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SECTION 15. OTHER PROGRAMS

CONTENTS

Overview

Food Stamp Program

Administration, Program Variations, and Funding

Eligibility

Benefits

Quality Control (QC)

Interaction With TANF, SSI, and GA Programs

Recipiency Rates

Recent Legislative History

Medicaid

Eligibility

Families, Pregnant Women, and Children

Aged and Disabled Persons

The Medically Needy

Medicaid and the Poor

Services

Financing

Reimbursement Policy

Administration

Medicaid and Managed Care

Legislative History

Program Data

State Children’s Health Insurance Program

Eligibility

Benefits

Cost Sharing

Financing

Legislative History

Program Data

Federal Housing Assistance

Types of Assistance

Trends in Levels and Budgetary Impact of Housing Aid

School Lunch and Breakfast Programs

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

Child and Adult Care Food Program

Centers and Outside-of-School Programs

Family and Group Day Care Homes

Workforce Investment Act

Description of Major Differences Between WIA and JTPA

Head Start

Low-Income Home Energy Assistance Program (LIHEAP)

Background

Program Components

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Allotments to States

Eligibility and Types of Assistance

Planning and Administration

Veterans Benefits and Services

Workers’ Compensation

Overview Through 1996

Recent Developments in Statistical Compilation

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; the State Children’s

Health Insurance Program (SCHIP); housing assistance; School

Lunch and Breakfast Programs; the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); the Child

and Adult Care Food Program (CACFP); the Workforce Investment

Act (WIA); Head Start; the Low-Income Home Energy Assistance

Program (LIHEAP); veterans benefits and services; and workers’

compensation.

Most families receiving Temporary Assistance for Needy Families

(TANF) or Supplemental Security Income (SSI) would have incomes low enough to qualify them 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 TANF 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 TANF.

Tables 15–1 and 15–2 describe the overlap in recipients between

programs within the jurisdiction of the Committee on Ways and

Means and other major Federal assistance programs. Table 15–1 illustrates that 81.0 percent of TANF recipient households also received food stamps during the first quarter of 1998; 30.6 percent

received WIC; 97.3 percent received Medicaid; 60.3 percent received

free or reduced-price school meals; and 32.2 percent received housing assistance.

Table 15–2 presents the percentage of recipients of other meanstested programs who are participating in programs under Ways

and Means jurisdiction. For example, 35.1 percent of food stamp

households received TANF benefits at some time during the first

quarter of 1998; 30.1 percent received SSI; 30.5 percent received

Social Security; 1.6 percent received unemployment benefits; and

27.9 percent received Medicare.

Table 15–3 shows the percentage of households receiving Aid to

Families with Dependent Children (AFDC)/TANF or SSI and also

receiving assistance from other programs for selected time periods.

The figures at the bottom of the AFDC/TANF portion of the table

show that the number of households receiving AFDC/TANF increased rapidly between 1990 and 1994, declined somewhat in

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TABLE 15–1.—PERCENT OF RECIPIENTS IN PROGRAMS WITHIN THE JURISDICTION OF

THE COMMITTEE ON WAYS AND MEANS RECEIVING ASSISTANCE FROM OTHER MAJOR

FEDERAL ASSISTANCE PROGRAMS, 1997–98

Other assistance program

Ways and Means assistance program

TANF SSI Social

Security

Unemployment compensation

Medicare

Food stamps ........................... 81.0 43.7 7.3 7.0 7.3

WIC ......................................... 30.6 5.5 1.3 7.9 0.9

Medicaid ................................. 97.3 95.0 16.9 16.9 17.2

Free or reduced-price school

meals ................................. 60.3 18.4 4.0 18.0 2.9

Public or subsidized rental

housing .............................. 32.2 23.4 5.7 4.0 5.8

VA compensation or pensions 1.1 2.8 4.9 1.2 4.9

Number of households

receiving benefits (in

thousands) ................ 3,008 4,772 28,833 1,546 26,525

Note.—Table shows number of households for December 1997–March 1998. Table reads that 81.0 percent of TANF 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. Census Bureau, Survey of Income and Program Participation.

TABLE 15–2.—PERCENT OF RECIPIENTS IN OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS RECEIVING ASSISTANCE UNDER PROGRAMS WITHIN THE JURISDICTION OF THE

COMMITTEE ON WAYS AND MEANS, 1997–98

Ways and Means assistance

program

Other assistance program

Food

stamps WIC

Free or reduced-price

school

meals

Public or

subsidized

rental

housing

Medicaid

VA compensation or

pensions

TANF ............................. 35.1 25.6 21.5 21.6 22.5 1.4

SSI ................................ 30.1 7.4 10.4 24.9 34.8 5.7

Social Security ............. 30.5 10.2 13.6 36.3 37.4 59.3

Unemployment compensation ................. 1.6 3.4 3.3 1.4 2.0 0.8

Medicare ...................... 27.9 6.3 9.0 34.3 35.2 55.2

Number of households receiving

benefits (in

thousands) ..... 6,932 3,585 8,444 4,487 13,014 2,369

Note.—Table shows households for December 1997–March 1998. Table reads that 35.1 percent of food

stamp recipient households receive TANF. 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. Census Bureau, Survey of Income and Program Participation.

TABLE 15–3.—PERCENT OF HOUSEHOLDS RECEIVING AFDC/TANF OR SSI AND ALSO RECEIVING ASSISTANCE FROM OTHER PROGRAMS FOR SE

TIME PERIODS

Assistance program

Year

1984 1987 1990 1992 1993 1994 1995 

AFDC/TANF:

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 

Note.—Data on households interviewed between December 1997 and March 1998. SSI recipients living in California receive a higher SSI payment in lieu of food sta

thus are not included in the food stamp percentages; in 1997, the TANF Program replaced the Aid to Families with Dependent Children (AFDC) Program.

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

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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 20–25

percent of their total cash monthly income on food.

1995, and then fell rapidly between 1995 and 1997/1998. Due to

the rapid decline after 1994, the AFDC/TANF rolls declined by 16

percent 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 1998. The rolls increased

by nearly 60 percent over this period.

The percentage of AFDC/TANF households receiving other benefits fluctuated over the 1984–98 period, but the biggest programs—

food stamps, school meals, housing assistance, and Medicaid—increased and then declined. Food stamps experienced increased coverage until 1993, after which it fell off by nearly 9 percent between

1994 and 1998. School lunches also fell off somewhat between 1995

and 1998. Medicaid coverage increased between 1984 and 1990, but

the pattern was erratic after that and 1990 proved to be the highwater mark of coverage. The high-water mark for housing was

1990. The pattern of receiving other benefits for SSI households is

broadly similar; namely, initial increases and then declines. For

every program, except Medicaid which was received by 100 percent

of SSI households, and veterans benefits, coverage increased between 1984 and 1994 but then declined either between 1994 and

1995 or between 1995 and 1998. Medicaid too declined from its 100

percent coverage in 1995 to 95 percent in 1998. The explanation for

declining coverage probably varies from program to program, but

the pattern of general decline after 1994 or 1995 deserves careful

study, especially if it continues to occur over the next several years.

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 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,

is set at the level of the U.S. Department of Agriculture’s lowest

cost food plan (the Thrifty Food Plan or TFP), 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.

Benefits are available to most households that meet Federal eligibility tests for limited monthly income and liquid assets. But

household members must fulfill requirements related to work effort

and, in general, must be U.S. citizens. Recipients in the two primary cash welfare programs (TANF and SSI) generally are automatically eligible for food stamps, as are recipients of State general

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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 for determining need.

assistance (GA) payments, if their household is composed entirely

of TANF, SSI, or GA beneficiaries.2

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 most of the rules that govern the

program, and, with limited variations for Alaska, Hawaii, and the

territories, these rules are nationally uniform. However, by law and

regulation, States have a number of significant options to vary

from Federal administrative, benefit calculation, and eligibility

rules, especially for those who also are recipients of their State’s

cash welfare programs, and a number of waivers from regular rules

and procedures have been (and continue to be) granted. Sales taxes

on food stamp purchases may not be charged, and food stamp benefits do not directly 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, discussed below).

Federal administrative responsibilities

At the Federal level, the program is administered by the Agriculture Department’s Food and Nutrition Service (FNS). The FNS

gives direction to welfare agencies through Federal regulations that

define eligibility requirements, benefit levels, and administrative

rules. It is also responsible for arranging for printing food stamp

coupons and distributing them to welfare agencies, for overseeing

State programs for the electronic issuance of food stamp benefits,

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 stamp benefits are redeemed

for cash, and which has some jurisdiction over ‘‘electronic benefit

transfer (EBT)’’ 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 DeVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00866 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
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3Prior to July 1982, the regular Food Stamp Program operated in Puerto Rico, although with

slightly different eligibility and benefit rules. 4For fiscal years 2000 and 2001, $1.268 billion and $1.301 billion are earmarked. The block

grant funds the full cost of benefits and half the cost of administration.

partment’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 (using coupons or electronic benefit transfers) 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, the length of eligibility

certification periods, the structure of EBT systems). Most often, the

Food Stamp Program is operated through the same welfare agency

and staff that runs the State’s TANF Program.

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 (e.g., benefits are paid in cash (checks) rather

than food stamp coupons); (3) income eligibility limits are about

one-third those used in the regular Food Stamp Program; (4) maximum benefit levels are about 40 percent less than in the 48 contiguous States and the District of Columbia; and (5) different rules

are used in counting income for eligibility and benefit purposes. In

fiscal year 1999, Puerto Rico’s Nutrition Assistance Program aided

approximately 1.1 million persons each month with monthly benefits averaging $74.50 a person ($193 a household).

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 (increased to $6.1 million for fiscal year

2000); (2) a portion of each household’s food stamp benefit must be

used to purchase locally produced food; (3) maximum allotments

are about 5 percent higher than in the 48 contiguous States and

the District of Columbia; and (4) income eligibility limits are about

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half those in the regular program. As of the end of fiscal year 1999,

the Northern Marianas’ program assisted 5,100 people each month

with monthly benefits averaging about $75 a person (see section

12).

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.

While maximum monthly allotments are similar to those in the

regular Food Stamp Program ($125 a person), income eligibility

limits are about 25 percent lower. In fiscal year 1999, the program

aided about 3,200 persons a month with average monthly benefits

of just over $100 a person (see section 12).

Program options

The Food Stamp Act authorizes demonstration projects to test

program variations that might improve operations. However, because of the law’s substantial limits on how much any demonstration can reduce benefits or restrict eligibility, an administration

policy that effectively bars demonstrations that have a significant

cost to the Food Stamp Program, and implementation of the 1996

welfare reform law’s provisions for State flexibility, no major demonstration projects are operational. Instead: (1) a few small demonstrations are operating in some States (these deal with joint application processing and standardized food stamp benefits for SSI

recipients, cash benefits for the elderly and SSI recipients, and

evaluation of earlier welfare reform demonstrations); and (2) extensive waivers of administrative rules are routinely granted.

In addition to demonstration projects, States are allowed to implement some options. States may change administrative requirements such as those pertaining to application processing and reporting of household circumstances. They may issue benefits (at

their own cost) to ineligible noncitizens and those ineligible under

the new work rule for able-bodied adults without children (discussed below). 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 EBT systems. They may

choose to operate a ‘‘simplified’’ program under which they can use

many of their TANF rules and procedures when determining food

stamp benefits for TANF recipients. They largely determine the

length of eligibility certification periods. They may sanction food

stamp recipients failing to meet other public assistance program

rules or failing to cooperate in child support enforcement. They

may, to a certain extent, waive the application of the new work

rule for able-bodied adults without dependents (ABAWDs) (discussed below); and they may choose to disqualify an entire household if the head of household fails to fulfill work-related requirements. They may include the cash value of food stamp benefits

when using welfare to subsidize some recipients’ wages and can

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5 Under the terms of Public Law 105–185, most States are subject to an annual reduction in

their normal Federal share totaling about $200 million nationwide. 6The overwhelming majority (80 percent) of the formula grant funds must be spent on services to those covered by a new work requirement for able-bodied adults without dependents.

pay food stamp benefits in cash to other working households getting off cash welfare. Finally, States and localities may opt to run

‘‘workfare’’ programs, and States determine the 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, except where States choose to ‘‘buy into’’ the

program and pay for issuing food stamp benefits to ineligible noncitizens or those made ineligible by the new work rule for ABAWDs

(discussed below). The Federal Government also is 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 Federal Government shares the cost of carrying out

employment and training programs for food stamp recipients: (1)

each State receives a Federal grant for basic operating costs (a formula share of $172 million in fiscal year 2000 and $219 million in

fiscal year 2001); 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.6 Finally,

States are allowed to retain a portion of improperly issued benefits

they recover (other than those caused by welfare agency error): 35

percent of recoveries in fraud cases and 20 percent in other circumstances. Federal and State Food Stamp Act spending since

1979 is shown in table 15–4.

ELIGIBILITY

The Food Stamp Program has financial, employment/trainingrelated, and ‘‘categorical’’ tests for eligibility. Its financial tests require that most of those eligible have monthly income and liquid

assets below limits set by law. Under the employment/trainingrelated 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. And, under a new work requirement established in 1996,

food stamp eligibility for ABAWDs is limited to 3–6 months in any

36-month period unless they are working at least half time or in

a work or training activity. Categorical eligibility rules make some

automatically eligible for food stamps (many TANF, SSI, and GA

recipients), and categorically deny eligibility to others (e.g., strikers

and most noncitizens, postsecondary students, and people living in

institutional settings). Applications cannot be denied because of the

length of a household’s residence in a welfare agency’s jurisdiction

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or because the household has no fixed mailing address or does not

reside in a permanent dwelling.

TABLE 15–4.—RECENT FOOD STAMP ACT EXPENDITURES, 1979–99

[Obligations in millions of dollars]

Fiscal year Benefits 1

(Federal)

Administration 2

Total

Federal State

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 ............................................................ 23,759 1,917 1,748 27,424

1996 ............................................................ 23,510 1,984 1,842 27,336

1997 ............................................................ 20,810 2,058 1,904 24,772

1998 ............................................................ 18,228 2,169 1,988 22,385

1999 ............................................................ 17,217 2,100 1,874 21,191

1 All benefit costs associated with the Food Stamp Program, Puerto Rico’s block grant, and grants to

American Samoa and the Northern Marianas are included. Fiscal year 1998 and 1999 amounts shown in

the table also cover the cost of State-financed benefits for noncitizens (approximately $100 million a

year). For certain years, small downward adjustments have been made for overpayments collected from

recipients and 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 appropriation and grants to

Puerto Rico, American Samoa, and the Northern Marianas are included: Federal matching spending for

the various administrative and employment and training program expenses of States and other jurisdictions, and direct Federal administrative costs. Figures for Federal administrative costs beginning with fiscal year 1993 are for those paid out of food stamp appropriations; for earlier years, these figures include

estimates of food-stamp-related Federal administrative expenses paid out of other Agriculture Department

appropriations accounts ($40–$60 million a year). Fiscal year 1998 and 1999 Federal amounts shown in

the table also cover the administrative cost of State-financed benefits for noncitizens. State and local

costs are estimated based on the known Federal shares of administrative and employment and training

program expenses and represent an estimate of these costs to States and other jurisdictions; however,

the State/local figures shown in the table do not include administrative expenses for State-financed benefits to noncitizens.

Source: U.S Department of Agriculture budget justification materials for fiscal years 1981–2000. 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 faVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00870 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
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7 Although they do not have to meet food stamp financial eligibility tests, TANF, SSI, and general assistance households must still have their income calculated under food stamp rules to

determine their food stamp benefits. 8 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).

cilities. The food stamp household is unrelated to recipient units in

other welfare programs (e.g., TANF 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, related coresidents

generally 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), 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 (165 percent of the Federal poverty guidelines).

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 TANF, SSI, or GA recipients (who generally are automatically eligible for food stamps),

monthly cash income is the primary food stamp eligibility determinant.7 In establishing eligibility for households without an elderly or disabled member,8 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

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income is considered; in effect, this procedure applies a more liberal

income test to elderly and disabled households.

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) Federal

energy assistance; (7) expense reimbursements that are not a ‘‘gain

or benefit’’ to the household; (8) income earned by schoolchildren 17

or younger; (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) ‘‘onthe-job’’ training earnings of dependent children under 19 in the

Workforce Investment Act (WIA), formerly the Job Training Partnership Act (JTPA), Programs, as well as monthly ‘‘allowances’’;

(13) income set aside by disabled SSI recipients under an approved

‘‘plan for achieving self-support’’; 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 gross monthly income less the following deductions:

—A standard deduction set at $134 a month, regardless of household size; different standard deductions are used for Alaska

($229), Hawaii ($189), Guam ($269), and the Virgin Islands

($118).

—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 $275 a month. Different ceilings prevail in

Alaska, Hawaii, Guam, and the Virgin Islands: $478, $393,

$334, and $203, respectively.

For households with an elderly or disabled member, counted

monthly income equals gross monthly income less:

—The same standard, child support, earned income, and dependent care deductions noted above;

873

—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 TANF, SSI, or

GA 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. 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 15–5.

TABLE 15–5.—COUNTED (NET) AND BASIC (GROSS) MONTHLY INCOME ELIGIBILITY

LIMITS FOR THE FOOD STAMP PROGRAM, FISCAL YEAR 2000

Household size

48 States, the

District of

Columbia, and the

territories

Alaska Hawaii

Counted (net) monthly income eligibility limits 1:

1 person ................................................ $687 $860 $791

2 persons .............................................. 922 1,154 1,061

3 persons .............................................. 1,157 1,447 1,331

4 persons .............................................. 1,392 1,740 1,601

5 persons .............................................. 1,627 2,034 1,871

6 persons .............................................. 1,862 2,327 2,141

7 persons .............................................. 2,097 2,620 2,411

8 persons .............................................. 2,332 2,914 2,681

Each additional person ......................... +235 +294 +270

Basic (gross) monthly income eligibility limits 2:

1 person ................................................ 893 1,118 1,029

2 persons .............................................. 1,199 1,500 1,380

3 persons .............................................. 1,504 1,881 1,731

4 persons .............................................. 1,810 2,262 2,082

5 persons .............................................. 2,115 2,644 2,433

6 persons .............................................. 2,421 3,025 2,784

7 persons .............................................. 2,726 3,406 3,135

8 persons ............................................. 3,032 3,788 3,486

Each additional person ....................... +306 +382 +351

1 Set at the applicable Federal poverty guidelines, updated for inflation through calendar 1998.

2 Set at 130 percent of the applicable Federal poverty guidelines, updated for inflation through calendar 1998.

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

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Allowable assets

Except for households automatically eligible for food stamps because they are composed entirely of Temporary Assistance for

Needy Families (TANF), Supplemental Security Income (SSI), or

GA recipients, eligible households must have counted liquid assets

that do not exceed federally prescribed limits. Households without

an elderly member cannot have counted liquid assets above $2,000.

Households with an elderly member cannot have counted liquid assets above $3,000.

Counted liquid assets include cash on hand, checking and savings accounts, savings certificates, stocks and bonds, individual retirement accounts (IRAs) and Keogh plans (less any early withdrawal penalties), and nonrecurring lump-sum payments such as

insurance settlements. Certain less liquid assets are also counted:

a portion of the value of vehicles (generally, the fair market value

in excess of $4,650) 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, would not yield more than $1,000 if sold (e.g., a car

with a small equity value), or are required to be disregarded by

other Federal laws.

Work-related requirements

To gain or retain eligibility, most able-bodied adults must: (1)

register for work (typically with the welfare agency or a State employment service office); (2) accept a suitable job if offered one; (3)

fulfill any work, job search, or training requirements established by

administering welfare agencies; (4) provide the administering welfare agency with sufficient information to allow a determination

with respect to their job availability; and (5) not voluntarily quit

a job without good cause or reduce work effort below 30 hours a

week. If the household head fails to fulfill any of these requirements, the entire household may, at State option, be disqualified

for up to 180 days. Individual disqualification periods differ according to whether the violation is the first, second, or third; minimum

periods, which may be increased by the State welfare agency, range

from 1 to 6 months.

Those who are exempt by law from these basic 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; 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

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ments; 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,

their State welfare agency may require them to fulfill some type of

work, job search, or training obligation. Welfare agencies must 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 by further exempting additional categories and individuals for whom participation is judged

impracticable or not cost effective. 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.

However, at least 80 percent of unmatched Federal money provided

for States’ employment and training programs must be spent on

services to those covered by the new work rule for ABAWDs (see

below).

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. Total hours

of participation (including both work and any other required activity) cannot exceed 120 hours a month. Welfare agencies also must

provide 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.

In addition to these work-related requirements, the 1996 welfare

reform law (Public Law 104–193) added a new work requirement

for most able-bodied adults between 18 and 50 without dependents.

They are ineligible for food stamps if, during the prior 36 months,

they received food stamps for 3 months while not working at least

20 hours a week or participating in an approved work/training activity. Those disqualified under this rule are able to reenter the

Food Stamp Program if, during a 30-day period, they work 80

hours or more or participate in a work/training activity. If they

then become unemployed or leave work/training, they are eligible

for an additional 3-month period on food stamps without working

at least 20 hours a week or participating in a work/training activity. But they are allowed only one of these added 3-month eligibility periods in any 36 months for a potential total of 6 months

on food stamps in any 36 months without half-time work or enrollment in a work/training program.

At State request, this rule can be waived for areas with very

high unemployment (over 10 percent) or lack of available jobs.

Moreover, States may, on their own initiative, exempt up to 15 percent of those covered under the new work rule.

In fiscal year 1999, States reported 2 million new work registrants. Of these, approximately 1.4 million—including an estimated 700,000 ABAWDs—were subject to employment and training program placement. Just over 600,000 of the 1.4 million potenVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00875 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
876

tially subject to employment and training participation requirements were reported actually placed in a work/training component.

Work/training slots were not found for many of the remainder, or

they left the Food Stamp Program or were sanctioned for failure

to fulfill their obligation.

Categorical eligibility rules and other limitations

Food stamp eligibility is sometimes denied for reasons other than

financial need or compliance with work-related requirements.

Many noncitizens are barred—eligibility is extended only to children, the elderly, and disabled who were legally resident before August 1996, refugees and asylees for a limited period of time, veterans, those with a substantial history of work covered under the Social Security system, and certain other limited groups of aliens.

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. 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 in which they are boarding. 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. Food stamps are denied those who intentionally

violate program rules, for specific time periods ranging from 1 year

(on a first violation) to permanently (on a third violation or other

serious infraction); and States may impose food stamp disqualification when an individual is disqualified from another public assistance program. Automatic disqualification is required for those applying in multiple jurisdictions, fleeing arrest, or convicted of a

drug-related felony. And States may disqualify individuals not cooperating with child support enforcement authorities or in arrears

on their child support obligations.

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., the deductions noted earlier 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 net income) from its maximum

allotment. Thus, a 3-person household with $400 in counted net income (after deductions) would receive a monthly allotment of $215

(the maximum 3-person benefit in the 48 States, $335, less 30 percent of net income, $120).

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 eligiVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00876 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
877

bility and others take into account the general availability of food

stamps in deciding what level of benefits to provide. In fiscal year

1999, monthly benefits averaged $72 a person and about $170 a

household.

Maximum monthly allotments

Maximum monthly food stamp allotments are tied to the cost of

purchasing a nutritionally adequate low-cost diet, as measured by

the Agriculture Department’s Thrifty Food Plan (TFP). 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), 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 15–6).

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.

Application, processing, and issuing food stamps

Food stamp benefits normally are 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 7 days of initial application).

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TABLE 15–6.—MAXIMUM MONTHLY FOOD STAMP ALLOTMENTS, FISCAL YEAR 2000

Household size

48

States

and the

District

of Columbia

Alaska 1 Hawaii Guam Virgin

Islands

1 person ........................................... $127 $158 $199 $188 $164

2 persons .......................................... 234 290 365 345 301

3 persons .......................................... 335 415 523 495 431

4 persons .......................................... 426 528 664 628 548

5 persons .......................................... 506 627 789 746 651

6 persons .......................................... 607 752 947 896 781

7 persons .......................................... 671 831 1,047 990 863

8 persons .......................................... 767 950 1,196 1,131 987

Each additional person ................... +96 +119 +150 +141 +123

1Maximum monthly allotments for designated urban areas of Alaska. Two separate higher allotment

levels are applied in remote rural areas of Alaska. They are 28 and 55 percent higher than the urban

allotments shown here.

Source: U.S. Department of Agriculture.

Food stamp issuance is a welfare agency responsibility, and

issuance practices differ among welfare agencies. Food stamp coupons have traditionally been issued by: (1) providing (usually mailing) recipients an authorization-to-participate 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, in a growing number of States, 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 (either statewide or in part of the State) in the

majority of States (reaching more than half of food stamp recipients). All remaining States are well along in the process of converting to EBT issuance, which is expected to be the national norm by

2002.

Using food stamps

‘‘Paper’’ 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; food stamp purchases are not taxable.

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) food purchased at approved farmers’ markets; (4) in the case of the elderly and SSI recipients and their spouses, meals prepared and served through approved communal dining programs; (5) in the case of the elderly

879

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; (6) 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 (7) 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, and special arrangements must be made for nontraditional

sites like farmers’ markets.

QUALITY CONTROL (QC)

Since the early 1970s, the Food Stamp Program has had a QC

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.

It also provides outside evaluators with a general picture of the integrity of the eligibility and benefit determination process in each

State.

Under the QC 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 indepth 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 administering 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.

QC reviews generate annual estimates of the proportion of cases

in which administrators or recipients make an ‘‘error’’ and the dollar value of those errors. Caseload and dollar error rates are calculated for overpayments (including incorrect payments to eligible

880

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 7.6 percent in fiscal year 1998 (table 15–7). This

was noticeably above the all-time low of 7 percent in 1991. Error

rates for underpayments have been relatively unchanged historically (running about 2 percent), but have risen recently. In fiscal

year 1998, the national weighted average underpayment dollar

error rate was estimated at 3.1 percent. Finally, the rate of denials

and terminations found improper in the most recent estimate

(1994) was 3.8 percent.

