
operations of the AFDC JOBS Program and the Food Stamp 
Program's employment and training activities; (4) a project 
granting quarterly (instead of monthly) benefit payments to SSI 
recipients eligible for very small benefits; and (5) awards to 
nonprofit organizations to test ways to improve program 
responsiveness to specific low-income groups.
    In addition to demonstration projects, 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. With 50-percent Federal 
cost-sharing, they can operate ``outreach'' programs to inform 
low-income persons about food stamps and support nutrition 
education efforts. They may choose to issue food stamp benefits 
through electronic benefit transfer systems. Finally, States or 
localities may opt to run ``workfare'' programs, and States 
determine which type(s) of employment or training programs in 
which recipients must participate.
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 benefits through the Federal 
Reserve, and paying the Social Security Administration for 
certain intake services.
    In most instances, the Federal Government provides half the 
cost of State welfare agency administration. \5\ However, the 
50-percent Federal share can be increased to as much as 60 
percent if the State has a very low rate of erroneous benefit 
determinations. In addition, 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. Finally, 
States are allowed to retain a portion of improperly issued 
benefits they recover (other than those caused by welfare 
agency error): 25 percent of recoveries in fraud cases and 10 
percent in other circumstances. As shown in table 16-4, food 
stamp spending has grown from $7.4 billion in 1979 to $27.4 
billion in 1995.
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    \5\ 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.
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                              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, most postsecondary students, people 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 the household has no fixed mailing 
address or does not reside in a permanent dwelling.

             TABLE 16-4.--RECENT FOOD STAMP ACT EXPENDITURES            
                        [In millions of dollars]                        
------------------------------------------------------------------------
                                             Administration \2\         
                                            --------------------        
         Fiscal year           Benefits \1\              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.........................       23,033      1,716     1,572   26,321
1994.........................       23,736      1,789     1,643   27,168
1995.........................       23,761      1,917     1,748   27,426
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\1\ 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.                                     
\2\ 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).                                
                                                                        
Source: U.S Department of Agriculture budget justification materials for
  fiscal years 1981-97. Compiled by the Congressional Research Service. 

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. The food stamp household is unrelated 
to recipient units in other welfare programs (e.g., AFDC 
families with dependent children, elderly or disabled 
individuals or 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 coresidents are required to apply together, and special 
rules apply to those living in institutional settings. Most 
often, persons living together receive larger aggregate 
benefits if they are treated as more than one food stamp 
household.
    Persons who live together, but purchase food and prepare 
meals separately, may apply for food stamps 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 may be treated separately) who live under the 
parental control of a caretaker. In addition, persons 60 years 
or older who live with others and cannot purchase food and 
prepare meals separately because of a substantial disability 
may apply separately from their coresidents as long as their 
coresidents' income is below prescribed limits.
    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. \6\ In establishing 
eligibility for households without an elderly or disabled 
member, \7\ 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 procedure applies a more liberal income test to elderly 
and disabled households.
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    \6\ 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.
    \7\ In the Food Stamp Program, ``elderly'' persons are those 60 
years or older. The ``disabled'' generally are beneficiaries of 
governmental disability-based payments (e.g., Social Security or SSI 
disability recipients, disabled veterans, certain disability retirement 
annuitants, and recipients of disability-based Medicaid or general 
assistance).
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    Basic (or gross) monthly income includes all of a 
household's cash income except the following ``exclusions'' 
(disregards): (1) most payments made to third parties (rather 
than directly to the household); (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) advance payments of Federal earned 
income 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).
    Counted (or net) monthly income is computed by subtracting 
certain ``deductions'' from a household's basic (or gross) 
monthly income. This procedure is based on the recognition that 
not all of a household's income is equally available for food 
purchases. Thus, a standard portion of income, plus amounts 
representing work expenses or excessively high nonfood living 
expenses, are disregarded.
    For households without an elderly or disabled member, 
counted monthly income equals their gross monthly income less 
the following deductions:
  --An inflation-indexed (each October) standard deduction set 
        at $134 a month in fiscal year 1996, regardless of 
        household size; different standard deductions are used 
        for Alaska ($229), Hawaii ($189), Guam ($269), and the 
        Virgin Islands ($118). The normal October 1995 
        adjustment was suspended under terms of the fiscal year 
        1996 appropriation for food stamps;
  --Any amounts paid as legally obligated child support;
  --Twenty 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 $175 a month per dependent, $200 a 
        month for children under age 2;
  --Shelter expenses that exceed 50 percent of counted income 
        after all other deductions, up to a periodically 
        adjusted ceiling now standing at $247 a month. 
        Different ceilings prevail in Alaska, Hawaii, Guam, and 
        the Virgin Islands: $429, $353, $300, and $182, 
        respectively. Under current law, ceilings on shelter 
        expense deductions will be completely lifted as of 
        January 1997.
    For households with an elderly or disabled member, counted 
monthly income equals gross monthly income less the following 
deductions:
  --The same standard, child support, 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.
    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 
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 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. The net and gross eligibility 
limits on income are summarized in table 16-5.


 TABLE 16-5.--COUNTED (NET) AND BASIC (GROSS) MONTHLY INCOME ELIGIBILITY
           LIMITS FOR THE FOOD STAMP PROGRAM, FISCAL YEAR 1996          
------------------------------------------------------------------------
                               48 States, the                           
                                 District of                            
        Household size          Columbia, and    Alaska       Hawaii    
                                     the                                
                                 territories                            
------------------------------------------------------------------------
                                                                        
           COUNTED (NET) MONTHLY INCOME ELIGIBILITY LIMITS \1\          
------------------------------------------------------------------------
1 person.....................            $623       $779            $718
2 persons....................             836      1,045             963
3 persons....................           1,050      1,312           1,208
4 persons....................           1,263      1,579           1,453
5 persons....................           1,426      1,845           1,698
6 persons....................           1,690      2,112           1,943
7 persons....................           1,903      2,379           2,188
8 persons....................           2,116      2,645           2,433
Each additional person.......            +214       +267            +245
------------------------------------------------------------------------
                                                                        
           BASIC (GROSS) MONTHLY INCOME ELIGIBILITY LIMITS \2\          
------------------------------------------------------------------------
1 person.....................            $810     $1,012            $933
2 persons....................           1,087      1,359           1,252
3 persons....................           1,364      1,706           1,570
4 persons....................           1,642      2,052           1,889
5 persons....................           1,919      2,399           2,207
6 persons....................           2,196      2,746           2,526
7 persons....................           2,474      3,092           2,844
8 persons....................           2,751      3,439           3,163
Each additional person.......            +278       +347            +319
------------------------------------------------------------------------
\1\ Set at the applicable Federal poverty guidelines, updated for       
  inflation through calendar 1994.                                      
\2\ Set at 130 percent of the applicable Federal poverty guidelines,    
  updated for inflation through calendar 1994.                          
                                                                        
Source: U.S. Department of Agriculture.                                 

Allowable assets
    Except for households automatically eligible for food 
stamps because they are composed entirely of AFDC, SSI, or 
general assistance recipients, eligible households must have 
counted or 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 $4,600) 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, employment, and training 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 these work requirements 
include: persons physically or mentally unfit for work, those 
under age 16 or over age 59, 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; 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 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 the agency 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 a minimum proportion (10 percent) 
in one or more program components. Program components can 
include any or all of the following activities: 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.
    In fiscal year 1995, there were some 5.6 million work 
registrants, of whom 37 percent were exempted from employment 
and training program requirements. Of the remainder, 1.5 
million persons participated in some employment activity and 
over 500,000 received ``notices of adverse action'' because 
they failed to meet participation requirements. The 
overwhelming majority of those fulfilling an employment 
activity requirement participated in work or job search or job 
search training (as opposed to education or other training).
    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
    Some rules deny food stamp eligibility for reasons other 
than financial need or compliance with employment and training 
requirements. Households in which the head has voluntarily quit 
a job without good cause are barred for 90 days. Households 
with members on strike are denied benefits unless eligible 
prior to the strike. With some exceptions, postsecondary 
students (in school half time or more) who are fit for work and 
between ages 18 and 50 are ineligible. Illegal and temporarily 
resident aliens are barred, and legal aliens may be barred 
based on their sponsor's income. Persons living in 
institutional settings are denied eligibility, except those in 
special SSI-approved small group homes for the disabled, 
persons living in drug addiction or alcohol treatment programs, 
and persons in shelters for battered women and children or 
shelters for the homeless. Boarders cannot receive food stamps 
unless they apply together with the household they are boarding 
with. Those who transfer assets for the purpose of qualifying 
for food stamps are barred. Persons who fail to provide Social 
Security numbers or cooperate in providing information needed 
to verify eligibility or benefit determinations are ineligible. 
And food stamps are denied those who intentionally violate 
program rules, for specific time periods ranging from 6 months 
(on a first violation) to permanently (on a third violation or 
other serious infraction).

                                Benefits

    Food stamp benefits are a function of a household's size, 
its net monthly income, and maximum monthly benefit levels (in 
some cases, adjusted for geographic location). An eligible 
household's net income is determined (i.e., deductions are 
subtracted from gross income), its maximum benefit level is 
established, and a benefit is calculated by subtracting its 
expected contribution (30 percent of its counted income) from 
its maximum allotment. 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 
1995, monthly benefits averaged $71 a person and about $175 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). Maximum allotments are set at: the monthly cost of the 
TFP for a four-person family consisting of a couple between 
ages 20 and 50 and two school-age children, adjusted for family 
size (using a formula reflecting economies of scale developed 
by the Human Nutrition Information Service), increased by 3 
percent, and rounded down to the nearest whole dollar. 
Allotments are adjusted for food price inflation annually, each 
October, to reflect the cost of the TFP in the immediately 
previous June.
    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 16-6).
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. 
In a few cases, benefits can be reduced to zero before income 
eligibility limits are exceeded. At present, minimum monthly 
allotments for households of three or more persons range from 
$2 to over $80.
    In addition, a household's calculated monthly allotment can 
be prorated (reduced) for 1 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.

                      TABLE 16-6.--MAXIMUM MONTHLY FOOD STAMP ALLOTMENTS, FISCAL YEAR 1996                      
----------------------------------------------------------------------------------------------------------------
                                                                    48                                          
                                                                  States                                        
                                                                  and the                                 Virgin
                         Household size                          District  Alaska \1\   Hawaii    Guam   Islands
                                                                    of                                          
                                                                 Columbia                                       
----------------------------------------------------------------------------------------------------------------
1 person.......................................................      $119       $153      $198     $175     $153
2 persons......................................................       218        280       364      322      281
3 persons......................................................       313        401       522      461      402
4 persons......................................................       397        510       663      586      511
5 persons......................................................       472        605       787      696      607
6 persons......................................................       566        726       945      835      728
7 persons......................................................       626        803     1,044      923      805
8 persons......................................................       716        918     1,193    1,055      920
Each additional person.........................................       +90       +115      +149     +132     +115
----------------------------------------------------------------------------------------------------------------
\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.                                                                                                         
                                                                                                                
Source: U.S. Department of Agriculture.                                                                         

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 State or substate 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. EBT issuance is used statewide in 
five States; in eight States benefits are issued through an EBT 
system in at least part of the State. More than twenty 
additional States are well along in the process of converting 
to EBT issuance.
Using food stamps
    Food stamp benefits are usually 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; (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, food stamp 
benefits also can be used through EBT cards. In this case, the 
card is swiped through an approved retailer's point-of-sale 
device, automatically debiting the recipient's food stamp 
account and crediting the retailer's bank account; unlike 
coupon transactions, recipients receive no cash change.

                          Quality Control (QC)

    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 State welfare agencies. The system 
was established by regulation in the 1970s as an administrative 
tool to enable welfare officials to identify problems and take 
corrective actions. Today, by legislative directive, the QC 
system also is used to calculate and impose fiscal sanctions on 
States that have very high rates of erroneous benefit and 
eligibility decisions.
    Under the quality control system, welfare agencies, with 
Federal oversight, continuously sample their active food stamp 
caseloads, as well as their decisions to deny or end benefits. 
The agencies perform in-depth investigations of the eligibility 
and benefit status of the randomly chosen cases 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. This information 
also is used 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 the 
proportion of cases in which an error is made 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 national weighted average for the dollar value of 
overpayments was estimated at 7.3 percent in fiscal year 1995. 
This was slightly higher than the all-time low of 7 percent in 
1991. Error rates for underpayments have been relatively 
unchanged over time. In fiscal year 1995, the national weighted 
average underpayment dollar error rate was estimated at 2.4 
percent. Finally, the rate of denials and terminations found 
improper in the most recent estimate (1994) was 3.8 percent 
(table 16-7).

  TABLE 16-7.--FOOD STAMP QUALITY CONTROL ERROR RATES, FISCAL YEAR 1995 
             [Percent of benefits paid or not paid in error]            
------------------------------------------------------------------------
                                  Underpayment  Overpayment    Combined 
              State                error rate    error rate   error rate
------------------------------------------------------------------------
Alabama.........................          1.05         5.98         7.02
Alaska..........................          1.20         3.93         5.12
Arizona.........................          2.88        10.60        13.48
Arkansas........................          1.50         4.01         5.51
California......................          3.40         6.08         9.48
Colorado........................          1.52         4.87         6.39
Connecticut.....................          1.09         7.45         8.54
Delaware........................          1.45         7.96         9.41
District of Columbia............          2.89         6.42         9.31
Florida.........................          2.60         8.47        11.07
Georgia.........................          3.38         7.61        10.99
Guam............................          2.16         5.36         7.53
Hawaii..........................          1.17         2.61         3.78
Idaho...........................          1.61         5.08         6.69
Illinois........................          2.20         9.49        11.70
Indiana.........................          3.26        13.09        16.35
Iowa............................          3.20         8.42        11.63
Kansas..........................          1.44         6.67         8.11
Kentucky........................          1.45         3.25         4.70
Louisiana.......................          2.05         5.12         7.17
Maine...........................          2.03         4.44         6.46
Maryland........................          2.43         9.66        12.09
Massachusetts...................          1.73         3.24         4.97
Michigan........................          1.88         7.67         9.55
Minnesota.......................          1.92         4.65         6.58
Mississippi.....................          1.55         8.44         9.99
Missouri........................          3.40         9.56        12.96
Montana.........................          3.00         5.18         8.18
Nebraska........................          2.41         6.30         8.71
Nevada..........................          2.50         6.91         9.41
New Hampshire...................          3.94         6.31        10.25
New Jersey......................          1.99         6.71         8.70
New Mexico......................          1.43         6.14         7.57
New York........................          3.41         6.06         9.46
North Carolina..................          2.66         5.48         8.14
North Dakota....................          0.98         5.00         5.98
Ohio............................          3.39        11.18        14.57
Oklahoma........................          2.32         8.81        11.13
Oregon..........................          2.08         6.96         9.04
Pennsylvania....................          2.41         6.55         8.96
Rhode Island....................          1.30         3.94         5.24
South Carolina..................          1.81         4.43         6.24
South Dakota....................          0.62         2.94         3.56
Tennessee.......................          1.50         9.10        10.60
Texas...........................          1.34         7.37         8.71
Utah............................          1.80         6.16         7.96
Vermont.........................          1.55         7.58         9.13
Virginia........................          3.17        10.20        13.37
Virgin Islands..................          1.36         3.98         5.35
Washington......................          1.41         7.12         8.53
West Virginia...................          2.51         8.61        11.13
Wisconsin.......................          2.62         9.57        12.19
Wyoming.........................          2.70         4.88         7.58
                                 ---------------------------------------
    U.S. average................          2.42         7.30         9.72
------------------------------------------------------------------------
Note.--Underpayment and overpayment rates may not add to combined rates 
  due to rounding.                                                      
                                                                        
Source: Food and Consumer Service (1995).                               

    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 about $1 billion in sanctions have been 
assessed since the early 1980s, less than $10 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. 
Permission for States to invest sanction amounts in improved 
program administration has now become the rule, and States 
regularly apply and agree to invest sanction amounts under 
Federal guidelines rather than pay the Federal Government.
    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 (9.7 percent in 1995). 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 
(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 &lt;greek-e&gt; 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 &lt;greek-e&gt; 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 1995, 16 
States had combined error rates above the 9.7 percent tolerance 
level and were assessed some $73 million.
    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 $10-20 million a year; in fiscal 
year 1995, eight States had combined error rates below 6 
percent and received $16 million in enhanced funding.
    Finally, the quality control system identifies the various 
sources of error and requires that States develop and carry out 
corrective action plans to improve payment accuracy. These 
reviews generally show that the primary responsibility for 
overpayment errors is almost evenly split between welfare 
agencies and clients. The most common errors are related to 
establishing food stamp expense deductions and households' 
income.
    Intentional program violations (e.g., fraud) can occur in a 
number of ways; the most common are intentionally 
misrepresenting household circumstances in order to obtain food 
stamps or increase benefits and trafficking in food stamp 
coupons. About one-quarter of the dollar value of erroneous 
benefit and eligibility determinations identified through 
quality control reviews are fraudulent--under 2 percent of all 
benefits issued in 1995. The most recent Agriculture Department 
study on the extent of food stamp coupon trafficking estimated 
it at some $800 million in 1993--3.7 percent of all benefits 
issued that year.

               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. 
Joint food stamp and cash welfare application and interview 
procedures are the general rule. This coadministration does not 
apply for most elderly or disabled persons, whose cash 
assistance from the Supplemental Security Income Program (SSI) 
is 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 of these have no other income. About 20 percent of food 
stamp households receive Social Security or veterans benefits; 
nearly 15 percent are paid general assistance, unemployment 
insurance, or workers' compensation benefits.

                            Recipiency Rates

    Table 16-8 shows food stamp participation rates from 1975 
to 1995 using three different measures. Food stamp enrollment 
has fluctuated widely over the last 20 years, reaching its peak 
in fiscal year 1994; in that year, it averaged 27.5 million 
persons a month, with an all-time high of 28 million in the 
spring of 1994 (not including 1.4 million persons receiving aid 
in Puerto Rico).
    A recent (October 1994) report from the U.S. Department of 
Agriculture provides a more refined analysis of participation 
rates and the extent to which the program is serving its target 
population. The report estimates that 74 percent of persons 
eligible participated (69 percent of eligible households). 
These participants received 82 percent of benefits payable if 
all eligibles had been enrolled. However, subgroups of the 
food-stamp-eligible population participated at very diferent 
rates: (1) most eligible children were enrolled (86 percent); 
(2) only one-third of eligible elderly persons participated, 
and the majority of those not participating lived alone; (3) 
virtually all eligible single-parent households were enrolled, 
while only 78 percent of eligible households with children and 
two or more adults participated; (4) eligible households headed 
by African-Americans participated at a greater rate (92 
percent) than households headed by Hispanics (61 percent) or 
white non-Hispanics (59 percent); and (5) virtually all 
eligible households with income below half the Federal poverty 
guidelines were enrolled, but the participation rate fell for 
eligible households with larger incomes (e.g., the 
participation rate for those with income between half the 
poverty guidelines and the guidelines themselves was 76 
percent). Finally, another (December 1995) report from the 
Agriculture Department notes that about half of the major 
increase in food stamp enrollment from 1988 to 1993 (a rise of 
over 40 percent) was a result of a higher participation rate 
among eligibles--as opposed to an increased number of eligible 
persons.

                    TABLE 16-8.--FOOD STAMP PARTICIPATION RATES IN THE UNITED STATES, 1975-95                   
----------------------------------------------------------------------------------------------------------------
                                                                           Food stamp participation as a percent
                                                              Number of                    of--                 
                                                             food stamp  ---------------------------------------
                           Year                             participants                                 Pre-   
                                                                 (in           Total         Poor      transfer 
                                                              millions)   population \1\  population     poor   
                                                                                                      population
----------------------------------------------------------------------------------------------------------------
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          68.7          NA
1994......................................................         27.5           10.5          72.1          NA
1995......................................................         26.6           10.1            NA          NA
----------------------------------------------------------------------------------------------------------------
\1\ Calculated as a percent of total U.S. resident population at the end of the fiscal year. Total U.S. resident
  population was 263.2 million persons at the end of fiscal year 1995.                                          
                                                                                                                
NA--Not available.                                                                                              
                                                                                                                
Note.--Participants in Puerto Rico are not included in this table.                                              
                                                                                                                
Source: U.S. Bureau of the Census.                                                                              

    Table 16-9 shows the average monthly number of people (in 
thousands) who received food stamp benefits in each State, the 
District of Columbia, and the participating Commonwealths and 
territories for selected years between 1975 (when the Food 
Stamp Program became nationally available) and 1995. There has 
been a general increase in food stamp participants since 1975, 
with enrollment peaking in 1994. The number of recipients has 
declined significantly since its height in the spring of 1994.

                                       TABLE 16-9.--FOOD STAMP RECIPIENTS BY STATE, SELECTED FISCAL YEARS 1975-95                                       
                                                                 [Thousands of persons]                                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                             State                              1975 \1\  1979 \2\  1985 \3\  1990 \3\  1991 \3\  1992 \3\  1993 \3\  1994 \3\  1995 \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.......................................................       393       525       588       449       504       550       560       551       525
Alaska........................................................        12        25        22        25        30        38        43        46        45
Arizona.......................................................       166       129       206       317       388       457       489       512       480
Arkansas......................................................       268       277       253       235       258       277       285       283       272
California....................................................     1,517     1,334     1,615     1,936     2,212     2,558     2,866     3,155     3,175
Colorado......................................................       162       145       170       221       241       260       273       268       252
Connecticut...................................................       189       155       145       133       171       202       215       223       227
Delaware......................................................        39        45        40        33        41        51        58        59        57
District of Columbia..........................................       112       100        72        62        72        82        87        91        94
Florida.......................................................       767       828       630       781     1,021     1,404     1,500     1,474     1,395
Georgia.......................................................       569       559       567       536       648       751       807       830       816
Hawaii........................................................        84        96        99        77        83        94       103       115       125
Idaho.........................................................        39        47        59        59        65        72        79        82        80
Illinois......................................................       948       837     1,110     1,013     1,096     1,156     1,178     1,189     1,151
Indiana.......................................................       255       275       406       311       375       448       497       521       470
Iowa..........................................................       118       117       203       170       180       192       196       196       184
Kansas........................................................        63        73       119       142       156       175       188       192       184
Kentucky......................................................       449       405       560       458       496       529       530       522       520
Louisiana.....................................................       502       523       644       727       742       779       779       756       711
Maine.........................................................       151       121       114        94       116       133       138       136       132
Maryland......................................................       273       299       291       254       304       343       375       387       399
Massachusetts.................................................       560       429       337       347       397       429       443       442       410
Michigan......................................................       685       706       985       917       978       994     1,022     1,031       971
Minnesota.....................................................       191       143       228       263       286       309       317       316       308
Mississippi...................................................       390       452       495       499       520       536       537       511       480
Missouri......................................................       299       280       362       431       490       549       591       593       576
Montana.......................................................        38        33        58        57        61        66        70        71        71
Nebraska......................................................        50        55        94        95        99       107       113       111       105
Nevada........................................................        34        27        32        50        63        80        93        97        99
New Hampshire.................................................        66        44        28        31        47        58        60        62        58
New Jersey....................................................       565       524       464       381       441       495       531       545       540
New Mexico....................................................       154       159       157       157       188       221       244       244       239
New York......................................................     1,398     1,704     1,834     1,546     1,717     1,885     2,045     2,154     2,183
North Carolina................................................       537       517       474       419       517       597       627       630       614
North Dakota..................................................        19        20        33        39        41        46        48        45        41
Ohio..........................................................       924       760     1,133     1,078     1,171     1,251     1,269     1,245     1,155
Oklahoma......................................................       184       184       263       267       296       346       370       376       375
Oregon........................................................       208       160       228       216       240       265       283       286       289
Pennsylvania..................................................       893       923     1,032       954     1,052     1,137     1,186     1,208     1,173
Rhode Island..................................................       104        80        69        64        78        87        92        93       100
South Carolina................................................       421       369       373       299       329       369       394       385       364
South Dakota..................................................        31        37        48        50        52        55        56        53        50
Tennessee.....................................................       435       531       518       527       608       702       774       735       662
Texas.........................................................     1,085     1,027     1,263     1,880     2,155     2,454     2,659     2,730     2,564
Utah..........................................................        50        44        75        99       110       123       133       128       119
Vermont.......................................................        46        40        44        38        47        54        58        65        59
Virginia......................................................       293       320       360       346       414       495       535       547       546
Washington....................................................       239       205       281       337       385       432       462       468       476
West Virginia.................................................       204       182       278       262       281       310       322       321       329
Wisconsin.....................................................       163       171       363       286       294       334       337       330       320
Wyoming.......................................................        11        11        27        28        31        33        34        34        34
American Samoa................................................        NA        NA        NA        NA        NA        NA        NA         2         3
Guam..........................................................        21        18        20        12        11        20        13        15        16
Northern Marianas.............................................        NA        NA         4         4         2         2         3         4         4
Puerto Rico...................................................     1,800     1,822     1,480     1,480     1,490     1,480     1,440     1,410     1,370
Virgin Islands................................................        25        34        32        18        15        16        18        20        23
                                                               -----------------------------------------------------------------------------------------
      Total...................................................    19,199    18,926    21,385    21,510    24,105    26,888    28,426    28,888    27,995
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Year end participation, July 1975. Total does not match totals in other tables, which are annual average participation.                             
\2\ Year end 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 monthly participation.                                                                                                               
                                                                                                                                                        
NA--Not available.                                                                                                                                      
                                                                                                                                                        
Source: U.S. Department of Agriculture, Food and Consumer Service. Compiled by the Congressional Research Service.                                      

                          Legislative History

    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 (Public Law 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 (Public 
Law 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, retroactive to fiscal year 1986.
    The 1990 Food, Agriculture, Conservation, and Trade Act 
(Public Law 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. 
The changes included: limited revisions for postsecondary 
students, forgiveness of most pre-1986 quality control 
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.
    The Mickey Leland Childhood Hunger Relief Act (incorporated 
in the 1993 Omnibus Budget Reconciliation Act, Public Law 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 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 for trafficking in 
food stamps. The net cost of the 1993 amendments was estimated 
at $2.5 billion over fiscal years 1994-98.
    Most recently, the 1996 Omnibus ``farm bill'' (the Federal 
Agriculture Improvement and Reform Act; Public Law 104-127) 
extended the Food Stamp Act's overall authorization for 
appropriations through fiscal year 1997, with no specific 
dollar limits. It also: (1) continued the requirement for 
nutrition assistance grants to Puerto Rico and American Samoa, 
and for employment and training programs, through fiscal year 
2002; (2) revised rules for penalizing food stores in 
trafficking cases involving management; and (3) extended 
authority for several pilot projects.
    Table 16-10 provides an overview of the characteristics of 
food stamp households for selected years since 1980; table 16-
11 summarizes annual vital statistics about the program since 
1972.

                                MEDICAID

    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 States in coverage, 
types and scope of benefits offered, and amounts of payments 
for services (for additional information, see Committee on 
Energy and Commerce, 1993).

                              Eligibility

    Although Medicaid eligibility has traditionally been linked 
to actual or potential receipt of cash assistance under AFDC or 
SSI, both of which are under jurisdiction of the Committee on 
Ways and Means, 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. \8\ 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; the 
medically needy are discussed separately at the end of this 
section.
---------------------------------------------------------------------------
    \8\ 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.

                                     TABLE 16-10.--CHARACTERISTICS OF FOOD STAMP HOUSEHOLDS, SELECTED YEARS 1980-94                                     
                                                                      [In percent]                                                                      
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Year and month survey was conducted                                   
                                             -----------------------------------------------------------------------------------------------------------
       Food stamp recipient households         1980     1985      1986      1987      1988      1989      1990      1991      1992      1993      1994  
                                              (Aug.)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)
--------------------------------------------------------------------------------------------------------------------------------------------------------
With gross monthly income:                                                                                                                              
    Below the Federal poverty levels........      87       94        93        94        92        92        92        91        92        91        90 
    Between the poverty levels and 130                                                                                                                  
     percent of the poverty levels..........      10        6         6         6         8         8         8         9         8         8         9 
    Above 130 percent of the poverty levels.       2    (\3\)     (\3\)     (\3\)     (\3\)     (\3\)     (\3\)     (\3\)     (\3\)         1         1 
With earnings...............................      19       20        21        21        20        20        19        20        21        21        21 
With public assistance income \1\...........      65       68        69        74        72        73        73        70        66        68        69 
    With AFDC income........................      NA       39        38        41        42        42        43        41        40        40        38 
    With SSI income.........................      18       19        18        21        20        21        19        19        19        20        23 
With children...............................      60       59        61        61        61        60        61        61        62        60        61 
    And female heads of household...........      NA       46        48        50        50        50        51        51        51        52        51 
With elderly members \2\....................      23       21        20        21        19        20        18        17        15        16        16 
    With elderly female heads of household                                                                                                              
     \2\....................................      NA       16        15        15        14        14        11        10         9        NA        11 
                                             -----------------------------------------------------------------------------------------------------------
Average household size......................     2.8      2.7       2.7       2.7       2.6       2.6       2.6       2.6       2.5       2.6       2.5 
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Public assistance income includes Aid to Families with Dependent Children, Supplemental Security Income, and general assistance.                    
\2\ Elderly members and heads of household include those age 60 or older.                                                                               
\3\ Less than 0.5 percent.                                                                                                                              
                                                                                                                                                        
NA--Not available.                                                                                                                                      
                                                                                                                                                        
Note.--The proportion of households with public assistance income shown in this table is an estimate that generally overcounts them because it is not   
  corrected for households with multiple sources of public assistance income. The proportion of households with elderly female heads shown in this table
  for years prior to 1994 is an estimate that generally undercounts them because it counts only single-person female households.                        
                                                                                                                                                        
Source: U.S. Department of Agriculture, Food and Consumer Service surveys of the characteristics of food stamp households. Compiled by the Congressional
  Research Service.                                                                                                                                     


                             TABLE 16-11.--HISTORICAL FOOD STAMP STATISTICS, 1972-95                            
----------------------------------------------------------------------------------------------------------------
                                    Total Federal spending                     Average monthly                  
                                       (in millions) \1\       Average      benefits (per person)   Four-person 
                                   ------------------------    monthly    ------------------------    maximum   
            Fiscal year                          Constant   participation               Constant      monthly   
                                     Current      (1995)     (in millions   Current      (1995)    allotment \2\
                                     dollars   dollars \3\   of persons)    dollars   dollars \3\               
----------------------------------------------------------------------------------------------------------------
1972 \4\..........................     $1,871      $6,879          11.1       $13.50      $47.90          $108  
1973..............................      2,211       7,813          12.2        14.60       47.70           112  
1974..............................      2,843       9,230          12.9        17.60       48.10           116  
1975 \5\..........................      4,624      13,520          17.1        21.40       53.40           150  
1976..............................      5,692      15,552          18.5        23.90       56.10           162  
Transition quarter \6\............      1,367       3,597          17.3        24.40       56.10           166  
1977..............................      5,469      13,881          17.1        24.70       55.60           166  
1978..............................      5,573      13,206          16.0        26.80       55.10           170  
1979 \7\..........................      6,995      15,043          17.7        30.60       56.40           182  
1980..............................      9,188      17,401          21.1        34.40       59.00           204  
1981..............................     11,308      19,264          22.4        39.50       62.10           209  
1982 \8\..........................     11,117      17,646          22.0        39.20       59.40           233  
1983 \8\..........................     12,733      19,529          23.2        43.00       64.30           253  
1984 \8\..........................     12,470      18,365          22.4        42.70       62.00           253  
1985 \8\..........................     12,599      17,896          21.4        45.00       64.00           264  
1986 \8\..........................     12,528      17,352          20.9        45.50       63.40           268  
1987 \8\..........................     12,539      16,899          20.6        45.80       61.00           271  
1988 \8\..........................     13,289      17,191          20.1        49.80       64.00           290  
1989 \8\..........................     13,815      17,055          20.2        51.90       62.60           300  
1990 \8\..........................     16,512      19,426          21.5        59.00       66.90           331  
1991 \8\..........................     19,765      22,133          24.1        63.90       69.70           352  
1992 \8\..........................     23,539      25,585          26.9        68.50       74.30           370  
1993 \8\..........................     24,749      26,106          28.4        68.00       72.30           375  
1994..............................     25,525      26,233          28.9        69.00       71.30           375  
1995..............................     25,678      25,678          28.0        71.30       71.30           386  
----------------------------------------------------------------------------------------------------------------
\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 spending 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 the Green   
  Book to reflect more recent spending information and more precise inflation adjustments for constant dollar   
  amounts.                                                                                                      
                                                                                                                
Source: Compiled by the Congressional Research Service.                                                         

AFDC-related groups
    States must provide Medicaid to all persons receiving cash 
assistance under AFDC, as well as to additional AFDC-related 
groups that 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.
    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
    Between 1986 and 1991, Congress gradually extended Medicaid 
to groups of pregnant women and children defined in terms of 
family income and resources, rather than in terms of their ties 
to the AFDC Program.
    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 the age of mandatory coverage will increase each year 
until reaching age 18 in fiscal year 2002.
    States are permitted, but not required, to cover pregnant 
women and infants under 1 year old with incomes below a State-
established maximum that is above 133 percent of the poverty 
level. As of July 1995, 35 States and the District of Columbia 
had made use of this option; 25 had set their income limits at 
the maximum of 185 percent.
SSI-related groups
    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
Hawaii
Illinois
Indiana
Minnesota
Missouri
New Hampshire
North Carolina
North Dakota
Ohio
Oklahoma
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 eligibility for the medically needy.
    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 nondisability 
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).
    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
    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.
    In addition, 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 and 120 percent of the poverty level.
    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.
    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 they lived 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 who would be eligible if they were in an 
institution. These include children being cared for at home, 
persons of any age who are ventilator-dependent, and persons 
receiving hospice benefits in lieu of institutional services.

                 Optional Coverage: The Medically Needy

    Forty 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 and income.
    The State may set its separate medically needy income 
standard for a family of a given size at any level up to 133 
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, 1995, the following 40 States and 
territories covered some groups of the medically needy:

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

                         Medicaid and the Poor

    In 1994, Medicaid covered 12 percent of the total U.S. 
population (excluding institutionalized persons) and 46.2 
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 16-12 shows Medicaid 
coverage by age and income status in 1994, as reported in the 
March 1995 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 16-12.--MEDICAID COVERAGE BY AGE AND FAMILY INCOME, 1994     
                             [In thousands]                             
------------------------------------------------------------------------
                                                               Percent  
               Age                  Covered by   Persons in      with   
                                     Medicaid    age group     Medicaid 
------------------------------------------------------------------------
In poverty:                                                             
    0-5..........................        4,358        6,093         71.5
    6-10.........................        2,762        4,228         65.3
    11-18........................        2,940        5,611         52.4
    19-44........................        5,101       13,823         36.9
    45-64........................        1,366        4,639         29.4
    65 or older..................        1,050        3,663         28.7
                                  --------------------------------------
      Total......................       17,577       38,057         46.2
                                  ======================================
Family income between 100 and 133                                       
 percent of poverty:                                                    
    0-5..........................          875        1,967         44.5
    6-10.........................          548        1,472         37.2
    11-18........................          575        1,987         28.9
    19-44........................        1,151        6,258         18.4
    45-64........................          346        1,997         17.3
    65 or older..................          552        2,907         19.0
                                  --------------------------------------
      Total......................        4,047       16,589         24.4
                                  ======================================
Family income between 133 and 185                                       
 percent of poverty:                                                    
    0-5..........................          825        2,822         29.2
    6-10.........................          391        2,166         18.0
    11-18........................          496        3,257         15.2
    19-44........................        1,072       10,175         10.5
    45-64........................          374        3,625         10.3
    65 or older..................          430        4,915          8.8
                                  --------------------------------------
      Total......................        3,588       26,960         13.3
                                  ======================================
Family income greater than 185                                          
 percent of poverty:                                                    
    0-5..........................        1,109       13,379          8.3
    6-10.........................          621       11,401          5.4
    11-18........................          874       19,094          4.6
    19-44........................        2,034       75,164          2.7
    45-64........................          707       41,187          1.7
    65 or older..................          843       19,783          4.3
                                  --------------------------------------
      Total......................        6,189      180,009          3.4
                                  ======================================
All persons:                                                            
    0-5..........................        7,167       24,261         29.5
    6-10.........................        4,321       19,267         22.4
    11-18........................        4,885       29,949         16.3
    19-44........................        9,358      105,420          8.9
    45-64........................        2,794       51,449          5.4
    65 or older..................        2,876       31,269          9.2
                                  --------------------------------------
      Total......................       31,400      261,614         12.0
------------------------------------------------------------------------
Source: CRS tabulations from the March 1995 Current Population Survey   
  (CPS). Table excludes persons in institutions and approximately       
  250,000 children under age 15 living with nonfamily caretakers. Number
  of recipients is lower than the number on administrative records due  
  to underreporting by CPS respondents.                                 

                                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, and 
inpatient psychiatric care for individuals under age 21 or over 
65 (see table 16-24). 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 in 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 pay the cost of 
Medicaid services by means of a variable matching formula which 
is adjusted annually. The Federal matching rate, which is 
inversely related to a State's per capita income, can range 
from 50 to 83 percent though currently the highest rate is 
78.07 percent, with 11 States and the District of Columbia 
receiving the minimum match of 50 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 cost-sharing 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 nursing facility 
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 an 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.

                       Medicaid and Managed Care

    To contain escalating health care costs and improve access 
to the Medicaid Program, States are increasingly adopting 
managed care delivery systems. Managed care refers to an array 
of health plans which attempt to control the cost and quality 
of care by coordinating medical and other health-related 
services. States wishing to require Medicaid beneficiaries to 
enroll in managed care plans must obtain one of two types of 
waivers from the HCFA. Section 1115(a) of the Social Security 
Act offers States the greatest flexibility, allowing HCFA to 
waive a broad range of Medicaid requirements. Statewide section 
1115(a) waivers have been approved in 13 States, implemented in 
9, and are pending in 11 States. These waivers allow States to 
expand coverage to those not traditionally eligible, to impose 
premiums and copayments on those new eliginles, and to modify 
the Medicaid benefit package. A second kind of waiver, known as 
a ``freedom-of-choice'' waiver, is permitted by section 1915(b) 
of the Social Security Act. Section 1915(b) waivers allow 
States to waive specific requirements for a specific population 
or geographical area, and have been used to require Medicaid 
beneficiaries to enroll in managed care plans and to restrict 
the providers from whom enrollees receive Medicaid-covered 
services. There are currently 91 freedom-of-choice programs 
operating in 42 States.
    Managed care includes a wide array of approaches to 
organizing the delivery of health care. In contrast to 
traditional ``fee-for-service'' plans, most managed care plans 
are ``capitated,'' meaning they receive a fixed amount of money 
per person to provide a set of services for any patient 
enrolled. However, some plans are a synthesis of partially 
capitated and fee-for-service care. Arrangements include 
primary care case managers (PCCMs), preferred provider 
organizations (PPOs), health maintenance organizations (HMOs), 
and point-of-service plans (POSs). Medicaid managed care 
enrollment has increased 140 percent since 1993. Currently 
there are approximately 11.6 million Medicaid recipients 
enrolled in some type of managed care: 5.1 million in HMOs, 3.6 
million in PCCM, and 2.9 million in other variations. Of these, 
approximately 7.5 million recipients are in fully capitated 
plans.
    Arizona received the first comprehensive statewide section 
1115(a) waiver in 1982. Since 1993, Delaware, Hawaii, 
Minnesota, Oklahoma, Oregon, Rhode Island, Tennessee, and 
Vermont have received and implemented statewide section 1115(a) 
waivers. Statewide waivers have been approved but not 
implemented in Florida, Kentucky, Massachusetts and Ohio. Most 
of these waivers are designed to move Medicaid beneficiaries 
into managed care and to expand Medicaid eligibility to low-
income and uninsured persons not statutorily entitled to 
coverage. However, there is significant variability in the 
degree of expanded coverage offered under each. Many waivers 
require newly-covered enrollees to contribute to the cost of 
their medical care by paying premiums and copayments based on 
income, some limit eligibility to certain populations, and most 
impose upper income eligibility limits.
    Section 1115(a) waivers are approved on condition that they 
are budget neutral to the Federal Government--that Federal 
costs over the life of the waiver (typically 5 years) are no 
more than if the State had continued operating its prewaiver 
Medicaid Program. To enforce budget neutrality, some waivers 
employ aggregate caps on Federal matching and others use per 
capita expenditure caps. Many States exempt Medicaid eligibles 
who are SSI recipients (aged, blind, and disabled), who often 
incur high medical expenses, from mandatory managed care 
participation. Research by the Government Accounting Office 
(GAO) has shown that Arizona's waiver program has succeeded in 
containing health care costs by developing a competitive 
Medicaid health care market. GAO questions whether approved 
section 1115(a) waivers in other States, notably Oregon, 
Hawaii, and Florida, will be cost neutral, and suggests that 
statewide section 1115(a) waivers instead could increase 
Federal Medicaid expenditures significantly by expanding 
coverage to those ineligible under traditional plans.
    Until 1982, Arizona was the only State that did not have a 
Medicaid Program. The State became the first to mandate managed 
care enrollment for its Medicaid-eligibles when it received a 
section 1115(a) waiver to implement the Arizona Health Care 
Cost Containment System. The Arizona system, with an estimated 
450,000 enrollees, is fully capitated and includes both acute 
care and long-term care programs. The waiver has been extended 
through 1997. Oregon's Health Plan Demonstration, implemented 
February 1994, is part of the State's health care reform goal 
of universal coverage. The plan expands Medicaid eligibility to 
an estimated 120,000 people with incomes below 100 percent of 
the Federal poverty level. The benefit package, developed by 
the State in conjunction with health care providers and 
consumers, consists of a prioritized list of 581 conditions and 
treatments, in addition to certain preventive services. Most 
care is delivered through fully capitated managed care health 
plans. Similarly, Tennessee's TennCare Program is designed to 
provide benefits to traditional Medicaid beneficiaries, 
uninsured State residents, and those who are otherwise 
uninsurable. There is no upper income eligibility limit, 
expanding eligibility to an estimated additional 500,000 
persons. The plan requires new eligibles to share the cost of 
medical care by paying premiums, deductibles, and copayments 
based on income. Plan enrollment, capped by the State at 1.4 
million, is currently about 1.3 million.