TABLE 15–7.—FOOD STAMP QUALITY CONTROL ERROR RATES, FISCAL YEAR 1998

[Percent of benefits paid or not paid in error]

State Overpayment

error rate

Underpayment

error rate

Combined error

rate

Alabama ..................................................... 6.55 1.12 7.67

Alaska ........................................................ 11.82 2.37 14.19

Arizona ....................................................... 4.32 1.58 5.90

Arkansas .................................................... 4.96 1.01 5.96

California ................................................... 8.17 4.35 12.52

Colorado ..................................................... 7.67 3.02 10.69

Connecticut ............................................... 10.34 2.79 13.13

Delaware .................................................... 9.71 2.74 12.45

District of Columbia .................................. 7.41 3.25 10.66

Florida ........................................................ 8.47 4.47 12.94

Georgia ....................................................... 9.90 3.75 13.65

Guam .......................................................... 8.15 2.17 10.32

Hawaii ........................................................ 3.23 1.58 4.82

Idaho ......................................................... 6.12 4.33 10.45

Illinois ....................................................... 11.04 3.00 14.04

Indiana ..................................................... 4.98 1.81 6.79

Iowa .......................................................... 10.02 3.35 13.37

Kansas ...................................................... 8.03 3.08 11.10

Kentucky ..................................................... 4.53 2.87 7.40

Louisiana .................................................. 5.52 2.16 7.67

Maine ........................................................ 7.43 2.72 10.15

Maryland ................................................... 11.56 3.84 15.40

Massachusetts ........................................... 4.96 2.51 7.46

Michigan ................................................... 13.13 4.55 17.67

Minnesota ................................................. 3.35 1.83 5.18

Mississippi ................................................ 3.70 2.31 6.01

Missouri .................................................... 6.73 1.57 8.31

Montana .................................................... 5.29 2.04 7.33

Nebraska .................................................... 12.51 4.18 16.69

Nevada ...................................................... 6.25 2.62 8.88

New Hampshire ........................................ 5.74 4.46 10.19

New Jersey ................................................ 8.70 3.21 11.91

New Mexico ............................................... 7.80 2.85 10.64

New York .................................................... 8.61 4.33 12.93

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TABLE 15–7.—FOOD STAMP QUALITY CONTROL ERROR RATES, FISCAL YEAR 1998—

Continued

[Percent of benefits paid or not paid in error]

State Overpayment

error rate

Underpayment

error rate

Combined error

rate

North Carolina .......................................... 7.92 2.86 10.78

North Dakota ............................................ 6.32 3.03 9.36

Ohio .......................................................... 6.19 3.10 9.29

Oklahoma .................................................. 7.65 3.22 10.87

Oregon ...................................................... 11.47 1.98 13.45

Pennsylvania .............................................. 7.42 2.43 9.85

Rhode Island .............................................. 4.66 2.37 7.03

South Carolina .......................................... 6.60 1.46 8.07

South Dakota ............................................ 1.59 0.52 2.11

Tennessee ................................................... 6.58 2.16 8.74

Texas .......................................................... 3.82 1.45 5.27

Utah .......................................................... 7.69 2.01 9.70

Vermont .................................................... 10.56 2.69 13.25

Virginia ....................................................... 6.83 4.30 11.13

Virgin Islands ........................................... 4.41 2.15 6.56

Washington ................................................ 12.04 3.16 15.21

West Virginia ............................................ 8.51 2.88 11.39

Wisconsin .................................................. 9.28 5.30 14.58

Wyoming ................................................... 3.48 1.33 4.81

U.S. average ...................................... 7.63 3.07 10.69

Note.—Underpayment and overpayment rates may not add to combined rates due to rounding.

Source: Food and Nutrition Service.

The dollar error rates reported through the food stamp QC system are used as the basis for assessing the financial liability of

States for overpaid and underpaid benefits. Although well over $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. Moreover, the

administration chose to reduce sanction assessments for fiscal year

1998 from $78 million (22 States) to $27 million (16 States) by removing small errors from the assessment calculations and because

of the presumed error-rate effects of high and increased proportions

of households with earnings and immigrant applicants.

Legislated rules governing fiscal sanctions have changed a number of times. Under the most recent revision (1993), sanctions are

assessed against States with combined (overpayment and underpayment) dollar error rates above the national weighted average

882

combined error rate for the year in question (10.7 percent in 1998).

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 × 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 × 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 1998, 22 States had

combined error rates above the 10.7 percent tolerance level and

were assessed some $78 million in sanctions (later lowered to $27

million, see above).

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 1998, five States had combined error rates

below 6 percent (and the requisite low rate of improper denials)

and received $27 million in enhanced funding.

Finally, the QC 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 QC reviews are fraudulent—just under 2

percent of all benefits issued in 1998. 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 TANF, SSI, AND GA PROGRAMS

The Food Stamp Program is intertwined with Temporary Assistance for Needy Families (TANF), SSI, and State/local General Assistance (GA) Programs in three ways: it is administratively linked

883

with TANF and GA Programs, most TANF, SSI, and GA recipients

are automatically (categorically) eligible for food stamps, and the

food stamp recipient population is made up largely of TANF, SSI,

and GA participants.

State and local offices and personnel administering TANF and

GA Programs are typically the same offices that enroll people for

food stamps and issue food stamp benefits. Joint food stamp-TANF/

GA application and interview procedures are common. And information about applicants and recipients is shared. This coadministration does not apply in the case of the SSI Program, which is administered separately through Social Security Administration offices—although these offices do provide limited intake and referral

services for the Food Stamp Program and one small pilot project

provides standardized food stamp benefits through SSI offices.

Food stamp rules generally make households in which all members are TANF, SSI, or GA recipients categorically eligible for food

stamps, without reference to regular food stamp eligibility requirements. TANF recipients are broadly defined as anyone receiving

benefits or services through a State’s TANF Programs. SSI recipients’ eligibility for food stamps is barred in California (see earlier

eligibility discussion), and GA Programs must meet minimal Federal standards to qualify their recipients for food stamps. Categorical eligibility for food stamps is particularly important in cases

where States have chosen TANF rules that are more liberal than

food stamps (e.g., disregarding the value of vehicles for working

households) in order to encourage work effort. However, it is important to keep in mind that food stamp rules often qualify a household for food stamps even after loss of TANF, SSI, or GA benefits.

For most persons participating in the Food Stamp Program, food

stamp aid represents a second or third form of government assistance. Fewer than 20 percent of food stamp households rely solely

on nongovernmental sources for their cash income, although over

one-quarter have some income from these sources (e.g., earnings,

private retirement income). According to 1997 data from QC surveys, TANF (or Aid to Families with Dependent Children (AFDC))

contributed to the income of some 35 percent of food stamps households, and for the large majority of them TANF/AFDC was their

only cash income. Supplemental Security Income (SSI) benefits

went to about 26 percent of food stamp households; GA payments

were received by around 6 percent.

RECIPIENCY RATES

Table 15–8 shows overall food stamp participation rates from

1975 to 1998 using two measures: as a proportion of the total U.S.

population and as a percentage of the population with income

below the Federal poverty thresholds. Food stamp enrollment has

fluctuated widely over the last 25 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 under Puerto Rico’s nutrition assistance grant in lieu of food stamps).

884

TABLE 15–8.—FOOD STAMP PARTICIPATION RATES IN THE UNITED STATES, 1975–98

Year

Number of

food stamp

participants

(in millions)

Food stamp participation as

a percent of——

Total population 1Poor population

1975 ................................................................. 16.3 7.6 63.0

1976 ................................................................. 17.0 7.9 68.1

1977 ................................................................. 15.6 7.2 63.1

1978 ................................................................. 14.4 6.5 58.8

1979 ................................................................. 15.9 7.1 61.0

1980 ................................................................. 19.2 8.4 65.6

1981 ................................................................. 20.6 9.0 64.7

1982 ................................................................. 20.4 8.8 59.3

1983 ................................................................. 21.6 9.2 61.2

1984 ................................................................. 20.9 8.8 62.0

1985 ................................................................. 19.9 8.3 60.2

1986 ................................................................. 19.4 8.0 59.9

1987 ................................................................. 19.1 7.8 59.1

1988 ................................................................. 18.7 7.6 58.9

1989 ................................................................. 18.8 7.6 59.6

1990 ................................................................. 20.0 8.0 59.6

1991 ................................................................. 22.6 9.0 63.3

1992 ................................................................. 25.4 10.0 68.9

1993 ................................................................. 27.0 10.4 68.7

1994 ................................................................. 27.5 10.5 72.1

1995 ................................................................. 26.6 10.1 73.0

1996 ................................................................. 25.5 9.6 69.8

1997 ................................................................. 22.9 8.5 64.3

1998 ................................................................. 19.8 8.2 57.4

1 Calculated as a percent of total U.S. resident population at the end of the fiscal year through 1996.

For later fiscal years, calculated as a percent of total U.S. resident population reported in the March

Current Population Survey (271 million for 1998).

Note.—Participants in Puerto Rico are not included in this table. Data are monthly average for each

year.

Source: U.S. Census Bureau.

Food stamp enrollment is responsive to changes in the economy

(i.e., recipients’ employment status and earnings), food stamp eligibility rules (and potential applicants’ perception of their eligibility

status), and administrative practices, as well as recipients getting

or losing public assistance eligibility. With few changes in eligibility rules, the caseload expanded from a monthly average of 22.6

million persons in fiscal year 1991 to the 1994 peak. Since 1994,

enrollment has declined continuously, dropping to 19.8 million persons in 8.2 million households during fiscal year 1998 because of

the effects of an improved economy, Federal and State welfare reform initiatives, and a lower participation rate among those eligible. In fiscal year 1999, participation continued to decline, to a

monthly average of 18.2 million people in 7.7 million households,

reaching the lowest level since the 1970s.

Until recently, Agriculture Department studies (e.g., for January

1994) have indicated that just over 70 percent of those individuals

885

9Participation rates were and are not uniformly as high as 70+ percent among all segments

of the food-stamp-eligible population: e.g., participation is very low among the elderly (below

one-third) and the ‘‘working poor’’ (less than half those eligible) and relatively high among those

enrolled in other public assistance programs. While overall participation among eligible individuals was estimated at some 70 percent, the proportion of benefits issued as a proportion of potential benefits to all those eligible was projected to be higher (approximately 80 percent). Participation rates also varied by State—from an estimated 40 percent to virtually all those thought

to be eligible in a few States according to one Department study. Participation also differed by

presence of children (higher participation rates) and income (declining participation rates with

increased income).

eligible for food stamps actually participate.9 The improved state of

the economy and a number of more restrictive food stamp eligibility

rules implemented in recent years are acknowledged to be primary

factors affecting reduced food stamp participation. But the relatively dramatic recent decline in enrollment has led many observers to conclude that other factors are at work and that the 70+ percent participation rate noted above (as opposed to the number of

persons eligible) has dropped significantly, to 63 percent in fiscal

year 1997 by one estimate. Reasons cited for this decline range

from changing welfare office administrative practices to recipients’

lack of understanding that being dropped from (or discouraged

from applying for) one public assistance program does not mean

automatic ineligibility for food stamps. Based on preliminary Department studies, less-than-optimum participation appears to be

concentrated among needy families with children and the ‘‘working

poor,’’ but a full understanding of the dynamics of declining participation has not emerged.

Table 15–9 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 1999. There has been a general increase in food stamp participants since 1975, with enrollment peaking in 1994.

RECENT LEGISLATIVE HISTORY

(For legislative history prior to 1996, see previous editions of the

Green Book.)

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.

Later in 1996, the omnibus welfare reform law (the Personal Responsibility and Work Opportunity Act; Public Law 104–193) made

the most extensive changes to the Food Stamp Program since the

Food Stamp Act was rewritten in 1977. Under this law, spending

TABLE 15–9.—FOOD STAMP RECIPIENTS BY JURISDICTION, SELECTED FISCAL YEARS 1975–99

[In thousands]

State 1975 1 1979 2 1985 3 1990 3 1994 3 1995 3 1996 3 1997 3 1998 3 

Alabama ........................................ 393 525 588 449 551 525 509 486 427 Alaska ........................................... 12 25 22 25 46 45 46 45 42 American Samoa ........................... NA NA NA NA23333Arizona .......................................... 166 129 206 317 512 480 427 364 296 Arkansas ....................................... 268 277 253 235 283 272 274 266 256 California ...................................... 1,517 1,334 1,615 1,936 3,155 3,175 3,143 2,815 2,259 Colorado ........................................ 162 145 170 221 268 252 244 217 191 Connecticut ................................... 189 155 145 133 223 227 223 210 196 Delaware ....................................... 39 45 40 33 59 57 58 54 46 District of Columbia ..................... 112 100 72 62 91 94 93 90 85 Florida ........................................... 767 828 630 781 1,474 1,395 1,371 1,192 991 Georgia .......................................... 569 559 567 536 830 816 793 698 632 Guam ............................................ 21 18 20 12 15 16 18 18 25 Hawaii ........................................... 84 96 99 77 115 125 130 127 122 Idaho ............................................. 39 47 59 59 82 80 80 70 62 Illinois ........................................... 948 837 1,110 1,013 1,189 1,151 1,105 1,020 923 Indiana .......................................... 255 275 406 311 521 470 390 348 313 Iowa .............................................. 118 117 203 170 196 184 177 161 141 Kansas .......................................... 63 73 119 142 192 184 172 149 119 Kentucky ........................................ 449 405 560 458 522 520 478 444 412 Louisiana ...................................... 502 523 644 727 756 711 670 575 537 Maine ............................................ 151 121 114 94 136 132 131 124 115 Maryland ....................................... 273 299 291 254 387 399 375 354 323 Massachusetts .............................. 560 429 337 347 442 410 374 340 293 

Michigan ....................................... 685 706 985 917 1,031 971 935 839 772 Minnesota ..................................... 191 143 228 263 316 308 295 260 220 Mississippi .................................... 390 452 495 499 511 480 457 399 329 Missouri ........................................ 299 280 362 431 593 576 554 478 411 Montana ........................................ 38 33 58 57 71 71 71 67 62 Nebraska ....................................... 50 55 94 95 111 105 102 97 95 Nevada .......................................... 34 27 32 50 97 99 97 82 72 New Hampshire ............................. 66 44 28 31 62 58 53 46 40 New Jersey .................................... 565 524 464 381 545 540 541 490 425 New Mexico ................................... 154 159 157 157 244 239 235 205 175 New York ....................................... 1,398 1,704 1,834 1,546 2,154 2,183 2,099 1,919 1,627 North Carolina .............................. 537 517 474 419 630 614 631 586 528 North Dakota ................................. 19 20 33 39 45 41 40 38 34 Northern Mariana Islands ............. NA NA4444444Ohio ............................................... 924 760 1,133 1,078 1,245 1,155 1,045 874 734 Oklahoma ...................................... 184 184 263 267 376 375 354 309 288 Oregon ........................................... 208 160 228 216 286 289 288 259 238 Pennsylvania ................................. 893 923 1,032 954 1,208 1,173 1,124 1,009 907 Puerto Rico ................................... 1,800 1,822 1,480 1,480 1,410 1,370 1,330 1,240 1,180 Rhode Island ................................. 104 80 69 64 93 100 91 85 73 South Carolina .............................. 421 369 373 299 385 364 358 349 333 South Dakota ................................ 31 37 48 50 53 50 49 47 45 Tennessee ..................................... 435 531 518 527 735 662 638 586 538 Texas ............................................. 1,085 1,027 1,263 1,880 2,730 2,564 2,372 2,034 1,636 Utah .............................................. 50 44 75 99 128 119 110 98 92 Vermont ......................................... 46 40 44 38 65 59 56 53 46 Virginia ......................................... 293 320 360 346 547 546 538 476 397 Virgin Islands ............................... 25 34 32 18 20 23 31 20 17 Washington ................................... 239 205 281 337 468 476 476 442 362 

TABLE 15–9.—FOOD STAMP RECIPIENTS BY JURISDICTION, SELECTED FISCAL YEARS 1975–99—Continued

[In thousands]

State 1975 1 1979 2 1985 3 1990 3 1994 3 1995 3 1996 3 1997 3 1998 3 

West Virginia ................................ 204 182 278 262 321 329 300 287 269 Wisconsin ...................................... 163 171 363 286 330 320 283 232 193 Wyoming ........................................ 11 11 27 28 34 34 33 29 25 

Total ................................ 19,199 18,926 21,385 21,510 28,888 27,995 26,871 24,106 20,974 

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

pation 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.Note.—Data are average monthly number of recipients for each year.Source: U.S. Department of Agriculture, Food and Nutrition Service. Compiled by the Congressional Research Service.

889

on food stamps was projected for a net reduction of $23.3 billion

through fiscal year 2002 (or 13 percent less than under thencurrent law over fiscal years 1997–2002). The food-stamp-related

provisions of the welfare reform act: (1) gave States significantly

more control over program operations and expanded their administrative options (e.g., allowed States to more closely conform their

TANF and food stamp rules and sanction food stamp recipients for

failure to meet other public assistance program requirements), (2)

established a new work rule limiting participation by able-bodied

adults without dependents (ABAWDs) who are not working or in

training for work to 3 months in any 3-year period, (3) added other

new work rules (e.g., disqualification for significantly reduced work

effort), (4) instituted an across-the-board benefit reduction, (5)

barred eligibility for most legally resident noncitizens, (6) increased

penalties for violating Food Stamp Program rules, and (7) encouraged implementation of electronic benefit transfer (EBT) systems

for issuing food stamp benefits (requiring systems be in place nationwide by 2002).

In 1997, the Balanced Budget Act’s (BBA) food stamp component

followed up on the 1996 welfare reform law with amendments that

allowed States to exempt significant numbers of ABAWDs from

new work requirements and more than doubled Federal funding for

employment and training programs for food stamp recipients (targeted on adults without dependents). It also required States to establish systems to ensure that prisoners are not counted as part of

any food stamp household. Separately, the 1997 emergency supplemental appropriations law (Public Law 105–18) permitted States to

‘‘buy into’’ the Food Stamp Program and pay for benefits to noncitizens ineligible for federally financed food stamps and adults without dependents made ineligible by work requirements.

Most recently, the 1998 Agricultural Research, Extension, and

Education Reform Act (Public Law 105–185) significantly reduced

spending for the Federal share of State food stamp administrative

costs—some $200 million a year—by imposing a flat annual dollar

reduction on most States’ entitlements to correct for a perceived

‘‘windfall’’ extra payment States can potentially receive through the

interaction between food stamp and TANF funding rules. It also

lowered Federal payments to States for employment and training

programs for food stamp recipients. A portion of the money saved

by these reductions was then used to restore food stamp eligibility

to some of the noncitizens made ineligible by the 1996 welfare reform law (e.g., elderly and disabled persons legally resident at the

time the 1996 law was enacted).

Table 15–10 provides an overview of the characteristics of food

stamp households for selected years since 1980; table 15–11 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 to low-income persons who are aged, blind, disabled,

members of families with dependent children, or in certain other

TABLE 15–10.—CHARACTERISTICS OF FOOD STAMP HOUSEHOLDS, SELECTED YEARS 1980–97

[In percent]

Food stamp recipient households

1980

(August)

1985

(Summer)

1989

(Summer)

1990

(Summer)

1991

(Summer)

1992

(Summer)

1993

(Summer)

1994

(Summer)

1995

(Annual)

1996

(Annual)

With gross monthly income:

Below the Federal poverty levels .................. 87 94 92 92 91 92 91 90 92 91 Between the poverty levels and 130 percent

of the poverty levels ................................. 10688988988

Above 130 percent of the poverty levels ...... 2 (1) (1) (1) (1) (1) 1 1(1) 1

With earnings ......................................................... 19 20 20 19 20 21 21 21 21 23 With public assistance income 2 ........................... 65 68 73 73 70 66 68 69 68 67 

With AFDC/TANF income ............................... NA 39 42 43 41 40 40 38 38 37 With SSI income ............................................ 18 19 21 19 19 19 20 23 23 24 

With children .......................................................... 60 59 60 61 61 62 60 61 60 59 

And female heads of household ................... NA 46 50 51 51 51 52 51 50 50 

With elderly members 3 .......................................... 23 21 20 18 17 15 16 16 16 16 

With elderly female heads of household 3 .... NA 16 14 11 10 9 NA 11 NA NA 

Average household size ......................................... 2.8 2.7 2.6 2.6 2.6 2.5 2.6 2.5 2.5 2.5 

1 Percentage equals 0.5 or less.2 Public assistance income includes Aid to Families with Dependent Children, TANF, SSI, and general assistance.3 Elderly members and heads of household include those age 60 or older.4 Estimate.

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 h

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 erally undercounts them because it counts only single-person female households. The 1995–97 figures represent characteristics over the full course of each fiscal year.

Source: U.S. Department of Agriculture, Food and Nutrition Service surveys of the characteristics of food stamp households. Compiled by the Congressional Research Ser

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TABLE 15–11.—HISTORICAL FOOD STAMP STATISTICS, SELECTED YEARS, 1972–99

Fiscal year

Total Federal spending (in

millions) 1 Average

monthly

participation

(in millions

of persons)

Average monthly benefits

(per person) Four-person

maximum

monthly allotment Current 3

dollars

Constant

(1999)

dollars 2

Current

dollars

Constant

(1999)

dollars 2

1972 4 ...... $1,871 $7,516 11.1 $13.50 $52.90 $108

1974 ......... 2,843 10,097 12.9 17.60 53.30 116

1975 5 ...... 4,624 14,774 17.1 21.40 59.00 150

1976 ......... 5,692 16,973 18.5 23.90 62.00 162

Transition

quarter 6 1,367 3,941 17.3 24.40 62.90 166

1977 ......... 5,469 15,161 17.1 24.70 61.60 166

1978 ......... 5,573 14,434 16.0 26.80 61.00 170

1979 7 ...... 6,995 16,444 17.7 30.60 62.50 182

1980 ......... 9,188 19,008 21.1 34.40 65.30 204

1981 ......... 11,308 21,051 22.4 39.50 68.70 209

1982 8 ...... 11,117 19,286 22.0 39.20 65.70 233

1983 8 ...... 12,733 21,329 23.2 43.00 71.20 253

1984 8 ...... 12,470 20,056 22.4 42.70 68.50 253

1985 8 ...... 12,599 19,560 21.4 45.00 70.80 264

1986 8 ...... 12,528 18,970 20.9 45.50 70.10 268

1987 8 ...... 12,539 18,463 20.6 45.80 67.50 271

1988 8 ...... 13,289 18,798 20.1 49.80 70.90 290

1989 8 ...... 13,815 18,649 20.2 51.90 69.30 300

1990 8 ...... 16,512 21,233 21.5 59.00 74.00 331

1991 8 ...... 19,765 24,195 24.1 63.90 77.10 352

1992 8 ...... 23,539 27,966 26.9 68.50 82.20 370

1993 8 ...... 24,749 28,543 28.4 68.00 80.00 375

1994 8 ...... 25,525 28,679 28.9 69.00 78.90 375

1995 8 ...... 25,676 28,067 28.0 71.30 78.90 386

1996 8 ...... 25,494 27,116 26.9 73.30 78.60 397

1997 ......... 22,868 23,684 24.1 71.30 73.90 400

1998 ......... 20,397 20,786 21.0 71.10 72.50 408

1999 ......... 19,317 19,317 19.3 72.30 72.30 419

1 Spending for benefits and administration, including Puerto Rico.

2 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. 3 For the 48 contiguous States and the District of Columbia, as in effect at the beginning of the fiscal year in current dollars. 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 1.1 to 1.5 million persons a month under the nutrition assistance grant and higher figures in earlier years). Average benefit figures do not reflect benefits in Puerto Rico under its nutrition assistance

grant. For fiscal years 1998 and 1999, State-financed costs for benefits to some noncitizens are included

(approximately $100 million a year).

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.

892

categories of 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 amount of payment for services.

Legislation passed in the 105th Congress changed the rules governing Medicaid reimbursement to hospitals and community health

centers, increased States’ flexibility to enroll Medicaid recipients

into managed care programs, and gave States additional options for

conducting outreach and eligibility determinations. Recent legislation in the 106th Congress made further changes to Medicaid law.

In addition to technical amendments to the Balanced Budget Act

of 1997, Public Law 106–113 included provisions allowing for increased disproportionate share allotments to certain States and the

District of Columbia. The legislation also extended access to a special $500 million fund to pay for Medicaid eligibility determinations

resulting from welfare reform and modified the phase-out schedule

of cost-based reimbursement for federally qualified health centers

and rural health clinics. The Foster Care Independence Act of 1999

(Public Law 106–169) allowed States to extend health insurance

coverage under Medicaid for former foster care youth under age 21.

Finally, the Ticket to Work and Work Incentives Improvement Act

of 1999 (Public Law 106–170) gave States the option to eliminate

upper income and assets eligibility limits for workers with disabilities.

ELIGIBILITY

The requirements of Federal law, coupled with the decisions of

individual States in structuring their Medicaid Programs, determine who is actually eligible for Medicaid in a given State. In general, Federal law places limitations on the categories of individuals

that can be covered and establishes specific eligibility rules for

groups within those broad categories. Traditionally, Medicaid eligibility was limited to the following categories of individuals: lowincome families with dependent children (in which one parent was

absent, incapacitated or unemployed), low-income persons with disabilities, and low-income elderly. In addition, certain individuals

with higher income, especially those facing large costs for medical

care, were eligible as ‘‘medically needy.’’ Beginning in the 1980s,

additional coverage categories were added to Medicaid for higher

income children and pregnant women. Other coverage groups are

identified in the statute as needing special protection against the

high cost of medical care. Over 50 distinct population groups are

identified in the Federal law. Some are mandatory groups that all

States must cover; some are optional eligibility groups.

Contributing to the complexity of the Medicaid Program are financial criteria. Medicaid is a means-tested entitlement program.

To qualify, applicants’ income and resources must be within certain

limits, most of which are determined by States, again within Federal statutory parameters. Further complicating this picture is the

flexibility States have in defining countable income and assets.

Consequently, income and resource standards vary considerably

among States, and different standards apply to different population

groups within a State. In general, individuals in similar circumstances may be automatically eligible for coverage in one State,

893

10 Children can also qualify for Medicaid as a result of disability. For a detailed description

of eligibility for persons with disabilities, see the subsequent section on SSI-related groups.

but required to assume a certain portion of their medical expenses

before they can obtain coverage in a second State, and not eligible

at all in a third State.