                          Legislative History

    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 are 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 were 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 were to be issued by the Secretary. 
        States 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 are 
        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 five 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 120 
        percent of the poverty level beginning 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 age 65 or over, effective the later of 
        July 1, 1991, or 30 days after the publication of 
        interim rules. States are 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 were 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 
        include personal assistance, training and habilitation, 
        and other services needed to help with activities of 
        daily living. Total Federal expenditures were 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 businesses 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 years 1993-95, Federal 
        matching funds for revenue from voluntary 
        contributions, provider specific taxes, and broad-based 
        taxes were 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 are 
        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, States with DSH payments of 12 
        percent or more of total Medicaid expenditures in 
        fiscal year 1992 cannot exceed this dollar level in the 
        future; States with DSH payments of less than 12 
        percent may increase them at the same rate as their 
        overall Medicaid expenditure growth.
    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 
1993), 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 would 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. States 
        are allowed 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 1993 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 1993 
        amendments, the period of ineligibility is determined 
        by comparing the cost of care and the fair market value 
        of the assets transferred. States are required to 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 1993 
        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).--States are 
        prohibited 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.--Medicaid payments for designated 
        health services (including clinical laboratory, 
        physical and occupational therapy, radiology, or other 
        diagnostic services, home health and other services) 
        are limited 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.--A new entitlement program is 
        established 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.--States are permitted 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 $105.8 billion in fiscal year 1997, an 11-percent 
increase over the $94.9 billion projected for fiscal year 1996. 
This and other Medicaid Program data are presented in tables 
16-13 to 16-24.

                            TABLE 16-13.--HISTORY OF MEDICAID PROGRAM COSTS, 1966-97                            
----------------------------------------------------------------------------------------------------------------
                                                          Total               Federal               State       
                                                  --------------------------------------------------------------
                   Fiscal year                      Dollars              Dollars              Dollars           
                                                      (in      Percent     (in      Percent     (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\ 22,65                               
                                                                                5      12.9  \6\ 18,26          
                                                                                                     2       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.............................................    143,919       9.0     82,034       8.3     61,885      10.0
1995.............................................    156,263       8.6     89,070       8.6     67,193       8.6
1996 \7\.........................................    166,477       6.5     94,892       6.5     71,585       6.5
1997 \7\.........................................    185,212      11.2    105,571      11.2     79,641      11.2
----------------------------------------------------------------------------------------------------------------
\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 January 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 October 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.                                                                                                    
\7\ Current law estimate.                                                                                       
                                                                                                                
NA--Not available.                                                                                              
                                                                                                                
Note.--Totals may not add due to rounding.                                                                      
                                                                                                                
Source: Budget of the U.S. Government, fiscal years 1969-97 (see Office of the President, 1996, in reference    
  list), and Health Care Financing Administration, Division of Budget.                                          


     TABLE 16-14.--UNDUPLICATED NUMBER OF MEDICAID RECIPIENTS BY ELIGIBILITY CATEGORY, FISCAL YEARS 1972-94     
                                             [Numbers in thousands]                                             
----------------------------------------------------------------------------------------------------------------
                                                                                           Adults in            
                                                                   Permanent   Dependent    family              
         Fiscal year             Total     Age 65 or   Blindness   and total   children      with        Other  
                              recipients     over                  disabled    under age   dependent            
                                                                                  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 \3\....................      25,255       3,202          83       3,635      11,220       6,010       1,105
1991 \3\....................      28,280       3,359          85       3,983      13,415       6,778         658
1992 \3\....................      30,926       3,742          84       4,378      15,104       6,954         664
1993 \3\....................      33,432       3,863          84       4,932      16,285       7,505         642
1994 \3\....................      35,053       4,035          87       5,372      17,194       7,586         573
----------------------------------------------------------------------------------------------------------------
\1\ Fiscal year 1997 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.                                      
\3\ Recipient categories do not add to the unduplicated total due to ``unknown.''                               
                                                                                                                
Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                     


                                  TABLE 16-15.--MEDICAID RECIPIENTS BY BASIS OF ELIGIBILITY BY STATE, FISCAL YEAR 1994                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Total                                                AFDC                             
                            State                               recipients      Aged        Blind       Disabled     children   AFDC adults     Other   
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama......................................................      543,537       71,473        1,580      123,669      244,281       98,852        2,597
Alaska.......................................................       68,854        4,456           95        5,921       38,836       19,546            0
Arizona......................................................      509,663       26,700          804       58,379      309,537      114,243            0
Arkansas.....................................................      339,920       51,953        1,260       82,221      112,370       58,547       30,669
California...................................................    5,007,635      510,470       24,655      678,923    2,259,597    1,422,414       81,900
Colorado.....................................................      289,423       36,840          154       41,059      142,193       66,733        2,444
Connecticut..................................................      354,473       63,321          289       44,434      165,726       80,701            2
Delaware.....................................................       74,800        5,819          117       10,907       40,397       15,594        1,614
District of Columbia.........................................      127,208        9,365          168       21,509       67,278       28,774          114
Florida......................................................    1,727,034      204,302        3,189      247,881      990,980      229,455       51,227
Georgia......................................................    1,084,929      104,296       10,415      168,190      542,580      246,953          163
Hawaii.......................................................      120,793       16,468           14       12,757       59,680       27,840            0
Idaho........................................................      110,043        9,022           48       16,737       59,333       24,407          496
Illinois.....................................................    1,441,034      116,261        1,322      258,471      719,431      313,273       32,276
Indiana......................................................      604,770       69,545        1,037       66,109      319,276      144,423            0
Iowa.........................................................      302,535       38,425          584       46,690      135,634       74,821        5,595
Kansas.......................................................      251,742       25,523          115       35,748      125,396       58,409          136
Kentucky.....................................................      637,558       63,112        1,853      143,295      272,754      134,178            0
Louisiana....................................................      778,223      100,878        1,795      147,520      375,960      152,070            0
Maine........................................................      176,998       23,245          254       33,229       76,758       37,922        4,801
Maryland.....................................................      415,101       46,492          288       80,868      198,228       80,217        9,008
Massachusetts................................................      710,490      102,417        6,842      140,879      304,265      156,087            0
Michigan.....................................................    1,186,621       83,543        2,113      211,069      571,418      316,712        1,766
Minnesota....................................................      425,563       59,503          564       68,241      196,612       97,779        2,864
Mississippi..................................................      536,916       65,009        1,580      115,720      258,293       83,153        1,782
Missouri.....................................................      668,765       89,812        1,113       90,881      328,035      157,499            0
Montana......................................................       96,206        9,119           80       15,155       34,379       23,587       11,917
Nebraska.....................................................      164,440       21,031          239       22,053       73,565       25,153       22,399
Nevada.......................................................       95,411       10,642          425       13,848       46,086       21,868        1,644
New Hampshire................................................       85,555       12,837          411       10,496       42,247       19,136          150
New Jersey...................................................      789,692       88,479        1,229      135,452      363,967      190,084          153
New Mexico...................................................      268,204       17,922          641       37,049      151,993       60,599            0
New York.....................................................    2,907,963      367,833        3,764      467,563    1,300,163      596,873      171,767
North Carolina...............................................      985,273      137,899          934      112,432      491,043      242,965            0
North Dakota.................................................       62,769       10,943           23        8,383       26,556       13,312        2,496
Ohio.........................................................    1,523,296      185,106          998      209,919      784,774      339,301        3,198
Oklahoma.....................................................      390,628       53,181          696       52,150      197,674       86,329          600
Oregon.......................................................      411,311       33,656        1,269       42,973      172,182       79,421            0
Pennsylvania.................................................    1,255,358      142,712          822      262,758      580,848      236,787       29,980
Rhode Island.................................................      114,850       18,949          219       24,437       43,896       26,895          454
South Carolina...............................................      486,110       77,542        1,852       86,068      231,724       87,582        1,342
South Dakota.................................................       72,151        9,360          163       12,389       36,598       13,542            0
Tennessee....................................................      938,711      105,085        2,992      199,627      451,584      166,889       12,534
Texas........................................................    2,513,959      308,543        4,155      246,866    1,407,134      547,261            0
Utah.........................................................      157,099        9,415          155       16,967       86,489       43,511            0
Vermont......................................................       94,150       10,291           80       13,481       46,907       20,660           12
Virginia.....................................................      642,947       85,077        1,112       95,751      334,420      126,587            0
Washington...................................................      668,363       53,495          393      100,605      328,483      176,968        6,642
West Virginia................................................      366,638       34,612          305       67,243      160,734       99,890        3,854
Wisconsin....................................................      473,740       67,960        1,206      103,049      141,358       84,776       73,162
Wyoming......................................................       50,544        4,627           11        5,458       26,152       10,731          525
Puerto Rico..................................................      926,518      159,533          415       57,105      709,465            0            0
Virgin Islands...............................................       16,499        1,280            9          967        9,156        4,463          624
                                                              ------------------------------------------------------------------------------------------
    United States............................................   34,109,996    3,874,566       86,422    5,313,479   16,475,804    7,581,309      572,283
    All jurisdictions........................................   35,053,013    4,035,379       86,846    5,371,551   17,194,425    7,585,772      572,907
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Total recipients include unknowns which are not reflected in this table.                                                                         
                                                                                                                                                        
Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                                                             


                                 TABLE 16-16.--MEDICAID EXPENDITURES BY BASIS OF ELIGIBILITY BY STATE, FISCAL YEAR 1994                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Total                                        AFDC       AFDC               Aged, blind and      AFDC    
                   State                    expenditures     Aged      Blind    Disabled   children    adults     Other      disabled \2\   children \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama...................................        1,312         411         5        524        191        175          5             71.7          14.6
Alaska....................................          243          42         1         67         76         57          0             45.2          31.5
Arizona...................................          199          13         1         63         73         50          0             38.2          36.8
Arkansas..................................        1,253         350         7        591        122         77         98             75.7           9.7
California................................        9,988       2,577       107      3,538      1,468      2,067        179             62.3          14.7
Colorado..................................          952         302         4        358        138        138         12             69.7          14.5
Connecticut...............................        1,943         902         4        664        213        160        (&lt;SUP&gt;1)             80.8          11.0
Delaware..................................          277          72         1        126         41         30          5             71.9          14.7
District of Columbia......................          550         146         1        257         94         52        (&lt;SUP&gt;1)             73.4          17.1
Florida...................................        4,266       1,324        14      1,486      1,052        323         67             66.2          24.7
Georgia...................................        2,845         577        97        971        576        602        (&lt;SUP&gt;1)             57.8          20.2
Hawaii....................................          338         147       (&lt;SUP&gt;1)         87         50         52          0             69.3          14.8
Idaho.....................................          331          83       (&lt;SUP&gt;1)        149         52         45          1             70.3          15.7
Illinois..................................        4,826         934        10      2,368        807        586        121             68.6          16.7
Indiana...................................        2,250         769         7        801        381        283          0             70.1          16.9
Iowa......................................          982         271         2        418        160        123          7             70.5          16.3
Kansas....................................          782         230         1        314        129         98        (&lt;SUP&gt;1)             69.7          16.5
Kentucky..................................        1,779         435         8        776        279        265          0             68.5          15.7
Louisiana.................................        2,684         661        12      1,132        519        361          0             67.2          19.3
Maine.....................................          807         286         1        318        101         81         20             75.0          12.5
Maryland..................................        1,875         474         2        843        300        185         71             70.4          16.0
Massachusetts.............................        3,052       1,308        72      1,073        351        248          0             80.4          11.5
Michigan..................................        3,274         724        11      1,558        502        473          5             70.1          15.3
Minnesota.................................        1,982         836         7        826        178        133          2             84.2           9.0
Mississippi...............................        1,090         297         5        445        205        132          5             68.6          18.8
Missouri..................................        1,809         593         5        649        332        229          0             68.9          18.3
Montana...................................          303          98       (&lt;SUP&gt;1)        115         35         38         14             70.7          11.7
Nebraska..................................          593         199         2        205         85         45         56             68.5          14.4
Nevada....................................          307          71         3        119         51         43         14             62.9          16.7
New Hampshire.............................          389         181         8        129         43         28        (&lt;SUP&gt;1)             81.6          11.1
New Jersey................................        3,612       1,132        10      1,601        367        486          1             75.9          10.2
New Mexico................................          638         118         5        252        163        100          0             58.8          25.5
New York..................................       18,731       6,906        97      7,439      2,377      1,604        308             77.1          12.7
North Carolina............................        2,685         832        10        851        557        434          0             63.1          20.8
North Dakota..............................          284         112       (&lt;SUP&gt;1)        115         30         22          3             80.0          10.7
Ohio......................................        4,995       1,816         5      1,792        803        578          1             72.3          16.1
Oklahoma..................................          974         307         2        333        220        111        (&lt;SUP&gt;1)             65.9          22.6
Oregon....................................        1,036         237        24        367        234        117          0             60.6          22.6
Pennsylvania..............................        4,224       1,665         3      1,630        534        348         42             78.1          12.6
Rhode Island..............................          685         208        30        294         87         63          4             77.7          12.6
South Carolina............................        1,396         387         7        569        257        175          1             69.0          18.4
South Dakota..............................          284          96         1        124         42         22          0             77.6          14.7
Tennessee.................................        1,965         535         9        770        368        233         52             66.8          18.7
Texas.....................................        6,141       1,637        22      1,810      1,527      1,145          0             56.5          24.9
Utah......................................          451          83         1        165         95         97          0             55.3          21.1
Vermont...................................          259          80         1        110         40         28        (&lt;SUP&gt;1)             73.6          15.3
Virginia..................................        1,723         549         6        643        299        226          0             69.6          17.3
Washington................................        1,574         496         2        558        232        282          2             67.1          14.7
West Virginia.............................        1,107         268         1        432        158        197         50             63.4          14.3
Wisconsin.................................        1,830         756         8        753        102        114         95             82.9           5.6
Wyoming...................................          157          43       (&lt;SUP&gt;1)         60         27         24          1             65.5          17.1
Puerto Rico...............................          233          39       (&lt;SUP&gt;1)         14        180          0          0             22.8          77.2
Virgin Islands............................            8           2       (&lt;SUP&gt;1)          1          2          2        (&lt;SUP&gt;1)             45.0          26.1
                                           -------------------------------------------------------------------------------------------------------------
    United States.........................      108,029      33,576       644     41,639     17,121     13,583      1,242             70.2          15.8
    All jurisdictions.....................      108,270      33,618       644     41,654     17,302     13,585      1,243             70.1          10.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Denotes expenditures of less than $500,000.    \2\ As percentage of total spending.                                                                 
                                                                                                                                                        
Note.--In millions; total expenditures include unknowns which are not reflected in this table.                                                          
                                                                                                                                                        
Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                                                             


                            TABLE 16-17.--TOTAL AND PER CAPITA MEDICAID PAYMENTS FOR CATEGORICALLY NEEDY AND MEDICALLY NEEDY, FISCAL YEARS 1975, 1981, 1992, AND 1994                           
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           1975                            1981                            1992                            1994                 Percent change  
                                             --------------------------------------------------------------------------------------------------------------------------------       1975-94     
              Category of needy                  Total                           Total                           Total                           Total                       -------------------
                                                amount     Percent     Per      amount     Percent     Per      amount     Percent     Per      amount     Percent     Per      Total      Per  
                                              (millions)  of total   capita   (millions)  of total   capita   (millions)  of total   capita   (millions)  of 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    $49,682       45.9    $2,519     591.2     484.5
        Aged................................      1,341       11.0       555      2,480        9.1     1,270      5,795        6.4     3,778      6,485        6.0     4,273     383.6     669.9
        Blind...............................         61        0.5       717        109        0.4     1,527        334        0.4     4,669        373        0.3     5,464     511.5     662.1
        Disabled............................      2,042       16.7     1,094      5,616       20.6     2,490     19,863       21.9     6,097     25,683       23.7     6,549   1,157.7     498.6
        AFDC children.......................      1,850       15.1       222      3,002       11.0       361      8,376        9.2       891      9,259        8.6       963     400.5     333.8
        Adults in AFDC families.............      1,895       15.5       478      3,328       12.2       769      7,374        8.1     1,682      7,882        7.3     1,712     315.9     258.2
    Not receiving cash payments.............      1,753       14.3     1,261      4,736       17.4     2,641     16,064       17.7     4,243     18,173       16.8     4,057     936.7     221.7
        Aged................................      1,275       10.4     2,331      3,143       11.6     5,273      7,085        7.8    11,658      8,068        7.5    12,977     532.8     456.7
        Blind...............................         12        0.1     1,094         19        0.1     2,785         80        0.1    15,310         87        0.1    18,377     625.0   1,579.8
        Disabled............................        353        2.9     1,854      1,214        4.5     5,146      5,065        5.6    11,913      5,236        4.8    11,044   1,383.3     495.7
        AFDC children.......................         61        0.5       152        153        0.6       302      1,764        1.9     1,156      2,440        2.3     1,177   3,900.0     674.3
        Adults in AFDC families.............         27        0.2       144         87        0.3       298      1,428        1.6     1,606      1,566        1.4     1,637   5,700.0   1,036.8
        Other...............................         25        0.2       463        120        0.4       734        643        0.7     1,927        778        0.7     2,232   3,012.0     382.1
                                             ---------------------------------------------------------------------------------------------------------------------------------------------------
          Total.............................      8,941       73.0       495     19,270       70.8     1,032     57,807       63.7     2,577     67,855       62.7     2,803     658.9     466.3
                                             ===================================================================================================================================================
Medically needy:                                                                                                                                                                                
    Aged....................................      1,742       14.2     2,672      4,303       15.8     5,260      8,927        9.8    11,724      9,383        8.7    11,833     438.6     342.9
    Blind...................................         20        0.2     1,472         27        0.1     3,132         71        0.1    21,865         69        0.1    18,463     245.0   1,154.3
    Disabled................................        657        5.4     2,202      2,471        9.1     4,924      5,243        5.8    13,876      5,838        5.4    13,064     788.6     493.3
    AFDC children...........................        274        2.2       324        353        1.3       460      1,592        1.8       943      1,839        1.7     1,004     571.2     209.9
    Adults in AFDC families.................        140        1.1       368        348        1.3       613      1,265        1.4     1,930      1,497        1.4     1,980     969.3     438.0
    Other...................................        467        3.8       267        433        1.6       360        268        0.3     1,844        277        0.3     2,135     -40.7     699.6
                                             ---------------------------------------------------------------------------------------------------------------------------------------------------
      Total.................................      3,301       27.0       838      7,935       29.2     2,145     17,367       19.1     4,782     18,903       17.5     4,771     472.6     469.3
                                             ===================================================================================================================================================
      Grand total...........................     12,242      100.0       556     27,205      100.0     1,216     90,814      100.0     2,936    108,270      100.0     3,089     784.4     455.6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Totals may not addd 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 1994 are: Other coverage pre-1988, $13,582; coverage from 1988, $7,705; and medical assistance status unknown, $225.                                                   
                                                                                                                                                                                                
Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                                                                                                     


            TABLE 16-18.--MEDICAID RECIPIENTS AND PAYMENTS BY BASIS OF ELIGIBILITY, FISCAL YEAR 1994            
----------------------------------------------------------------------------------------------------------------
                                                                Amount   Percent  Recipients  Percent     Per   
                    Basis of eligibility                         (in        of        (in        of      capita 
                                                              millions)   total   thousands)   total    payments
----------------------------------------------------------------------------------------------------------------
Aged........................................................    $33,618     31.0       4,035     11.5   $8,330.8
Blind.......................................................        644      0.6          87      0.2    7,412.0
Disabled....................................................     41,654     38.5       5,372     15.3    7,754.6
AFDC child..................................................     17,302     16.0      17,194     49.1    1,006.3
AFDC adult..................................................     13,585     12.5       7,586     21.6    1,790.8
Other.......................................................      1,243      1.1         573      1.6    2,168.8
                                                             ---------------------------------------------------
      Total.................................................    108,270    100.0      35,053    100.0    3,088.8
----------------------------------------------------------------------------------------------------------------
Note.--Recipients and payments total include unknowns which are not shown in this table.                        
                                                                                                                
Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                     


                     TABLE 16-19.--MEDICAID PAYMENTS AND PER CAPITA PAYMENTS BY BASIS OF ELIGIBILITY, SELECTED FISCAL YEARS 1975-94                     
                                                                [In millions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Fiscal year                                                   Percent
       Basis of eligibility       -------------------------------------------------------------------------------------------------------------  change 
                                     1975     1981     1984     1985     1986     1987     1988     1989     1990     1991     1992     1994     1975-94
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  [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    33,618     671.4
  Blind..........................       93      154      219      249      277      309      344      409      434      475      530       644     593.0
  Disabled.......................    3,052    9,301   11,758   13,203   14,635   16,507   18,250   20,476   23,969   27,798   33,326    41,654   1,264.7
  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    17,302     691.5
  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    13,585     558.9
  Other..........................      492      552      700      798      980    1,078    1,198    1,137    1,051      973    1,032     1,243     152.7
                                  ----------------------------------------------------------------------------------------------------------------------
    Total \1\....................   12,242   27,204   33,891   37,508   41,005   45,050   48,710   54,500   64,859   77,048   90,814   108,270     784.4
                                  ======================================================================================================================
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     8,331     591.1
  Blind..........................      850    1,784    2,766    3,104    3,401    3,644    4,005    4,319    5,212    5,572    6,298     7,412     772.1
  Disabled.......................    1,296    3,108    4,149    4,496    4,721    5,008    5,366    5,858    6,595    6,979    7,612     7,755     498.3
  Dependent children under age 21      228      366      411      452      512      542      583      668      811      871      959     1,006     341.8
  Adults in families with                                                                                                                               
   dependent children............      455      725      789      860      864      999    1,069    1,206    1,429    1,540    1,752     1,791     293.4
  Other..........................      273      405      590      658      719      761      891      967    1,062    1,732    1,814     2,169     694.0
                                  ----------------------------------------------------------------------------------------------------------------------
    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     3,089     455.2
                                  ======================================================================================================================
                                                               [In constant 1994 dollars]                                                               
Payments:                                                                                                                                               
  Age 65 and over................   12,135   16,445   18,348  .......   20,348  .......   21,563   22,294   24,609   27,725   30,747    33,618     177.0
  Blind..........................      259      255      314  .......      373  .......      433      491      497      517      560       644     148.7
  Disabled.......................    8,499   15,410   16,835  .......   19,725  .......   22,967   24,598   27,425   30,279   35,238    41,654     390.1
  Dependent children under age 21    6,087    5,812    5,697  .......    6,921  .......    7,359    8,279   10,412   12,733   15,323    17,302     184.2
  Adults in families with                                                                                                                               
   dependent children............    5,742    6,234    6,323  .......    6,577  .......    7,403    8,285    9,829   11,371   12,884    13,585     136.6
  Other..........................    1,370      915    1,002  .......    1,321  .......    1,508    1,366    1,203    1,360    1,091     1,243       9.3
                                  ----------------------------------------------------------------------------------------------------------------------
    Total \1\....................   34,089   45,070   48,524  .......   55,267  .......   61,299   65,470   74,212   83,325   96,025   108,270     217.6
                                  ======================================================================================================================
Per capita payment:                                                                                                                                     
  Age 65 and over................    3,355    4,884    5,666  .......    5,480  .......    6,827    7,119    7,686    8,253    8,216     8,331     138.3
  Blind..........................    2,367    2,956    3,960  .......    4,584  .......    5,040    5,183    5,964    6,069    6,659     7,412     213.2
  Disabled.......................    3,609    5,249    5,940  .......    6,363  .......    6,753    7,037    7,546    7,602    8,049     7,755     114.9
  Dependent children under age 21      635      606      588  .......      690  .......      734      802      928      949    1,014     1,006      58.5
  Adults in families with                                                                                                                               
   dependent children............    1,267    1,201    1,130  .......    1,164  .......    1,345    1,449    1,635    1,677    1,853     1,791      41.4
  Other..........................      760      671      845  .......      969  .......    1,021    1,162    1,215    1,887    1,918     2,169     185.3
                                  ----------------------------------------------------------------------------------------------------------------------
    Total, per capita payment....    1,548    2,051    2,246  .......    2,454  .......    2,675    2,785    2,938    2,968    3,104     3,089      99.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Data includes 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 of constant 
  dollars using CPI-U price index. Total expenditures includes other coverage groups and unknowns for fiscal year 1994.                                 
                                                                                                                                                        
Source: Health Care Financing Administration, U.S. Department of Health and Human Services, and Congressional Research Service.                         


                              TABLE 16-20.--MEDICAID PAYMENTS BY SERVICE CATEGORY, FISCAL YEARS 1975, 1981, 1990, AND 1994                              
                                                         [In millions of constant 1994 dollars]                                                         
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   1975                1981                1990                1994            Average  
                                                           --------------------------------------------------------------------------------    annual   
                     Service category                                                                                                          percent  
                                                             Amount    Percent   Amount    Percent   Amount    Percent   Amount    Percent  change 1975-
                                                                                                                                  of total       92     
--------------------------------------------------------------------------------------------------------------------------------------------------------
Inpatient hospital........................................    $9,396      30.9   $11,693      29.7   $18,388      28.4   $28,237      26.1           5.6
  General.................................................     8,389      27.6    10,423      26.4    16,674      25.7    26,180      24.2           5.8
  Mental..................................................     1,007       3.3     1,271       3.2     1,714       2.6     2,057       1.9           4.2
Skilled nursing facilities................................  \1\ 6,05                                                                                    
                                                                   2      19.9     5,846      14.8     8,026      12.4    27,095      25.0           7.8
Intermediate care facilities..............................     5,632      18.5    10,870      27.6    17,021      26.2     8,347       7.7         (\1\)
  Intermediate care facilities for the mentally retarded..       945       3.1     4,341      11.0     7,354      11.3                               2.0
  Other...................................................     4,687      15.4     6,530      16.6     9,667      14.9     7,189       6.6           3.7
Physician.................................................     3,046      10.0     3,044       7.7     4,018       6.2       969       0.9          -0.4
Dental....................................................       843       2.8       787       2.0       593       0.9     1,040       1.0           2.7
Other practitioner........................................       316       1.0       330       0.8       372       0.6     6,342       5.9          10.3
Outpatient hospital.......................................       927       3.0     2,041       5.2     3,324       5.1     3,747       3.5           6.0
Clinic....................................................       967       3.2       540       1.4     1,688       2.6     1,176       1.1           6.8
Lab and x ray.............................................       313       1.0       213       0.5       721       1.1     7,042       6.5          21.1
Home health...............................................       174       0.6       620       1.6     3,404       5.2     8,875       8.2           6.9
Prescribed drugs..........................................     2,026       6.7     2,224       5.6     4,420       6.8       516       0.5           6.2
Family planning...........................................       167       0.5       201       0.5       265       0.4       980       0.9         (\1\)
Early and periodic screening..............................     (\2\)     (\2\)        97       0.2       198       0.3       188       0.2         (\1\)
Rural health clinic.......................................     (\2\)     (\2\)         6       0.0        34       0.1                                  
Other.....................................................       579       1.9       897       2.3     2,385       3.7     6,522       6.0          10.8
                                                           ---------------------------------------------------------------------------------------------
    Total.................................................    30,440     100.0    39,414     100.0    64,859       100   108,270     100.0           6.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Prior to fiscal year 1991, there were two categories of Medicaid nursing home care: skilled nursing facilities and 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 converted to        
  constant dollars using the Consumer Price Index (CPI-U). Data exclude unknowns.                                                                       
                                                                                                                                                        
 Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                                                            


                                  TABLE 16-21.--MEDICAID RECIPIENTS BY SERVICE CATEGORY, SELECTED FISCAL YEARS 1975-94                                  
                                                                     [In thousands]                                                                     
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Fiscal year                                       
                       Service category                       ------------------------------------------------------------------------------------------
                                                                   1975         1981         1989         1990         1991         1992         1994   
--------------------------------------------------------------------------------------------------------------------------------------------------------
Inpatient hospital:                                                                                                                                     
    General..................................................        3,432        3,703        4,171        4,593        5,137        5,768        5,866
    Mental...................................................           67           90           90           92        5,072           77           85
Nursing facilities \1\.......................................        1,312        1,385        1,452        1,461        1,499        1,573        1,639
Intermediate care facilities for the mentally retarded.......           69          151          148          147          146          151          159
Physician....................................................       15,198       14,403       15,686       17,078       19,321       21,627       24,267
Dental.......................................................        3,944        5,173        4,214        4,552        5,209        5,700        6,352
Other practitioner...........................................        2,673        3,582        3,555        3,873        4,282        4,711        5,409
Outpatient hospital..........................................        7,437       10,018       11,344       12,370       14,137       15,120       16,567
Clinic.......................................................        1,086        1,755        2,391        2,804        3,511        4,115        5,258
Laboratory &amp; x ray...........................................        4,738        3,822        7,759        8,959       10,505       11,804       13,412
Home health..................................................          343          402          609          719          813          925        1,293
Prescribed drugs.............................................       14,155       14,256       15,916       17,294       19,602       22,030       24,471
Family planning..............................................        1,217        1,473        1,564        1,752        2,185        2,550        2,566
Early and periodic screening.................................          &lt;SUP&gt;(2)        1,969        2,524        2,952        3,957        4,982        6,456
Rural health clinics.........................................          &lt;SUP&gt;(2)           81          166          224          405          743          945
Other........................................................        2,911        2,344        4,583        5,126        5,957        6,702        9,908
                                                              ------------------------------------------------------------------------------------------
      Unduplicated total.....................................       22,007       21,980       23,511       25,255       28,280       30,926       35,053
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Prior to fiscal year 1991, there were two categories of Medicaid nursing home care: skilled nursing facilities and intermediate nursing facilities. 
\2\ 1975 data not available.                                                                                                                            
                                                                                                                                                        
Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                                                             


       TABLE 16-22.--MEDICAL VENDOR PAYMENTS BY BASIS OF ELIGIBILITY AND TYPE OF SERVICE, FISCAL YEAR 1994      
----------------------------------------------------------------------------------------------------------------
                                                                           AFDC                                 
       Type of service           Aged        Blind     Disabled  ------------------------    Other       Total  
                                                                   Children     Adults                          
----------------------------------------------------------------------------------------------------------------
                                                                                                                
(6) [In millions of dollars]                                                                                    
                                                                                                                
Inpatient hospital services.     1,963.7        88.0    10,862.6     6,902.5     5,768.0       494.3    26,079.1
Mental hospital services for                                                                                    
 the aged...................       782.1         0.5        41.0         6.8         2.3         9.3       842.0
SNF/ICF mental health                                                                                           
 services for the aged......        54.9         0.0         4.2         0.0         0.0         0.0        59.1
Inpatient psychiatric                                                                                           
 services, aged under 21....         0.5         0.3       428.8       544.5        12.2       165.4     1,151.7
ICF services for the                                                                                            
 mentally retarded..........       584.9       103.0     7,598.1        45.5         1.9         3.8     8,337.2
Nursing facilities services.    22,660.3       190.5     4,172.0        24.1        24.3         8.1    27,079.3
Physicians services.........       543.9        27.2     1,911.7     2,270.7     2,290.2       124.0     7,167.7
Dental services.............        55.8         1.5       158.2       516.9       212.3        22.6       967.2
Other practitioners services        84.9         2.9       437.8       311.7       153.1        48.7     1,039.1
Outpatient hospital services       454.0        22.9     2,165.2     1,925.1     1,673.8        89.7     6,330.6
Clinic services.............       218.0        24.5     2,075.8       811.6       545.3        65.4     3,740.6
Home health services........     2,663.0        69.2     4,005.9       203.5        73.6        24.4     7,039.7
Family planning services....         1.2         0.5        34.7        53.0       417.9         7.3       514.6
Lab and x-ray services......        66.0         4.0       364.7       249.6       475.3        13.5     1,173.1
Prescribed drugs............     2,650.6        62.5     4,084.1     1,063.1       960.9        46.7     8,867.9
Early and periodic screening         0.2         1.7       148.8       768.0        28.2        25.7       972.6
Rural health clinic services         6.9         0.3        32.0       100.2        46.3         2.4       188.1
Other care..................       823.0        44.3     3,129.4     1,505.1       898.8        91.2     6,491.8
Unknown/error...............         0.6         0.0         2.6         0.6         0.1         0.0         3.8
                             -----------------------------------------------------------------------------------
      Total.................    33,617.8       643.7    41,654.1    17,302.5    13,584.7     1,242.5   108,045.2
                                                                                                                
                                                                                                                
(6) [In percent]                                                                                                
                                                                                                                
Inpatient hospital services.         5.8        13.7        26.1        39.9        42.5        39.8        24.1
Mental hospital services for                                                                                    
 the aged...................         2.3         0.1         0.1         0.0         0.0         0.7         0.8
SNF/ICF mental health                                                                                           
 services for the aged......         0.2         0.0         0.0         0.0         0.0         0.0         0.1
Inpatient psychiatric                                                                                           
 services, aged under 21....         0.0         0.0         1.0         3.1         0.1        13.3         1.1
ICF services for the                                                                                            
 mentally retarded..........         1.7        16.0        18.2         0.3         0.0         0.3         7.7
Nursing facilities services.        67.4        29.6        10.0         0.1         0.2         0.7        25.1
Physicians services.........         1.6         4.2         4.6        13.1        16.9        10.0         6.6
Dental services.............         0.2         0.2         0.4         3.0         1.6         1.8         0.9
Other practitioners services         0.3         0.5         1.1         1.8         1.1         3.9         1.0
Outpatient hospital services         1.4         3.6         5.2        11.1        12.3         7.2         5.9
Clinic services.............         0.6         3.8         5.0         4.7         4.0         5.3         3.5
Home health services........         7.9        10.8         9.6         1.2         0.5         2.0         6.5
Family planning services....         0.0         0.1         0.1         0.3         3.1         0.6         0.5
Lab and x-ray services......         0.2         0.6         0.9         1.4         3.5         1.1         1.1
Prescribed drugs............         7.9         9.7         9.8         6.1         7.1         3.8         8.2
Early and periodic screening         0.0         0.3         0.4         4.4         0.2         2.1         0.9
Rural health clinic services         0.0         0.1         0.1         0.6         0.3         0.2         0.2
Other care..................         2.4         6.9         7.5         8.7         6.6         7.3         6.0
Unknown/error...............         0.0         0.0         0.0         0.0         0.0         0.0         0.0
                             -----------------------------------------------------------------------------------
      Total.................       100.0       100.0       100.0       100.0       100.0       100.0       100.0
----------------------------------------------------------------------------------------------------------------
Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                     


       TABLE 16-23.--AVERAGE EXPENDITURE PER RECIPIENT BY BASIS OF ELIGIBILITY BY STATE, FISCAL YEAR 1994       
----------------------------------------------------------------------------------------------------------------
                                                                                           AFDC                 
                   State                      Total     Aged      Blind   Disabled --------------------   Other 
                                                                                    Children   Adults           
----------------------------------------------------------------------------------------------------------------
Alabama...................................    $2,414    $5,747    $3,331    $4,241      $783    $1,766    $1,854
Alaska....................................     3,531     9,443     6,161    11,360     1,970     2,902         0
Arizona...................................       390       469       877     1,076       236       436         0
Arkansas..................................     3,687     6,737     5,918     7,192     1,083     1,314     3,198
California................................     1,995     5,048     4,343     5,211       650     1,453     2,180
Colorado..................................     3,288     8,186    26,386     8,713       973     2,072     4,819
Connecticut...............................     5,482    14,250    13,983    14,936     1,285     1,985       783
Delaware..................................     3,699    12,330     7,157    11,591     1,008     1,950     2,972
District of Columbia......................     4,326    15,573     8,337    11,940     1,398     1,805     1,893
Florida...................................     2,470     6,481     4,491     5,995     1,061     1,407     1,313
Georgia...................................     2,623     5,534     9,315     5,771     1,062     2,436     2,229
Hawaii....................................     2,798     8,920    10,458     6,834       836     1,854         0
Idaho.....................................     3,010     9,216     8,021     8,924       878     1,860     1,785
Illinois..................................     3,349     8,034     7,454     9,162     1,121     1,869     3,764
Indiana...................................     3,721    11,061     6,820    12,118     1,193     1,957         0
Iowa......................................     3,244     7,059     4,248     8,959     1,177     1,640     1,274
Kansas....................................     3,105     9,023     4,736     8,776     1,028     1,684     1,577
Kentucky..................................     2,790     6,894     4,228     5,414     1,021     1,974         0
Louisiana.................................     3,449     6,553     6,438     7,674     1,380     2,371         0
Maine.....................................     4,558    12,287     5,472     9,562     1,313     2,126     4,127
Maryland..................................     4,517    10,198     7,549    10,426     1,513     2,307     7,835
Massachusetts.............................     4,296    12,776    10,470     7,620     1,152     1,590         0
Michigan..................................     2,759     8,670     5,396     7,382       879     1,494     2,752
Minnesota.................................     4,657    14,047    11,873    12,111       906     1,358       682
Mississippi...............................     2,030     4,575     3,335     3,844       793     1,583     2,952
Missouri..................................     2,705     6,603     4,488     7,138     1,011     1,457         0
Montana...................................     3,148    10,793     4,917     7,614     1,031     1,591     1,174
Nebraska..................................     3,604     9,462     7,993     9,288     1,162     1,788     2,521
Nevada....................................     3,213     6,685     6,387     8,592     1,113     1,984     8,330
New Hampshire.............................     4,545    14,074    18,831    12,285     1,019     1,466       462
New Jersey................................     4,573    12,791     7,879    11,820     1,009     2,555     3,285
New Mexico................................     2,380     6,574     7,872     6,815     1,071     1,655         0
New York..................................     6,441    18,774    25,838    15,910     1,828     2,687     1,794
North Carolina............................     2,725     6,036    11,191     7,569     1,134     1,785         0
North Dakota..............................     4,522    10,222     7,535    13,709     1,144     1,673     1,317
Ohio......................................     3,279     9,813     4,595     8,538     1,023     1,704       311
Oklahoma..................................     2,494     5,770     3,065     6,384     1,114     1,291       799
Oregon....................................     2,519     7,035    18,731     8,536     1,358     1,474         0
Pennsylvania..............................     3,365    11,670     3,582     6,204       919     1,469     1,407
Rhode Island..............................     5,968    10,987   138,766    12,030     1,972     2,325     8,180
South Carolina............................     2,871     4,990     4,025     6,609     1,108     1,993       867
South Dakota..............................     3,936    10,243     5,747     9,972     1,141     1,615         0
Tennessee.................................     2,093     5,087     2,887     3,855       814     1,395     4,116
Texas.....................................     2,443     5,305     5,364     7,332     1,085     2,092         0
Utah......................................     2,871     8,819     4,857     9,752     1,101     2,228         0
Vermont...................................     2,756     7,786     7,442     8,172       845     1,377     2,383
Virginia..................................     2,680     6,454     5,518     6,720       893     1,783         0
Washington................................     2,355     9,280     4,564     5,544       705     1,595       332
West Virginia.............................     3,018     7,742     4,633     6,424       982     1,973    13,037
Wisconsin.................................     3,863    11,120     6,810     7,304       724     1,351     1,293
Wyoming...................................     3,111     9,308     1,104    10,976     1,030     2,231     2,021
Puerto Rico...............................       251       244       211       247       254         0         0
Virgin Islands............................       478     1,938       135     1,105       225       475       263
                                           ---------------------------------------------------------------------
    United States.........................    $3,167    $8,666    $7,447    $7,836    $1,039    $1,792    $2,171
    All jurisdictions.....................     3,089     8,331     7,412     7,755     1,006     1,791     2,169
----------------------------------------------------------------------------------------------------------------
Source: Health Care Financing Administration, U.S. Department of Health and Human Services.                     