FAMILIES, PREGNANT WOMEN, AND CHILDREN

Prior to the enactment of the 1996 welfare reform law (Public

Law 104–193), there were two major routes to Medicaid for low-income families and children. The first was through cash welfare: individuals who qualified for Aid to Families with Dependent Children (AFDC), cash assistance, or Supplemental Security Income

(SSI) were automatically eligible for Medicaid. The second was

through legislation enacted during the last two decades that extended coverage to low-income pregnant women and children with

no ties to the welfare system. The 1996 reforms replaced the AFDC

Program with a block grant to States for Temporary Assistance for

Needy Families (TANF), severing the automatic connection between cash assistance received by low-income families with children and Medicaid. The following categories describe eligibility

pathways for families, pregnant women, and low-income children

since welfare reform.10

Persons who would be eligible for cash assistance under the old

AFDC Program

Unlike AFDC, TANF eligibility does not confer automatic Medicaid eligibility. Nonetheless, current law (section 1931) preserves

Medicaid entitlement for individuals who meet the requirements

for the former AFDC Programs that were in effect in their States

on July 16, 1996, even if they do not qualify for assistance under

TANF. This categorical group was created to ensure that lowincome families do not lose their Medicaid eligibility as a result of

welfare reform. States are required to use the eligibility determination processes that were already in place for AFDC and Medicaid,

including the same income and resource standards and other rules

formerly used to determine if a family’s income and composition

made it eligible for AFDC and Medicaid. The 1996 welfare reform

law allows States to modify their ‘‘prereform’’ AFDC income and resource standards as follows: (1) States may lower their income eligibility standards, but not below those used on May 1, 1988; (2)

States may increase their income and resource standards up to the

percentage increase in the Consumer Price Index (CPI); and (3)

States may use less restrictive income and resource methodologies

than those in effect on July 16, 1996.

The 1996 income standards for AFDC Programs are well below

the current Federal poverty level (FPL). For example, the maximum AFDC payment levels on July 16, 1996, range from about 14

percent of the current poverty level in Alabama to about 86 percent

in Connecticut. The median level nationwide is 45 percent. In addition, for most eligibility categories in most States, individuals must

have resources valued at less than a specified amount (typically

$1,000 for an adult with one or more dependent children) to be eligible for Medicaid. States determine what items constitute countVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00893 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
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able resources and the dollar value assigned to those countable

items. Assets may include, for example, cars, savings accounts, real

estate, trust funds, and tax credits.

A number of States have established more generous standards

for determining Medicaid eligibility than those in place in 1996 and

some States have taken advantage of the flexibility offered under

section 1931 to realign Medicaid eligibility with eligibility for the

new TANF Programs. By using less restrictive methods for calculating income and/or resources, those States effectively raised the

income and resource standards in determining Medicaid eligibility

for persons living in families with dependent children.

In the near term, the flexibility afforded by section 1931 is not

likely to become a major pathway for children into the Medicaid

Program. Children with income too high to qualify for cash assistance have a number of other pathways to Medicaid. On the other

hand, this provision may hold important promise for extending coverage to the parents of children who have fewer alternative pathways to Medicaid, or for simplifying Medicaid eligibility while at

the same time qualifying entire families for coverage—an option

that could help to raise participation in a program that has become

increasingly complex for States to administer and for qualifying

family members to navigate.

Poverty level 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, rather than in terms of their ties to the AFDC Program.

These are groups who, prior to the 1996 welfare reforms, did not

qualify for cash assistance.

States are required to cover pregnant women and children under

age 6 with family incomes below 133 percent of the Federal poverty

income guidelines. In 2000, the poverty guideline in the 48 contiguous States and the District of Columbia is $14,150 for a family of

three. Coverage for pregnant women is limited to services related

to the pregnancy or complications of the pregnancy. Eligibility extends to 60 days after termination 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 FPL.

The 1983 start date means that the mandatory coverage is extended to children by one age cohort each year until reaching all

those under age 19 in fiscal year 2002.

States are permitted, but not required, to cover pregnant women

and infants under 1 year of age whose family income is between

133 and 185 percent of the FPL. In 1999, 41 States and the District

of Columbia extended coverage to some or all pregnant women and

infants in this category. States wishing to further expand eligibility

have several options under Medicaid law, including waivers of Federal rules. The Balanced Budget Act of 1997 (Public Law 105–33),

gives States the option of providing 12 months of continuous Medicaid coverage for children regardless of whether they continue to

meet income eligibility tests, and to presume that certain low-income children are eligible in advance of completing the application

895

process, allowing the States to provide services during the time

that eligibility is being determined. States have been able to use

‘‘presumptive eligibility’’ for providing coverage to pregnant women

before enrollment is finalized since 1986.

Transitional medical assistance

An increasingly important eligibility group for families with children is called ‘‘transitional medical assistance’’ or TMA. TMA was

created to address the concern that the loss of Medicaid for individuals who could successfully obtain employment would provide a

disincentive to seek and to keep jobs. States are required to continue Medicaid for 6 months for families that were covered by Medicaid under section 1931 in at least 3 of the last 6 months preceding the month in which the family lost such assistance due to increased hours of employment, increased earnings of the caretaker

relative, or the family member’s loss of one of the time limited

earned income disregards. States must extend Medicaid coverage

for an additional 6 months for families that were covered during

the entire first 6-month period, and are earning below 185 percent

of the Federal poverty line. The eligibility pathway for these groups

will sunset at the end of fiscal year 2001.

A small additional group of TMA-eligible persons are those who

lose Medicaid coverage under section 1931 because of increased

child or spousal support. Families eligible for this 4 month extension must have been receiving Medicaid under section 1931 in at

least 3 of the preceding 6 months.

Other AFDC-related groups

While the AFDC Program no longer exists, a number of Medicaid

eligibility groups that are tied to States’ former AFDC rules remain. These rules continue to apply today because of the 1996 welfare reform law’s provision requiring Medicaid coverage for people

who would have qualified for the former AFDC Program. Other

AFDC-related groups include persons who did not receive cash assistance because the payment would be less than $10; persons

whose payments were reduced to zero because of recovery of previous overpayments; certain work supplementation participants;

and persons who were ineligible for AFDC because of a requirement that could not be imposed under Medicaid. For example,

States are permitted to deny Medicaid benefits to nonpregnant

adults and heads of households who lose TANF benefits because of

refusal to work, but must continue to provide Medicaid coverage to

their children.

States must continue Medicaid for recipients of adoption assistance and foster care under title IV–E of the Social Security Act.

The Foster Care Independence Act of 1999 (Public Law 106–169)

amends Medicaid law by giving States the option to extend Medicaid coverage to former foster care recipients ages 18, 19, and 20,

and further allows States to limit coverage to those who were eligible for assistance under title IV–E before turning 18 years of age.

Ribicoff children

‘‘Ribicoff children,’’ named for the former Senator that sponsored

legislation authorizing coverage for this group, is a coverage pathVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00895 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
896

11 Under limited circumstances, States have the option to purchase a health benefits plan that

is provided by a community-based health delivery system, or to purchase family coverage under

a group health plan as long as it is cost effective to do so.

way that is gradually diminishing in importance as more children

are included under the poverty-related coverage categories. Ribicoff

children are children under age 21 who meet income and resource

requirements for the former AFDC Program but who do not meet

other categorical requirements for AFDC. Included in this category

are often children who are in State-sponsored foster care, are institutionalized, or are inpatients in psychiatric facilities.

Targeted low-income children authorized under the State Children’s

Health Insurance Program (SCHIP)

SCHIP was established by the Balanced Budget Act of 1997

under a new title XXI of the Social Security Act. The program,

while completely separate from Medicaid, allows States to access

funds to cover targeted low-income children through group health

or other insurance that meets specific standards for benefits and

cost sharing, or through their Medicaid Programs, or through a

combination of both.11 SCHIP is discussed here because many

States have extended Medicaid coverage to targeted low-income

children, although they pay for that coverage with title XXI funds.

Title XXI defines SCHIP-eligible children as those who are not

eligible for Medicaid or are covered under a group health plan or

other insurance, and are living in families with incomes that are

either: (1) above the State’s Medicaid financial eligibility standard

in effect in March 1997 but less than 200 percent of the FPL; or

(2) in States with Medicaid income levels for children already at or

above 200 percent of the poverty level as of March 1997, within 50

percentage points over this income standard. Within those broad

statutory requirements, each State can define the group of targeted

low-income children who may enroll in SCHIP. As of January 1,

2000, the Health Care Financing Administration (HCFA) had approved SCHIP plans for all 50 States, the District of Columbia, and

5 territories. Twenty-four States use Medicaid expansions, 15 have

separate State programs, and 17 combine a Medicaid expansion

and a separate State program. (For a more detailed description of

the SCHIP Program, see below).

Section 1902(r)(2) and demonstration waivers

Medicaid statute includes other provisions that provide States

with options to extend coverage to individuals who would not otherwise qualify. One of these provides States with flexibility in defining methods for counting income and assets (authorized under section 1902(r)(2) of the Social Security Act), and another allows

States to create demonstration projects (authorized under section

1115 of the Social Security Act) to test new approaches for providing health care coverage.

Section 1902(r)(2) of the Social Security Act allows State Medicaid Programs to submit a State plan amendment to use more liberal methods for calculating income and resources for some categories of Medicaid eligibles. Most States that have chosen to implement section 1902(r)(2) have done so only for children. In addition, most States using the flexibility created by section 1902(r)(2)

897

12Section 1115 waivers have been used to create managed care delivery systems to provide

acute and long-term care services to the aged and disabled.

do so by disregarding certain types or amounts of income to extend

Medicaid to children in families with earnings that are too high to

qualify for one of the other eligibility groups, or have assets that

exceed the allowable levels.

Demonstration waivers, authorized in section 1115 of the Social

Security Act, enable States to waive some Medicaid requirements

to create demonstration projects that promote the objectives of the

Medicaid statute. Through a fairly cumbersome application process,

a number of States have used such waivers to enact broad-based

and sometimes statewide health reforms although demonstrations

under this provision need not be statewide. A number of the demonstrations extend comprehensive health insurance coverage to

low-income children (and families) who would otherwise not be eligible for Medicaid. Section 1115 waivers are also often used by the

States to enroll their Medicaid beneficiaries in managed care

plans.12 (See ‘‘Medicaid Managed Care’’ section below.)

AGED AND DISABLED PERSONS

SSI-related groups

With one important exception, States are required to provide

Medicaid coverage to recipients of SSI, the cash assistance program

for aged, blind and disabled persons. For 2000, persons qualifying

for SSI cannot have income in excess of $572 per month or resources of more than $2,000.

The major exception to automatic Medicaid coverage for SSI recipients is in so-called ‘‘209(b)’’ States. States may elect the option,

described in section 209(b) of the Social Security Amendments of

1972 (Public Law 92–603), allowing them to use income and resource standards that are no more restrictive than those in effect

on January 1, 1972 (before the implementation of SSI) that established the option. These standards may vary in the definition of

disability used, or in income or resource standards or definitions.

There are 11 section 209(b) States:

Connecticut

Hawaii

Illinois

Indiana

Minnesota

Missouri

New Hampshire

North Dakota

Ohio

Oklahoma

Virginia

States that use more restrictive eligibility rules under section

209(b) must also allow applicants to deduct medical expenses from

their income (not including SSI or State supplemental payments)

in determining eligibility. This process is known as ‘‘spend down.’’

For example, if an applicant has a monthly income of $600 (not including SSI or State supplemental payments) and the State’s maximum allowable income is $300, the applicant would qualify for

Medicaid after incurring $300 in medical expenses. As discussed

below, the spend down process is also used in establishing eligibility for the medically needy.

Many States, recognizing that the SSI benefit standard may provide too little income to meet the individual’s living expenses, supplement SSI with additional cash assistance payments known as

State supplemental payments. States use a variety of different poliVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00897 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
898

cies for providing these payments. Some States provide State supplemental payments to certain groups of elderly or disabled individuals whose income is too high to qualify for SSI. In those States,

Medicaid coverage may be extended to persons receiving State supplemental payments on the same basis as persons receiving SSI.

Some examples of specified groups of elderly or disabled State supplemental payment recipients include those living independently in

the community but with special needs for in-home personal care assistance or home-delivered meals; or those residing in protected living arrangements, such as adult foster care or domiciliary care provided in large congregate care facilities. In 1999, all but seven

States provided some amount of supplemental payments.

When States provide Medicaid coverage to persons receiving

State supplemental payments, the combined Federal SSI and State

supplemental benefit payments become the effective income eligibility standard. Because specified amounts of income are disregarded in determining eligibility for SSI and most State supplemental payment programs, a person with income which exceeds the

maximum benefit may still be eligible for cash assistance and Medicaid. For 209(b) States, however, the effective Medicaid income eligibility standards may be below the SSI/State supplemental payment standard, because some of those States use more restrictive

income standards or definitions of countable income.

States must continue Medicaid coverage for several defined

groups of individuals who have lost SSI or State supplemental payment 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 (the current law threshold for earnings is $1,109 per

month). States must continue Medicaid coverage to a qualified severely impaired individual if the person needs Medicaid 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.

Effective in August 1997, as a part of BBA 1997, States can opt

to expand eligibility for employed, disabled individuals with incomes up to 250 percent of poverty. Those beneficiaries can buy

into Medicaid by paying a sliding scale premium based on the individual’s income as determined by the State. The 1999 ticket to

work legislation further allows States to cover employed, disabled

individuals at higher income and resource levels (i.e., income over

250 percent of the FPL and resources over $2,000 for an individual

or $3,000 for a couple). States may also cover financially eligible

working individuals whose medical condition has improved such

that they no longer meet the Social Security definition of disability.

States can require these individuals to ‘‘buy in’’ to Medicaid coverage by paying premiums or other cost-sharing charges on a sliding fee scale based on income, as established by the State.

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 in their Social

Security benefits. Similarly, Medicaid continuations have been provided for certain other persons who lose SSI as a result of eligiVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00898 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
899

13 Certain States providing Medicaid coverage to persons receiving State supplemental payments may end up covering persons with incomes at 100 percent of the Federal poverty level

or higher, when State supplemental payments provide income at those levels. 14The levels are actually higher since $20 per month of unearned income is disregarded in

the calculation. 15 In general, Medicaid payments are shared between the Federal Government and the States

according to a matching formula. However, expenditures under the QI–1 and QI–2 programs

are paid for 100 percent by the Federal Government (from the Medicare Part B Trust Fund)

up to the State’s allocation level. A State is only required to cover the number of persons which

would bring its spending on these population groups in a year up to its allocation level. Any

expenditures beyond that level are paid by the State. Total allocations are $200 million in fiscal

year 1998, $250 million for fiscal year 1999, $300 million for fiscal year 2000, $350 million for

fiscal year 2001, and $450 million for fiscal year 2002. Assistance under the QI–1 and QI–2 programs is available for the period January 1, 1998–December 31, 2002.

bility for or an increase 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 have the option of extending coverage to certain additional

elderly or disabled persons. These include individuals eligible for

SSI but not receiving it; and elderly and disabled persons whose income does not exceed 100 percent of the FPL and whose resources

do not exceed the SSI standard.13

Qualified Medicare beneficiaries and related groups

Certain low-income individuals are entitled to assistance in paying their Medicare part B premiums and other Medicare costsharing through the Medicaid Program. Such persons fall into one

of the following four coverage groups:

1. Qualified Medicare beneficiaries (QMBs).—QMBs are aged or

disabled persons with incomes at or below the Federal poverty

line ($8,350 for an individual and $11,250 for a couple in

2000 14) and assets below $4,000 for an individual and $6,000

for a couple. QMBs are entitled to have their Medicare costsharing charges, including the part B premium, paid by Medicaid. Medicaid protection is limited to payment of Medicare

cost-sharing and premium charges (i.e., the Medicare beneficiary is not entitled to coverage of Medicaid plan services) unless the individual is otherwise entitled to Medicaid.

2. Specified low-income Medicare beneficiaries.—These are persons who meet the QMB criteria, except that their income is

slightly over the QMB limit. The specified low-income Medicare beneficiary limit is 120 percent of the FPL. Medicaid protection is limited to payment of the Medicare part B premium

(i.e., the Medicare beneficiary is not entitled to coverage of

Medicaid plan services) unless the individual is otherwise entitled to Medicaid.

3. Qualifying individuals (QI–1).—These are persons who meet

the QMB criteria, except that their income is between 120 and

135 percent of poverty. Further, they are not otherwise eligible

for Medicaid. Medicaid protection is limited to payment of the

Medicare part B premium.15

4. Qualifying individuals (QI–2).—These are persons who meet

the QMB criteria, except that their income is between 135 and

175 percent of poverty. Further, they are not otherwise eligible

for Medicaid. Medicaid protection is limited to payment of that

portion of the part B premium attributable to the transfer of

900

16See footnote number 6. 17 Named for a ventilator-dependent child who was unable to leave an institutionalized setting

to receive care at home because, if discharged, she would no longer have been eligible for Medicaid. This option requires States to serve all such children in the State and is distinguished from

1915(c) waivers that allow States to extend coverage to individuals in limited geographic areas.

home health visits ($1.07 in 1998; $2.23 in 1999 and $2.87 in

2000).16

Institutionalized persons and related groups (all optional)

States may provide Medicaid to certain otherwise ineligible persons because their incomes are too high to qualify for SSI or State

supplemental payments but who are in nursing facilities (NFs) or

other institutions. States have the option to establish a special income standard, known as ‘‘the 300 percent rule,’’ to allow these persons to qualify for Medicaid coverage. Individuals qualifying for

coverage through this pathway may have income that is not higher

than 300 percent of the maximum SSI benefit applicable to a person living at home with no other resources. For 2000, this limit is

$1,536 per month.

States can also apply this higher income standard to persons

qualifying under the waiver authority of section 1915(c) of the Social Security Act. Section 1915(c) waivers allow States to waive

Medicaid statewideness and comparability rules to provide homeand community-based services to defined groups of individuals who

would otherwise require institutional care. States are required to

make a special application to HCFA to implement such waivers.

With approval, they can provide a wide variety of nonmedical, social, and supportive services that have been shown to be critical in

allowing chronically ill and disabled persons to remain in their

homes. States are using waiver programs to provide services to a

diverse long-term care population, including children, the elderly,

and others who are disabled or who have chronic mental illness,

mental retardation and developmental disabilities, and AIDS. In

addition, under this waiver authority States are permitted to disregard income of other relatives living in the home of the disabled

beneficiary. (This is especially important for disabled persons who

are able to live at home with their spouse or parents and who need

Medicaid assistance to do so.)

States are also able to 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 but can also

be cared for at home. These include children being cared for at

home under the ‘‘Katie Beckett’’ option,17 persons of any age who

are ventilator-dependent, and persons receiving hospice benefits in

lieu of institutional services.

Finally, in 1997, Congress created a Medicaid requirement that

States continue Medicaid coverage for those disabled children who

were receiving SSI on the date of enactment of the 1996 welfare

reform law but who would lose such coverage based on the new definition of childhood disability created in that legislation.

Aliens

Legal immigrants arriving in the United States after August 22,

1996 are ineligible for Medicaid benefits for 5 years. Coverage of

901

such persons after the 5 year ban is a State option. States are required to provide Medicaid coverage to legal immigrants who resided in the country and were receiving benefits on August

22,1996, and for those residing in the country as of that date who

become disabled in the future. States are also required to provide

coverage to: refugees for the first 7 years after entry into the

United States; asylees for the first 7 years after asylum is granted;

individuals whose deportation is being withheld by the Immigration and Naturalization Service for the first 7 years after grant of

deportation withholding; lawful permanent aliens after they have

been credited with 40 quarters of coverage under Social Security;

and honorably discharged U.S. military veterans, active duty military personnel, and their spouses and unmarried dependent children. Qualified aliens and nonqualified aliens who meet the financial and categorical eligibility requirements for Medicaid may receive emergency Medicaid services.

THE MEDICALLY NEEDY

As of January 2000, 39 States and other jurisdictions covered at

least some groups of the medically needy. 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, spend down

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 1331⁄3 percent of the

maximum payment for a similar family under the State’s AFDC

Program (in effect on July 16, 1996, as modified). 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.

At the close of fiscal year 1998, the following 35 States, the District of Columbia, and 3 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

Oklahoma

Oregon

Pennsylvania

Puerto Rico

Rhode Island

Tennessee

Texas

Utah

Vermont

Virginia

Virgin Islands

Washington

West Virginia

Wisconsin

902

MEDICAID AND THE POOR

In 1998, Medicaid covered 10.2 percent of the total U.S. population (excluding institutionalized persons) and 40.3 percent of

those with incomes below the FPL. Because categorical eligibility

requirements for children are less restrictive than those for adults,

poor children are much more likely to receive coverage. Table 15–

12 shows Medicaid coverage by age and income status in 1998, as

reported in the March 1999 Current Population Survey (CPS) conducted by the U.S. 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.

TABLE 15–12.—MEDICAID COVERAGE BY AGE AND FAMILY INCOME, 1998

[In thousands]

Age Covered by

Medicaid

Persons in age

group

Percent with

Medicaid

In poverty:

0–5 .................................................... 3,112 5,087 61.2

6–10 .................................................. 2,385 4,148 57.5

11–18 ................................................ 2,521 5,253 48.0

19–44 ................................................ 3,632 12,320 29.5

45–64 ................................................ 1,373 4,647 29.5

65 or older ........................................ 1,004 3,386 29.6

Total .............................................. 16,920 36,650 40.3

Family income between 100 and 132 percent of poverty:

0–5 .................................................... 762 1,668 45.7

6–10 .................................................. 509 1,457 34.9

11–18 ................................................ 550 1,801 30.5

19–44 ................................................ 819 5,289 15.5

45–64 ................................................ 358 2,066 17.3

65 or older ........................................ 458 2,702 16.9

Total .............................................. 3,456 14,980 23.1

Family income between 133 and 185 percent of poverty:

0–5 .................................................... 771 2,799 27.5

6–10 .................................................. 537 2,349 22.8

11–18 ................................................ 683 3,334 20.5

19–44 ................................................ 951 9,700 9.8

45–64 ................................................ 450 3,648 12.3

65 or older ........................................ 438 4,589 9.5

Total .............................................. 3,829 26,420 14.5

Family income greater than 185 percent

of poverty:

0–5 .................................................... 964 14,010 6.9

6–10 .................................................. 712 12,450 5.7

903

TABLE 15–12.—MEDICAID COVERAGE BY AGE AND FAMILY INCOME, 1998—Continued

[In thousands]

Age Covered by

Medicaid

Persons in age

group

Percent with

Medicaid

11–18 ................................................ 1,058 21,350 5.0

19–44 ................................................ 1,719 77,850 2.2

45–64 ................................................ 844 47,780 1.8

65 or older ........................................ 1,063 21,720 4.9

Total .............................................. 6,359 195,200 3.3

All persons:

0–5 .................................................... 5,609 23,560 23.8

6–10 .................................................. 4,142 20,410 20.3

11–18 ................................................ 4,812 31,740 15.2

19–44 ................................................ 7,121 105,200 6.8

45–64 ................................................ 3,025 58,140 5.2

65 or older ........................................ 2,962 32,390 9.1

Total .............................................. 27,670 271,400 10.2

Source: Congressional Research Service tabulations from the March 1999 Current Population Survey

(CPS). Number of recipients on the CPS is lower than the number on administrative records due to

underreporting by CPS respondents due in part to welfare reform and the transition to managed care

(see more detailed discussion in the section text). Counts exclude approximately 800,000 children in foster care for whom income data are not available on the CPS.

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. Estimates of the number of people with

Medicaid coverage based on the CPS and other national surveys

have always differed from official numbers published by HCFA

based on data reported by States on form HCFA–2082. While estimates of Medicaid coverage based on the CPS show a substantial

decline over the period from 1994 to 1998, administrative data reported by the States to HCFA show little or no decline nationally

over the same period. While not all of the reasons for this divergence are understood, some plausible explanations for at least part

of the growing disparity may be: (1) double counting and classification errors on the HCFA–2082; (2) imprecise imputation or underreporting of Medicaid status based on receipt of cash assistance on

the CPS; and (3) respondents reporting their current insurance coverage rather than coverage last year when responding to the questions on the CPS. Moreover, with the widespread transition of Medicaid from fee-for-service reimbursement to capitated managed

care, some beneficiaries may report the source of their health insurance coverage incorrectly. They may now carry health insurance

cards that identify them as members of a health maintenance organization such as Kaiser or Blue Cross/Blue Shield rather than as

Medicaid beneficiaries or they may be classified as uninsured if the

plan in which they are enrolled is not included among those listed

on the CPS questionnaire. Changes have been made to the March

2000 CPS that should improve the reporting of Medicaid coverage

by respondents.

904

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; NF services

for those over age 21; home health services for those entitled to NF

care; early and periodic screening, diagnosis, and treatment for

those under age 21; family planning services and supplies; physicians’ services; and nurse-midwife services. The Omnibus Budget

Reconciliation Act (OBRA) of 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 15–24).

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 or in institutions for mental disease, it must offer to all groups covered in its

medically needy program 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. In

2000 the highest rate is 76.80 percent, with 15 States and other

jurisdictions receiving the minimum match of 50 percent. Beginning in fiscal year 1998 the Federal matching rate for the District

of Columbia increased permanently to 70 percent; Alaska’s matching percentage increased to 59.8 percent for fiscal years 1998, 1999,

and 2000. 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 for which 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 were

required to submit to the Secretary their payment rates for pediatric and obstetrical services along with additional data that would

905

assist the Secretary in evaluating the State’s compliance with this

requirement. Effective October 1, 1997, States no longer must assure adequate payment levels to obstetricians and pediatricians nor

provide annual reports on their payment levels for these services.

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

had to also be sufficient to assure reasonable access to inpatient

services of adequate quality. The Balanced Budget Act (BBA) of

1997 repealed the Boren amendment. Effective October 1, 1997,

States must instead provide public notice of the proposed rates for

hospitals, NFs, and intermediate care facilities for the mentally retarded and the methods used to establish those rates.

State hospital reimbursement systems must provide for additional payments to facilities serving a disproportionate share of

low-income patients. Unlike comparable Medicare payments, Medicaid disproportionate share hospital (DSH) payments must follow

a formula that considers a hospital’s charity patients as well as its

Medicaid caseload. Beginning in fiscal year 1992, DSH payments in

the national aggregate, as well as in each State, are permitted to

equal up to 12 percent of total Medicaid spending applicable to a

fiscal year, excluding administrative costs. The 12 percent limit

was phased in through the use of State-specific DSH allotments

(limits on Federal matching payments) for each Federal fiscal year.

BBA 1997 (Public Law 105–33) lowered the DSH allotments by imposing a freeze and making graduated proportional reductions. It

established additional caps on the State DSH allotments for fiscal

years beginning in 1998 and specifies those caps for 1998–2002.

Thereafter, annual DSH allotments for a State equal the allotment

for the preceding fiscal year increased by the percentage change in

the medical care component of the Consumer Price Index for All

Urban Consumers, subject to a ceiling of 12 percent of the total

amount of expenditures under the State plan for medical assistance

during the fiscal year. Public Law 105–33 also imposed a new cap

on DSH payments to institutions for mental disease and other

mental health facilities. Finally, the law required States to pay disproportionate share adjustments on behalf of individuals in managed care entities directly to the hospitals rather than to the managed care entities and not to include such payments in the capitation rate. Public Law 106–113 made further changes to DSH by increasing the disproportionate share allotments for certain States

and the District of Columbia. This law also removed the July 1,

1999, end date for increased hospital-specific limits for disproportionate share payments in California, extending the transition period indefinitely.

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

906

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.

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, and services provided to NF inpatients who are required to spend all of their income for medical care except for a

personal needs allowance. Effective August 5, 1997 States are permitted to pay Medicaid rates to providers for services to ‘‘dual eligibles’’ (those Medicare beneficiaries who are also eligible for full

Medicaid benefits) and QMBs).

ADMINISTRATION

Medicaid is a State-administered program. At the Federal level,

the Health Care Financing Administration (HCFA) of the U.S. Department of Health and Human Services (DHHS) 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. Enrollment in Medicaid managed care has increased steadily during the 1990s. According to HCFA, by 1998,

20.2 million Medicaid recipients were enrolled in some form of

managed care, representing 49.7 percent of all Medicaid recipients

that year. Medicaid managed care refers to a system of health care

delivery in which the provision of an agreed upon set of Medicaidcovered health care services is coordinated by a health plan or a

primary care case manager. These plans, or case managers, are obligated by contract or agreement to be responsible for the care provided (or not provided) to enrollees. The goal of managed care systems is to provide access to quality health care while containing

costs by ensuring that all necessary services are provided to individuals.

The Balanced Budget Act of 1997 included several provisions

that significantly affect the operation of State Medicaid managed

care programs. Effective October 1, 1997, States no longer need a

waiver of Federal law to require the majority of Medicaid beneficiaries to enroll in managed care. Prior to BBA 1997, States wishing to require Medicaid beneficiaries to enroll in managed care had

to obtain one of two types of waivers from HCFA. The first type

907

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 270 freedom-of-choice programs operating in 34

States. The second, a section 1115(a) waiver, offers States greater

flexibility, allowing HCFA to waive a broad range of Medicaid requirements. As of March 2000, statewide section 1115(a) waivers

were approved in 21 States, implemented in 19, and pending in 3

States. In addition to permitting States to require Medicaid beneficiaries to enroll in managed care and to restrict their choice of

providers, these waivers allow States to expand coverage to those

not traditionally eligible for Medicaid, to impose premiums and copayments on those new eligibles, and to modify the Medicaid benefit package. 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. Some States exempt aged, blind, and disabled Medicaid eligibles, who often incur high medical expenses, from mandatory managed care participation. Most Medicaid managed care programs

have operated under waiver authorities allowed by Medicaid statute.

Medicaid managed care programs generally fall into two categories: those in which the health plan assumes full financial risk

for services it provides to enrollees, referred to as ‘‘risk-based’’ programs; and those in which an individual health care provider (a

physician or other licensed health professional) is paid a small

monthly amount by the State in return for managing health care

services for a defined population, referred to as ‘‘primary care case

management (PCCM)’’ programs. In the latter case, the provider

acts as a gatekeeper for services needed by an individual, but does

not assume financial risk for health care services provided. There

are other hybrid models of Medicaid managed care in which entities assume either full or partial risk for selected services and may

also function as PCCMs for enrolled beneficiaries. For analytic purposes, such hybrid models are also typically classified as ‘‘riskbased’’ programs. According to a survey conducted by the National

Academy for State Health Policy (1999), 48 States (all except Alaska and Wyoming) and the District of Columbia reported using some

form of Medicaid managed care in 1998. Forty-five States had riskbased programs, and 29 States had nonrisk PCCM programs.

The Medicaid population covered by State managed care programs is composed primarily of low-income women and children. As

of 1998, all States operating risk-based programs enrolled the Aid

to Families with Dependent Children (AFDC) related population

and poverty-level children; and 43 enrolled poverty-level pregnant

women. Some States enroll populations with more complex medical

needs, such as the noninstitutionalized elderly, and persons with

mental and physical disabilities. As of 1998, 26 States covered the

908

noninstitutional elderly in their risk-based programs; 32 covered

Supplemental Security Income (SSI) eligible children; and 30 covered SSI eligible adults living in the community. In general, States

tend to require risk-based managed care plans to provide a comprehensive range of Medicaid-covered services. The exceptions to

this are long-term care services needed by the elderly and disabled,

which generally are not included under managed care, and behavioral health services, which are sometimes provided under a separate contract. This is in contrast to States that operate PCCM programs; most States limit the PCCM providers to gatekeeper functions for a smaller range of services.

Despite changes to Medicaid law made by BBA 1997, waivers are

still required to mandate the enrollment of children with special

health care needs, Native Americans/Alaska Natives, and dualeligible Medicaid-Medicare beneficiaries into managed care. BBA

1997 also permits States to contract with managed care organizations serving only Medicaid beneficiaries and to ‘‘lock’’ beneficiaries

into the same plan for up to 12 months. Prior to BBA 1997, States

required a section 1115 waiver to implement these requirements.

BBA 1997 establishes rules intended to safeguard the quality of

care provided under managed care arrangements. These include

provisions related to enrollment and disenrollment; information

that States must provide enrollees and potential enrollees; assurances of adequate capacity and access to care; balance billing protections; solvency standards; marketing materials; grievance procedures; and other quality assurance standards the Secretary of the

DHHS is charged with developing. The law adopts the ‘‘prudent

layperson’’ standard to whether a Medicaid managed care organization would have to pay for services provided to an enrollee in an

emergency room and includes a ban on so-called ‘‘gag rules,’’ prohibiting interference with physician advice to enrollees.

LEGISLATIVE HISTORY

(For legislative history prior to 1996, see previous editions of the

Green Book.)

The following is a summary of major Medicaid changes enacted

in the Contract with America Advancement Act of 1996, Public

Law 104–121:

1. Alcoholics and drug addicts.—SSI benefits are terminated for

individuals receiving disability cash assistance based on a finding of alcoholism and drug addiction. Persons who lose SSI eligibility, which gives them automatic Medicaid coverage, may

still be eligible for Medicaid if they meet other Medicaid eligibility criteria. States are required to perform a redetermination

of Medicaid eligibility in any case in which an individual loses

SSI and that determination affects her Medicaid eligibility.

The following is a summary of major Medicaid changes enacted

in the Personal Responsibility and Work Opportunity Act of 1996,

Public Law 104–193:

1. Eligibility.—A new cash welfare block grant to States, Temporary Assistance for Needy Families (TANF), is established.

The automatic link between AFDC and Medicaid is severed.

Families who meets AFDC eligibility criteria as of July 16,

1996 are eligible for Medicaid, even if they do not qualify for

909

TANF. States must use the same income and resource standards and other rules previously used to determine eligibility,

and the prereform AFDC family composition requirement still

must be met. A State may lower its income standard, but not

below the standard it applied on May 1, 1988. A State may increase its income and resource standards up to the percentage

increase in the Consumer Price Index (CPI) subsequent to July

16, 1996. States may use less restrictive methods for counting

income and resources than were required by law as in effect

on July 16, 1996. States are permitted to deny Medicaid benefits to adults and heads of households who lose TANF benefits

because of refusal to work; States may not apply this requirement to poverty-related pregnant women and children.

2. Disabled children.—The definition of disability used to establish the eligibility of children for SSI is narrowed. Children

who lose SSI eligibility, which gives them automatic Medicaid

coverage, may still be eligible for Medicaid if they meet other

Medicaid eligibility criteria. States are required to perform a

redetermination of Medicaid eligibility in any case in which an

individual loses SSI and that determination affects his or her

Medicaid eligibility.

3. Aliens.—For legal resident aliens and other qualified aliens

who entered the United States on or after August 22, 1996

whose coverage is not mandatory (e.g., they have been credited

with 40 quarters of Social Security coverage), Medicaid is

barred for 5 years. Except for emergency services, Medicaid

coverage for such aliens entering before August 22, 1996 and

coverage after the 5 year ban are State options.

4. Administration.—A State may use the same application form

for Medicaid as they use for TANF. A State may choose to administer the Medicaid Program through the same agency that

administers TANF or through a separate Medicaid agency. A

special fund of $500 million is provided for enhanced Federal

matching for States’ expenditures attributable to the administrative costs of Medicaid eligibility determinations due to the

law.

The following is a summary of major Medicaid changes enacted

in the Balanced Budget Act of 1997, Public Law 105–33:

1. Eligibility.—The Balanced Budget Act restores Medicaid eligibility and SSI coverage for legal immigrants who entered the

country prior to August 22, 1996 and later become disabled;

guarantees continued Medicaid eligibility for children with disabilities who are expected to lose their SSI eligibility as the result of restrictions enacted in 1996; and extends the exemption

from the ban on Medicaid and other forms of public assistance

for refugees and individuals seeking asylum from 5 to 7 years.

States are permitted to provide continuous Medicaid coverage

for 12 months to all children, regardless of whether they continue to meet income eligibility tests. States are permitted to

create a new Medicaid eligibility category for individuals with

incomes up to 250 percent of poverty and who would, but for

income, be eligible for SSI. Such individuals can ‘‘buy into’’

Medicaid by paying a sliding scale premium based on the individuals’ income as determined by the State.

910

2. Payment methodology.—The law repeals the Boren amendment, which directed that payment rates to institutional providers be ‘‘reasonable and adequate’’ to cover the cost of ‘‘efficiently and economically operated’’ facilities, and repeals the

law requiring States to assure adequate payment levels for

services provided by obstetricians and pediatricians. The requirement to pay federally qualified health centers and rural

health clinics 100 percent of reasonable costs will be phased

out over 6 fiscal years, with special payment rules in place during fiscal years 1998–2002 to ease the transition.

3. Payments for disproportionate share hospitals.—The law reduces State DSH allotments by imposing freezes and making

graduated proportionate reductions. Limitations are placed on

payments to institutions for mental disease. The act establishes additional caps on the State DSH allotments for fiscal

years beginning in 1998 and specifies those caps for 1998–

2002. States are required to report annually on the method

used to target DSH funds and to describe the payments made

to each hospital.

4. Managed care.—The law eliminates the need for 1915(b) waivers for most Medicaid populations. Under the new law, States

can require the majority of Medicaid recipients to enroll in

managed care simply by amending their State plan. Waivers

are still required to mandate that children with special health

care needs and certain dual eligible Medicaid-Medicare beneficiaries enroll with managed care entities. The law establishes

a statutory definition of PCCM, adds it as a covered service,

and sets contractual requirements for both PCCM and Medicaid managed care organizations. The act also includes managed care provisions that establish standards for quality and

solvency, and provide protections for beneficiaries. The law repeals the provision that requires managed care organizations

to have no more than 75 percent of their enrollment be Medicaid and Medicare beneficiaries and the prohibition on cost

sharing for services furnished by health maintenance organizations.

The following is a summary of the major Medicaid changes included in the Medicare, Medicaid, and State Children’s Health Insurance Program (SCHIP) Balanced Budget Refinement Act of

1999, incorporated by reference in the Consolidated Appropriations

Act for fiscal year 2000, Public Law 106–113:

1. Increase in DSH allotments for selected States.—The law increases the Federal share of DSH payments to Minnesota, New

Mexico, Wyoming, and the District of Columbia for each of fiscal years 2000–2002.

2. Administration.—The law extends beyond fiscal year 2000 the

availability of a $500 million fund created to assist with the

transitional costs of new Medicaid eligibility activities resulting

from welfare reform, and allows these funds to be used for

costs incurred beyond the first 3 years following welfare reform.

3. Federally qualified health centers services and rural health

clinics.—The law slows the phase-out of the cost-based system

of reimbursement for services provided by federally qualified

911

health centers and rural health clinics and authorizes a study

of the impact of reducing or modifying payments to such providers.

4. Payments for monitoring services and external review requirements.—The law provides that States will receive enhanced

matching payments for medical and utilization reviews for

Medicaid fee-for-service, and quality reviews for Medicaid managed care, when conducted by certain entities similar to peer

review organizations. It also eliminates duplicative requirements for external review and requires the DHHS Secretary to

certify to Congress that the external review requirements for

Medicaid managed care are fully implemented.

5. Federal matching for disproportionate share hospital payments.—The law clarifies that Medicaid disproportionate share

hospital payments are matched at the Medicaid Federal medical assistance percentage and not at the enhanced Federal

medical assistance percentage authorized under title XXI.

6. Outpatient drugs.—The law allows rebate agreements entered

into after the date of enactment of this act to become effective

on the date on which the agreement is entered into, or at State

option, any date before or after the date on which the agreement is entered into.

7. Disproportionate share hospital transition rule.—The law extends a provision included in the Balanced Budget Act of 1997

related to allocation of DSH funds among California’s hospitals.

The following is a summary of the major Medicaid changes enacted in the Foster Care Independence Act of 1999, Public Law

106–169:

1. Foster care children.—States are given the option to extend

Medicaid coverage to former foster care recipients ages 18, 19,

and 20, and States may limit coverage to those who were eligible for assistance under title IV–E before turning 18 years of

age. The law also includes a ‘‘sense of Congress’’ statement indicating that States should provide health insurance coverage

to all former foster care recipients ages 18, 19, and 20.

The following is a summary of the major Medicaid changes enacted in the Ticket to Work and Work Incentives Improvement Act

of 1999, Public Law 106–170:

1. Employed, disabled individuals.—States can opt to cover working persons with disabilities at higher income and resource levels than otherwise permitted (i.e., income over 250 percent of

the Federal poverty level (FPL) and resources over $2,000 for

an individual or $3,000 for a couple). States may also cover financially eligible working individuals whose medical condition

has improved such that they no longer meet the Social Security

definition of disability. States can require these individuals to

‘‘buy in’’ to Medicaid coverage. These individuals pay premiums

or other cost-sharing charges on a sliding fee scale based on income, as established by the State.

PROGRAM DATA

Under current law, Federal Medicaid outlays are projected to

reach $116.1 billion in fiscal year 2000, a 7.5 percent increase over

912

the $108 billion projected for fiscal year 1999. This and other Medicaid Program data are presented in tables 15–13 to 15–26.

TABLE 15–13.—HISTORY OF MEDICAID PROGRAM COSTS, 1966–2001

[In millions of dollars]

Fiscal year

Total Federal State

Program

costs

Percentage

change

Program

costs

Percentage

change

Program

costs

Percentage

change

1966 1 ............ $1,658 ................ $789 ................ $869 ................

1967 1 ............ 2,368 42.8 1,209 53.2 1,159 33.4

1968 1 ............ 3,686 55.7 1,837 51.9 1,849 59.5

1969 1 ............ 4,166 13.0 2,276 23.9 1,890 2.2

1970 1 ............ 4,852 16.5 2,617 15.0 2,235 18.3

1971 ............... 6,176 27.3 3,374 28.9 2,802 25.4

1972 2 ............ 8,434 36.6 4,361 29.3 4,074 45.4

1973 ............... 9,111 8.0 4,998 14.6 4,113 1.0

1974 ............... 10,229 12.3 5,833 16.7 4,396 6.9

1975 ............... 12,637 23.5 7,060 21.0 5,578 26.9

1976 ............... 14,644 15.9 8,312 17.7 6,332 13.5

TQ 3 ....... 4,106 NA 2,354 NA 1,752 NA

1977 ............... 17,103 4 16.8 9,713 4 16.9 7,389 4 16.7

1978 ............... 18,949 10.8 10,680 10.0 8,269 11.9

1979 ............... 21,755 14.8 12,267 14.9 9,489 14.8

1980 ............... 25,781 18.5 14,550 18.6 11,231 18.4

1981 ............... 30,377 17.8 17,074 17.3 13,303 18.4

1982 ............... 32,446 6.8 17,514 2.6 14,931 12.2

1983 ............... 34,956 7.7 18,985 8.4 15,971 7.0

1984 ............... 37,569 7.5 20,061 5.7 17,508 9.6

1985 5 ............ 40,917 8.9 6 22,655 12.9 6 18,262 4.3

1986 ............... 44,851 9.6 24,995 10.3 19,856 8.7

1987 ............... 49,344 10.0 27,435 9.8 21,909 10.3

1988 ............... 54,116 9.7 30,462 11.0 23,654 8.0

1989 ............... 61,246 13.2 34,604 13.6 26,642 12.6

1990 ............... 72,492 18.4 41,103 18.8 31,389 17.8

1991 ............... 91,519 26.2 52,532 27.8 38,987 24.2

1992 ............... 118,166 29.1 67,827 29.1 50,339 29.1

1993 ............... 131,775 11.5 75,774 11.7 56,001 11.2

1994 ............... 143,204 8.7 82,034 8.3 61,170 9.2

1995 ............... 156,395 9.2 89,070 8.6 67,325 10.1

1996 ............... 161,963 3.6 91,990 3.3 69,973 3.9

1997 ............... 167,635 3.5 95,552 3.8 72,083 3.1

1998 ............... 177,364 5.8 100,177 4.8 77,187 7.1

1999 7 ............ 189,547 6.9 108,042 7.9 81,505 5.6

2000 7 ............ 203,714 7.5 116,117 7.5 87,597 7.5

913

TABLE 15–13.—HISTORY OF MEDICAID PROGRAM COSTS, 1966–2001—Continued

[In millions of dollars]

Fiscal year

Total Federal State

Program

costs

Percentage

change

Program

costs

Percentage

change

Program

costs

Percentage

change

2001 7 ............ 219,014 7.5 124,838 7.5 94,176 7.6

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 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., 5 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. Except for fiscal years 1999–2001, program costs are

taken from the HCFA 64 report. These payments are primarily for direct payment for medical benefits but

include all other Medicaid expenditures claimed by the State. Total State expenditures include lump sum

adjustments, disproportionate share hospital payments, and administrative costs. These data do not

match payments reported on the HCFA–2082 reports, which typically exclude lump-sum payments not attributable to individual claims, such as institutional cost settlements, disproportionate share hospital payments, and administrative costs.

Source: Budget of the U.S. Government, fiscal years 1969–2001 and Health Care Financing Administration.

914

TABLE 15–14.—UNDUPLICATED NUMBER OF MEDICAID RECIPIENTS BY ELIGIBILITY

CATEGORY, FISCAL YEARS 1972–98

[In thousands]

Fiscal year Total recipients

Age 65

or older

Blind/

disabled Children Adults Other 1

1972 ....................................... 17,606 3,318 1,733 7,841 3,137 1,576

1973 ....................................... 19,622 3,496 1,905 8,659 4,066 1,495

1974 ....................................... 21,462 3,732 2,357 9,478 4,392 1,502

1975 ....................................... 22,007 3,615 2,464 9,598 4,529 1,800

1976 ....................................... 22,815 3,612 2,669 9,924 4,774 1,836

1977 2 .................................... 22,832 3,636 2,802 9,651 4,785 1,959

1978 ....................................... 21,965 3,376 2,718 9,376 4,643 1,852

1979 ....................................... 21,520 3,364 2,753 9,106 4,570 1,727

1980 3 .................................... 21,605 3,440 2,911 9,333 4,877 1,499

1981 3 .................................... 21,980 3,367 3,079 9,581 5,187 1,364

1982 3 .................................... 21,603 3,240 2,890 9,563 5,356 1,434

1983 3 .................................... 21,554 3,371 2,921 9,535 5,592 1,129

1984 3 .................................... 21,607 3,238 2,913 9,684 5,600 1,187

1985 3 .................................... 21,814 3,061 3,017 9,757 5,518 1,214

1986 3 .................................... 22,515 3,140 3,182 10,029 5,647 1,362

1987 3 .................................... 23,109 3,224 3,381 10,168 5,599 1,418

1988 3 .................................... 22,907 3,159 3,487 10,037 5,503 1,343

1989 3 .................................... 23,511 3,132 3,591 10,318 5,717 1,175

1990 ....................................... 25,255 3,202 3,718 11,220 6,010 1,105

1991 ....................................... 28,280 3,359 4,068 13,415 6,778 658

1992 ....................................... 30,926 3,742 4,462 15,104 6,954 664

1993 ....................................... 33,432 3,863 5,016 16,285 7,505 763

1994 ....................................... 35,053 4,035 5,459 17,194 7,586 779

1995 ....................................... 36,282 4,119 5,859 17,164 7,604 1,537

1996 ....................................... 36,118 4,285 6,221 16,739 7,127 652

1997 ....................................... 34,872 3,955 4 6,129 15,266 6,803 524

1998 ....................................... 40,649 3,964 4 6,638 18,309 7,908 655

1 This category includes other title XIX, such as Ribicoff children and foster care children.

2 Fiscal year 1977 began in October 1976 and was the first year of the new Federal fiscal cycle. Before 1977, the fiscal year began in July. 3 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. 4 In fiscal year 1997 HCFA combined the blind and disabled categories.

Note.—For 1972–97, a recipient is an individual for whom a fee-for-service claim was paid during

the year. For fiscal year 1998 only, a recipient is an individual for whom a fee-for-service claim was

paid during the year, or for whom a capitation payment was made during the year. Capitated service delivery systems became more prominent under Medicaid starting in 1995, and primarily include nondisabled children and adults. See tables 15–25 and 15–26 for detailed data on capitated beneficiaries

and expenditures.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form

HCFA–2082.

915

TABLE 15–15.—MEDICAID RECIPIENTS BY SERVICE CATEGORY, FISCAL YEAR 1998

[In thousands of people]

Service category Number of

recipients

Inpatient hospital ........................................................................................ 4,273

Mental health facility .................................................................................. 135

Nursing facility ............................................................................................ 1,646

Intermediate care facility for the mentally retarded .................................. 126

Physician ..................................................................................................... 18,555

Dental .......................................................................................................... 4,965

Other practitioner ........................................................................................ 4,342

Outpatient hospital ..................................................................................... 12,158

Clinic ........................................................................................................... 5,285

Laboratory and x ray ................................................................................... 9,381

Home health ................................................................................................ 1,225

Prescribed drugs ......................................................................................... 19,338

Family planning ........................................................................................... 2,011

Early and periodic screening ...................................................................... 6,175

Personal care support ................................................................................. 3,108

Home- and community-based ..................................................................... 467

Primary care case management ................................................................. 4,066

Prepaid health care ..................................................................................... 20,203

Other care .................................................................................................... 6,975

Unduplicated total ......................................................................... 40,649

Note.—A recipient is an individual for whom a fee-for-service claim was paid during the year or for

whom a capitation payment was made during the year. See tables 15–25 and 15–26 for detailed data

on capitated beneficiaries and expenditures.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form

HCFA–2082 Report.

TABLE 15–16.—MEDICAID RECIPIENTS AND PAYMENTS BY BASIS OF ELIGIBILITY,

FISCAL YEAR 1998

Basis of eligibility

Payments

(in millions of

dollars)

PercentageRecipients

(in thousands)

Percentage

Per capita

payments

Age 65 and older ......................... $40,602 28.5 3,964 9.8 $10,243

Blind/disabled .............................. 60,375 42.4 6,637 16.3 9,097

Children ........................................ 20,459 14.4 18,309 45.0 1,117

Adults ........................................... 14,833 10.4 7,908 19.5 1,876

Foster care children ..................... 2,347 1.6 655 1.6 3,583

Unknown ....................................... 3,702 2.6 3,176 7.8 1,166

Total ................................ 142,318 100 40,649 100 3,501

Note.—A recipient is an individual for whom a fee-for-service claim was paid during the year, or for

whom a capitation payment was made during the year. The data in this table includes payments for

capitated delivery systems and fee-for-service delivery systems. See tables 15–25 and 15–26 for detailed

data on capitated beneficiaries and expenditures. Medicaid payments reported on the HCFA–2082 for fiscal year 1998 include payments made for Medicaid claims processed during the year.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form

HCFA–2082 Report.

TABLE 15–17.—MEDICAID RECIPIENTS BY BASIS OF ELIGIBILITY BY JURISDICTION, FISCAL YEAR 1998

State Total recipi- ents Age 65 and older Blind/dis- abled Children Adults Foster care/ children U

Alabama ................................................................................. 527,078 64,651 145,892 262,547 48,049 4,038 Alaska .................................................................................... 74,508 50306 8,912 37,429 19,990 1,055 Arizona ................................................................................... 507,668 27,473 78,121 282,256 114,360 5,458 Arkansas ................................................................................ 424,727 50,746 96,507 179,405 85,023 4,994 California ............................................................................... 7,082,175 587,326 926,252 3,345,491 1,646,576 138,609 Colorado ................................................................................. 344,916 43,264 62,492 154,206 66,485 14,354 Connecticut ............................................................................ 381,208 51,741 51,586 189,083 81,613 7,185 Delaware ................................................................................ 101,436 6,652 13,726 49,425 28,831 461 District of Columbia .............................................................. 166,146 7,979 22,551 58,488 25,682 1,664 Florida .................................................................................... 1,904,591 186,566 383,978 944,280 354,337 20,311 Georgia ................................................................................... 1,221,978 89,197 226,263 666,385 202,223 6,508 Hawaii .................................................................................... 184,614 17,022 16,913 75,329 64,575 3,022 Idaho ...................................................................................... 123,176 12,210 17,395 57,056 17,147 1,351 Illinois .................................................................................... 1,363,856 108,132 262,773 620,251 293,879 78,821 Indiana ................................................................................... 607,293 72,880 91,514 313,972 101,228 5,802 Iowa ....................................................................................... 314,936 39,847 51,219 138,633 78,021 4,836 Kansas ................................................................................... 241,933 27,388 43,388 120,383 40,811 4,029 Kentucky ................................................................................. 644,482 65,739 178,672 273,114 111,161 6,369 Louisiana ............................................................................... 720,615 93,838 160,544 345,723 120,369 141 Maine ..................................................................................... 170,456 22,669 37,064 74,213 30,487 2,160 Maryland ................................................................................ 561,085 44,502 104,461 264,965 106,312 15,219 Massachusetts ....................................................................... 908,238 113,876 197,426 409,962 186,362 612 Michigan ................................................................................ 1,362,890 91,663 259,243 616,825 287,617 28,346 Minnesota .............................................................................. 538,413 58,701 73,913 293,632 96,443 6,476 Mississippi ............................................................................. 485,767 60,567 131,439 218,491 61,217 2,894 Missouri ................................................................................. 734,015 88,776 113,652 384,773 115,773 14,859 Montana ................................................................................. 100,760 9,130 16,378 45,686 20,665 3,186 Nebraska ................................................................................ 211,188 25,162 27,724 106,023 42,199 10,080 Nevada ................................................................................... 128,144 12,320 19,320 65,349 21,460 3,155 New Hampshire ...................................................................... 93,970 12,291 12,124 51,166 14,838 2,434 

New Jersey ............................................................................. 813,251 94,244 151,050 372,807 172,122 15,605 New Mexico ............................................................................ 329,418 19,601 44,824 209,014 52,197 1,558 New York ................................................................................ 3,073,241 393,567 592,598 1,315,777 689,543 81,756 North Carolina ....................................................................... 1,167,988 158,676 198,254 609,190 189,692 12,176 North Dakota .......................................................................... 62,280 10,376 8,953 27,779 11,398 1,481 Ohio ........................................................................................ 1,290,776 168,246 232,986 586,546 276,603 24,395 Oklahoma ............................................................................... 342,475 NA NA NA NA NA Oregon .................................................................................... 511,171 39,401 97,889 129,409 210,350 13,701 Pennsylvania .......................................................................... 1,523,120 222,458 272,083 745,977 257,602 23,026 Puerto Rico ............................................................................ 964,015 NA NA NA NA NA Rhode Island .......................................................................... 153,130 17,540 28,524 64,882 30,866 3,583 South Carolina ....................................................................... 594,962 72,074 102,904 269,751 121,013 6,412 South Dakota ......................................................................... 89,537 9,496 15,767 48,794 14,154 1,326 Tennessee .............................................................................. 1,843,661 88,948 302,470 554,235 479,727 12,130 Texas ...................................................................................... 2,324,810 301,368 288,293 1,327,276 391,786 16,087 Utah ....................................................................................... 215,801 9,716 20,093 106,259 44,966 3,783 Vermont .................................................................................. 123,992 14,101 15,258 53,842 36,814 1,952 Virginia .................................................................................. 653,236 86,550 121,112 333,370 107,944 4,260 Virgin Islands ........................................................................ 19,764 1,516 1,208 11,424 5,616 NA Washington ............................................................................ 1,413,208 61,996 112,306 489,005 181,319 14,342 West Virginia ......................................................................... 342,668 29,157 73,037 153,021 56,682 5,065 Wisconsin ............................................................................... 518,595 63,432 120,136 231,607 82,360 13,094 Wyoming ................................................................................. 46,121 4,146 6,793 24,639 9,448 523 

All jurisdictions ............................................................. 40,649,482 3,964,223 6,637,980 18,309,145 7,907,935 654,684 3

NA—Not available.Note.—A recipient is an individual for whom a fee-for-service claim was paid during the year or for whom a capitation payment was made during the year. Capitated s

livery systems became more prominent under Medicaid starting in 1995, and primarily include nondisabled children and adults. See tables 15–25 and 15–26 for detailed capitated beneficiaries and expenditures.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. HCFA–2082 Report.