    TABLE 16-24.--OPTIONAL MEDICAID SERVICES AND NUMBER OF STATES \1\   
                   OFFERING EACH SERVICE, OCTOBER 1995                  
------------------------------------------------------------------------
                                                   States               
                                    States        offering     Access to
                                   offering     services to     include 
            Service              services to        both       Medicaid 
                                categorically  categorically   services 
                                  needy only   and medically    to the  
                                                   needy       uninsured
------------------------------------------------------------------------
Podiatrists' services.........            11             29            6
Optometrists' services........            14             30            6
Chiropractors' services.......             5             21            2
Psychologists' services.......             6             18            3
Medical social workers'                                                 
 services.....................             1              5            1
Nurse anesthetists' services..             8             13            2
Private duty nursing..........             7             18            3
Clinic services...............            15             35            5
Dental services...............            12             31            6
Physical therapy..............            11             29            4
Occupational therapy..........             7             24            4
Speech, hearing and language                                            
 disorder.....................            11             26            4
Prescribed drugs..............            16             34            6
Dentures......................             8             26            5
Prosthetic devices............            15             32            6
Eyeglasses....................            13             30   ..........
Diagnostic services...........             8             23            4
Screening services............             7             23            3
Preventive services...........             7             21            4
Rehabilitative services.......            15             31            6
Services for age 65 and older                                           
 in mental institutions:                                                
    A. Inpatient hospital                                               
     services.................            13             22            5
    B. SNF services...........            10             17            4
    C. ICF/MR services........            22             23            6
Inpatient psychiatric services            11             24            6
Christian science nurses......             1              2            1
Christian science sanitoria...             2              8            3
SNF for under age 21..........            14             27            6
Emergency hospital services...            13             24            5
Personal care services........             9             19            3
Transportation services.......            14             34            6
Case management services......            16             26            5
Hospice services..............            11             23            4
Respiratory care services.....             2             10            4
TB related services...........             2              6            2
------------------------------------------------------------------------
\1\ Includes the territories.                                           
                                                                        
Source: Health Care Financing Administration, U.S. Department of Health 
  and Human Services.                                                   

                     FEDERAL HOUSING ASSISTANCE \9\
---------------------------------------------------------------------------

    \9\ This discussion draws directly from Congressional Budget Office 
(1988). For this report, CBO has updated all figures with 7 additional 
years of data. For a more recent study on these topics, see 
Congressional Budget Office (1994).
---------------------------------------------------------------------------
    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 2 
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. 
This section describes recent trends in the number and mix of 
new commitments, as well as trends in expenditures.

                          Types of Assistance

    The Federal Government has traditionally provided housing 
aid directly to lower income households in the form of rental 
subsidies and mortgage-interest subsidies. 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. Both the number of 
households receiving aid and total Federal expenditures have 
steadily increased each year, but the growth in assisted 
households has slowed since the 1980s.
    A number of different housing assistance programs evolved 
over time 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 home ownership, and, most recently, empowering the 
poor to become self-sufficient.
    New housing programs have been developed 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 as 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 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 (Congressional Research Service, 1991; 1993). 
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.
    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 rent.
    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. 
\10\ 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. 
\11\ These programs distributed funds through a national 
competition and by formula, respectively, to units of local 
government that meet eligibility criteria established by 
statute.
---------------------------------------------------------------------------
    \10\ A small number of renters continue to receive project-based 
subsidies through the now inactive section 221(d)(3) below-market 
interest rate and rent supplement programs.
    \11\ The Housing and Community Development Act of 1987 terminated 
the HoDAG Program at the end of fiscal year 1989; 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. \12\
---------------------------------------------------------------------------
    \12\ 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 that choose 
standard units in the private housing stock. Certificate 
holders generally must occupy units with rents that are within 
guidelines--the so-called fair market rents--established by 
HUD. Voucher recipients, however, are allowed to occupy units 
with rents above the HUD guidelines provided they pay the 
difference.
Traditional homeowners' assistance
    Each year, the Federal Government also assists some low- 
and moderate-income households in becoming homeowners by making 
long-term commitments to reduce their mortgage interest. \13\ 
Most of this aid has been provided through the section 502 
program administered by the FmHA. This program supplies direct 
mortgage loans at low interest rates roughly equal to the long-
term government borrowing rates or provides guarantees for 
private loans with interest rates that 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.
---------------------------------------------------------------------------
    \13\ In addition, a small number of very-low-income homeowners 
receive grants or loans each year from the FmHA for housing repairs.
---------------------------------------------------------------------------
    A number of home buyers have received aid through the 
section 235 program administered by HUD. This program 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. 
\14\ 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 has allowed some very-low-income households to defer up to 
25 percent of their monthly payments, subject to later 
repayment.
---------------------------------------------------------------------------
    \14\ 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 authorized several new housing 
assistance approaches. The major initiatives of the 1990 act 
are: the HOME Investment Partnerships Block Grant Program, the 
Home Ownership and Opportunity for People Everywhere (HOPE) 
Program, and the National Home Ownership Trust Demonstration. 
For 1996, funds were appropriated only for the HOME Program.
    The HOME 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. Currently, participating 
jurisdictions must provide matching contributions of at least 
25 percent of HOME funds spent in each fiscal year.

                   Trends in Commitments and Payments

Trends in commitments
    Although the Federal Government has been subsidizing the 
shelter costs of low-income households since 1937, more than 
half of all currently outstanding commitments were funded over 
the past 20 years. Between 1977 and 1996, about 2.8 million net 
new commitments were funded to aid low-income renters. Another 
1.1 million new commitments were provided in the form of 
mortgage assistance to low- 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 
20-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 16-25).
    The production-oriented approach in rental programs has 
been sharply curtailed since 1982 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 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 over 5.7 million at the beginning of fiscal 
year 1996--an increase of more than 80 percent (see table 16-
26). This increase results largely from net new commitments 
over the past 20 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 to 5.1 
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 0.7 
million by 1996. 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 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 less 
than 12 percent at the beginning of 1996. 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 about 40 percent at the beginning of 1996, with the 
proportion of renters receiving household-based subsidies 
increasing from 8 to 28 percent.

            TABLE 16-25.--NET NEW COMMITMENTS FOR RENTERS AND NEW COMMITMENTS FOR HOMEBUYERS, 1977-96           
----------------------------------------------------------------------------------------------------------------
                                                                 Net new commitments for renters         New    
                                                            ---------------------------------------- commitments
                        Fiscal year                            Existing        New                       for    
                                                               housing    construction     Total      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 \1\...................................................       66,907        29,194       96,101       38,588
1995 \1\...................................................       25,822        19,440       45,262       31,985
1996 (estimate) \1\........................................        8,172        17,731       25,903       42,350
----------------------------------------------------------------------------------------------------------------
\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 U.S. Department of Housing and Urban          
  Development and the Farmers Home Administration.                                                              

Trends in commitments, budget authority, and outlays
    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.

                 TABLE 16-26.--TOTAL HOUSEHOLDS RECEIVING ASSISTANCE BY TYPE OF SUBSIDY, 1977-96                
                                                 [In thousands]                                                 
----------------------------------------------------------------------------------------------------------------
                                                 Assisted renters                                               
                              ------------------------------------------------------                    Total   
                                     Existing housing                                Total assisted    assisted 
         Fiscal year          ------------------------------      New        Total   homeowners \1\   homeowners
                               Household  Project            construction  assisted                  and renters
                                 based     based   Subtotal                 renters                      \1\    
----------------------------------------------------------------------------------------------------------------
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       4,962          751         5,714  
1995.........................     1,487       595     2,081       3,242       5,087          705         5,792  
1996.........................     1,413       608     2,021       3,293       5,079          670         5,748  
----------------------------------------------------------------------------------------------------------------
\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. Data are for beginning of fiscal year.                                       
                                                                                                                
Source: Congressional Budget Office based on data provided by the U.S. Department of Housing and Urban          
  Development and the Farmers Home Administration.                                                              

    Annual appropriations of new budget authority for housing 
assistance were 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 changes in the 
method for financing the construction and modernization of 
public housing and the construction of housing for the elderly 
and the disabled. \15\ For HUD's programs alone, appropriations 
of budget authority declined (in 1996 dollars) from a high of 
$75.5 billion in 1978 to a low of $11.3 billion in 1989 (see 
table 16-27). The increased levels of budget authority since 
1990 reflect primarily the cost of renewing section 8 contracts 
that expire.
---------------------------------------------------------------------------
    \15\ 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 were financed with up front grants, which reduce 
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 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 16-27.--NET BUDGET AUTHORITY APPROPRIATED FOR HOUSING AID    
                      ADMINISTERED BY HUD, 1977-96                      
                [In millions of current and 1996 dollars]               
------------------------------------------------------------------------
                                               Net budget authority     
                                         -------------------------------
               Fiscal year                    Current                   
                                              dollars      1996 dollars 
------------------------------------------------------------------------
1977....................................          28,579          71,377
1978....................................          32,169          75,466
1979....................................          25,123          54,121
1980....................................          27,435          53,183
1981....................................          26,022          45,841
1982....................................          14,766          24,307
1983....................................          10,001          15,764
1984....................................          11,425          17,278
1985....................................          11,071          16,147
1986....................................          10,032          14,277
1987....................................           8,979          12,421
1988....................................           8,592          11,415
1989....................................       \1\ 8,879          11,264
1990....................................      \1\ 10,557          12,755
1991....................................      \1\ 19,239          22,128
1992....................................      \1\ 18,855          21,054
1993....................................      \1\ 20,236          21,927
1994....................................      \1\ 19,710          20,811
1995....................................      \1\ 13,240          13,598
1996 (estimate).........................      \1\ 14,926          14,926
------------------------------------------------------------------------
\1\ Includes $99 million, $1,164 million, $8,814 million, $7,585        
  million, $6,926 million, $5,202, $2,197 million, and $4,351 million   
  for renewing expiring section 8 contracts in 1989, 1990, 1991, 1992,  
  1993, 1994, 1995, and 1996 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 U.S.  
  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 1996 dollars), from $7.3 billion in 
fiscal year 1977 to an estimated $26 billion in fiscal year 
1996, an increase of 256 percent (see table 16-28). Moreover, 
despite measures to contain costs, and the increase in 
household contributions from 25 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 $2,900 in 1977 to an estimated $5,480 in 1996--an 
increase of 89 percent (see table 16-29). \16\
---------------------------------------------------------------------------
    \16\ 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 16-29). Without 
that bulge in expenditures, average outlays per unit in 1985 would have 
been about $3,950 in 1994 dollars.

   TABLE 16-28.--OUTLAYS FOR HOUSING AID ADMINISTERED BY HUD, 1977-96   
                [In millions of current and 1996 dollars]               
------------------------------------------------------------------------
                                                         Outlays        
                                               -------------------------
                  Fiscal year                     Current        1996   
                                                  dollars      dollars  
------------------------------------------------------------------------
1977..........................................        2,928        7,312
1978..........................................        3,592        8,427
1979..........................................        4,189        9,025
1980..........................................        5,364       10,399
1981..........................................        6,733       11,861
1982..........................................        7,846       12,915
1983..........................................        9,419       14,846
1984..........................................       11,000       16,635
1985..........................................       25,064       36,555
1986..........................................       12,179       17,332
1987..........................................       12,509       17,304
1988..........................................       13,684       18,180
1989..........................................       14,466       18,352
1990..........................................       15,690       18,958
1991..........................................       16,897       19,435
1992..........................................       18,242       20,370
1993..........................................       20,487       22,198
1994..........................................       22,183       23,422
1995..........................................   \1\ 24,002       24,651
1996 (estimate)...............................   \1\ 25,954       25,954
------------------------------------------------------------------------
\1\ Figures have been adjusted to account for $1.2 billion of advance   
  spending that occurred in 1995 but that should have occurred in 1996. 
                                                                        
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, outlays for public housing since that time have 
  been lower than they would have been otherwise.                       
                                                                        
Source: Congressional Budget Office based on data provided by the U.S.  
  Department of Housing and Urban Development.                          

    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). \17\ Second, the 
number of households that occupy units completed under the 
section 8 New Construction Program rose during the 1980s. These 
units require larger subsidies compared with the older units 
that were built prior to the 1980s under the Mortgage-Interest 
Subsidy Programs and the Public Housing Program. Third, the 
share of households receiving less costly home ownership 
assistance has decreased. Fourth, housing aid is being targeted 
toward a poorer segment of the population, requiring larger 
subsidies per assisted household.
---------------------------------------------------------------------------
    \17\ 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 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 16-29.--PER UNIT OUTLAYS FOR HOUSING AID ADMINISTERED BY HUD, 1977-
                                   96                                   
                      [In current and 1996 dollars]                     
------------------------------------------------------------------------
                                                    Per unit outlays    
                                               -------------------------
                  Fiscal year                     Current        1996   
                                                  dollars      dollars  
------------------------------------------------------------------------
1977..........................................        1,160        2,900
1978..........................................        1,310        3,070
1979..........................................        1,430        3,070
1980..........................................        1,750        3,390
1981..........................................        2,100        3,710
1982..........................................        2,310        3,800
1983..........................................        2,600        4,100
1984..........................................        2,900        4,380
1985..........................................        6,420        9,360
1986..........................................        3,040        4,320
1987..........................................        3,040        4,210
1988..........................................        3,270        4,340
1989..........................................        3,390        4,300
1990..........................................        3,610        4,360
1991..........................................        3,830        4,410
1992..........................................        4,060        4,540
1993..........................................        4,450        4,830
1994..........................................        4,720        4,980
1995..........................................        5,070        5,200
1996 (estimate)...............................        5,480        5,480
------------------------------------------------------------------------
Note.--The peak in outlays per unit in 1985 of $6,420 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 $2,860.                            
                                                                        
Source: Congressional Budget Office based on data provided by the U.S.  
  Department of Housing and Urban Development.                          

                SCHOOL LUNCH AND BREAKFAST PROGRAMS \18\
---------------------------------------------------------------------------

    \18\ Other major Federal child nutrition programs include: the 
Child and Adult Care Food Program (discussed in section 10) and the 
Summer Food Service Program (which provides subsidies for meals served 
during the summer months to some 2 million children participating in 
recreational and other programs in low-income areas).
---------------------------------------------------------------------------
    The School Lunch and School Breakfast Programs provide 
Federal cash and commodity support for meals served by public 
and private nonprofit elementary and secondary schools and 
residential child care institutions (RCCIs) that opt to enroll 
and guarantee to offer free or reduced-price meals to eligible 
low-income children. The programs are ``entitlement'' programs, 
and both subsidize participating schools and RCCIs for all 
meals served that meet Federal nutrition standards at specific, 
inflation-indexed rates for each meal. Each program has a 
three-tiered system for per-meal Federal reimbursements to 
schools and RCCIs that: (1) allows children to receive free 
meals if they have family income below 130 percent of the 
Federal poverty guidelines (about $16,400 for a three-person 
family in the 1995-96 school year); (2) permits children to 
receive reduced-price meals (no more than 40 cents for a lunch 
or 30 cents for a breakfast) if their family income is between 
130 and 185 percent of the poverty guidelines (between about 
$16,400 and $23,300 for a three-person family in the 1995-96 
school year); and (3) provides a small per-meal subsidy for 
``full-price'' meals (the price is set by the school or RCCI) 
served to children whose families do not apply, or whose family 
income does not qualify them for free or reduced-price meals. 
Children in AFDC and food stamp households may automatically 
qualify for free school meals without an income application, 
and the majority actually receive them.
    The School Lunch Program subsidizes lunches (nearly 4.3 
billion in fiscal year 1995) to children in over 5,000 RCCIs 
and almost all schools (90,000 in 1995). During fiscal year 
1995, average daily participation was 25.7 million students (57 
percent of all 45.1 million enrolled students); of these, 48 
percent received free lunches, and 7 percent ate reduced-price 
lunches (see table 16-30). However, although just over half the 
meals served go to children from low-income families, more than 
90 percent of Federal funding is used to subsidize their 
lunches, as opposed to full-price lunches, because subsidies 
for free and reduced-price lunches are much higher. In the 
1995-96 school year, per-lunch Federal subsidies (cash and 
commodity support) ranged from about 32 cents for full-price 
lunches to $1.94 and $1.54 for free and reduced-price lunches. 
\19\ Fiscal year 1995 Federal school lunch costs (including 
commodity assistance) totaled nearly $5.3 billion (see table 
16-30).
---------------------------------------------------------------------------
    \19\ Schools and RCCIs with very high proportions of low-income 
children receive an extra 2 cents a meal. Federally donated commodity 
assistance made up about 14 cents of each cited subsidy rate.
---------------------------------------------------------------------------
    The School Breakfast Program serves far fewer students than 
does the School Lunch Program; about 1.1 billion breakfasts in 
60,000 schools (and 5,000 RCCIs) were subsidized in fiscal year 
1995. Average daily participation was 6.3 million children (20 
percent of all 31.8 million enrolled students). Unlike the 
School Lunch Program, the great majority received free or 
reduced-price meals: 81 percent received free meals, and 6 
percent purchased reduced-price meals (see table 16-31). In the 
1995-96 school year, per-breakfast Federal subsidies (cash 
only) ranged from about 20 cents for full-price meals to $1 and 
70 cents for free and reduced-price breakfasts, respectively. 
\20\ Fiscal year 1995 Federal school breakfast funding totaled 
about $1.1 billion (see table 16-31).
---------------------------------------------------------------------------
    \20\ Subsidies are substantially higher (about 19 cents more) for 
schools in which breakfast service is required by State law or at least 
40 percent of lunches are served free or at reduced price.

      TABLE 16-30.--THE NATIONAL SCHOOL LUNCH PROGRAM PARTICIPATION AND FEDERAL COSTS, FISCAL YEARS 1977-95     
                                              [Dollars in millions]                                             
----------------------------------------------------------------------------------------------------------------
                                                     Participation 9 month average (in         Federal costs    
                                                               millions) \1\              ----------------------
                                                ------------------------------------------                      
                  Fiscal year                              Reduced-    Full-                 Current    Constant
                                                   Free      price     price    Total \3\  dollars \4\    1995  
                                                   meals     meals   meals \2\                           dollars
----------------------------------------------------------------------------------------------------------------
1977...........................................      10.5       1.3       14.5       26.3    $2,111.1   $5,358.1
1978...........................................      10.3       1.5       14.9       26.7     2,293.6    5,435.1
1979...........................................      10.0       1.7       15.3       27.0     2,659.0    5,718.3
1980...........................................      10.0       1.9       14.7       26.6     3,044.9    5,766.8
1981...........................................      10.6       1.9       13.3       25.8     2,959.5    5,041.7
1982...........................................       9.8       1.6       11.5       22.9     2,611.5    4,145.2
1983...........................................      10.3       1.5       11.2       23.0     2,828.6    4,338.3
1984...........................................      10.3       1.5       11.5       23.3     2,948.2    4,342.0
1985...........................................       9.9       1.6       12.1       23.6     3,034.4    4,334.9
1986...........................................      10.0       1.6       12.2       23.8     3,160.2    4,377.0
1987...........................................      10.0       1.6       12.4       24.0     3,245.6    4,374.1
1988...........................................       9.8       1.6       12.8       24.2     3,383.7    4,377.4
1989...........................................       9.7       1.6       12.7       24.2     3,479.4    4,295.6
1990...........................................       9.9       1.6       12.8       24.1     3,676.4    4,325.2
1991...........................................      10.3       1.8       12.1       24.2     4,072.9    4,560.9
1992...........................................      11.1       1.7       11.7       24.5     4,474.5    4,863.6
1993...........................................      11.8       1.7       11.3       24.8     4,663.8    4,919.6
1994...........................................      12.2       1.8       11.3       25.3     4,994.5    5,133.1
1995...........................................      12.4       1.9       11.3       25.6     5,254.0    5,254.0
----------------------------------------------------------------------------------------------------------------
\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 the value of ``entitlement'' commodities; does not include the value of ``bonus''
  commodities. Overstates actual support for school lunches only because a small portion (less than $75 million 
  a year) of commodity support included in the figures is used for other child nutrition programs.              
                                                                                                                
Note.--Constant dollars were calculated using the fiscal year CPI-U.                                            
                                                                                                                
Source: U.S. Department of Agriculture, Food and Consumer Service. For fiscal years 1994 and 1995: (1) budget   
  justification materials prepared by the U.S. Department of Agriculture for fiscal year 1996 and 1997          
  appropriations requests; and (2) monthly ``Program Information Report'' summaries prepared by the U.S.        
  Department of Agriculture's Food and Consumer Service, Program Information Division.                          