918

TABLE 15–18.—MEDICAID PAYMENTS BY BASIS OF ELIGIBILITY OF RECIPIENT BY

STATE, FISCAL YEAR 1998

[In millions of dollars]

State Total expenditures

Age 65

and older

Blind/

disabled Children Adults

Foster

care

children

Alabama ........................... $1,902 $550 $598 $187 $34 $18

Alaska .............................. 330 57 115 86 61 10

Arizona ............................. 1,644 324 610 405 297 8

Arkansas .......................... 1,376 430 791 262 99 29

California ......................... 14,237 2,878 6,143 2,665 2,149 250

Colorado ........................... 1,439 438 582 150 125 101

Connecticut ...................... 2,421 1,048 890 289 176 17

Delaware .......................... 420 95 197 68 55 2

District of Columbia ........ 731 151 346 78 53 16

Florida .............................. 5,687 1,555 2,659 846 549 51

Georgia ............................. 3,012 493 1,403 583 458 24

Hawaii .............................. 507 157 128 117 89 5

Idaho ................................ 425 124 168 52 38 2

Illinois .............................. 6,173 1,105 3,262 786 686 333

Indiana ............................. 2,564 864 1,084 400 175 23

Iowa ................................. 1,289 464 489 179 134 19

Kansas ............................. 916 253 450 132 60 7

Kentucky ........................... 2,425 583 1,162 387 240 43

Louisiana ......................... 2,384 672 1,101 372 238 0

Maine ............................... 747 239 329 96 44 26

Maryland .......................... 2,489 604 1,184 387 239 40

Massachusetts ................. 4,609 1,475 2,174 561 398 1

Michigan .......................... 4,345 940 1,945 516 515 52

Minnesota ........................ 2,924 993 1,223 455 197 37

Mississippi ....................... 1,442 415 665 226 120 12

Missouri ........................... 2,570 927 1,016 410 157 47

Montana ........................... 361 115 139 57 38 6

Nebraska .......................... 753 264 278 108 67 36

Nevada ............................. 462 92 174 79 52 41

New Hampshire ................ 606 227 221 99 34 24

New Jersey ....................... 4,219 1,325 1,978 434 370 97

New Mexico ...................... 862 146 310 270 105 26

New York .......................... 24,299 7,871 11,645 2,324 2,091 367

North Carolina ................. 4,014 1,193 1,663 716 397 44

North Dakota .................... 341 131 140 34 23 10

Ohio .................................. 6,121 2,245 2,545 705 554 71

Oklahoma ......................... 1,178 0 0 0 00

Oregon .............................. 1,378 113 268 367 576 37

Pennsylvania .................... 6,080 2,510 1,988 1,025 457 98

Puerto Rico ...................... 250 0 0 0 00

Rhode Island .................... 919 298 455 81 59 13

South Carolina ................. 2,019 478 762 305 162 51

South Dakota ................... 356 107 161 57 27 4

Tennessee ........................ 3,167 675 991 411 633 58

Texas ................................ 7,140 2,342 2,485 1,397 872 44

Utah ................................. 619 90 227 120 79 30

919

TABLE 15–18.—MEDICAID PAYMENTS BY BASIS OF ELIGIBILITY OF RECIPIENT BY

STATE, FISCAL YEAR 1998—Continued

[In millions of dollars]

State Total expenditures

Age 65

and older

Blind/

disabled Children Adults

Foster

care

children

Vermont ............................ 351 97 136 55 47 15

Virginia ............................ 2,118 639 933 336 201 9

Virgin Islands .................. 10 2 2 3 30

Washington ...................... 2,044 573 623 341 354 22

West Virginia ................... 1,243 359 474 154 102 32

Wisconsin ......................... 2,206 817 978 256 123 35

Wyoming ........................... 192 54 84 30 22 1

All jurisdictions .. 142,318 40,602 60,375 20,459 14,833 2,347

Note.—The data in this table include payments for capitated service delivery systems and fee-for-service delivery systems. Capitated service delivery systems became more prominent under Medicaid starting

in 1995, and primarily include nondisabled children and adults. See tables 15–25 and 15–26 for detailed data on capitated beneficiaries and expenditures. Medicaid payments reported on the HCFA–2082

for fiscal year 1998 include payments made for Medicaid claims processed during the year. These payments typically exclude lump sum payments not attributable to individual claims, such as disproportionate share hospital payments, and other institutional cost settlements, or administrative costs.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form

HCFA–2082 Report.

TABLE 15–19.—AMOUNTS OF MEDICAID PAYMENTS BY BASIS OF ELIGIBILITY AND TYPE OF SERVICE, FISCAL YEAR 1998

Service category Aged Blind/disabled Children Adults Foster care/ children To

In millions of dollars

Inpatient hospital ........................................ $1,871.1 $9,643.4 $4,825.5 $4,211.0 $307.5 $2Mental health facility .................................. 854.7 1,142.4 361.6 125.7 288.8 Nursing facility ............................................ 25,529.8 5,952.3 90.8 104.8 11.2 3Intermediate care facility for the mentally

retarded ................................................... 691.7 8,763.3 41.8 37.4 16.4 

Physician ...................................................... 695.0 2,102.0 1,524.6 1,533.2 119.4 Outpatient hospital ...................................... 585.2 2,682.7 1,149.6 1,182.6 90.6 Early and periodic screening, diagnosis,

and treatment ......................................... 13.9 364.1 822.3 28.7 97.0 

Prescribed drugs .......................................... 3,805.9 7,618.5 1,011.8 916.1 119.7 1Dental .......................................................... 58.6 200.8 460.2 156.4 21.4 Other practitioner ........................................ 92.8 218.2 166.4 72.5 34.5 Clinic ............................................................ 223.0 2,240.7 750.0 514.8 138.8 Laboratory and x ray ................................... 55.0 367.6 166.4 311.5 16.2 Family planning ........................................... 2.6 51.4 65.0 316.5 3.7 Home health ................................................ 797.5 1,691.8 101.5 61.2 43.7 Personal care support ................................. 2,367.1 4,376.5 856.2 205.2 346.5 Home- and community-based waiver ......... 950.1 5,478.7 72.0 70.2 117.4 Other care .................................................... 719.0 2,382.0 621.3 252.1 361.7 Prepaid health care ..................................... 1,281.7 5,061.1 7,258.2 4,716.6 210.2 1Primary care case management ................. 4.8 26.0 66.5 18.4 1.7 Unknown/error .............................................. 2.5 11.4 47.4

¥1.6 0.2 

Total ............................................... 40,602.1 60,375.1 20,459.1 14,833.1 2,346.8 14

Percentage

Inpatient hospital ........................................ 4.6 16.0 23.6 28.4 13.1 Mental health facility .................................. 2.1 1.9 1.8 0.8 12.3 Nursing facility ............................................ 62.9 9.9 0.4 0.7 0.5 Intermediate care facility for the mentally

retarded ................................................... 1.7 14.5 0.2 0.3 0.7 

Physician ...................................................... 1.7 3.5 7.5 10.3 5.1 Outpatient hospital ...................................... 1.4 4.4 5.6 8.0 3.9 Early and periodic screening, diagnosis,

and treatment ......................................... 0.0 0.6 4.0 0.2 4.1 

Prescribed drugs .......................................... 9.4 12.6 4.9 6.2 5.1 Dental .......................................................... 0.1 0.3 2.2 1.1 0.9 Other practitioner ........................................ 0.2 0.4 0.8 0.5 1.5 Clinic ............................................................ 0.5 3.7 3.7 3.5 5.9 Laboratory and x ray ................................... 0.1 0.6 0.8 2.1 0.7 Family planning ........................................... 0.0 0.1 0.3 2.1 0.2 Home health ................................................ 2.0 2.8 0.5 0.4 1.9 Personal care support ................................. 5.8 7.2 4.2 1.4 14.8 Home- and community-based waiver ......... 2.3 9.1 0.4 0.5 5.0 Other care .................................................... 1.8 3.9 3.0 1.7 15.4 Prepaid health care ..................................... 3.2 8.4 35.5 31.8 9.0 Primary care case management ................. 0.0 0.0 0.3 0.1 0.1 Unknown/error .............................................. 0.0 0.0 0.2 –0.0 0.0 

Total ............................................... 100 100 100 100 100 

Note.—Parentheses are used to indicate negative values. Negative values typically result from large negative claims payment adjustments. The data in this table inc

ments for capitated service delivery systems and fee-for-service delivery systems. See tables 15–25 and 15–26 for detailed data on capitated beneficiaries and expendituicaid payments reported on the form HCFA–2082 for fiscal year 1998 include payments made for Medicaid claims processed during the year.

Source: Health Care Financing Administration, Data and Data Systems Group, Division of Information Analysis and Technical Assistance.

TABLE 15–20.—MEDICAID PAYMENTS AND PER CAPITA PAYMENTS BY BASIS OF ELIGIBILITY, SELECTED FISCAL YEARS 1975–98

Basis of eligibility

Fiscal year 

1975 1980 1985 1990 1995 1998 1

Nominal payments, in millions of dollars

Payments:

Age 65 and older ........................................................... $4,358 $8,739 $14,096 $21,508 $36,527 $40,602 Blind/disabled ................................................................ 3,145 7,621 13,452 24,403 49,418 60,375 Children .......................................................................... 2,186 3,123 4,414 9,100 17,976 20,459 Adults ............................................................................. 2,062 3,231 4,746 8,590 13,511 14,833 Other .............................................................................. 492 596 798 1,051 1,499 6,048 

Total ........................................................................... 12,242 23,311 37,508 64,859 120,140 142,318 

Per capita payment:

Age 65 and older ........................................................... 1,205 2,540 4,605 6,717 8,868 10,242 Blind/disabled ................................................................ 2,146 2,619 7,600 11,807 17,678 9,095 Children .......................................................................... 228 335 452 811 1,047 1,117 Adults ............................................................................. 455 663 860 1,429 1,777 1,876 Other .............................................................................. 273 NR 658 1,062 2,380 1,579 

Total ........................................................................... 556 1,079 1,719 2,568 3,311 3,501 

Constant 1998 dollars in millions

Payments:

Age 65 and older ........................................................... 13,684 17,740 21,426 27,100 39,084 40,602 Blind/disabled ................................................................ 9,875 15,471 20,447 30,748 52,877 60,375 Children .......................................................................... 6,864 6,340 6,709 11,466 19,234 20,459 Adults ............................................................................. 6,475 6,559 7,214 10,823 14,457 14,833 Other .............................................................................. 1,545 1,210 1,213 1,324 1,604 6,048 

Total ........................................................................... 38,440 47,321 57,012 81,722 128,550 142,318 

Per capita payment:

Age 65 and older ........................................................... 3,784 5,156 7,000 8,463 9,489 10,242 Blind/disabled ................................................................ 6,738 5,317 31,080 14,877 18,915 9,095 Children .......................................................................... 716 680 687 1,022 1,120 1,117 Adults ............................................................................. 1,429 1,346 1,307 1,801 1,901 1,876 Other .............................................................................. 857 NR 1,000 1,338 2,547 1,579 

Total ........................................................................... 1,746 2,190 2,613 3,236 3,543 3,501 

Note.—Totals may not add due to rounding and include other coverage groups and individuals for whom basis of eligibility is unknown. Fiscal year 1975 ended in 

other fiscal years end in September. Nominal dollars were converted to constant dollars by inflating each year’s spending for the cumulative growth in the Consumer Pfor All Urban Consumers (CPI–U) (inflation) between that fiscal year and fiscal year 1998. The 1998 data reflect changes in HCFA–2082 reporting forms that affected categories. For fiscal years 1975–97, a recipient is an individual for whom a fee-for-service claim was paid during the year. For fiscal year 1998 only, a recipient is an for whom a fee-for-service claim was paid during the year, or for whom a capitation payment was paid during the year. The fiscal year 1998 dollar figures include paycapitated delivery systems and fee-for-service delivery systems. See tables 15–25 and 15–26 for detailed data on capitated beneficiaries and expenditures. Medicaid payported on the HCFA–2082 for fiscal year 1998 include payments made for Medicaid claims processed during the year.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form HCFA–2082 Report.

924

TABLE 15–21.—MEDICAID PAYMENTS BY SERVICE CATEGORY, FISCAL YEAR 1998

Service category

Payments (in

millions of dollars)Percentage

Inpatient hospital ............................................................... $21,499 15.1

Mental health facility ......................................................... 2,801 2.0

Nursing facility ................................................................... 31,892 22.4

Intermediate care facility for the mentally retarded ......... 9,482 6.7

Physician ............................................................................. 6,070 4.3

Dental ................................................................................. 901 0.6

Other practitioner ............................................................... 587 0.4

Outpatient hospital ............................................................. 5,759 4.0

Clinic ................................................................................... 3,921 2.8

Laboratory and x ray .......................................................... 939 0.7

Home health ....................................................................... 2,702 1.9

Prescribed drugs ................................................................. 13,522 9.5

Family planning .................................................................. 449 0.3

Early and periodic screening .............................................. 1,335 0.9

Personal care support ........................................................ 8,222 5.8

Home- and community-based ............................................ 6,709 4.7

Primary care case management ........................................ 134 0.1

Prepaid health care ............................................................ 19,296 13.6

Other care ........................................................................... 4,386 3.1

Total ...................................................................... 142,318 100

Note.—The data in this table include payments for capitated service delivery systems and fee-forservice delivery systems. See tables 15–25 and 15–26 for detailed data on capitated beneficiaries and

expenditures. Medicaid payments reported on the HCFA–2082 for fiscal year 1998 include payments made

for Medicaid claims processed during the year.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form

HCFA–2082 Report.

TABLE 15–22.—AVERAGE PAYMENTS BY BASIS OF ELIGIBILITY BY JURISDICTION, FISCAL

YEAR 1998

State Total payments

Age 65

and older

Blind/disabledChildren Adults

Foster

care/children

Alabama ....................... $3,609 $8,513 $4,098 $711 $701 $4,414

Alaska .......................... 4,434 10,765 12,919 2,297 3,072 9,150

Arizona ......................... 3,238 11,801 7,804 1,436 2,595 1,438

Arkansas ...................... 3,239 8,474 8,198 1,462 1,168 5,779

California ..................... 2,010 4,900 6,632 797 1,305 1,800

Colorado ....................... 4,173 10,117 9,312 970 1,879 7,051

Connecticut .................. 6,350 20,258 17,259 1,529 2,156 2,396

Delaware ...................... 4,138 14,325 14,317 1,372 1,906 3,500

District of Columbia .... 4,402 18,901 15,354 1,340 2,076 9,498

Florida .......................... 2,986 8,336 6,926 896 1,550 2,533

Georgia ......................... 2,465 5,531 6,200 874 2,265 3,681

Hawaii .......................... 2,749 9,238 7,588 1,554 1,376 1,785

Idaho ............................ 3,446 10,195 9,640 906 2,205 1,845

Illinois .......................... 4,526 10,217 12,415 1,268 2,335 4,224

925

TABLE 15–22.—AVERAGE PAYMENTS BY BASIS OF ELIGIBILITY BY JURISDICTION, FISCAL

YEAR 1998—Continued

State Total payments

Age 65

and older

Blind/disabledChildren Adults

Foster

care/children

Indiana ......................... 4,222 11,853 11,845 1,273 1,732 3,918

Iowa ............................. 4,092 11,641 9,555 1,293 1,718 3,842

Kansas ......................... 3,788 9,239 10,377 1,096 1,460 1,836

Kentucky ....................... 3,763 8,870 6,506 1,417 2,158 6,788

Louisiana ..................... 3,308 7,165 6,860 1,075 1,980 1,095

Maine ........................... 4,383 10,556 8,879 1,300 1,435 12,222

Maryland ...................... 4,437 13,571 11,331 1,459 2,246 2,628

Massachusetts ............. 5,075 12,954 11,013 1,369 2,133 1,604

Michigan ...................... 3,188 10,258 7,501 836 1,789 1,821

Minnesota .................... 5,432 16,923 16,552 1,550 2,041 5,667

Mississippi ................... 2,969 6,857 5,062 1,034 1,958 4,284

Missouri ....................... 3,501 10,445 8,940 1,067 1,353 3,137

Montana ....................... 3,585 12,593 8,478 1,239 1,862 1,888

Nebraska ...................... 3,566 10,511 10,031 1,015 1,581 3,594

Nevada ......................... 3,606 7,439 9,013 1,209 2,442 13,016

New Hampshire ............ 6,449 18,451 18,246 1,928 2,282 9,912

New Jersey ................... 5,188 14,063 13,094 1,164 2,152 6,245

New Mexico .................. 2,617 7,440 6,918 1,290 2,006 16,800

New York ...................... 7,907 20,000 19,651 1,766 3,032 4,492

North Carolina ............. 3,437 7,520 8,389 1,176 2,093 3,653

North Dakota ................ 5,476 12,660 15,656 1,212 2,009 6,829

Ohio .............................. 4,742 13,345 10,923 1,202 1,990 2,927

Oklahoma ..................... 3,439 0 0 0 0 0

Oregon .......................... 2,695 2,867 2,736 2,832 2,740 2,673

Pennsylvania ................ 3,992 11,283 7,307 1,374 1,775 4,249

Puerto Rico .................. 259 0 0 0 0 0

Rhode Island ................ 6,004 16,996 15,936 1,254 1,916 3,731

South Carolina ............. 3,393 6,631 7,408 1,132 1,340 7,990

South Dakota ............... 3,974 11,315 10,193 1,169 1,895 2,855

Tennessee .................... 1,718 7,588 3,276 741 1,319 4,767

Texas ............................ 3,071 7,771 8,620 1,053 2,224 2,746

Utah ............................. 2,867 9,276 11,290 1,134 1,768 7,887

Vermont ........................ 2,834 6,893 8,897 1,020 1,271 7,921

Virginia ........................ 3,243 7,377 7,706 1,009 1,859 2,204

Virgin Islands .............. 511 1,643 1,463 274 484 0

Washington .................. 1,447 9,236 5,546 697 1,952 1,527

West Virginia ............... 3,628 12,322 6,483 1,004 1,794 6,374

Wisconsin ..................... 4,255 12,880 8,144 1,106 1,497 2,651

Wyoming ....................... 4,163 13,037 12,308 1,236 2,310 2,802

All jurisdictions 3,501 10,243 9,097 1,117 1,876 3,583

Note.—A recipient is an individual for whom a fee-for-service claim was paid during the year, or for

whom a capitation payment was made during the year. The data in this table include payments for

capitated service delivery systems and fee-for-service delivery systems. See tables 15–25 and 15–26 for

detailed data on capitated beneficiaries and expenditures.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form

HCFA–2082 Report.

926

TABLE 15–23.—TOTAL AND PER CAPITA MEDICAID PAYMENTS FOR RECIPIENTS BY

MAINTENANCE ASSISTANCE STATUS AND BASIS OF ELIGIBILITY, FISCAL YEAR 1998

Maintenance assistance status and basis of eligibility

Total payments

(in millions of

dollars)

Percentage of

total

Payments per

capita

Receiving cash payments .......................... $63,035 44.3 $3,590

Aged .................................................. 9,176 6.4 5,516

Blind/disabled ................................... 39,128 27.5 7,924

Children ............................................. 8,427 5.9 1,121

Adults ................................................ 6,304 4.4 1,834

Poverty related ........................................... 19,758 13.9 2,147

Aged .................................................. 4,566 3.2 7,608

Blind/disabled ................................... 4,432 3.1 7,760

Children ............................................. 6,296 4.4 1,029

Adults ................................................ 4,464 3.1 2,332

Other coverage groups ............................... 30,686 21.6 4,834

Aged .................................................. 14,499 10.2 15,954

Blind/disabled ................................... 8,174 5.7 14,211

Children ............................................. 3,405 2.4 1,264

Adults ................................................ 2,261 1.6 1,493

Foster care children .......................... 2,347 1.6 3,585

Medically needy .......................................... 25,139 17.7 5,754

Aged .................................................. 12,361 8.7 15,610

Blind/disabled ................................... 8,641 6.1 15,611

Children ............................................. 2,331 1.6 1,177

Adults ................................................ 1,805 1.3 1,731

Unknown ..................................................... 3,700 2.6 1,166

Total .............................................. 142,318 100.0 3,501

Note.—A recipient is an individual for whom a fee-for-service claim was paid during the year, or for

whom a capitation payment was made during the year. Totals may not add due to rounding. Totals include other coverage groups and unknowns. The data in this table includes payments for capitated delivery systems and fee-for-service delivery systems. See tables 15–25 and 15–26 for detailed data on

capitated beneficiaries and expenditures. Medicaid payments reported on the HCFA–2082 for fiscal year

1998 include payments made for Medicaid claims processed during the year.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form

HCFA–2082 Report.

927

TABLE 15–24.—OPTIONAL MEDICAID SERVICES AND NUMBER OF STATES 1 OFFERING

EACH SERVICE, OCTOBER 1996

Service

States offering services

to categorically needy

only

States offering services

to both categorically and

medically

needy

Access to include Medicaid services

to the uninsured

Podiatrist .......................................................... 9 27 10

Optometrist ...................................................... 11 28 10

Chiropractor ..................................................... 4 20 4

Psychologist ..................................................... 6 20 6

Medical social worker ......................................163

Nurse anesthetist ............................................. 8 16 5

Private duty nursing ........................................ 4 16 6

Clinic ................................................................ 13 33 9

Dental ............................................................... 11 26 9

Physical therapy ............................................... 10 29 6

Occupational therapy ....................................... 6 24 6

Speech, hearing and language disorder ......... 11 26 5

Prescribed drugs .............................................. 14 32 10

Dentures ........................................................... 7 25 6

Prosthetic devices ............................................ 14 31 10

Eyeglasses ........................................................ 12 27 9

Diagnostic ........................................................ 5 22 7

Screening ......................................................... 5 20 7

Preventive ......................................................... 6 20 6

Rehabilitative ................................................... 13 31 9

Services for age 65 and older in mental institutions:

Inpatient hospital ................................... 12 21 9

Skilled nursing facility ............................ 9 17 6

Intermediate care facility for the mentally retarded ...................................... 18 22 10

Inpatient psychiatric ........................................ 12 21 9

Christian science nurses .................................121

Christian science sanitoria .............................. 3 7 4

Skilled nursing facility for under age 21 ........ 16 26 10

Emergency hospital .......................................... 11 25 8

Personal care ................................................... 7 18 6

Transportation .................................................. 13 32 10

Case management ........................................... 11 27 8

Hospice ............................................................. 8 22 8

Respiratory care ............................................... 2 9 3

Tuberculosis related ......................................... 1 5 3

1 Includes the territories.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services.

928

TABLE 15–25.—PREPAID HEALTH CARE MEDICAID RECIPIENTS BY BASIS OF

ELIGIBILITY, FISCAL YEAR 1998

[In thousands]

State Total recipients

Age 65

and

older

Blind/

disabled Child Adult Unknown

Alabama ......................... 344.9 0.0 0.0 0.0 0.0 344.9

Alaska ............................ 0.0 0.0 0.0 0.0 0.0 0.0

Arizona ........................... 368.3 0.0 0.0 0.0 0.0 368.3

Arkansas ........................ 244.8 22.6 70.7 110.7 35.8 5.0

California ....................... 6,022.5 548.1 894.7 3,053.2 1,390.1 136.4

Colorado ......................... 316.1 37.3 58.6 148.3 56.5 15.3

Connecticut .................... 271.4 0.0 0.9 185.6 77.9 7.0

Delaware ........................ 85.2 0.3 8.1 47.2 27.6 2.0

District of Columbia ...... 100.9 0.0 1.9 43.3 15.3 40.4

Florida ............................ 791.8 17.3 110.2 507.5 149.4 7.4

Georgia ........................... 78.5 0.7 8.3 53.6 15.7 0.2

Hawaii ............................ 144.7 0.0 0.0 75.3 64.6 4.8

Idaho .............................. 0.0 0.0 0.0 0.0 0.0 0.0

Illinois ............................ 142.4 0.1 1.3 101.1 38.7 1.2

Indiana ........................... 271.0 59.3 42.2 127.8 38.8 2.9

Iowa ............................... 246.6 0.8 41.6 130.6 68.5 5.0

Kansas ........................... 44.0 0.0 0.1 34.1 9.6 0.2

Kentucky ......................... 194.2 9.3 50.9 97.8 35.1 1.0

Louisiana ....................... 0.0 0.0 0.0 0.0 0.0 0.0

Maine ............................. 9.3 0.0 0.0 6.7 2.5 0.1

Maryland ........................ 449.8 6.3 75.2 258.3 91.2 18.9

Massachusetts ............... 768.8 1.7 111.7 451.1 203.7 0.6

Michigan ........................ 758.2 8.7 130.5 422.7 181.0 15.3

Minnesota ...................... 318.9 27.6 2.6 222.3 64.3 2.1

Mississippi ..................... 17.6 0.8 4.7 9.7 2.4 0.0

Missouri ......................... 336.1 0.0 0.5 248.2 69.8 17.6

Montana ......................... 96.7 8.6 15.8 44.5 19.8 8.0

Nebraska ........................ 159.6 1.2 14.6 98.0 37.5 8.3

Nevada ........................... 55.9 0.6 0.1 40.7 12.6 1.9

New Hampshire .............. 11.2 0.0 0.0 9.1 1.9 0.1

New Jersey ..................... 545.4 35.5 16.5 353.3 138.8 1.4

New Mexico .................... 263.3 1.0 26.7 192.2 41.7 1.6

New York ........................ 884.4 6.2 51.0 565.6 258.0 3.6

North Carolina ............... 220.7 0.0 12.3 194.3 9.8 4.3

North Dakota .................. 1.5 0.0 0.0 1.1 0.4 0.0

Ohio ................................ 453.3 0.1 1.9 315.0 135.8 0.5

Oklahoma ....................... 0.0 0.0 0.0 0.0 0.0 0.0

Oregon ............................ 481.5 37.7 93.8 123.8 201.5 24.8

Pennsylvania .................. 902.9 63.0 144.5 505.6 178.6 11.2

Rhode Island .................. 96.2 0.0 0.6 63.5 29.7 2.4

South Carolina ............... 17.2 0.4 1.6 13.6 1.5 0.1

South Dakota ................. 84.0 8.1 14.7 47.0 12.9 1.3

Tennessee ...................... 1,764.3 84.2 293.6 552.7 472.5 361.4

Texas .............................. 0.0 0.0 0.0 0.0 0.0 0.0

Utah ............................... 170.3 6.6 11.3 92.5 29.4 30.6

Vermont .......................... 69.7 0.0 1.1 36.7 31.5 0.4

929

TABLE 15–25.—PREPAID HEALTH CARE MEDICAID RECIPIENTS BY BASIS OF

ELIGIBILITY, FISCAL YEAR 1998—Continued

[In thousands]

State Total recipients

Age 65

and

older

Blind/

disabled Child Adult Unknown

Virginia .......................... 159.4 1.2 20.5 105.7 32.0 0.0

Washington .................... 1,146.2 1.6 10.7 455.4 141.9 536.7

West Virginia ................. 0.1 0.0 0.0 0.0 0.0 0.1

Wisconsin ....................... 293.2 0.3 6.1 211.4 67.6 7.9

Wyoming ......................... 0.0 0.0 0.0 0.0 0.0 0.0

All jurisdictions 20,202.9 997.3 2,352.0 10,356.9 4,493.6 2,003.2

Note.—Recipients are those for whom a capitation payment was made during the year. Prepaid health

care includes all managed care plans except primary care case management (PCCM) programs. Totals

may not match those reported on other sources and should be used with caution due to errors in State

reporting.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form

HCFA–2082 Report.