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

    The Special Supplemental Nutrition Program for Women, 
Infants, and Children (the WIC Program) 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. 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.

        TABLE 16-31.--THE SCHOOL BREAKFAST PROGRAM PARTICIPATION AND FEDERAL COSTS, FISCAL YEARS 1977-95        
                                              [Dollars in millions]                                             
----------------------------------------------------------------------------------------------------------------
                                                     Participation 9 month average (in         Federal costs    
                                                               millions) \1\              ----------------------
                                                ------------------------------------------                      
                  Fiscal year                              Reduced-    Full-                 Current    Constant
                                                   Free      price     price    Total \3\  dollars \4\    1995  
                                                   meals     meals   meals \2\                           dollars
----------------------------------------------------------------------------------------------------------------
1977...........................................       2.0       0.1        0.4        2.5      $148.6     $377.2
1978...........................................       2.2       0.2        0.4        2.8       181.2      429.4
1979...........................................       2.6       0.2        0.5        3.3       231.0      496.8
1980...........................................       2.8       0.2        0.6        3.6       287.8      545.1
1981...........................................       3.0       0.2        0.5        3.8       331.7      565.1
1982...........................................       2.8       0.2        0.4        3.3       317.3      503.6
1983...........................................       2.9       0.1        0.3        3.4       343.8      527.3
1984...........................................       2.9       0.1        0.4        3.4       364.0      536.1
1985...........................................       2.9       0.2        0.4        3.4       379.3      538.8
1986...........................................       2.9       0.2        0.4        3.5       406.3      562.7
1987...........................................       3.0       0.2        0.4        3.7       446.8      602.2
1988...........................................       3.0       0.2        0.5        3.7       482.0      623.5
1989...........................................       3.1       0.2        0.5        3.8       507.0      625.9
1990...........................................       3.3       0.2        0.5        4.0       589.1      693.1
1991...........................................       3.6       0.2        0.6        4.4       677.2      758.3
1992...........................................       4.0       0.3        0.6        4.9       782.6      850.6
1993...........................................       4.4       0.3        0.7        5.4       868.4      916.0
1994...........................................       4.8       0.3        0.7        5.8       958.7      985.3
1995...........................................       5.1       0.4        0.8        6.3     1,181.8    1,181.8
----------------------------------------------------------------------------------------------------------------
\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 totals due to rounding.                                                              
\4\ Does not include the value of any federally donated commodities. Fiscal year 1995 figure for Federal costs  
  is not reduced for a ``write-down'' of approximately $50-$80 million for obligations not expected to be paid. 
                                                                                                                
Note.--Constant dollars were calculated using the fiscal year CPI-U.                                            
                                                                                                                
Source: U.S. Department of Agriculture, Food and Consumer Service. For fiscal years 1994 and 1995: (1) budget   
  justification materials prepared by the U.S. Department of Agriculture for fiscal year 1996 and 1997          
  appropriations requests; and (2) monthly ``Program Information Report'' summaries prepared by the U.S.        
  Department of Agriculture's Food and Consumer Service, Program Information Division.                          

    Beneficiaries of the WIC Program 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, and allows 
Federal limits on the foods that may be provided by the WIC 
Program. 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 to 12 months; (3) women and children with 
special dietary needs; (4) children from 1 to 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 and breast feeding support (where 
called for).
    The Federal cost of providing WIC benefits varies widely 
depending on the recipient and the foods included in the food 
package, as well as differences in retail prices (where 
vouchers are used), food costs (where the WIC agency buys and 
distributes food), and administrative costs (including the 
significant costs of nutritional risk screening, breast feeding 
support, and nutrition education). Moreover, the program's food 
costs are significantly influenced by the degree to which 
States gain rebates from infant formula manufacturers under a 
requirement to pursue ``cost containment'' strategies; these 
rebates total over $1 billion a year nationwide. In fiscal year 
1995, the national average Federal cost of a WIC food package 
(after rebates) was just over $30 a month, and, for each 
participant, the average monthly administrative cost (including 
nutritional risk assessments) was about $11.
    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. WIC 
applicants must show evidence of health or nutritional risk, 
medically verified by a health professional, in order to 
qualify. They must also have family income below 185 percent of 
the most recent Federal poverty guidelines (currently, about 
$24,000 a year for a three-person family). But State WIC 
agencies may, and in some cases do, set lower income 
eligibility cutoff points; they can set them as low as poverty 
guidelines themselves (about $12,500 for three persons in 
1996). Receipt of AFDC, food stamps, or Medicaid assistance 
also can satisfy the WIC Program's income test, and States may 
consider pregnant women meeting the income test 
``presumptively'' eligible until a nutritional risk evaluation 
is made. Drawing on a 1994 study, over 60 percent of WIC 
enrollees had family income below the Federal poverty 
guidelines, 27 percent of WIC enrollees were AFDC recipients, 
36 percent received food stamps, and 53 percent were covered by 
Medicaid.
    WIC participants receive benefits for a specified period of 
time, and in some cases must be recertified during this period 
to show continuing need. Pregnant women may continue to receive 
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.
    The WIC Program, which is federally funded but administered 
by State and local health agencies, does not serve all who are 
eligible. It is not an ``entitlement'' program, and 
participation is limited by the amount of Federal funding 
appropriated, whatever State supplementary funding is provided, 
and the extent of manufacturers' infant formula rebates. In 
fiscal year 1995, $3.45 billion in Federal funds were spent, 
and the program served a monthly average of 6.9 million women, 
infants, and children: 23 percent women, 26 percent infants, 
and 51 percent children. With an increased appropriation for 
fiscal year 1996, participation is likely to surpass 7.2 
million persons a month. The most recent estimate of the total 
number of persons eligible and likely to apply for WIC benefits 
(incorporated in the Administration's fiscal year 1997 budget 
request) is 7.5 million persons, although earlier estimates by 
the Administration and the Congressional Budget Office have 
placed the figure somewhat higher (perhaps as high as 8 
million). Table 16-32 summarizes WIC participation and Federal 
costs.

    TABLE 16-32.--THE SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN (WIC) PARTICIPATION AND   
                                     FEDERAL SPENDING, FISCAL YEARS 1977-95                                     
                                              [Dollars in millions]                                             
----------------------------------------------------------------------------------------------------------------
                                                        Participation (in thousands)          Federal spending  
                                                 ---------------------------------------------------------------
                   Fiscal year                                                                          Constant
                                                    Women    Infants  Children  Total \1\    Current      1995  
                                                                                           dollars \2\   dollars
----------------------------------------------------------------------------------------------------------------
1977............................................     165.0     213.0     471.0      848.0      $255.9     $649.5
1978............................................     240.0     308.0     633.0    1,181.0       379.6      899.5
1979............................................     312.0     389.0     782.0    1,483.0       525.4    1,129.9
1980............................................     411.0     507.0     995.0    1,913.0       724.7    1,372.5
1981............................................     446.0     585.0   1,088.0    2,119.0       874.4    1,489.6
1982............................................     478.0     623.0   1,088.0    2,189.0       948.2    1,505.1
1983............................................     542.0     730.0   1,265.0    2,537.0     1,123.1    1,719.9
1984............................................     657.0     825.0   1,563.0    3,045.0     1,386.3    2,041.7
1985............................................     665.0     874.0   1,600.0    3,138.0     1,488.9    2,114.9
1986............................................     712.0     945.0   1,655.0    3,312.0     1,580.5    2,189.1
1987............................................     751.0   1,019.0   1,660.0    3,429.0     1,663.6    2,242.2
1988............................................     815.0   1,095.0   1,683.0    3,593.0     1,802.4    2,331.7
1989............................................     951.8   1,259.6   1,907.0    4,118.4     1,929.4    2,382.0
1990............................................   1,035.0   1,412.5   2,069.4    4,516.9     2,125.9    2,501.1
1991............................................   1,120.1   1,558.8   2,213.8    4,892.6     2,301.1    2,576.8
1992............................................   1,221.5   1,684.1   2,505.2    5,410.8     2,566.5    2,789.7
1993............................................   1,364.9   1,741.9   2,813.4    5,920.3     2,819.5    2,974.2
1994............................................   1,499.2   1,786.3   3,191.7    6,477.2     3,159.8    3,247.5
1995............................................   1,576.8   1,817.3   3,500.1    6,894.2     3,451.0    3,451.0
----------------------------------------------------------------------------------------------------------------
\1\ Details may not sum to totals due to rounding.                                                              
\2\ Includes funding for studies, surveys, pilots, and farmers' market programs. Spending figures include       
  adjustments for significant interyear carryovers and reflect spending by State WIC agencies derived both from 
  current-year appropriations and prior-year amounts, adjusted for amounts carried forward into the next year.  
                                                                                                                
Note.--Constant dollars were calculated using the fiscal year CPI-U.                                            
                                                                                                                
Source: U.S. Department of Agriculture, Food and Consumer Service. For fiscal years 1994 and 1995: (1) budget   
  justification materials prepared by the U.S. Department of Agriculture for fiscal year 1996 and 1997          
  appropriations requests; and (2) monthly ``Program Information Report'' summaries prepared by the U.S.        
  Department of Agriculture's Food and Consumer Service, Program Information Division.                          

                      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 (year-round) 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.
    JTPA's title II 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 16-33a, of title II-A participants who 
terminated during program year 1994, 52 percent were white, 31 
percent were black, and 14 percent were Hispanic. Of 
participants who terminated benefits, 63 percent entered 
employment. The average hourly wage for adult terminees who 
entered employment was $7.09.
    Among the 40 percent of title II-A terminees who were cash 
welfare recipients at the time of enrollment in program year 
1993, 80 percent received AFDC payments. Women comprised 80 
percent of terminees receiving cash welfare payments, as 
compared with 52 percent of terminees who were not recipients. 
Among title II-A participants receiving cash welfare payments, 
27 percent did not complete high school, compared with 21 
percent of those participants who were not recipients. Fifty-
six percent of cash welfare recipients entered employment in 
program year 1993, compared with 67 percent for those II-A 
terminees who did not receive cash welfare payments. The 
average hourly starting wage for cash welfare recipients 
entering employment was $6.62, compared with $6.99 for 
nonrecipients.
    As shown in table 16-33b, of the youth participants in 
year-round services who terminated during program year 1994, 41 
percent were white, 35 percent were black, and 20 percent were 
Hispanic. Of the title II-C participants who terminated, 37 
percent entered employment, and the average hourly wage for 
terminees who entered employment was $5.61.
    Among the 35 percent of title II-C (youth) participants 
receiving cash welfare payments in program year 1993, 29 
percent entered employment, compared with 36 percent of II-C 
participants who did not receive cash welfare payments. The 
average hourly starting wage for cash welfare recipients and 
nonrecipients was nearly identical. Among the almost 55 percent 
of II-C terminees who had either dropped out of school or were 
behind in grade level, the average entered employment rate in 
program year 1993 was 30 percent as compared with 41 percent 
for those not in this legislatively defined hard-to-serve 
category. The average hourly starting wage for youths who had 
dropped out of school or were behind in their grade level was 
$5.20 compared with $5.70 for those not in this category.

          TABLE 16-33a.--CHARACTERISTICS OF JTPA TITLE II-A ADULT TERMINEES, PROGRAM YEARS 1990-94 \1\          
----------------------------------------------------------------------------------------------------------------
                                                                                  Program years                 
                   Selected characteristics                    -------------------------------------------------
                                                                  1990      1991      1992      1993      1994  
----------------------------------------------------------------------------------------------------------------
Total terminees...............................................   307,935   276,227   257,561   180,178   175,647
Sex:                                                                                                            
    Male......................................................        42        42        41        36        33
    Female....................................................        58        58        59        64        67
Ethnic status:                                                                                                  
    White (excluding Hispanic)................................        52        54        52        53        52
    Black (excluding Hispanic)................................        31        29        30        31        31
    Hispanic..................................................        14        13        15        13        14
    Other.....................................................         4         4         4         3         3
Age at enrollment:                                                                                              
    22-29.....................................................        43        42        42        42        42
    30-54.....................................................        54        55        56        56        56
    55 and older..............................................         3         3         3         2         2
Economically disadvantaged....................................    \2\ 93    \2\ 93        NA        97        98
Receiving AFDC................................................        26        27        28        32        35
Receiving public assistance (including AFDC)..................        31        35        33        40        42
U.C. claimant.................................................         8        10        13        14        10
Education status:                                                                                               
    High school graduate......................................        49        50        51        55        56
    Post high school..........................................        24        24        25        21        21
Average weeks participated....................................        23        25        26        31        37
Entered employment............................................        63        63        62        62        63
Average hourly wage at placement..............................     $5.85     $6.08     $6.40     $6.86     $7.09
----------------------------------------------------------------------------------------------------------------
\1\ Prior to 1993, title II-A served both adults and youth. Data in this table is for adults only.              
\2\ The Job Training Quarterly Survey.                                                                          
                                                                                                                
Source: U.S. Department of Labor.                                                                               

    In fiscal year 1996, an estimated $1 billion is expected to 
be spent for JTPA II-A and II-C grants, providing training and 
other services to about 329,000 new enrollees. Data on 
participation (new enrollees) and budget authority for recent 
years are provided in table 16-34 below. Figures for 1996 are 
estimates based on assumptions of continued spending.
    For the summer youth program (title II-B), approximately 
$867 million was appropriated for the summer of 1995, with an 
estimated 489,200 participants served. The funding included 
$682 million appropriated in fiscal year 1994 plus $185 million 
added in fiscal year 1995. For the summer of 1996, $625 million 
was appropriated to serve an estimated 521,000 individuals. 
Funds originally appropriated in fiscal year 1995 were 
rescinded by Public Law 104-19; funds currently available for 
the summer of 1996 were appropriated in fiscal year 1996.

      TABLE 16-33b.--CHARACTERISTICS OF JTPA YEAR-ROUND YOUTH PROGRAM TERMINEES, PROGRAM YEARS 1990-94 \1\      
----------------------------------------------------------------------------------------------------------------
                                                                                  Program years                 
                   Selected characteristics                    -------------------------------------------------
                                                                  1990      1991      1992      1993      1994  
----------------------------------------------------------------------------------------------------------------
Total terminees...............................................   266,623   257,503   255,268   167,444   158,083
Sex:                                                                                                            
    Male......................................................        48        47        47        45        44
    Female....................................................        52        53        53        55        56
Ethnic status:                                                                                                  
    White (excluding Hispanic)................................        42        43        40        41        41
    Black (excluding Hispanic)................................        36        35        36        35        35
    Hispanic..................................................        18        19        21        20        20
    Other.....................................................         4         4         4         4         5
Age at enrollment:                                                                                              
    14-15.....................................................        15        16        18        16        14
    16-17.....................................................        32        32        33        34        36
    18-21.....................................................        53        51        48        49        50
Economically disadvantaged....................................    \2\ 93    \2\ 92        NA        95        95
Receiving AFDC................................................        21        23        25        27        27
Receiving public assistance (including AFDC)..................        23        25        27        35        31
U.C. claimant.................................................         1         2         1         1         1
Education status:                                                                                               
    Less than high school graduate............................        74        76        78        79        77
    High school graduate......................................        21        20        18        19        20
    Post high school..........................................         5         4         4         3         3
Average weeks participated....................................        26        28        29        35        36
Entered employment............................................        39        36        34        34        37
Average hourly wage at placement..............................     $4.93     $5.07     $5.19     $5.45     $5.61
----------------------------------------------------------------------------------------------------------------
\1\ Prior to 1993, youth were served under title II-A. Since that time, year-round services for youth are       
  provided under title II-C.                                                                                    
\2\ The Job Training Quarterly Surveys issued by Employment and Training Administration, U.S. Department of     
  Labor.                                                                                                        
                                                                                                                
Source: U.S. Department of Labor.                                                                               

    In the summer of 1994, 45 percent of title II-B enrollees 
were ages 14 and 15, 37 percent were either 16 or 17 years old, 
and 18 percent were between the ages of 18 and 21. During that 
summer, 84 percent of summer enrollees were students and 8 
percent were high school graduates. Black youth comprised 41 
percent of enrollees, while 27 percent were white, 27 percent 
were Hispanic, 3 percent were Asian or Pacific Islanders, and 1 
percent were Native American. Eight percent had limited 
English-speaking ability, and 15 percent had disabilities.

    TABLE 16-34.--JOB TRAINING PROGRAMS \1\ FOR THE DISADVANTAGED: NEW ENROLLEES, FEDERAL APPROPRIATIONS AND    
                                          OUTLAYS, FISCAL YEARS 1975-96                                         
----------------------------------------------------------------------------------------------------------------
                                                                                           Budget               
                                                                                         authority    Outlays in
                 Fiscal year                      New      Appropriations    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........................................           NA          1,594         2,277        2,175        3,107
1983........................................           NA          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........................................  \2\ 603,900          1,779         1,746        1,694        1,676
1992........................................  \2\ 602,300          1,774         1,767        1,637        1,632
1993........................................  \2\ 584,547          1,692         1,747        1,530        1,580
    Adult...................................      316,687          1,015         1,048          918          948
    Youth...................................      267,860            677           699          612          632
1994........................................  \2\ 541,463          1,597         1,693        1,415        1,500
    Adult...................................      312,297            988         1,016          875          900
    Youth...................................      229,166            609           677          540          600
1995........................................  \2\ 340,354          1,124         1,534          971        1,325
    Adult...................................      310,123            997           934          861          807
    Youth...................................   \3\ 30,231            127           600          110          518
1996........................................  \2\ 329,178            977         1,023          824          862
    Adult...................................      254,318            850           866          717          730
    Youth...................................       74,860            127           157          107          132
----------------------------------------------------------------------------------------------------------------
\1\ Figures shown in years 1975-83 are for training activities under the Comprehensive Employment and Training  
  Act (CETA); public service employment under CETA is not included. Figures shown in years 1984-92 are for      
  activities under title II-A of the Job Training Partnership Act (JTPA). For 1993-96 figures are for titles II-
  A (adult) and II-C (youth) of the JTPA, as amended in 1992.                                                   
\2\ Estimate.                                                                                                   
\3\ According to the Department of Labor, reduced budget authority in fiscal year 1995 was insufficient to serve
  those already enrolled and to enroll a comparable number of new participants. In fiscal year 1996, transfers  
  from II-B (summer youth) enabled more participants to be enrolled.                                            
                                                                                                                
NA--Not available.                                                                                              
                                                                                                                
Source: U.S. Department of Labor.                                                                               

    Table 16-35 presents a funding and participation history of 
the summer program.

 TABLE 16-35.--SUMMER YOUTH EMPLOYMENT PROGRAM: FEDERAL APPROPRIATIONS, OUTLAYS, AND PARTICIPANTS, FISCAL YEARS 
                                                     1984-96                                                    
                                              [Dollars in millions]                                             
----------------------------------------------------------------------------------------------------------------
                                                                               Outlays                          
                                                                     --------------------------                 
               Fiscal or calendar year                Appropriations                 Constant   Participants \1\
                                                                        Current        1990                     
                                                                        dollars      dollars                    
----------------------------------------------------------------------------------------------------------------
1984................................................           $824          $584         $731         672,000  
1985................................................            724           776          938         767,600  
1986................................................            636           746          879         785,000  
1987................................................            750           723          828         634,400  
1988................................................            718           707          778         722,900  
1989................................................            709           697          732         607,900  
1990................................................            700           699          699         585,100  
1991................................................            683           698          663         555,200  
1992................................................        \2\ 995           958      \3\ 912         782,100  
1993................................................      \4\ 1,025           915          827     \3\ 647,400  
1994................................................        \5\ 888           834          739     \3\ 574,400  
1995................................................        \6\ 185           883          763     \3\ 489,200  
1996................................................        \7\ 625            NA           NA     \3\ 521,000  
----------------------------------------------------------------------------------------------------------------
\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 1991 appropriations were spent 
  during the summer of calendar year 1992. The pattern has varied somewhat in recent years. These variations are
  noted.                                                                                                        
\2\ Fiscal year 1992 funding includes a $500 million supplemental appropriation for summer 1992 and $495 million
  for summer 1993.                                                                                              
\3\ Estimate.                                                                                                   
\4\ Fiscal year 1993 funding includes $354 million for summer 1993 and $671 million for summer 1994.            
\5\ Fiscal year 1994 funding includes $206 million for summer 1994 and $682 million for summer 1995.            
\6\ Public Law 104-19 rescinded $682 million in fiscal year 1995 funds which were to be available for the summer
  of 1996. The remaining $185 million was for the summer of 1995.                                               
\7\ Fiscal year 1996 funds are for the summer of 1996.                                                          
                                                                                                                
NA--Not available.                                                                                              
                                                                                                                
Note.--Appropriations and outlays are for fiscal years; participants are for calendar years.                    
                                                                                                                
Source: Employment and Training Administration, U.S. Department of Labor.                                       

    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 110 
centers around the country. Services include basic education, 
vocational skill training, work experience, counseling, health 
care, and other supportive services.
    In program year 1994 (July 1, 1994-June 30, 1995), 61 
percent of Job Corps enrollees were male. In that same year, 51 
percent of enrollees were black, 28 percent were white, 15 
percent were Hispanic, 4 percent were Native Americans, and 3 
percent were Asian or Pacific Islanders. Seventy-nine percent 
of the enrollees had dropped out of high school and 69 percent 
had never worked full time. Forty-three percent of Job Corps 
enrollees in program year 1994 came from families on public 
assistance.
    The average length of stay for Job Corps enrollees in 
program year 1994 was 7.5 months. The Labor Department 
estimates that 63 percent of terminees entered employment after 
leaving the program, while another 10 percent either continued 
their education or entered another training program, for a 
total positive termination rate in 1994 of 73 percent.
    Table 16-36 provides a funding and participation history of 
the Job Corps since 1982. The program was first authorized in 
the mid-1960s by the Economic Opportunity Act and has been 
authorized under JTPA since 1982.

        TABLE 16-36.--JOB CORPS: FEDERAL APPROPRIATIONS, OUTLAYS, AND NEW ENROLLEES, FISCAL YEARS 1982-96       
                                              [Dollars in millions]                                             
----------------------------------------------------------------------------------------------------------------
                                                                                    Outlays                     
                                                                          --------------------------            
                                                           Appropriations                 Constant       New    
                                                                             Current        1990      enrollees 
                                                                             dollars      dollars               
----------------------------------------------------------------------------------------------------------------
1982.....................................................           $590          $595         $812       53,581
1983.....................................................            618           563          735       60,465
1984.....................................................            599           581          727       57,386
1985.....................................................            617           593          716       63,020
1986.....................................................            612           594          701       64,964
1987.....................................................            656           631          723       65,150
1988.....................................................            716           688          757       68,068
1989.....................................................            742           689          724       62,550
1990.....................................................            803           740          740       61,453
1991.....................................................            867           769          769       62,205
1992.....................................................            919           834          789       61,762
1993.....................................................            966           936          846       62,749
1994.....................................................          1,040           981          869       58,460
1995.....................................................          1,089         1,011          873       59,422
1996.....................................................          1,094     \1\ 1,049      \1\ 885   \1\ 63,955
----------------------------------------------------------------------------------------------------------------
\1\ Estimate.                                                                                                   
                                                                                                                
Note.--Appropriations and outlays are for fiscal years; enrollees are for calendar years.                       
                                                                                                                
Source: Employment and Training Administration, U.S. Department of Labor.                                       

                               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 1995, 750,696 
children were served in Head Start programs, at a total Federal 
cost of $3.534 billion. In June 1995, 51 percent of Head Start 
children came from families receiving AFDC benefits. Table 16-
37 provides historical data on participation in and funding of 
the Head Start Program, while table 16-38 provides 
characteristics of children enrolled in the program.

  TABLE 16-37.--HEAD START ENROLLMENT AND FEDERAL FUNDING, FISCAL YEARS 
                                 1965-95                                
------------------------------------------------------------------------
                                                          Appropriations
               Fiscal year                  Enrollment      (in millions
                                                            of dollars) 
------------------------------------------------------------------------
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....................................         740,493         3,325.7
1995....................................         750,696         3,534.1
------------------------------------------------------------------------
\1\ After sequestration.                                                
                                                                        
Source: Head Start Bureau, U.S. Department of Health and Human Services.


         TABLE 16-38.--CHARACTERISTICS OF CHILDREN ENROLLED IN HEAD START, SELECTED FISCAL YEARS 1980-95        
                                                  [In percent]                                                  
----------------------------------------------------------------------------------------------------------------
                                         Age of children enrolled                   Enrollment by race          
                                  ------------------------------------------------------------------------------
           Fiscal year                       5 and                Under   Native                                
                                   Disabled  older    4      3      3    American  Hispanic  Black  White  Asian
----------------------------------------------------------------------------------------------------------------
1980.............................       12      21     55     24      0        4        19      42     34      1
1982.............................       12      17     55     26      2        4        20      42     33      1
1984.............................       12      16     56     26      2        4        20      42     33      1
1986.............................       12      15     58     25      2        4        21      40     32      3
1988.............................       13      11     63     23      3        4        22      39     32      3
1990.............................       14       8     64     25      3        4        22      38     33      3
1991.............................       13       7     63     27      3        4        22      38     33      3
1992.............................       13       7     63     27      3        4        23      37     33      3
1993.............................       13       6     64     27      3        4        24      36     33      3
1994.............................       13       7     62     28      3        4        24      36     33      3
1995.............................       13       7     62     27      4        4        25      35     33      3
----------------------------------------------------------------------------------------------------------------
Source: Head Start Bureau, U.S. Department of Health and Human Services.                                        

           LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM (LIHEAP)

                               Background

    The Federal Government has been involved in providing 
energy assistance for the poor since 1973. But in 1980, in 
response to the 1973-74 Organization of Petroleum Exporting 
Countries (OPEC) oil embargo and the accompanying shortages and 
increased petroleum prices, Congress passed the Crude Oil 
Windfall Profit Tax Act (Public Law 96-223), title III of which 
was officially named the Home Energy Assistance Act of 1980. 
The 1980 program generally is considered the predecessor to the 
present Low Income Home Energy Assistance Program (LIHEAP).
    In 1981, title XXVI of the Omnibus Budget Reconciliation 
Act (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.
    LIHEAP is a block grant program under which the Federal 
Government gives States, the District of Columbia, U.S. 
territories and commonwealths (American Samoa, Commonwealth of 
Puerto Rico, Commonwealth of the Northern Mariana Islands, 
Guam, Palau, and the U.S. Virgin Islands), and Indian tribal 
organizations annual grants to operate multicomponent home 
energy assistance programs for needy households. Public Law 
103-252, the Human Services Reauthorization Act of 1994, 
reauthorized LIHEAP through fiscal year 1999. In fiscal year 
1981, more than $1.8 billion was appropriated for the program. 
Over the years, LIHEAP funding has reached a high of $2.1 
billion in 1985 and a current low of about $0.87 billion (see 
bottom of table 16-39).

                           Program Components

    Federal LIHEAP funds may be used by grantees for the 
following activities:
  --Home heating and cooling assistance;
  --Energy crisis intervention (with a reasonable amount 
            reserved, based on prior years' data, until March 
            15 of each program year);
  --Low-cost weatherization or other energy-related home 
            repairs (not to exceed 15 percent of the funds 
            allotted to or available to a grantee, although a 
            grantee may request a waiver that increases the 
            amount of LIHEAP funds for weatherization from 15 
            to 25 percent);
  --Administrative and planning costs (not to exceed 10 percent 
            of funds net of set-asides for Indian tribal 
            grants);
  --Carryover of funds to the next fiscal year (not to exceed 
            10 percent of funds net of set-asides for Indian 
            tribal grants); and
  --Development or implementation of a leveraging incentive 
            program that may be used by States to attract funds 
            from non-Federal sources.

                          Allotments to States

    Several sources of Federal and non-Federal funds generally 
are available to LIHEAP grantees:
  --Federal LIHEAP block grant allotments;
  --LIHEAP emergency contingency allotment for weather 
            emergencies (these funds can only be released at 
            the President's directive);
  --LIHEAP leveraging incentive awards;
  --LIHEAP carryover (grantees can request that up to 10 
            percent of their Federal LIHEAP funds be held 
            available for the next fiscal year);
  --Oil overcharge funds (disbursed by the Department of Energy 
            from settlements of cases of oil price overcharges 
            pursuant to the Emergency Petroleum Act of 1973. 
            States determine how to allocate these funds among 
            several eligible activities, including LIHEAP.); 
            and
  --State and other funds (States use their own funds to 
            supplement LIHEAP benefits or administrative costs. 
            Other funds include reimbursements to LIHEAP 
            agencies for taking application for low income 
            weatherization programs or winter heating 
            protection programs.).
    Table 16-39 shows State allotments for selected fiscal 
years.

                         TABLE 16-39.--LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM STATE ALLOTMENTS, SELECTED FISCAL YEARS 1981-96                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Fiscal year                                                   
               States                -------------------------------------------------------------------------------------------------------------------
                                        \1\ 1981       1985         1990         1991         1992         1993         1994         1995        1996   
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.............................       15,674       18,234       11,961       15,856       12,664       11,344       12,127       11,604       7,445
Alaska..............................        7,505        7,247        7,635        9,594        8,034        7,241        7,741        7,062       4,752
Arizona.............................        6,426        8,150        5,785        6,200        6,125        5,486        5,865        5,350       3,600
Arkansas............................       11,960       13,973        9,127       11,069        9,663        8,656        9,253        8,442       5,681
California..........................       84,088       97,894       64,168       68,764       67,940       60,855       65,056       59,352      39,939
Colorado............................       29,319       33,299       22,373       23,419       23,688       21,218       22,683       20,694      13,925
Connecticut \2\.....................       38,247       43,440       29,187       35,541       30,902       27,680       34,986       26,996      18,166
Delaware \2\........................        5,077        5,931        3,874        5,471        4,102        3,674        4,214        3,583       2,411
District of Columbia................        5,940        6,940        4,533        5,269        4,799        4,299        4,595        4,193       2,821
Florida.............................       25,921       28,970       18,926       21,731       20,039       17,950       19,188       17,506      11,780
Georgia.............................       19,609       22,910       14,964       17,439       15,844       14,191       15,171       13,841       9,314
Hawaii..............................        1,975        2,243        1,507        1,531        1,596        1,429        1,528        1,394         938
Idaho...............................       11,181       12,877        8,727        9,493        9,240        8,277        8,848        8,072       5,432
Illinois \2\........................      105,862      123,679       80,784       85,711       85,533       76,614       93,921       74,721      50,281
Indiana \2\.........................       47,431       55,371       36,577       41,069       38,727       34,689       39,408       33,831      22,766
Iowa \2\............................       29,470       38,581       25,922       28,719       27,466       24,584       34,335       23,977      16,134
Kansas..............................       15,515       18,211       11,905       12,901       12,605       11,290       12,069       11,011       7,410
Kentucky \2\........................       24,943       29,141       19,034       22,537       20,153       18,052       24,639       17,606      11,847
Louisiana...........................       16,024       18,867       12,228       13,203       12,947       11,597       12,398       11,311       7,611
Maine \2\...........................       27,513       27,914       18,908       23,550       20,020       17,932       27,275       17,489      11,769
Maryland \2\........................       29,285       34,214       22,348       29,361       23,662       21,194       29,288       20,671      13,910
Massachusetts \2\...................       82,707       86,878       58,383       69,364       61,815       55,369       73,071       54,001      36,338
Michigan \2\........................      111,598      113,951       76,697       86,099       81,206       72,738      126,605       70,941      47,737
Minnesota \2\.......................       72,409       82,239       55,256       62,063       58,504       52,404       93,421       51,109      34,392
Mississippi.........................       13,930       15,683       10,255       12,391       10,858        9,725       10,397        9,485       6,383
Missouri............................       37,885       48,026       32,268       35,779       34,165       30,603       32,715       29,846      20,084
Montana.............................       11,350       12,298       10,236       10,938       10,838        9,708       10,378        9,468       6,371
Nebraska............................       13,799       19,032       12,820       13,851       13,573       12,158       12,997       11,857       7,979
Nevada..............................        3,560        4,151        2,717        3,214        2,877        2,577        2,754        2,513       1,691
New Hampshire \2\...................       14,481       16,447       11,051       13,648       11,700       10,480       14,352       10,221       6,878
New Jersey \2\......................       71,025       82,849       54,200       66,929       57,386       51,402       61,894       50,132      33,735
New Mexico..........................        8,867        9,973        7,242        8,123        7,668        6,868        7,342        6,698       4,507
New York \2\........................      231,907      263,291      176,970      214,983      187,373      167,835      240,880      163,688     110,149
North Carolina......................       34,561       40,378       26,374       35,612       27,924       25,013       26,739       24,394      16,415
North Dakota \2\....................        7,995       14,612       11,120       12,503       11,773       10,546       19,376       10,285       6,921
Ohio \2\............................       93,651      109,413       71,465       78,365       75,666       67,776       96,381       66,102      44,481
Oklahoma............................       15,998       16,004       10,995       12,250       11,641       10,427       11,147       10,169       6,843
Oregon..............................       22,723       25,808       17,340       19,298       18,360       16,445       17,580       16,039      10,793
Pennsylvania \2\....................      124,568      141,479       95,059      107,475      100,647       90,152      116,857       87,924      59,166
Rhode Island \2\....................       12,594       14,220        9,610       11,572       10,175        9,114       11,471        8,889       5,981
South Carolina......................       13,822       14,544        9,500       12,451       10,058        9,009        9,631        8,787       5,913
South Dakota \2\....................       10,241       11,434        9,031       10,691        9,562        8,565       11,150        8,353       5,621
Tennessee...........................       25,267       29,520       19,281       21,652       20,415       18,286       19,548       17,834      12,001
Texas...............................       41,261       48,206       31,487       36,455       33,337       29,861       31,922       29,123      19,598
Utah................................       13,289       14,827       10,397       11,062       11,008        9,860       10,541        9,617       6,471
Vermont \2\.........................       10,854       12,328        8,283        9,813        8,770        7,855       13,197        7,661       5,155
Virginia \2\........................       39,019       41,677       27,222       36,051       28,822       25,817       28,277       25,179      16,943
Washington..........................       33,104       40,896       28,522       31,495       30,199       27,050       28,917       26,382      17,753
West Virginia \2\...................       16,507       19,285       12,596       13,676       13,337       11,946       16,503       11,651       7,840
Wisconsin \2\.......................       61,679       74,027       49,738       56,987       52,662       47,171       65,147       46,005      30,958
Wyoming.............................        3,561        6,195        4,163        4,605        4,407        3,948        4,220        3,850       2,591
                                     -------------------------------------------------------------------------------------------------------------------
    U.S. total......................    1,813,177    2,077,577    1,390,749    1,607,819    1,472,503    1,318,961    1,709,998    1,286,368     865,626
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes reallocation of funds and crisis intervention funds.                                                                                       
\2\ Includes $300 million in LIHEAP contingency funds released in February 1994 to States hit by unusually harsh winter weather.                        
                                                                                                                                                        
Note.--Columns may not add due to rounding. The table includes payments to Indian tribal organizations and excludes minor costs.                        
                                                                                                                                                        
Source: U.S. Department of Health and Human Services.                                                                                                   

                  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 
(SSI), Aid to Families with Dependent Children (AFDC), food 
stamps, or needs-tested veterans' benefits. States can also 
elect to make payments to households with incomes of 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.
    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. In 
addition, Public Law 103-252 authorized the establishment of 
the Residential Energy Assistance Challenge (REACH) Program, 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 moneys may be used to fund 
REACH Programs.
    States have considerable discretion in the methods they may 
use to provide assistance to eligible households, including 
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 that supply home 
energy to low-income households at reduced rates. Table 16-40 
presents estimates by State for 1996 of total dollars spent on 
heating assistance, the number of households receiving benefits 
from the single largest program component (heating assistance), 
and average heating benefits.

 TABLE 16-40.--HEATING ASSISTANCE BENEFITS, NUMBER OF HOUSEHOLDS ASSISTED, AND AVERAGE BENEFIT BY STATE, FISCAL 
                                                    YEAR 1996                                                   
----------------------------------------------------------------------------------------------------------------
                                                                                                     Estimated  
                                                               Total heating    Estimated number      average   
                           State                               assistance \1\     of households     benefit (in 
                                                                  benefits          assisted         dollars)   
----------------------------------------------------------------------------------------------------------------
Alabama....................................................         $6,763,061            55,435            $122
Alaska.....................................................          4,220,958            12,229             345
Arizona....................................................          3,421,066            21,019             163
Arkansas...................................................          4,848,231            51,877              87
California.................................................         32,768,699           350,000              93
Colorado...................................................         18,117,579            61,237             303
Connecticut................................................         28,915,128            75,636             411
Delaware...................................................          2,636,007            13,623             194
District of Columbia.......................................          3,068,303            14,607             210
Florida....................................................         11,292,706           122,747              92
Georgia....................................................         10,325,887            65,689             157
Hawaii.....................................................          1,033,936             6,519             159
Idaho......................................................          4,883,453            27,005             181
Illinois...................................................         57,164,769           217,693             267
Indiana....................................................         28,440,973           108,210             254
Iowa.......................................................         14,458,451            73,558             197
Kansas.....................................................          4,436,830            27,093             164
Kentucky...................................................          9,242,136           144,087              64
Louisiana..................................................          3,398,538            24,071             141
Maine......................................................         10,650,000            53,000             201
Maryland...................................................         19,272,857            85,722             225
Massachusetts..............................................         48,846,902           140,176             348
Michigan...................................................         68,200,000           375,500             182
Minnesota..................................................         39,829,936           103,760             383
Mississippi................................................          5,317,082            35,447             150
Missouri...................................................         21,549,728           115,248             187
Montana....................................................          6,187,090            21,787             284
Nebraska...................................................          5,350,000            31,000             173
Nevada.....................................................          2,331,140             9,534             245
New Hampshire..............................................          8,191,877            22,349             366
New Jersey.................................................         44,016,381           164,956             283
New Mexico.................................................          5,645,250            68,358              89
New York...................................................        103,025,580           957,442             108
North Carolina.............................................         14,926,921           186,152              80
North Dakota...............................................          6,026,140            14,650             411
Ohio.......................................................         27,788,359           287,629              97
Oklahoma...................................................          7,010,932            75,205              95
Oregon.....................................................         11,089,195            54,709             215
Pennsylvania...............................................         49,307,783           287,993             171
Rhode Island...............................................          7,956,629            22,787             349
South Carolina.............................................          5,772,063            74,134              78
South Dakota...............................................          6,758,611            17,138             394
Tennessee..................................................         13,894,707            69,494             200
Texas......................................................          5,096,583            35,149             145
Utah.......................................................          7,291,447            33,225             219
Vermont....................................................          6,772,740            22,745             281
Virginia...................................................         20,657,059           118,709             174
Washington.................................................         17,224,663            63,727             209
West Virginia..............................................          6,601,747            56,913             116
Wisconsin..................................................         32,625,604           120,000             300
Wyoming....................................................          3,278,725            11,303             232
                                                            -------------------------------------               
      Total................................................       $887,930,442         5,208,276                
----------------------------------------------------------------------------------------------------------------
\1\ Includes leveraging awards.                                                                                 
                                                                                                                
Source: Administration for Children and Families, U.S. Department of Health and Human Services.                 