TABLE 15–26.—MEDICAID PAYMENTS FOR PREPAID HEALTH CARE BY BASIS OF

ELIGIBILITY, FISCAL YEAR 1998

[In millions of dollars]

State Total payments

Age 65

and older

Blind/

disabled Child Adult

Maintenance

assistance

status unknown

Alabama ................... $289.0 0.0 0.0 0.0 0.0 $289.0

Alaska ....................... 0.0 0.0 0.0 0.0 0.0 0.0

Arizona ...................... 1,431.4 $305.9 $538.3 $348.6 $231.0 7.6

Arkansas ................... 4.4 0.4 1.8 1.7 0.4 0.1

California .................. 2,867.7 243.4 502.1 1,461.2 627.0 34.0

Colorado ................... 238.6 18.3 92.0 62.9 26.2 39.2

Connecticut .............. 377.2 0.0 0.9 230.0 138.9 7.4

Delaware ................... 122.0 1.7 50.0 31.8 36.9 1.6

District of Columbia 98.2 0.0 10.6 25.5 9.1 53.1

Florida ...................... 701.3 71.5 279.2 223.8 121.8 5.1

Georgia ..................... 57.9 0.8 18.2 22.4 16.4 0.1

Hawaii ...................... 213.6 0.0 0.0 117.1 88.9 7.6

Idaho ........................ 0.0 0.0 0.0 0.0 0.0 0.0

Illinois ....................... 241.3 1.4 1.3 135.3 102.5 0.7

Indiana ..................... 168.0 33.3 22.1 75.1 36.4 1.1

Iowa .......................... 107.2 0.2 26.6 41.5 37.9 0.9

Kansas ...................... 17.2 0.0 0.0 11.3 5.8 0.1

Kentucky ................... 311.5 9.9 140.9 122.1 37.5 1.0

Louisiana .................. 0.0 0.0 0.0 0.0 0.0 0.0

Maine ........................ 4.2 0.0 0.0 2.9 1.3 0.0

Maryland ................... 852.0 29.4 429.6 217.3 157.7 17.9

Massachusetts ......... 477.9 17.8 168.9 191.7 99.5 0.1

Michigan ................... 823.7 7.7 370.0 206.7 223.3 16.1

930

TABLE 15–26.—MEDICAID PAYMENTS FOR PREPAID HEALTH CARE BY BASIS OF

ELIGIBILITY, FISCAL YEAR 1998—Continued

[In millions of dollars]

State Total payments

Age 65

and older

Blind/

disabled Child Adult

Maintenance

assistance

status unknown

Minnesota ................. 483.2 99.2 3.7 273.5 105.5 1.3

Mississippi ............... 22.2 1.1 8.7 10.1 2.2 0.1

Missouri .................... 277.7 0.0 0.2 207.0 60.1 10.3

Montana ................... 53.6 4.1 21.7 18.2 5.9 3.7

Nebraska .................. 73.0 1.8 17.9 20.9 12.9 19.5

Nevada ..................... 32.3 0.5 0.0 15.1 15.5 1.1

New Hampshire ........ 12.1 0.0 0.0 10.0 2.0 0.1

New Jersey ................ 617.6 8.0 37.3 338.9 232.5 0.8

New Mexico ............... 372.6 1.8 134.6 163.8 66.3 6.1

New York .................. 1,638.4 107.9 645.8 490.8 391.2 2.7

North Carolina .......... 85.7 0.0 8.9 65.5 9.3 2.0

North Dakota ............ 1.3 0.0 0.0 0.8 0.5 0.0

Ohio .......................... 494.8 0.7 3.4 282.7 207.8 0.4

Oklahoma ................. 0.0 0.0 0.0 0.0 0.0 0.0

Oregon ...................... 665.9 53.0 131.2 174.5 281.4 25.7

Pennsylvania ............ 1,801.1 177.8 663.2 652.0 290.8 17.2

Rhode Island ............ 114.9 0.0 0.3 58.1 51.1 5.4

South Carolina ......... 17.2 10.3 2.6 3.2 1.1 0.0

South Dakota ............ 3.8 0.3 0.7 2.3 0.4 0.1

Tennessee ................. 1,859.1 61.2 571.1 396.5 630.3 199.9

Texas ........................ 0.0 0.0 0.0 0.0 0.0 0.0

Utah .......................... 147.7 4.5 35.9 45.5 19.2 42.7

Vermont .................... 53.9 0.0 2.3 21.4 29.9 0.2

Virginia ..................... 186.3 2.0 68.8 73.8 41.7 0.0

Washington ............... 529.0 0.9 7.0 211.1 188.2 121.9

West Virginia ............ 26.6 0.0 0.0 0.0 0.0 26.6

Wisconsin ................. 321.9 4.8 43.3 193.3 72.3 8.1

Wyoming ................... 0.0 0.0 0.0 0.0 0.0 0.0

All jurisdictions ......... 19,296.2 1,281.7 5,061.1 7,258.2 4,716.6 978.7

Note.—Totals may not match those reported on other sources and should be used with caution due to

errors in State reporting. Payments include only capitation payments made on behalf of individuals enrolled in prepaid health care. Prepaid health care includes all managed care plans except PCCM programs.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form

HCFA–2082 Report.

STATE CHILDREN’S HEALTH INSURANCE PROGRAM

The Balanced Budget Act of 1997 (BBA 1997, Public Law 105–

33) established the State Children’s Health Insurance Program

(SCHIP) under a new title XXI of the Social Security Act. In general, the program offers Federal matching funds to States and territories to provide health insurance to certain low-income children.

931

18 In 2000 the poverty guideline in the 48 contiguous States and the District of Columbia is

$17,050 for a family of four (Federal Register, 2000). 19The one exception to this rule is when a State chooses to implement a Medicaid expansion

under SCHIP. Children who qualify for SCHIP through a Medicaid expansion are entitled to

Medicaid benefits as long as they continue to meet these specific eligibility criteria (even if

SCHIP itself terminates) or until the State is granted approval to eliminate the eligibility category created by the Medicaid expansion through SCHIP. 20For determining income eligibility for SCHIP and Medicaid, some States apply ‘‘income disregards.’’ These are specified dollar amounts subtracted from gross income to compute net income, which is then compared to the applicable income criterion. Such disregards increase the

effective income level above the stated standard. State SCHIP plans do not consistently report

the use of income disregards, nor whether the stated income standards include or exclude such

disregards. 21States may apply resource or asset tests in determining financial eligibility. Individuals

must have resources for which the dollar value is less than a specified standard amount in order

to qualify for coverage. States determine what items constitute countable resources and the dollar value assigned to those countable resources. Assets may include, for example, cars, savings

accounts, real estate, trust funds, tax credits, etc. See the Kaiser Commission on Medicaid and

the Uninsured: Medicaid for Children and CHIP-Funded Separate State Programs (Fact Sheet),

revised December 1, 1999.

ELIGIBILITY

Under SCHIP, States may cover children in families with incomes above the State’s Medicaid eligibility standard but less than

200 percent of the Federal poverty level (FPL).18 However, States

in which the maximum Medicaid income level for children was at

or above 200 percent FPL prior to the enactment of SCHIP may increase this income level by an additional 50 percentage points

above the level used under the State’s Medicaid Program.

Not all targeted low-income children will necessarily receive

medical assistance under SCHIP for two reasons. First, unlike

Medicaid, Federal law does not establish an individual entitlement 19 to benefits under SCHIP. Instead, it entitles States with

approved SCHIP plans to predetermined Federal allotments based

on a distribution formula set in the law. Second, each State can define the group of targeted low-income children who may enroll in

SCHIP. Title XXI allows States to use the following factors in determining eligibility: geography, age, income and resources, residency, disability status (so long as any standard relating to that

status does not restrict eligibility), access to other health insurance,

and duration of eligibility for coverage. Title XXI funds cannot be

used for children who would have been eligible for the State’s Medicaid plan under the eligibility standards that were in effect prior

to the enactment of the law establishing SCHIP or for children covered by a group health plan or other insurance.

To date, the upper income eligibility limit under SCHIP has

reached 350 percent of the FPL in one State (table 15–27).20 Eleven States have asset tests for some groups of SCHIP beneficiaries,

typically those in Medicaid rather than separate State programs

(see Benefits subsection).21 While increases in coverage have been

achieved for all age groups under SCHIP, the most significant increases in eligibility to date have benefited older adolescents.

States are taking advantage of the opportunity to use enhanced

matching funds under SCHIP to bring in older teens in families

with incomes up to 100 percent FPL sooner than required under

current Medicaid law, and in many cases, cover such children at

income levels well above poverty.

932

22 In the case of community-based health delivery systems, the cost of coverage cannot exceed,

on an average per child basis, the cost of coverage that would otherwise be provided. In the

case of family coverage, the alternative must be cost effective relative to the amount paid to

obtain comparable coverage only of the targeted low-income children, and it must not substitute

for health insurance coverage that would otherwise be provided to the children. 23When the law establishing SCHIP was enacted, existing State programs in Florida, New

York, and Pennsylvania were designated as meeting the minimum benefit requirements under

this program.

BENEFITS

States may choose from three options when designing their

SCHIP Programs. They may expand their current Medicaid Program, create a new ‘‘separate State’’ insurance program, or devise

a combination of both approaches. Under limited circumstances,

States have the option to purchase a health benefits plan that is

provided by a community-based health delivery system or to purchase family coverage under a group health plan as long as it is

cost effective to do so.22

States that choose to expand Medicaid to new eligibles under

SCHIP must provide the full range of mandatory Medicaid benefits,

as well as all optional services specified in their State Medicaid

plans. Alternately, States may choose any of three other benefit options: (1) a benchmark benefit package, (2) benchmark equivalent

coverage, or (3) any other health benefits plan that the Secretary

determines will provide appropriate coverage to the targeted population of uninsured children.23

A benchmark benefit package is one of the following three plans:

(1) the standard Blue Cross/Blue Shield preferred provider option

plan offered under the Federal Employees Health Benefit Plan, (2)

the health coverage offered and generally available to State employees in the State involved, and (3) the health coverage offered

by a health maintenance organization with the largest commercial

(non-Medicaid) enrollment in the State involved.

TABLE 15–27.—STATE CHILDREN’S HEALTH INSURANCE PROGRAM AGGREGATE

ENROLLMENT STATISTICS FOR FISCAL YEAR 1999

State

Type of

SCHIP

Program

Date implemented 1

Upper

eligibility 2

(in

percent)

State reported fiscal year

1999 SCHIP enrollment 3

(total children ever served

in fiscal year 1999)

Fiscal year

1999 total

SCHIP enrollment Separate

program

Medicaid

expansion

Alabama 4 ............. COMBO 02/01/98 200 25,738 13,242 38,980

Alaska .................. ME ...... 03/01/99 200 NA 8,033 8,033

American Samoa 5 ME ...... 04/01/99 NA ... NA NA 0

Arizona ................. SSP ..... 11/01/98 200 26,807 NA 26,807

Arkansas .............. ME ...... 10/01/98 100 NA 913 913

California ............. COMBO 03/01/98 250 187,854 34,497 222,351

Colorado ............... SSP ..... 04/22/98 185 24,116 NA 24,116

Connecticut .......... COMBO 07/01/98 300 5,277 4,635 9,912

Delaware .............. SSP ..... 02/01/99 200 2,433 NA 2,433

District of Columbia.ME ...... 10/01/98 200 NA 3,029 3,029

Florida 6 ................ COMBO 04/01/98 200 116,123 38,471 154,594

933

TABLE 15–27.—STATE CHILDREN’S HEALTH INSURANCE PROGRAM AGGREGATE

ENROLLMENT STATISTICS FOR FISCAL YEAR 1999—Continued

State

Type of

SCHIP

Program

Date implemented 1

Upper

eligibility 2

(in

percent)

State reported fiscal year

1999 SCHIP enrollment 3

(total children ever served

in fiscal year 1999)

Fiscal year

1999 total

SCHIP enrollment Separate

program

Medicaid

expansion

Georgia ................. SSP ..... 11/01/98 200 47,581 NA 47,581

Guam 5 7 ............... ME ...... 10/01/97 NA ... NA NA 0

Hawaii 8 ................ ME ...... 07/01/00 185 NA NI NI

Idaho .................... ME ...... 10/01/97 150 NA 8,482 8,482

Illinois 9 ................ ME ...... 01/05/98 133 7,567 35,132 42,699

Indiana 8 ............... COMBO 10/01/97 200 NI 31,246 31,246

Iowa ...................... COMBO 07/01/98 185 2,694 7,101 9,795

Kansas ................. SSP ..... 01/01/99 200 14,443 NA 14,443

Kentucky 8 10 ......... COMBO 07/01/98 200 NI 18,579 18,579

Louisiana .............. ME ...... 11/01/98 150 NA 21,580 21,580

Maine ................... COMBO 07/01/98 185 3,786 9,871 13,657

Maryland .............. ME ...... 07/01/98 200 NA 18,072 18,072

Massachusetts ..... COMBO 10/01/97 200 24,408 43,444 67,852

Michigan .............. COMBO 05/01/98 200 14,825 11,827 26,652

Minnesota 10 ......... ME ...... 10/01/98 280 NA 21 21

Mississippi 8 ......... COMBO 07/01/98 200 NI 13,218 13,218

Missouri ................ ME ...... 09/01/98 300 NA 49,529 49,529

Montana ............... SSP ..... 01/01/99 150 1,019 NA 1,019

Nebraska .............. ME ...... 05/01/98 185 NA 9,713 9,713

Nevada ................. SSP ..... 10/01/98 200 7,802 NA 7,802

New Hampshire .... COMBO 05/01/98 300 3,700 854 4,554

New Jersey ............ COMBO 03/01/98 350 43,824 31,828 75,652

New Mexico 10 ...... ME ...... 03/31/99 235 NA 4,500 4,500

New York 6 11 ........ COMBO 04/15/98 192 519,401 1,900 521,301

North Carolina 10 .. SSP ..... 10/01/98 200 57,300 NA 57,300

North Dakota 8 ...... COMBO 10/01/98 140 NI 266 266

Northern Mariana

Islands 5 7.

ME ...... 10/01/97 NA ... NA NA 0

Ohio ...................... ME ...... 01/01/98 150 NA 83,688 83,688

Oklahoma 10 ......... ME ...... 12/01/97 185 NA 40,196 40,196

Oregon .................. SSP ..... 07/01/98 170 27,285 NA 27,285

Pennsylvania 6 ...... SSP ..... 05/28/98 200 81,758 NA 81,758

Puerto Rico 12 ....... ME ...... 01/01/98 200 NA 20,000 20,000

Rhode Island 13 .... ME ...... 10/01/97 300 NA 7,288 7,288

South Carolina 14 ME ...... 10/01/97 150 NA 45,737 45,737

South Dakota ....... ME ...... 07/01/98 140 NA 3,191 3,191

Tennessee 10 ......... ME ...... 10/01/97 100 NA 9,732 9,732

Texas 8 .................. COMBO 07/01/98 200 NI 50,878 50,878

Utah 15 ................. SSP ..... 08/03/98 200 13,040 NA 13,040

Vermont 10 ............ SSP ..... 10/01/98 300 2,055 2,055 NA

Virginia ................. SSP ..... 10/22/98 185 16,895 NA 16,895

Virgin Islands 5 16 ME ...... 04/01/98 NA ... NA 120 120

Washington 8 ........ SSP ..... 02/01/00 250 NI NA NI

West Virginia ........ COMBO 07/01/98 150 6,656 1,301 7,957

934

TABLE 15–27.—STATE CHILDREN’S HEALTH INSURANCE PROGRAM AGGREGATE

ENROLLMENT STATISTICS FOR FISCAL YEAR 1999—Continued

State

Type of

SCHIP

Program

Date implemented 1

Upper

eligibility 2

(in

percent)

State reported fiscal year

1999 SCHIP enrollment 3

(total children ever served

in fiscal year 1999)

Fiscal year

1999 total

SCHIP enrollment Separate

program

Medicaid

expansion

Wisconsin ............. ME ...... 04/01/99 185 NA 12,949 12,949

Wyoming 8 ............. SSP ..... 12/01/99 133 NI NA NI

Total, 56

plans.

............ ................ ........ 1,284,387 695,063 1,979,450

1 Implementation date of the initial SCHIP plan as reported by States. In some States the initial SCHIP

plan involved a modest expansion of coverage and was followed by a plan amendment to further expand

coverage. As of January 1, 2000, there are 37 States with approved amendments, and another 13 States

have pending State plan amendments. 2 Reflects upper eligibility level of SCHIP plans and amendments approved as of January 1, 2000.

Upper eligibility is defined as a percent of the Federal poverty level (FPL). In 1999, the FPL was $16,700

for a family of four. In general, States with Medicaid expansion SCHIP Programs must establish their

upper eligibility levels net of income disregards. States with separate SCHIP Programs can establish their

upper eligibility levels on a gross income basis or net of income disregards. Puerto Rico defines the

upper eligibility limit as 200 percent of Puerto Rico’s poverty level. 3 State reported enrollment in fiscal year 1999 reflects formal State quarterly electronic statistical data

submissions and estimates by States in cases where electronic State quarterly data submissions were not

available. 4 Alabama’s enrollment for Medicaid expansion SCHIP is estimated.

5 Due to the unique nature of their SCHIP plans, these U.S. territories and jurisdictions may cover existing Medicaid populations with SCHIP funds, but only after their Medicaid funding caps are reached. 6 Florida, New York and Pennsylvania had State-funded programs prior to SCHIP. Title XXI permitted

children previously in the State-funded program to be covered under SCHIP and requires these States to

maintain at least the previous levels of spending. 7 Guam and the Commonwealth of the Northern Mariana Islands did not exceed their Medicaid funding

caps, and therefore could not claim any SCHIP funding in fiscal year 1999. 8 These States have plans or amendments approved, but these programs were not implemented as of

September 30, 1999. Therefore, the enrollment counts do not correspond fully to the upper eligibility levels reported in this table since these eligibility levels reflect plans and plan amendments approved as of

January 1, 2000. 9 Illinois is covering children under its proposed separate SCHIP Program; although the amendment is

pending. 10 State reported SCHIP enrollment is estimated. 11 New York’s enrollment for Medicaid expansion SCHIP is estimated. 12 Puerto Rico’s SCHIP allotment funded 20,000 children; another 44,324 children were funded with territorial funds. 13 Rhode Island has implemented their program to 250 percent FPL. In addition, Rhode Island has an

approved amendment (February 5, 1999) to further expand the program to 300 percent FPL. 14 South Carolina’s enrollment for SCHIP reflects estimated enrollment from October 1998–July 1999. 15 Utah SCHIP enrollment for fiscal year 1999 reflects the total number of children ever enrolled in the

fourth quarter. 16 Virgin Island’s SCHIP enrollment reflects the number of children for which health care claims were

paid during the period from July 1998 through April 1999.

COMBO—Combination approach. ME—Medicaid expansion. NA—Not applicable. NI—‘‘Not

implemented’’ denotes States with approved SCHIP plans or amendments with implementation dates after

fiscal year 1999. SSP—Separate State programs.

Note.—Fiscal year 1999 enrollment statistics reflect unedited, unduplicated data as submitted by

States to HCFA.

Source: Health Care Financing Administration (undated).

935

Benchmark equivalent coverage is defined as a package of benefits that has the same actuarial value as one of the benchmark

benefit packages. A State choosing to provide benchmark equivalent coverage must cover each of the benefits in the ‘‘basic benefits

category.’’ The benefits in the basic benefits category are inpatient

and outpatient hospital services, physicians’ surgical and medical

services, laboratory and x-ray services, and well-baby and wellchild care, including age-appropriate immunizations. Benchmark

equivalent coverage must also include at least 75 percent of the actuarial value of coverage under the benchmark plan for each of the

benefits in the ‘‘additional service category.’’ These additional services include prescription drugs, mental health services, vision services, and hearing services. States are encouraged to cover other categories of service not listed above. Abortions may not be covered,

except in the case of a pregnancy resulting from rape or incest, or

when an abortion is necessary to save the mother’s life.

COST SHARING

Federal law permits States to impose cost sharing for some beneficiaries and some services under SCHIP. States that choose to implement SCHIP as a Medicaid expansion must follow the costsharing rules of the Medicaid Program. If the State implements

SCHIP through a separate State program, premiums or enrollment

fees for program participation may be imposed, but the maximum

allowable amount is dependent on family income. For families with

incomes under 150 percent FPL, premiums may not exceed the

amounts set forth in Federal Medicaid regulations. Additionally,

these families may be charged service-related cost sharing, but

such cost sharing is limited to nominal amounts defined in Federal

Medicaid regulations.

For a family with income above 150 percent FPL, service-related

cost sharing may be imposed in any amount, provided cost sharing

for higher income children is not less than cost sharing for lower

income children. However, the total annual aggregate cost sharing

(including premiums, deductibles, copayments and any other

charges) for all targeted low-income children in a family may not

exceed 5 percent of total family income for the year. In addition,

States must inform families of these limits and provide a mechanism for families to stop paying once the cost-sharing limits have

been reached.

Preventive services are exempt from cost sharing for all families

regardless of income. In the proposed SCHIP regulations published

in November 1999, the Health Care Financing Administration

(HCFA) defines preventive services to include the following: all

healthy newborn inpatient physician visits, including routine

screening (inpatient and outpatient); routine physical examinations; laboratory tests; immunizations and related office visits as

recommended by the American Academy of Pediatrics; and routine

preventive and diagnostic dental services (for example, oral examinations, prophylaxis and topical fluoride applications, sealants, and

x rays).

936

24The law sets aside 0.25 percent of SCHIP funds for the five territories and commonwealths

(Puerto Rico, Guam, Virgin Islands, American Samoa, and the Northern Mariana Islands). It

also sets aside $60 million annually for special diabetes grants for fiscal year 1998 through fiscal

year 2002 only.

FINANCING

The Balanced Budget Act of 1997 appropriated a total of $39.7

billion for SCHIP for fiscal year 1998 through fiscal year 2007.24

A total of $4.295 billion was appropriated for fiscal year 1998,

$4.307 billion for fiscal year 1999, and $4.309 billion for fiscal year

2000. Allotment of funds among the States is determined by a formula set in law. This formula is based on a combination of the

number of low-income children and low-income uninsured children

in the State, and includes a cost factor that represents average

wages in the State compared to the national average. A State with

an approved plan has 3 fiscal years in which to draw down a given

year’s funding.

Like Medicaid, SCHIP is a Federal-State matching program. For

each dollar of State spending, the Federal Government makes a

matching payment. A State’s share of program spending is equal

to 100 percent minus the enhanced Federal medical assistance percentage (FMAP). The enhanced SCHIP FMAP is equal to a State’s

Medicaid FMAP increased by the number of percentage points that

is equal to 30 percent multiplied by the number of percentage

points by which the FMAP is less than 100 percent. For example,

among States with a Medicaid FMAP of 60 percent, under Medicaid such States must spend 40 cents for every 60 cents that the

Federal Government contributes. The enhanced FMAP for such

States equals the Medicaid FMAP increased by 12 percentage

points (60 percent + [30 percent × 40 percent] = 72 percent.) In this

example, the State share equals 100 percent ¥ 72 percent = 28

percent.

Compared with the Medicaid FMAP, which ranges from 50 to

76.8 percent in fiscal year 2000, the enhanced FMAP for SCHIP

ranges from 65 to 83.76 percent. All SCHIP assistance for targeted

low-income children, including child health coverage provided

through a Medicaid expansion, is eligible for the enhanced FMAP.