                      Planning and Administration

    LIHEAP is administered within the Department of Health and 
Human Services by the Administration for Children and Families. 
Grantees 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 (Indian 
tribe, or territory), or her designee, 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 (Public Law 98-502) 
supersedes this requirement in most instances, and requires 
grantees to conduct an annual audit of all Federal financial 
assistance received.

                     VETERANS BENEFITS AND SERVICES

    The Department of Veterans Affairs (VA) offers a wide range 
of benefits and services to eligible veterans, members of their 
families, and survivors of deceased veterans. VA programs 
include veterans compensation and pensions, readjustment 
benefits, medical care, and housing and loan guaranty programs. 
The VA also provides life insurance, burial benefits, and 
special counseling and outreach programs. In fiscal year 1995, 
Federal outlays for veterans' benefits and services were $37.9 
billion.
    Service-connected compensation is paid to veterans who have 
disabilities from injuries and illnesses sustained while in 
service. The amounts of monthly payments are determined by 
disability ratings that are based on presumed average 
reductions in earning capacities caused by the disabilities. 
Disability ratings generally range from 10 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 fiscal year 
1995, about 2.2 million disabled veterans and 307,443 survivors 
received about $14.8 billion in compensation payments.
    Veterans pensions are means-tested cash benefits paid to 
war veterans who have become permanently and totally disabled 
from nonservice-connected causes, and to survivors of war 
veterans. Under the current or ``improved law'' program, 
benefits are based on family size and the pensions provide a 
floor of income. For 1996, the basic benefit before subtracting 
other income sources is $10,801 for a veteran with one 
dependent ($8,246 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 798,721 persons 
received $3.0 billion in veterans pension payments in fiscal 
year 1995.
    Several VA 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 
educational assistance to persons, who as members of the Armed 
Forces or the Selected Reserve, elect to participate in the 
program after June 30, 1985. The purposes of the MGIB are to 
assist service members leaving the Armed Forces in their 
readjustment into civilian life, to provide an incentive for 
the recruitment and retention of qualified personnel in the 
Armed Forces, and to develop a more educated and productive 
work force. To participate in the MGIB, active duty military 
personnel contribute $100 per month, for the first 12 months of 
enlistment. Benefit levels are contingent upon length of 
service. To receive the maximum benefit of $416.62 per month 
for 36 months, service members must generally serve 
continuously for 3 years.
    The VA also provides vocational rehabilitation to disabled 
veterans. In fiscal year 1995, the net outlay for VA 
readjustment programs was $1.124 billion. In addition, the 
Department of Labor provides employment counseling and job 
training for veterans.
    The VA provides a comprehensive array of inpatient and 
outpatient medical services through 173 medical centers, 131 
nursing homes, 39 domiciliaries, and 391 ambulatory clinics. 
Eligibility rules for VA medical services are complex and vary 
by types of care and groups of veterans. The VA is required to 
provide free priority medical care, both inpatient and 
outpatient, to veterans for service-connected conditions. In 
addition, the VA is required to provide free inpatient medical 
care, and may provide outpatient care, to low-income veterans 
for nonservice-connected conditions if they meet certain income 
criteria. For 1996, the low-income criterion for free medical 
care is $21,001 or less for single veterans and $25,204 or less 
for married veterans and veterans with one dependent; each 
additional dependent adds another $1,404 to the family total. 
As facilities and other resources permit, the VA provides care 
to veterans for nonservice-connected conditions with incomes 
that exceed the limits enumerated above; however, copayments 
are required. Again, as facilities and other resources permit, 
the VA provides nursing home care to veterans, with priority 
going to those with service-connected disabilities. The VA also 
contracts with private facilities and medical providers when it 
is determined to be in the interests of the veteran and cost-
effective for the VA. VA-operated nursing home care is 
augmented by VA-supported care through contracts with private 
community nursing homes and with per diem payments for veterans 
in state-run homes for veterans.
    In fiscal year 1995, VA medical programs cost $16.4 
billion, and medical services were provided to about 2.9 
million separate applicants, resulting in 1 million inpatient 
episodes and 29 million outpatient visits.
    Table 16-41 summarizes annual expenditures on the various 
veterans programs and services for selected years between 1975 
and 1995; table 16-42 summarizes the annual number of 
recipients of the various benefits over the period.

          TABLE 16-41.--EXPENDITURES FOR VETERANS BENEFITS AND SERVICES, SELECTED FISCAL YEARS 1975-95          
                                            [In millions of dollars]                                            
----------------------------------------------------------------------------------------------------------------
                                                                                                Other           
                                        Compensation  Readjustment,                           veterans          
              Fiscal year               and pensions    education,      Medical     Housing   benefits    Total 
                                             \1\       job training  programs \2\  loans \3\     and            
                                                                                              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
1994..................................      19,613          1,115        15,678          197     1,039    37,642
1995..................................      18,966          1,124        16,428          329     1,091    37,938
----------------------------------------------------------------------------------------------------------------
\1\ Primarily compensation and pension benefits; includes 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: Office of the President (1996).                                                                         


       TABLE 16-42.--NUMBER OF RECIPIENTS OF VETERANS BENEFITS AND SERVICES, SELECTED FISCAL YEARS 1975-95      
                                                 [In thousands]                                                 
----------------------------------------------------------------------------------------------------------------
                                                                        Readjustment,                           
                       Fiscal year                        Compensation    education,      Medical      Housing  
                                                          and pensions   job training  programs \1\     loans   
----------------------------------------------------------------------------------------------------------------
1975....................................................         4,855         2,692          1,985          290
1980....................................................         4,646         1,233          2,671          297
1981....................................................         4,535         1,081          2,765          188
1982....................................................         4,407           906          2,720          103
1983....................................................         4,286           755          2,933          245
1984....................................................         4,123           629          3,026          252
1985....................................................         4,005           492          2,963          179
1986....................................................         3,900           419          2,942          314
1987....................................................         3,850           365          2,900          479
1988....................................................         3,762           352          2,922          235
1989....................................................         3,686           349          3,344          190
1990....................................................         3,614           360          3,018          196
1991....................................................         3,546           322          2,963          181
1992....................................................         3,462           388          2,927          266
1993....................................................         3,397           438          2,800          383
1994....................................................         3,351           472          2,965          602
1995....................................................         3,332           476          2,696          263
----------------------------------------------------------------------------------------------------------------
\1\ Recipients are the number of applicants during the year.                                                    
                                                                                                                
Source: U.S. Department of Veterans Affairs.                                                                    

                       WORKERS' COMPENSATION \21\
---------------------------------------------------------------------------

    \21\ Largely drawn from Schmulowitz (1995).
---------------------------------------------------------------------------
    Workers' compensation laws provide for 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 1993, workers' 
compensation laws protected approximately 96.1 million workers 
in 51 jurisdictions, including the District of Columbia. 
Although the laws vary from State to State, and among the 
Federal programs, 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 enacted in 1908), a 
worker was only protected in cases in which employer negligence 
could be proven as the cause of injury or death. By 1949, all 
States and the Federal Government had enacted laws to cover 
workers and their dependents in any case of occupational 
disability or death.
    Most workers' compensation benefits are paid by insurance 
companies through policies purchased by private employers that 
are keyed to the benefits required by the State or Federal 
workers' compensation law covering the employer. In addition, 
benefits may be paid by special State or Federal insurance 
funds, by employers themselves acting as self-insurers, and by 
the Federal Government (for Federal employees and some black 
lung beneficiaries). State laws generally are administered by 
entities such as industrial commissions or special units within 
State labor departments. Federal laws are administered by the 
U.S. Department of Labor, although the Social Security 
Administration has responsibility for paying some black lung 
claims.
    Federal involvement in the workers' compensation system is 
minimal. Federal laws cover work-related disability and death 
benefits for Federal employees, certain maritime and railroad 
employees, and benefits for black-lung-related disability or 
death. \22\ In general, Federal funding extends only to 
benefits for Federal employees and some black lung 
beneficiaries and administrative costs at the Labor Department 
and Social Security Administration. \23\ There are no Federal 
standards for or controls over the State laws that cover most 
of the work force, although they are structured similarly, and 
a 1972 Federal commission issued a still-current set of 
recommended goals for State laws. Workers' compensation 
benefits are not taxed at any level of government; if taxed as 
income by the Federal Government, the Joint Committee on 
Taxation estimates revenues would be about $4 billion (for tax 
year 1995).
---------------------------------------------------------------------------
    \22\ The Federal Employees' Compensation Act (FECA) covers Federal 
employees and certain others (e.g., some law enforcement officers and 
volunteers, postal service employees). The Longshore and Harbor 
Workers' Compensation Act (LHWCA) and the Jones Act cover certain 
workers in maritime endeavors (including, for example, workers on the 
outer continental shelf). The Federal Employers' Liability Act (FELA) 
covers interstate railroad employees. The Black Lung Benefits Act 
(BLBA) provides for benefits to coal mine employees and survivors for 
disability or death related to black lung disease.
    \23\ Under the FECA, the Federal Government pays all administrative 
and benefit costs from annual appropriations to the employing agencies 
and the Labor Department. Under the LHWCA, private employers are 
responsible for virtually all benefits; the Federal Government pays for 
a very small and declining payment to pre-1972 claimants and, standing 
in the place of a State, the administrative costs of the system. Under 
the Jones Act and the FELA, there are few Federal costs, limited to 
some Federal court costs and potential effects on the Federal 
appropriation for Amtrak. Under the BLBA, Federal appropriations pay 
for benefits and administrative costs for claims filed before 1974 
(through the Social Security Administration) and Department of Labor 
administrative expenses (for claims filed later). Black lung benefits 
for claims filed after 1973 are paid directly by responsible coal mine 
operators or the Black Lung Disability Trust Fund (which is financed 
through an excise tax on coal and borrowing from the Federal Treasury).
---------------------------------------------------------------------------
    Cash compensation for lost earnings made up 59 percent of 
total workers' compensation benefits in 1993. Some 70 percent 
of cash payments are for permanent partial disabilities of 
either major or minor severity. These payments cover loss (or 
loss of use) of body parts and partial, but permanent, loss of 
earning capacity due to work-related injuries. About 5-8 
percent of cash benefits are awarded to survivors because of 
work-related deaths. The remainder is paid for temporary 
disabilities in which an employee is unable to work, or must 
work at a reduced level, but is expected to recover fully.
    Permanently disabled workers receiving workers' 
compensation also may be eligible for benefits under the Social 
Security Disability Insurance (DI) Program if they meet 
generally more stringent DI tests. However, the Social Security 
Act stipulates that total benefits under workers' compensation 
and DI cannot exceed 80 percent of a worker's former earnings 
(or, if higher, 80 percent of the total family Social Security 
benefit). If there is an excess, the Social Security benefit is 
reduced by the amount of the excess, or, in 13 States, the 
workers' compensation benefit is reduced.
    Workers' compensation laws require that all injury-related 
medical and hospital care be paid for. As a result, medical 
expenses made up 41 percent of total workers' compensation 
benefits in 1993. Medical benefits are typically paid on an 
``as-charged'' basis; the majority of States and the Federal 
Government allow relatively unfettered employee choice of 
physician/care provider. However, the medical benefit component 
of workers' compensation has grown substantially in recent 
years, and a growing number of States (now over half) have 
instituted at least some form of ``managed care'' or ``fee 
schedules'' to control these costs.
    Workers' compensation laws make coverage compulsory for 
most private employers, except in South Carolina and Texas. 
\24\ If employers reject coverage in these States, they lose 
the use of common-law negligence defenses if sued. However, 
many State laws exempt from coverage employees of nonprofit, 
charitable, or religious institutions, as well as very small 
employers, domestic and agricultural employment, and casual 
labor. Coverage of State and local government employees differs 
widely from State to State.
---------------------------------------------------------------------------
    \24\ While coverage in New Jersey is technically elective, no 
employer has chosen an exemption from the workers' compensation 
statute, which requires that the election be made in writing prior to 
an accident.
---------------------------------------------------------------------------
    In 1993, 96.1 million employees were covered by State or 
Federal workers' compensation laws, and wages and salaries of 
covered workers totaled $2.5 trillion, about 82 percent of all 
civilian wages and salaries. However, while the number of 
covered employees grew from 1991, when 93.6 million workers 
were covered, the proportion of the civilian payroll covered by 
workers' compensation laws declined from 84 percent.
    The total of $42.9 billion in 1993 workers' compensation 
benefit costs (including those for black lung recipients) is 
driven by the level of benefits provided under workers' 
compensation laws, the cost of medical benefits, and injury 
rates, as well as ``administrative'' factors such as the degree 
of litigation involved.
    Cash compensation levels are established by formulas set in 
State and Federal workers' compensation laws and are typically 
a percentage of weekly earnings at the time of injury or death. 
Most laws provide benefits equal to two-thirds of gross 
(pretax) lost earnings (or earning capacity); but several 
States calculate benefits as a percentage of lost ``spendable'' 
(aftertax) earnings, usually replacing 75 or 80 percent. 
Workers' compensation laws also set maximum weekly benefit 
amounts. While maximum benefits are most often set at between 
two-thirds and 100 percent of the State's average weekly wage, 
they vary widely. For example, as of January 1996, maximum 
weekly compensation for permanent total disability ranged from 
$1,299 for Federal employees ($782 for those covered by the 
Federal LHWCA) to $846 for Iowa (the highest State figure) and 
$264 for Mississippi (the lowest State figure).
    In 1993, compensation under regular Federal and State 
Workers' Compensation Programs totaled $24.2 billion, of which 
$1.2 billion was paid to survivors. In addition, $1.2 billion 
in black lung cash benefits were provided, almost 60 percent of 
which went to survivors.
    In 1993, medical and hospitalization payments under regular 
Federal and State workers' compensation laws totaled $17.4 
billion, and an additional $100 million was paid out for black 
lung beneficiaries.
    The Bureau of Labor Statistics (BLS) reported a 1993 
workplace injury and illness incidence rate of 8.5 cases per 
100 full-time equivalent private industry workers. The 
incidence rate for lost workday cases was 3.8. Since 1989, the 
overall incidence rate has ranged between 8.9 and 8.4, and the 
lost-workday rate has varied between 3.8 and 4.1. According to 
the Survey of Occupational Injuries and Illnesses, the total 
number of private sector workplace injuries/illnesses in 1993 
was 6.7 million, of which nearly 3 million involved lost 
workdays. In addition, the BLS Census of Fatal Occupational 
Injuries reported some 6,300 fatalities resulting from on-the-
job injuries (see Schmulowitz, 1995).
    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. In two States (North Dakota and Wyoming), 
employers must purchase insurance from their State fund, and, 
in four other States (Nevada, Ohio, Washington, West Virginia), 
they must either self-insure or buy insurance from the State 
fund. And nearly half of the remaining States have fully 
``competitive'' State funds that allow employers to buy private 
insurance, self insure, or buy from a State fund.
    In 1993, 51 percent ($21.8 billion) of the total of $42.9 
billion in workers' compensation benefits (including all cash 
and medical costs under Federal and State laws) was paid by 
private insurers; 23 percent ($9.9 billion) was provided 
through self-insurance; 19 percent ($8.1 billion) came from 
State funds; and 7 percent ($3.1 billion) was paid under 
Federal programs. \25\
---------------------------------------------------------------------------
    \25\ Federal program disbursements were for black lung benefits and 
payments for Federal employees. Some of the payments financed through 
private insurers, self-insurance, and State funds were mandated by 
Federal laws covering private-sector employers (e.g., the LHWCA).
---------------------------------------------------------------------------
    Total workers' compensation costs to employers in a given 
year are greater than annual benefits paid out because of the 
built-in cost of long-term benefits. In 1993, employer costs 
totaled $57.3 billion. These costs included benefits paid, 
administration of insurance operations, insurer profits and 
taxes, and reserves for future benefit payments. Where 
insurance is purchased, the premium paid by employers varies 
with the risk involved in the covered employment and the 
industrial classification of the employer's particular 
industry, although it may be modified by ``experience rating'' 
for some moderate to large employers and other factors judged 
relevant by the insurer.
    By type of insurer, the total 1993 cost to employers was: 
$33.6 billion (59 percent) paid to private insurers, $10.9 
billion (19 percent) paid to State funds, $10.6 billion (18 
percent) financed by self-insured employers, and $2.3 billion 
(4 percent) from Federal appropriations for Federal employees 
and from that portion of black lung benefits financed by coal 
mine employers (as opposed to Federal appropriations).
    In 1993, average employer costs per covered employee were 
$597; as a proportion of employers' payrolls, this represented 
$2.30 per $100 of payroll. Although substantial increases in 
employers' workers' compensation costs were recorded in the 
1980s, these costs actually decreased in real terms in the 
early 1990s, dropping from a high of $2.40 per $100 of payroll 
in 1991.
    Table 16-43 shows the estimated number of workers covered 
and the total annual payroll in covered employment for selected 
years between 1948 and 1993. Over that time, the number of 
workers covered in an average month increased from 36 to 96.1 
million, and covered payroll rose from $105 billion to $2.5 
trillion.

  TABLE 16-43.--ESTIMATED NUMBER OF WORKERS COVERED BY WORKERS' COMPENSATION IN AVERAGE MONTH AND TOTAL ANNUAL  
                            PAYROLL IN COVERED EMPLOYMENT, SELECTED YEARS 1948-93 \1\                           
----------------------------------------------------------------------------------------------------------------
                                                        Workers covered in average    Total payroll in covered  
                                                                  month                      employment         
                                                      ----------------------------------------------------------
                                                                       Percent of                               
                         Year                                           employed                     Percent of 
                                                         Number  (in    wage and      Amount  (in  civilian wage
                                                         millions)       salary       billions)      and salary 
                                                                       workers \2\                 disbursements
----------------------------------------------------------------------------------------------------------------
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
1993.................................................           96.1            NA          2,500           82.0
----------------------------------------------------------------------------------------------------------------
\1\ Before 1963, excludes Alaska and Hawaii.                                                                    
\2\ Beginning in 1968, excludes those under age 16 and includes certain workers previously classified as self-  
  employed.                                                                                                     
                                                                                                                
NA--Not available.                                                                                              
                                                                                                                
Source: Nelson (1991, 1993); Schmulowitz (1995).                                                                

    Table 16-44 illustrates benefit payments under workers' 
compensation laws by type of benefit for the years 1987-93 
(except 1992). In 1993, total benefits paid equaled $42.9 
billion, of which $41.6 billion was paid out under regular 
State and Federal workers' compensation laws and nearly $1.4 
billion was provided through the Federal Black Lung Benefit 
Programs.

        TABLE 16-44.--ESTIMATED WORKERS' COMPENSATION BENEFIT PAYMENT AMOUNTS BY TYPE OF BENEFIT 1987-93        
                                                  [In millions]                                                 
----------------------------------------------------------------------------------------------------------------
                   Type of benefit                      1987      1988      1989      1990      1991      1993  
----------------------------------------------------------------------------------------------------------------
      Regular program...............................   $25,773   $29,234   $32,837   $36,804   $40,778   $41,569
                                                     -----------------------------------------------------------
Medical and hospitalization.........................     9,794    11,401    13,299    15,067    16,715    17,409
Compensation........................................    15,979    17,833    19,538    21,737    24,063    24,160
    Disability......................................    15,046    16,956    18,553    20,635    22,840    22,930
    Survivor........................................       933       877       985     1,102     1,223     1,229
                                                     ===========================================================
      Black Lung Program............................     1,545     1,499     1,479     1,434     1,391     1,355
                                                     -----------------------------------------------------------
Medical and hospitalization.........................       118       117       125       120       117       112
Compensation........................................     1,426     1,381     1,354     1,314     1,274     1,243
    Disability......................................       698       657       618       577       533       520
    Survivor........................................       729       725       736       737       741       723
                                                     ===========================================================
      Total (Regular and Black Lung)................    27,318    30,733    34,316    38,238    42,169    42,925
Medical and hospitalization.........................     9,912    11,518    13,424    15,187    16,832    17,521
Compensation........................................    17,406    19,215    20,892    23,051    25,337    25,403
    Disability......................................    15,775    17,613    19,171    21,212    23,373    23,450
    Survivor........................................     1,631     1,602     1,721     1,839     1,964     1,952
----------------------------------------------------------------------------------------------------------------
Source: Nelson (1991, 1993); Schmulowitz (1995).                                                                

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