The Medicaid FMAP and the enhanced SCHIP FMAP are subject

to a ceiling of 83 and 85 percent, respectively.

There is a limit on Federal spending for SCHIP administrative

expenses, which include activities such as data collection and reporting, as well as outreach and education. For Federal matching

purposes, a 10 percent cap applies to State administrative expenses. This cap is tied to the dollar amount that a State draws

down from its annual allotment to cover benefits under SCHIP, as

opposed to 10 percent of a State’s total annual allotment.

LEGISLATIVE HISTORY

Under the Balanced Budget Act of 1997, SCHIP was established,

effective August 5, 1997. The legislation specified eligibility criteria; coverage requirements for health insurance; Federal allotments and the State allocation formula; payments to States and

the enhanced FMAP formula; the process for submission, approval

and amendment of State SCHIP plans; strategic objectives and perVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00936 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
937

formance goals, and plan administration; annual reports and evaluations; options for expanding coverage of children under Medicaid;

and diabetes grant programs.

During late 1997 through 1999, changes to SCHIP have been included in four laws passed subsequent to BBA 1997. Major provisions affecting SCHIP in these laws are summarized below.

The District of Columbia Appropriations Act of 1998 (Public Law

105–100) and the 1998 Supplemental Appropriations and Rescissions Act (Public Law 105–174) made technical corrections to

SCHIP. In addition, Public Law 105–100 increased the fiscal year

1998 SCHIP appropriation from $4.275 billion to $4.295 billion.

Two changes to SCHIP were made in the Omnibus Consolidated

and Emergency Supplemental Appropriations Act, fiscal year 1999

(Public Law 105–277). For fiscal year 1999, an additional appropriation of $32 million for the territories was provided, bringing the

fiscal year 1999 total appropriation to $4.295 billion. In addition,

for fiscal year 1998 and fiscal year 1999, this law changed the annual State allotment formula by stipulating that children with access to health care funded by the Indian Health Service and no

other health insurance would be counted as uninsured (rather than

as insured as required under the previously existing law).

Finally, the recently enacted Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999 (incorporated by reference in

Public Law 106–113) made a number of mostly technical corrections to the program, of which the major changes are enumerated

below:

1. Stabilizing the SCHIP allotment formula

Annual Federal allotments to each State are determined in part

by States’ success in covering previously uninsured low-income

children under SCHIP. Under prior law, the more successful a

State is in enrolling children in SCHIP, especially early in the program, the greater the potential reduction in subsequent annual allotments. To limit the amount a State’s allocation can fluctuate

from one year to the next, the Balanced Budget Refinement Act of

1999 modifies the allotment distribution formula and establishes

new floors and ceilings.

2. Targeted, increased allotments

Additional allotments for the commonwealths and territories are

provided for fiscal years 2000–2007.

3. Improved data collection and evaluation

First, the law provides new funding for the collection of data to

produce reliable, annual State-level estimates of the number of uninsured children. These data changes will improve research and

evaluation efforts. They will also affect State-specific counts of the

number of low-income children and the number of such children

who are uninsured that feed into the formula that determines annual State-specific allotments from Federal SCHIP appropriations.

Second, new funding is also provided for a Federal evaluation to

identify effective outreach and enrollment practices for both SCHIP

and Medicaid, barriers to enrollment, and factors influencing beneficiary dropout. Finally, the law also requires: (a) an Inspector GenVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00937 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
938

25 Unspent funds will be redistributed to States that have fully expended their allotments.

eral audit and GAO report on enrollment of Medicaid-eligible children in SCHIP, (b) States to report annually the number of deliveries to pregnant women and the number of infants who receive

services under the Maternal and Child Health Services Block

Grant or who are entitled to SCHIP benefits, and (c) the Secretary

of Health and Human Services to establish a clearinghouse for the

consolidation and coordination of all Federal databases and reports

regarding children’s health.

PROGRAM DATA

As of December 1, 1999, the Health Care Financing Administration had approved SCHIP plans for all 50 States, the District of Columbia and all 5 territories. Twenty-five are Medicaid expansions

(ME), 16 are separate State programs (SSP), and 15 provide health

insurance coverage through a combination approach (COMBO).

As of December 1, 1999, 44 amendments to original State plans

were submitted; 32 amendments had been approved and 12 were

still in review. Several States have multiple amendments. The content of the plan amendments varies among States. Some States use

the amendments to extend coverage beyond income levels defined

in their original State plan (e.g., Michigan, New Mexico, and Nebraska). Others define new copayment standards for program participants (e.g., Missouri and Pennsylvania). Still others modify benefit packages (e.g., Alabama, Indiana, New Hampshire, and North

Carolina).

Officials at HCFA anticipate that amendments will be submitted

throughout the life of the program and that the nature of the

amendments will change as the program evolves. The proposed program regulations issued in November 1999 indicate that HCFA will

consider section 1115 research and demonstration waivers of title

XXI provisions only after a State has had at least 1 year of SCHIP

experience and has conducted an evaluation of that experience.

Early HCFA enrollment estimates indicate that nearly 1 million

children (982,000) were enrolled in SCHIP under 43 operational

State programs as of December 1998. More recently, HCFA reported that nearly 2 million children (1,979,450) were enrolled in

SCHIP during fiscal year 1999 under 53 operational State programs. Over 1.2 million of these children were served by separate

programs and almost 700,000 were enrolled in Medicaid expansions

(see table 15–27). Subsequent to enactment of the Balanced Budget

Act (BBA) of 1997, the Congressional Budget Office (CBO) estimated that SCHIP would cover an average of 2.3 million children

per year after 1999 (CBO, 1998). The administration’s goal is to enroll 5 million children in SCHIP by fiscal year 2002.

Because annual SCHIP allotments remain available for a period

of 3 years, nearly all States continue to draw down on their fiscal

year 1998 allotments, and have until the end of fiscal year 2000 to

spend these funds.25 Table 15–28 provides information on SCHIP

allotments and reported expenditures by State for fiscal year 1998.

These expenditures are based on unaudited State claims submitted

to HCFA and do not represent actual outlays. As of January 4,

2000, States have claimed $986.8 million, or 23.3 percent of the

TABLE 15–28.—ESTIMATED SCHIP FEDERAL ALLOTMENTS AND EXPENDITURES—FISCAL YEAR 1998

State Fiscal year 1998 allotment

Expenditures 1

S–SC

Total dollars Percent of al- lotment M–SCHIP

Alabama ......................................................................................... 85,975,213 25,421,675 29.6 10,840,371 14,Alaska ............................................................................................. 6,889,296 3,806,310 55.2 3,425,679 American Samoa 3 .......................................................................... 128,850 (4) 0.0 (4) 

Arizona ............................................................................................ 116,797,799 8,836,776 7.6 (4) 8,

Arkansas ......................................................................................... 47,907,958 680,106 1.4 612,096 California ........................................................................................ 854,644,807 68,780,451 8.0 7,012,804 61,Colorado .......................................................................................... 41,790,546 10,024,469 24.0 (4) 10,

Connecticut ..................................................................................... 34,959,075 12,301,470 35.2 9,567,126 2,Delaware ......................................................................................... 8,053,463 883,874 11.0 (4) 

District of Columbia ....................................................................... 12,076,002 498,585 4.1 498,585 

Florida ............................................................................................. 270,214,724 57,362,492 21.2 27,317,491 30,Georgia ........................................................................................... 124,660,136 7,428,825 6.0 (4) 7,

Guam 5 ............................................................................................ 375,812 (4) 0.0 (4) 

Hawaii 6 .......................................................................................... 8,945,304 (4) 0.0 (4) 

Idaho ............................................................................................... 15,879,707 5,280,101 33.3 4,752,091 Illinois ............................................................................................. 122,528,573 20,812,534 17.0 20,812,534 

Indiana ........................................................................................... 70,512,432 61,716,155 87.5 59,547,425 2,Iowa ................................................................................................ 32,460,463 10,839,004 33.4 8,901,735 1,Kansas ............................................................................................ 30,656,520 8,790,887 28.7 (4) 8,

Kentucky ......................................................................................... 49,932,527 17,825,116 35.7 17,352,499 Louisiana ........................................................................................ 101,736,840 10,361,817 10.2 9,325,635 1,Maine .............................................................................................. 12,486,977 5,617,064 45.0 4,060,701 1,Maryland ......................................................................................... 61,627,358 14,251,164 23.1 13,527,138 

TABLE 15–28.—ESTIMATED SCHIP FEDERAL ALLOTMENTS AND EXPENDITURES—FISCAL YEAR 1998—Continued

State Fiscal year 1998 allotment

Expenditures 1

S–SC

Total dollars Percent of al- lotment M–SCHIP

Massachusetts ................................................................................ 42,836,231 35,385,895 82.6 29,961,560 5,Michigan ......................................................................................... 91,585,508 15,576,561 17.0 9,076,713 6,Minnesota ....................................................................................... 28,395,980 7,189 0.0 7,189 

Mississippi ...................................................................................... 56,017,103 8,092,064 14.4 8,092,064 

Missouri .......................................................................................... 51,673,123 19,708,219 38.1 19,166,928 Montana .......................................................................................... 11,740,395 599,352 5.1 (4) 

Nebraska ......................................................................................... 14,862,926 3,773,847 25.4 3,773,847 

Nevada ............................................................................................ 30,407,067 4,110,173 13.5 (4) 4,

New Hampshire .............................................................................. 11,458,404 965,340 8.4 395,135 New Jersey ...................................................................................... 88,417,899 23,156,897 26.2 16,266,802 6,New Mexico ..................................................................................... 62,972,705 767,955 1.2 767,955 

New York ......................................................................................... 255,626,409 255,626,409 100.0 477,118 255,North Carolina ................................................................................ 79,508,462 34,921,019 43.9 (4) 34,

North Dakota .................................................................................. 5,040,741 75,874 1.5 74,324 Northern Mariana Islands 7 ............................................................ 118,113 (4) 0.0 (4) 

Ohio ................................................................................................ 115,734,364 44,510,120 38.5 44,510,120 

Oklahoma 8 ..................................................................................... 85,699,060 (4) 0.0 (4) 

Oregon ............................................................................................ 39,121,663 7,638,628 19.5 (4) 7,

Pennsylvania ................................................................................... 117,456,520 48,751,058 41.5 (4) 48,Puerto Rico ..................................................................................... 9,835,550 9,835,550 100.0 9,835,550 

Rhode Island .................................................................................. 10,684,422 2,321,095 21.7 2,321,095 

South Carolina ................................................................................ 63,557,819 63,557,819 100.0 61,250,170 2,South Dakota .................................................................................. 8,541,224 1,546,059 18.1 1,391,453 

Tennesseee 8 ................................................................................... 66,153,082 (4) 0.0 (4) 

Texas ............................................................................................... 561,331,521 39,799,551 7.1 35,917,987 3,Utah ................................................................................................ 24,241,159 7,994,253 33.0 (4) 7,

Vermont .......................................................................................... 3,535,445 524,624 14.8 (4) 

Virginia ........................................................................................... 68,314,914 4,992,151 7.3 (4) 4,

Virgin Islands 3 ............................................................................... 279,175 (4) 0.0 (4) 

Washington 6 ................................................................................... 46,661,213 (4) 0.0 (4) 

West Virginia .................................................................................. 23,606,744 1,078,823 4.6 247,648 Wisconsin 3 ..................................................................................... 40,633,039 (4) 0.0 (4) Wyoming 9 ....................................................................................... 7,711,638 (4) 0.0 (4) 

Total .................................................................................. 4,235,000,000 986,835,400 23.3 441,087,568 545,

1 Federal expenditures as reported by the States (Form HCFA–21C through September 30, 1999 as tabulated on January 4, 2000).2 Amounts may include Medicaid SCHIP administrative expenditures at enhanced Medicaid matching rates at State option.3 As of January 4, 2000, American Samoa, the Virgin Islands and Wisconsin had not submitted any expenditure reports.4 Not applicable or missing data. See footnotes for individual States for further explanation.5 Guam will be revising its expenditure reports through the fourth quarter of fiscal year 1999 to show that all the fiscal year 1998 allotment was spent. 6 Hawaii and Washington show no expenditures because the implementation date for their programs is July 1, and February 1, 2000, respectively. 7 Under its current SCHIP plan, the Northern Mariana Islands must exhaust their regular Medicaid funds (which has not been done for fiscal year 1998) before SCHIP f

come available. 8 As of early January 2000, Oklahoma and Tennessee could not get their Medicaid computer systems altered to adequately identify SCHIP expenditures, so costs hclaimed under regular Medicaid. Beginning with the first quarter of fiscal year 2000, these States plan to report SCHIP expenditures and begin the process of adjustinMedicaid claims for prior periods. 9Wyoming shows no expenditures because it did not begin enrolling children into SCHIP until October 1, 1999 (beyond fiscal year 1998).

M–SCHIP—Medicaid expansion CHIP.S–SCHIP—Separate State CHIP.Source: Health Care Financing Administration.

942

26This discussion draws directly from the Congressional Budget Office (1988). For this report,

CBO has updated all figures with 12 additional years of data. For a more recent study on these

topics, see Congressional Budget Office (1994). Assistance provided through various aspects of

the Tax Code is excluded from the discussion.

total fiscal year 1998 appropriation of $4.235 billion available to

States and territories. Just over half of these claims (55.3 percent)

cover administrative and benefit costs for separate State programs;

the remainder are for costs incurred under Medicaid expansions.

Actual Federal spending in fiscal year 1998 totaled less than $500

million. CBO estimates that Federal State Children’s Health Insurance Program (SCHIP) spending will total approximately $1 billion

for fiscal year 1999 and $2 billion for fiscal year 2000 (CBO, 2000).

The discrepancies between dollar figures reported by HCFA versus

CBO are due primarily to differences in reporting periods and the

time lag between claim submission and subsequent adjudication,

and actual disbursement of Federal funds.

The proportion of State SCHIP allotments claimed by early January 2000, varies considerably across States. Ten States and territories reported no expenditures (see table 15–28 footnotes for explanations). An additional 27 States submitted expenditure reports

claiming 25 percent or less of their allotments. Another 13 States

claimed between 26 and 50 percent of available funds. Finally, six

jurisdictions submitted expenditure reports totaling over 50 percent

of allotments. Three of these six jurisdictions—New York, Puerto

Rico and South Carolina—had claimed their full fiscal year 1998

allotments as of early January 2000, and have also submitted expenditure reports to access their fiscal year 1999 SCHIP funding.

FEDERAL HOUSING ASSISTANCE 26

A number of Federal programs administered by the U.S. Department of Housing and Urban Development (HUD) and the Rural

Housing Service (RHS) address the housing needs of low-income

households. Housing assistance has never been provided as an entitlement to all households that qualify for aid. Instead, Congress

has traditionally appropriated funds for a number of new commitments each year. Until the 1990s, those commitments generally

ran up to 40 years, with the result that the appropriations were

actually spent gradually over many years. More recently, funding

has been provided 1 year at a time. Those 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 more years to

come. The traditional housing programs have been augmented over

the years with additional programs funded through block grants to

State and local governments. This section describes recent trends

in the number and mix of new commitments, as well as trends in

expenditures for both the traditional assistance programs and the

more recent block grant programs. The section focuses primarily on

programs administered by HUD.

943

27 Because of changes in the way in which HUD reports the number of households assisted

through the traditional programs, it is not entirely clear whether the number has just leveled

off or has actually declined during the past 3 years.

TYPES OF ASSISTANCE

The Federal Government has traditionally provided housing aid

directly to low-income households in the form of rental subsidies

and mortgage interest subsidies. For the most part, both the number of households receiving aid and total Federal expenditures have

steadily increased, but the growth of households assisted through

the traditional programs has slowed since the 1980s and, in recent

years, the number of such assisted households may have declined.27 Starting in the mid-1980s, a number of statutes were enacted—including the Stewart B. McKinney Homeless Assistance

Act of 1987 (hereafter referred to as the McKinney Act) and the

1990 Cranston-Gonzalez National Affordable Housing Act (hereafter referred to as the 1990 Housing Act) that authorized new, indirect approaches in the form of housing block grants to State and

local governments. Those governments may use the grants for various housing assistance activities specified in the laws. Data on the

number of households assisted through those types of programs are

not readily available, however.

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 reduce housing

costs and improve housing quality for low-income households.

Other goals have included promoting residential construction, expanding housing opportunities for disadvantaged groups and

groups with special housing needs such as the elderly, the disabled,

and the homeless, promoting neighborhood preservation and revitalization, increasing home ownership, and 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.

Direct rental assistance

Most Federal housing aid is now targeted to very-low-income

renters through the rental assistance programs administered by

HUD and the RHS (Schussheim, 2000). Rental assistance is provided through two basic approaches: (1) project-based aid, which is

typically tied to projects specifically produced for low-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’

944

28 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. 29The 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.

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 productionoriented programs, which include the Public and Indian 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 RHS.28 Today new

commitments are being funded through only two of these four programs—a modified version of the section 8 New Construction Program for elderly and disabled families only and the section 515 program. In addition, some new housing for Native Americans continues to be developed through the Indian Housing Block Grant Program.

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. Traditionally, those components have included 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 or to provide deeper subsidies to the

occupants; 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 to units that have been brought up to standard

by the owner.29 In recent years, few, if any, new commitments have

been funded through these programs. Today, new funding is predominantly used for tenant protection to enable tenants to remain

in or move out of projects where rents are being raised after the

owners opt out of the Federal assistance programs. Tenant protection assistance is also used to replace aid to households that are

being displaced from assisted projects because the projects are

being demolished.

Household-based subsidies have traditionally been provided

through two other components of the section 8 Existing Housing

Program—section 8 rental certificates and vouchers. These programs tie aid to households that choose units meeting certain housing standards 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. Starting in 2000,

the certificate and voucher program are being combined into one

program that pays the difference between 30 percent of a tenant’s

income and the lesser of the tenant’s actual housing cost or a payment standard determined by local rent levels. Commitments to aid

additional households are being made under this program. In addiVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00944 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
945

30The Housing and Community Development Act of 1997 terminated the section 235 program

at the end of fiscal year 1989.

tion, because of the tenant protection programs discussed above,

aid is gradually being shifted from project-based to householdbased assistance.

Direct home ownership 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. Most of

this aid has been provided through the section 502 program administered by the RHS. 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 (VA). Many home buyers, however, receive much

deeper subsidies through the interest-credit component of this program, which reduces their effective interest rate to as low as 1 percent.

A number of home buyers have received aid through the section

235 program administered by HUD. That 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.30

Both programs generally reduce mortgage payments, property

taxes, and insurance costs to a fixed percentage of income, ranging

from 20 percent for the RHS program to 28 percent for the latest

commitments made under the HUD program.

Homeless programs

Since the mid-1980s, a number of programs specifically designed

to address the issue of homelessness have been authorized. The

still active programs, most of which were authorized by the McKinney Act, include the Emergency Shelter Grants Program, the Supportive Housing Program, the Shelter Plus Care Program, and the

Moderate Rehabilitation for Single Room Occupancy Dwellings Program. Another program, which is designed to prevent rather than

deal with homelessness, is the Housing Opportunities for Persons

with AIDS (HOPWA) Program, authorized by the 1990 Housing

Act.

Under these programs, HUD funds housing assistance indirectly

in the form of block grants to State and local governments. They

in turn are required to contribute matching funds under all programs except under the Single Room Occupancy Dwellings and

HOPWA Programs. Funds are distributed by formula or by competition, depending on the type of program. Funds may be used for

a variety of housing activities that may be supported on a shortterm, emergency basis or on a more permanent basis. Those activities include acquisition, rehabilitation, and new construction of facilities, tenant rental assistance (including section 8), supportive

services, and administration costs.

946

31The 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. 32Prior to the enactment of the HOME Program, some of the activities for home buyers were

supported under the Nehemiah Housing Opportunity Grant Program, which was authorized by

the Housing and Community Development Act of 1987.

Other housing block grant programs

Several programs funded through block grants that are not specifically designed to deal with homelessness have been authorized

since the early 1980s. Most of these programs have been terminated or are no longer being funded today.

Some assistance for the construction or rehabilitation of rental

housing was funded under two small HUD programs authorized in

1983, the Rental Housing Development Grants (HoDAG) and the

Rental Rehabilitation Block Grant Programs.31 These programs

distributed funds through a national competition and by formula,

respectively, to units of local government that met certain eligibility criteria.

The 1990 Housing Act authorized several new housing assistance

approaches, including the Home Ownership and Opportunity for

People Everywhere (HOPE) Program and the HOME Investment

Partnerships Block Grant Program. Since 1996, funds have been

appropriated only for the HOME Program. The HOME Program

provides Federal grants to State and local governments on a formula basis. Currently, participating jurisdictions generally must

provide matching contributions of at least 25 percent of HOME

funds spent in each fiscal year. Some or all of the matching requirement may be waived for jurisdictions that can show they are

financially distressed. Funds may be used for tenant-based rental

assistance or assistance to new home buyers.32 They may also be

used for acquisition, rehabilitation, or in limited circumstances,

construction of both rental and owner-occupied housing.

TRENDS IN LEVELS AND BUDGETARY IMPACT OF HOUSING AID

This section examines trends in the levels and the budgetary impact of housing aid. Figures are presented only for programs administered by HUD. Because of data limitations, figures for the

number of assisted households are presented only for those subsidized through the traditional programs that provide direct rental

and home ownership assistance. Figures for the budgetary impact

are shown for all housing programs discussed above.

Trends in net new commitments

Although HUD has been subsidizing the shelter costs of lowincome households since 1937, more than half of all currently outstanding commitments under the traditional assistance programs

were funded over the past 24 years. Between 1977 and 2000, funds

were appropriated for about 2.6 million net new commitments to

aid low-income renters (table 15–29). Another 108,000 new commitments were funded in the form of mortgage assistance to low- and

moderate-income home buyers. Between 1977 and 1983, the number of net new rental commitments funded each year declined

steadily, however, from 354,000 to 54,000. Trends have been somewhat erratic since that time. During the late 1990s relatively few

947

TABLE 15–29.—NET NEW COMMITMENTS FOR RENTERS AND HOME BUYERS RECEIVING

DIRECT HOUSING ASSISTANCE ADMINISTERED BY HUD, BY TYPE OF SUBSIDY, SELECTED YEARS 1977–2000

Fiscal year

Net new commitments for renters Net new commitments for home

buyers 3 Existing

housing 1

New construction 2 Total

1977 .......................................... 12,7581 226,832 354,413 4,719

1980 .......................................... 58,402 129,490 187,892 58,907

1981 .......................................... 83,520 75,365 158,885 5,102

1982 .......................................... 37,818 18,018 55,836 4,754

1983 .......................................... 54,071 ¥339 53,732 2,630

1984 .......................................... 78,648 9,619 88,267 930

1985 .......................................... 85,741 16,980 102,721 4,586

1986 .......................................... 85,476 13,109 98,585 5

1987 .......................................... 72,788 20,192 92,980 60

1988 .......................................... 64,270 19,991 84,261 0

1989 .......................................... 67,653 14,053 81,706 0

1990 .......................................... 61,309 7,428 68,737 0

1991 4 ........................................ 55,900 13,082 68,982 0

1992 4 ........................................ 62,008 23,537 85,545 0

1993 4 ........................................ 50,162 18,715 68,877 0

1994 4 ........................................ 47,807 17,652 65,459 0

1995 4 ........................................ 16,904 16,587 33,491 0

1996 4 ........................................ 7,055 1,438 8,493 0

1997 4 ........................................ 9,229 12,449 21,678 0

1998 4 ........................................ 18,376 17,675 36,051 0

1999 4 ........................................ 16,225 11,060 27,285 0

2000 est. 4 ................................. 126,000 9,556 135,556 0

1 Includes units assisted through section 8 certificates and vouchers, loan management set-aside

(LMSA), PD, and Moderate Rehabilitation Programs. 2 Includes units assisted through the section 8 New Construction and Substantial Rehabilitation Program, section 202/811 Housing for the Elderly and the Disabled, section 236, and Public and Indian

Housing Programs. Excludes units constructed under the Indian Housing Block Grant Program. 3 Includes units assisted through the various section 235 programs.

4 Figures are no longer adjusted for units for which funds were deobligated because data were unavailable.

Note.—Because reliable data are not readily available, this table excludes substantial numbers of

commitments made through the various programs for the homeless (including HOPWA) and other block

grant programs such as the HOME Investment Partnerships Program.

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, numbers are adjusted for commitments for which such funds are

deobligated or canceled that year (except where noted otherwise); the commitments for units converted

from one type of assistance to another; starting in 1985, the commitments replacing 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 commitments for units whose section 8 contracts expire.

New commitments for home buyers are defined as the total number of new loans that HUD subsidizes

each year. This measure of program activity is meant to indicate how many new home buyers can be

helped each year. It is not adjusted to account for homeowners who leave the program in any year because of mortgage repayments, prepayment, 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 from the U.S. Department of Housing and Urban

Development.

948

new commitments were funded, ranging from less than 8,500 in

1996 to 36,000 in 1998. For fiscal year 2000, however, funds were

appropriated for more than 135,000 new commitments.

The production-oriented approach in rental programs was sharply curtailed in 1982 in favor of the less costly section 8 Existing

Housing Programs. Between 1977 and 1981, commitments through

programs for new construction and substantial rehabilitation

ranged annually from 47 to 69 percent of the total. After 1981, the

proportion never exceeded 32 percent until 1995, when it rose to

roughly one-half of the total. Because in recent years the number

of commitments funded for existing housing has been so low, the

new construction commitments (primarily for the elderly and disabled) have been a relatively high proportion of the total.

Trends in number of assisted households

The total number of households receiving housing assistance

from HUD has increased substantially, almost 113 percent, from

2.4 million at the beginning of fiscal year 1977 to 5.1 million at the

beginning of fiscal year 2000 (table 15–30). That increase results

largely from net new commitments, but also from commitments

made before 1977 that have been processed during this period. The

number of households receiving rental subsidies increased from 2.1

million to 5.1 million. The number of assisted homeowners dropped

steadily from 331,000 to 43,000, however, reflecting commitments

for newly assisted home buyers, if any, being more than offset by

loan repayments, prepayments, and foreclosures.

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 42 percent at the beginning of fiscal year 2000. During that period, the proportion of renters receiving household-based

subsidies increased from 8 percent to 32 percent.

Trends in budget authority

Under the direct housing assistance programs, funding for additional commitments used to be provided each year through appropriations of long-term (up to 40 years) budget authority for subsidies to households and through appropriations of budget authority for grants to public housing agencies and developers of rental

housing. Today, most rental subsidies, both for new commitments

and for the renewal of expiring contracts, are funded for 1 year at

a time. Only new commitments that subsidize the operating costs

of projects being built for the elderly and disabled are funded for

5-year periods. For the homeless and other housing block grant

programs, funds are appropriated on an annual basis but spend out

over periods as long as 10 years.

Annual appropriations of new budget authority for all housing

assistance programs combined were cut dramatically during the

1980s. They dropped (in 2000 dollars) from a high of $82.5 billion

in 1978 to a low of $12.5 billion in 1989 (table 15–31). Those cuts

reflect four underlying factors affecting budget authority for the direct housing assistance programs: the previously mentioned reduction in the number of newly assisted households; the shift toward

TABLE 15–30.—TOTAL HOUSEHOLDS RECEIVING DIRECT HOUSING ASSISTANCE ADMINISTERED BY HUD, BY TYPE OF SUBSIDY, 1977–200

[In thousands of households]

Start of fiscal year

Assisted renters

Total assisted

homeowners 5

T

sis

o

Existing housing

New construction 3 Total as- sisted rent- ers Household- 4 based 1 Project- based 2 Subtotal ex- isting hous- ing

1977 ........................................................................................ 162 105 268 1,799 2,067 331 1978 ........................................................................................ 297 126 423 1,928 2,350 293 1979 ........................................................................................ 427 175 602 1,978 2,580 262 1980 ........................................................................................ 521 185 707 2,090 2,797 235 1981 ........................................................................................ 599 221 820 2,228 3,212 219 1982 ........................................................................................ 651 194 844 2,373 3,379 241 1983 ........................................................................................ 691 265 955 2,485 3,615 242 1984 ........................................................................................ 728 357 1,086 2,589 3,851 230 1985 ........................................................................................ 749 431 1,180 2,657 4,015 210 1986 ........................................................................................ 797 456 1,253 2,686 4,135 200 1987 ........................................................................................ 893 473 1,366 2,721 4,279 182 1988 ........................................................................................ 956 490 1,446 2,736 4,371 159 1989 ........................................................................................ 1,025 509 1,534 2,748 4,485 148 1990 ........................................................................................ 1,090 527 1,616 2,755 4,569 141 1991 ........................................................................................ 1,137 540 1,678 2,778 4,656 130 1992 ........................................................................................ 1,166 554 1,721 2,786 4,705 125 1993 ........................................................................................ 1,326 574 1,900 2,762 4,861 98 1994 ........................................................................................ 1,392 593 1,985 2,764 4,939 95 1995 ........................................................................................ 1,474 607 2,081 2,778 5,049 80 1996 ........................................................................................ 1,413 608 2,021 2,817 5,028 76 1997 ........................................................................................ 1,465 586 2,051 2,822 5,063 68 

TABLE 15–30.—TOTAL HOUSEHOLDS RECEIVING DIRECT HOUSING ASSISTANCE ADMINISTERED BY HUD, BY TYPE OF SUBSIDY, 1977–2000

Continued

[In thousands of households]

Start of fiscal year

Assisted renters

Total assisted

homeowners 5

T

sis

o

Existing housing

New construction 3 Total as- sisted rent- ers Household- 4 based 1 Project- based 2 Subtotal ex- isting hous- ing

1998 ........................................................................................ 1,481 564 2,045 2,786 5,021 60 1999 ........................................................................................ 1,613 542 2,154 2,757 5,101 53 2000 ........................................................................................ 1,621 522 2,143 2,728 5,061 43 

1 Includes units assisted through section 8 certificates and vouchers.2 Includes units assisted through the section 8 loan management set-aside (LMSA), PD, conversion (from rent supplement and section 236 Rental Assistance Progr

Moderate Rehabilitation Programs. 3 Includes units assisted through the section 8 New Construction and Substantial Rehabilitation Program, section 236, Rent Supplement, and Public Housing Programs, Indian units originally constructed under the Public Housing Program but currently assisted through the section 8 loan management set-aside (LMSA), PD, conversion (supplement and section 236 Rental Assistance Program), and Moderate Rehabilitation Programs. 4 Figures for total assisted renters have been adjusted since 1980 to avoid double-counting households receiving more than one subsidy. Therefore, the total is less 

sum of the components. 5 Includes units assisted through the various section 235 programs.

Note.—Because reliable data are not readily available, this table excludes substantial numbers of households receiving aid through the various programs for the hom

cluding the Housing Opportunities for Persons with AIDS Program) and other block grant programs such as the HOME Investment Partnerships Program).

Source: Congressional Budget Office based on data from the U.S. Department of Housing and Urban Development.

951

TABLE 15–31.—NET BUDGET AUTHORITY APPROPRIATED FOR HOUSING ASSISTANCE

ADMINISTERED BY HUD, BY BROAD PROGRAM CATEGORIES, 1977–2000

[In millions of current and 2000 dollars]

Fiscal year

Direct housing

assistance 1 in

current dollars

Homeless programs 2 in current dollars

Other housing

block grants 3

in current dollars

Total net budget authority

Current dollars 2000 dollars

1977 ......... $28,579 0 0 $28,579 $77,944

1978 ......... 32,193 0 0 32,193 82,470

1979 ......... 25,123 0 0 25,123 59,100

1980 ......... 27,435 0 0 27,435 58,075

1981 ......... 26,021 0 0 26,021 50,057

1982 ......... 14,766 0 0 14,766 26,544

1983 ......... 10,001 0 0 10,001 17,214

1984 ......... 10,810 0 $615 11,425 18,867

1985 ......... 11,071 0 0 11,071 17,633

1986 ......... 9,888 0 144 10,032 15,591

1987 ......... 8,645 $195 300 9,140 13,806

1988 ......... 8,353 107 204 8,664 12,570

1989 ......... 8,664 172 170 9,006 12,476

1990 ......... 10,331 284 152 10,767 14,206

1991 ......... 19,029 339 105 19,473 24,457

1992 ......... 16,730 498 1,861 19,089 23,277

1993 ......... 18,280 672 1,485 20,437 24,181

1994 ......... 18,107 979 1,173 20,259 23,358

1995 ......... 11,676 1,291 1,462 14,429 16,182

1996 ......... 13,218 994 1,400 15,612 17,036

1997 ......... 8,672 1,019 1,370 11,061 11,753

1998 ......... 14,175 1,027 1,500 16,702 17,463

1999 ......... 16,544 1,200 1,600 19,344 19,846

2000 ......... 17,459 1,252 1,600 20,311 20,311

1 Includes the following programs: section 8 Low-Income Housing Assistance, section 202/811 Housing

for the Elderly and the Disabled, section 236 Rental Housing Assistance, Rent Supplement, section 235

Homeownership Assistance, Public Housing Capital, Public Housing Operating Subsidies, Public Housing

Drug Elimination Grants, Revitalization of Severely Distressed Public Housing, Low-Rent Public Housing

Loan Fund, Indian Housing Block Grants. 2 Includes the following programs: Housing Opportunities for Persons with AIDS (HOPWA), Homeless Assistance Grants, Supplemental Assistance for Facilities to Assist the Homeless, Emergency Shelter Grants,

Supportive Housing, Shelter Plus Care Program, section 8 Moderate Rehabilitation for Single Room Occupancy Dwellings, Innovative Homeless Initiatives Demonstration Program. 3 Includes the following programs: HOME Investment Partnerships Program, Nehemiah Housing Opportunity Grant Program, Rental Housing Development Grants (HoDAG), Rental Rehabilitation Block Grant Program.

Note.—All figures are net of funding rescissions, exclude reappropriations of funds, and include supplemental appropriations. Figures exclude budget authority for HUD’s section 202 loan fund.

Source: Congressional Budget Office based on data from the U.S. Department of Housing and Urban

Development.

952

33 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 have been financed with up front grants, which reduced their budget authority requirements by between 51 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 years of section 8 rental assistance, which helped repay the direct loan. Starting in 1991, the loans have

been replaced by grants, which reduced the amount of budget authority required for annual

rental assistance. Moreover, starting in 1995, the term of the rental assistance was decreased

from 20 years to 5 years, thereby reducing the budget authority even more. 34For example, between 1980 and 1990, the CPI–U–X1 increased 59 percent. Over the same

period, the Consumer Price Index (CPI) for residential rents and median household income of

renters increased by 71 and 70 percent, respectively, while the maximum rents allowed for section 8 existing housing rental certificates—the so-called fair market rents—rose even faster, by

85 percent.

cheaper existing housing assistance; a systematic reduction in the

average term of new commitments from more than 24 years in

1977 to less than 5 years today; 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.33

Between 1991 and 1994, budget authority levels (in 2000 dollars)

rose sharply to between $23 and $25 billion. Those trends reflect

primarily the cost of renewing section 8 contracts that expired,

with contracts being extended for 5-year terms. In addition, appropriations for homeless programs and other housing block grant programs rose significantly during that period.

After 1994, budget authority levels dropped again to as low as

$11.8 billion in 1997. That decrease is explained by decreases in

net budget authority appropriated for direct housing assistance,

which were only partially offset by increases in appropriations for

homeless and other housing block grant programs. The decreases

in net budget authority for direct assistance reflect several factors:

a gradual reduction in the terms of renewed contracts from 5 years

to 1 year; further reductions in funding for new activity; and substantial rescissions of budget authority that had been appropriated

in earlier years.

Trends in outlays

Total outlays for all housing programs administered by the U.S.

Department of Housing and Urban Development (HUD) increased

(in 2000 dollars) steadily from 1977 through 1996, from $16 billion

to $57 billion (table 15–32). The lion’s share of that increase is explained by increases in outlays for direct housing assistance, reflecting both the continuing increase in the number of assisted

households and increases in the average subsidy in real terms.

Several factors have contributed to the growth of average subsidies over the 1977–96 period. 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 Consumer Price Index for All Urban Consumers (CPI–U–X1).34

Second, the number of households that occupy units completed

under the section 8 New Construction Program rose during the

1980s. Those units require larger subsidies compared with the

older units that were built prior to the 1980s under the Mortgage

Interest Subsidy and Public Housing Programs. Third, the share of

households receiving less costly home ownership assistance has deVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00952 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
TABLE 15–32.—OUTLAYS FOR HOUSING ASSISTANCE ADMINISTERED BY HUD, BY BROAD PROGRAM CATEGORIES, 1977–2000

[In millions of current and 2000 dollars]

Fiscal year

Direct housing assistance

(in current dollars) Homeless

programs 3

(in current

dollars)

Other housing block

grants 4 (in

current dollars)

Total outlay

Section 8

and other

assisted

housing 1

Public housing 2 Subtotal as- sisted hous- ing Current dol- lars 20

1977 ........................................................................................ $1,331 $1,564 $2,895 0 0 $5,790 1978 ........................................................................................ 1,824 1,779 3,603 0 0 7,206 1979 ........................................................................................ 2,374 1,815 4,189 0 0 8,378 1980 ........................................................................................ 3,146 2,218 5,364 0 0 10,728 1981 ........................................................................................ 4,254 2,478 6,732 0 0 13,464 1982 ........................................................................................ 5,293 2,553 7,846 0 0 15,692 1983 ........................................................................................ 6,102 3,318 9,420 0 0 18,840 1984 ........................................................................................ 7,068 3,932 11,000 0 0 22,000 1985 ........................................................................................ 7,771 17,261 25,032 0 $15 50,079 1986 ........................................................................................ 8,320 3,859 12,179 0 142 24,500 1987 ........................................................................................ 8,993 3,517 12,510 $2 165 25,187 1988 ........................................................................................ 9,985 3,699 13,684 37 180 27,585 1989 ........................................................................................ 10,689 3,774 14,463 72 275 29,273 1990 ........................................................................................ 11,357 4,331 15,688 85 276 31,737 1991 ........................................................................................ 12,107 4,786 16,893 125 168 34,079 1992 ........................................................................................ 13,052 5,182 18,234 150 35 36,653 1993 ........................................................................................ 14,032 6,447 20,479 180 276 41,414 1994 ........................................................................................ 15,289 6,857 22,146 225 862 45,379 1995 5 ...................................................................................... 16,448 7,505 23,953 359 1,259 49,524 1996 5 ...................................................................................... 17,496 7,668 25,164 616 1,273 52,217 1997 ........................................................................................ 17,131 7,809 24,940 718 1,263 51,861 

TABLE 15–32.—OUTLAYS FOR HOUSING ASSISTANCE ADMINISTERED BY HUD, BY BROAD PROGRAM CATEGORIES, 1977–2000—Continue

[In millions of current and 2000 dollars]

Fiscal year

Direct housing assistance

(in current dollars) Homeless

programs 3

(in current

dollars)

Other housing block

grants 4 (in

current dollars)

Total outlay

Section 8

and other

assisted

housing 1

Public housing 2 Subtotal as- sisted hous- ing Current dol- lars 20

1998 5 ...................................................................................... 16,975 8,028 25,003 916 1,316 52,238 1999 5 ...................................................................................... 17,171 7,805 24,976 1,032 1,367 52,351 2000 est. 5 .............................................................................. 17,443 8,094 25,537 1,174 1,456 53,704 

1 Includes the following programs: section 8 Low-Income Housing Assistance, section 202/811 Housing for the Elderly and the Disabled, section 236 Rental Housing A

Rent Supplement, section 235 Homeownership Assistance. 2 Includes the following programs: Public Housing Capital, Public Housing Operating Subsidies, Public Housing Drug Elimination Grants, Revitalization of Severely Distreslic Housing, Low-Rent Public Housing Loan Fund, Indian Housing Block Grants. 3 Includes the following programs: Housing Opportunities for Persons with AIDS (HOPWA), Homeless Assistance Grants, Supplemental Assistance for Facilities to Assist t

less, Emergency Shelter Grants, Supportive Housing, Shelter Plus Care Program, section 8 Moderate Rehabilitation for Single Room Occupancy Dwellings Program, Innovatiless Initiatives Demonstration Program. 4 Includes the following programs: HOME Investment Partnerships Program, Nehemiah Housing Opportunity Grant Program, Rental Housing Development Grants (HoDAG

Rehabilitation Block Grant Program. 5 In order to reflect trends more accurately, figures have been adjusted to account for advance spending in certain years. In 1995, $1.2 billion of spending occurred th

have occurred in 1996. In 1998, $680 million of spending occurred that should have occurred in 1999. The Congressional Budget Office also expects that $680 million ing will occur in 2000 that should occur in 2001.

Note.—The bulge in outlays for public housing in 1985 is caused by a change in the method of financing public housing, which generated close to $14 billion in one

penditures. That amount paid off—all at once—the capital cost of public housing construction and modernization activities undertaken between 1974 and 1985, which would have been paid off over periods of up to 40 years. Because of that expenditure, however, outlays for public housing since that time have been lower than they wbeen otherwise.

Source: Congressional Budget Office based on data from the U.S. Department of Housing and Urban Development.

955

TABLE 15–33.—PER UNIT OUTLAYS FOR HOUSING AID ADMINISTERED BY HUD, 1977–

97

[In current and 1997 dollars]

Fiscal year

Per unit outlays

Current dollars 1997 dollars

1977 .................................................................................... $1,160 $2,980

1978 .................................................................................... 1,310 3,160

1979 .................................................................................... 1,430 3,160

1980 .................................................................................... 1,750 3,480

1981 .................................................................................... 2,100 3,810

1982 .................................................................................... 2,310 3,900

1983 .................................................................................... 2,600 4,220

1984 .................................................................................... 2,900 4,500

1985 .................................................................................... 6,420 9,620

1986 .................................................................................... 3,040 4,440

1987 .................................................................................... 3,040 4,320

1988 .................................................................................... 3,270 4,460

1989 .................................................................................... 3,390 4,420

1990 .................................................................................... 3,610 4,480

1991 .................................................................................... 3,830 4,530

1992 .................................................................................... 4,060 4,670

1993 .................................................................................... 4,450 4,960

1994 .................................................................................... 4,720 5,120

1995 .................................................................................... 5,080 5,360

1996 .................................................................................... 5,350 5,490

1997 (estimate) .................................................................. 5,490 5,490

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.

creased. Fourth, housing assistance has been targeted increasingly

toward poorer segments of the population, requiring larger subsidies per assisted household (table 15–33).

Since 1996, outlays for all housing assistance programs have decreased from $57 billion to around $54 billion in 1999 and 2000 (in

2000 dollars). That drop is explained by a decrease in constant outlays for direct housing assistance from $54.9 billion in 1996 to an

estimated $51.1 billion in 2000, offset only partially by an increase

in real outlays for homeless and other housing block grant programs from $2.1 billion to an estimated $2.6 billion.

The decrease in constant dollar outlays for direct housing assistance, which is also evident in the leveling off of outlays in current

dollars, is not easily explained because of a lack of reliable data on

the underlying factors that may have contributed.

Given that the number of assisted households has more or less

leveled off at around 5 million, the factor likely to be responsible

for the decrease in real outlays is a decrease in real average subVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00955 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
956

35The apparent fluctuations in total number of assisted households between 5.021 and 5.101

million is most likely due to inaccuracies in the data.

sidies.35 Indeed, several cost containment measures have been enacted in recent legislation that have slowed down the growth in average subsidies in current dollars, thereby helping to reduce average subsidies in 2000 dollars. First, rents in assisted housing are

increasing at a slower rate or are even declining in many cases. Because the Federal Government pays part of those rents, subsidies

have been lower than they would have been otherwise. In particular, the maximum allowable rent in the section 8 voucher and certificate program has been lowered from the 45th percentile to the

40th percentile of the local rent distribution. That decrease is being

phased in gradually, as households move from their current units

or turn over their certificate or voucher to a new recipient. Also,

rents in certain assisted housing projects are no longer increased

annually, while rent adjustments in other cases are being reduced.

Second, many assisted households who had been contributing little

or nothing to their rent are now charged a minimum rent of up to

$50 per month. Third, preference rules for admitting new tenants

have been relaxed, thereby allowing a gradual shift to a population

with somewhat higher incomes. Fourth, in several of the years during the period, the reissuing of section 8 certificates and vouchers

upon turnover has been delayed for 3 months.

In addition to the legislative changes, some nonlegislative factors

may have contributed to the drop in real subsidies. First, the booming economy of the late 1990s likely has increased the incomes of

many assisted households, thereby resulting in larger shares of the

rent being paid by them and lower shares by HUD. Second, anecdotal evidence suggests that new recipients of section 8 certificates

and vouchers in some parts of the country have trouble finding

units in which to use their housing assistance because of very tight

housing markets or a lack of landlords willing to participate in the

programs. As a result, the utilization rate of certificates and vouchers has been decreasing.

Future trends in outlays for housing assistance will be affected

by further changes made by recent legislation. On the one hand,

the so-called mark-to-market initiative, enacted by the Multifamily

Assisted Housing Reform and Affordability Act of 1997, will reduce

rents in certain section 8 projects with federally insured mortgages,

thereby reducing outlays for the section 8 program. Under this initiative, project rents will be reduced to market levels as the section

8 contracts expire. To avoid defaults on the federally insured mortgages, HUD will write down, if needed, those mortgages to levels

that are supportable by the new lower rents. On the other hand,

a second initiative, enacted in 1999 by the Preserving Affordable

Housing for Senior Citizens and Families into the 21st Century

Act, will allow rents to increase in certain section 8 projects, thereby increasing outlays for section 8. To prevent owners from opting

out of the Federal assistance programs, rents will be raised to market levels. In cases where owners opt out anyway, tenants will be

enabled to stay in the project through the use of vouchers that will

be issued at market rent levels even if the latter exceed the section

8 fair market rent in the area.

957

36Other major Federal child nutrition programs include: the Child and Adult Care Food Program (discussed in section 9) 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). 37Schools and RCCIs with very high proportions of low-income children receive an extra 2

cents a meal. Federally donated commodity assistance make up about 15 cents of each cited subsidy rate.

SCHOOL LUNCH AND BREAKFAST PROGRAMS36

The School Lunch and School Breakfast Programs provide Federal cash and commodity support for meals. The meals are 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 meeting Federal

nutrition standards 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 $21,700 for a four-person family in the

1999–2000 school year); (2) permits children to receive reducedprice 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 $21,700 and $30,900 for

a four-person family in the 1999–2000 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 Temporary Assistance for Needy

Families (TANF) 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 (4.5 billion in fiscal year 1999) to children in 6,000 RCCIs and almost all schools

(91,000). During fiscal year 1999, average daily participation was

27 million students (57 percent of the children enrolled in participating schools and RCCIs); of these, 48 percent received free

lunches, and 9 percent ate reduced-price lunches (table 15–34).

More than 90 percent of Federal funding is used to subsidize free

and reduced-price lunches served to low-income children. For the

1999–2000 school year, per-lunch Federal subsidies (cash and commodity support) range from about 34 cents for full-price lunches to

$2.13 and $1.73 for free and reduced-price lunches.37 Fiscal year

1999 Federal school lunch costs (including commodity assistance)

totaled over $6 billion (table 15–34).

The School Breakfast Program serves far fewer students than

does the School Lunch Program; about 1.3 billion breakfasts in

66,000 schools (and 6,000 RCCIs) were subsidized in fiscal year

1999. Average daily participation was 7.4 million children (21 percent of the 36 million students enrolled in participating schools and

RCCIs). Unlike the School Lunch Program, the great majority received free or reduced-price meals: 77 percent received free meals,

and 8 percent purchased reduced-price meals (table 15–35). In the

958

38Subsidies are substantially higher (about 20 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.

1999–2000 school year, per-breakfast Federal subsidies (cash only)

range from about 21 cents for full-price meals to $1.09 and 79 cents

for free and reduced-price breakfasts, respectively.38 Fiscal year 1999 Federal school breakfast funding totaled about $1.4 billion

(table 15–35).

TABLE 15–34.—NATIONAL SCHOOL LUNCH PROGRAM PARTICIPATION AND FEDERAL

COSTS, FISCAL YEARS 1977–99

[In millions]

Fiscal year

Participation 9 month average 1 Federal costs

Free meals

Reducedprice

meals

Full-price

meals 2 Total 3 Currentdollars 4

Constant 1999

dollars

1977 ......... 10.5 1.3 14.5 26.3 $2,111.1 $5,857.3

1978 ......... 10.3 1.5 14.9 26.7 2,293.6 5,945.0

1979 ......... 10.0 1.7 15.3 27.0 2,659.0 6,247.2

1980 ......... 10.0 1.9 14.7 26.6 3,044.9 6,298.5

1981 ......... 10.6 1.9 13.3 25.8 2,959.5 5,510.6

1982 ......... 9.8 1.6 11.5 22.9 2,611.5 4,528.5

1983 ......... 10.3 1.5 11.2 23.0 2,828.6 4,738.6

1984 ......... 10.3 1.5 11.5 23.3 2,948.2 4,744.1

1985 ......... 9.9 1.6 12.1 23.6 3,034.4 4,709.2

1986 ......... 10.0 1.6 12.2 23.8 3,160.2 4,786.9

1987 ......... 10.0 1.6 12.4 24.0 3,245.6 4,779.6

1988 ......... 9.8 1.6 12.8 24.2 3,383.7 4,785.7

1989 ......... 9.7 1.6 12.7 24.2 3,479.4 4,697.5

1990 ......... 9.9 1.6 12.8 24.1 3,676.4 4,727.6

1991 ......... 10.3 1.8 12.1 24.2 4,072.9 4,986.0

1992 ......... 11.1 1.7 11.7 24.5 4,474.5 5,317.4

1993 ......... 11.8 1.7 11.3 24.8 4,663.8 5,379.1

1994 ......... 12.2 1.8 11.3 25.3 4,994.5 5,613.2

1995 ......... 12.4 1.9 11.3 25.6 5,254.0 5,743.6

1996 ......... 12.6 2.0 11.3 25.9 5,441.0 5,786.3

1997 ......... 13.0 2.0 11.3 26.3 5,729.8 5,935.1

1998 ......... 13.0 2.2 11.3 26.5 5,872.1 5,984.8

1999 ......... 13.0 2.4 11.6 27.0 6,249.8 6,249.8

1 In order to reflect participation for the actual school year (September through May), these estimates

are based on 9 month averages of October through May, plus September, rather than averages of the 12

months of the fiscal year (October through September). 2 The Federal Government provides a small subsidy for these meals.

3 Details may not sum to total because of rounding.

4 Includes cash payments and the value of ‘‘entitlement’’ commodities; does not include the value of

‘‘bonus’’ commodities. Overstates actual support for school lunches because a 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 (FCS): (1) budget justification materials prepared by the FCS for appropriations requests for fiscal years 1980–2001; and (2) monthly

‘‘Program Information Report’’ summaries prepared by the FCS.

959

TABLE 15–35.—SCHOOL BREAKFAST PROGRAM PARTICIPATION AND FEDERAL COSTS,

SELECTED FISCAL YEARS 1977–99

[In millions]

Fiscal

year

Participation 9 month average 1 Federal costs

Free meals Reduced-price

meals

Full-price

meals 2 Total 3 Currentdollars 4

Constant 1999

dollars

1977 ... 2.0 0.1 0.4 2.5 $148.6 $412.3

1980 ... 2.8 0.2 0.6 3.6 287.8 595.3

1981 ... 3.0 0.2 0.5 3.8 331.7 617.6

1982 ... 2.8 0.2 0.4 3.3 317.3 550.2

1983 ... 2.9 0.1 0.3 3.4 343.8 576.0

1984 ... 2.9 0.1 0.4 3.4 364.0 585.7

1985 ... 2.9 0.2 0.4 3.4 379.3 588.7

1986 ... 2.9 0.2 0.4 3.5 406.3 615.5

1987 ... 3.0 0.2 0.4 3.7 446.8 658.0

1988 ... 3.0 0.2 0.5 3.7 482.0 681.7

1989 ... 3.1 0.2 0.5 3.8 507.0 684.5

1990 ... 3.3 0.2 0.5 4.0 589.1 757.6

1991 ... 3.6 0.2 0.6 4.4 677.2 829.0

1992 ... 4.0 0.3 0.6 4.9 782.6 930.0

1993 ... 4.4 0.3 0.7 5.4 868.4 1,001.6

1994 ... 4.8 0.3 0.7 5.8 958.7 1,077.5

1995 ... 5.1 0.4 0.8 6.3 1,181.8 1,291.9

1996 ... 5.3 0.4 0.9 6.6 1,124.2 1,195.5

1997 ... 5.5 0.9 6.9 6.6 1,212.7 1,256.2

1998 ... 5.6 1.0 7.1 6.6 1,299.6 1,324.5

1999 ... 5.7 1.1 7.4 6.6 1,354.8 1,354.8

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 unclaimed obligations.

Note.—Constant dollars were calculated using the fiscal year CPI–U.

Source: U.S. Department of Agriculture, Food and Consumer Service (FCS): (1) budget justification materials prepared by the FCS for appropriations requests for fiscal years 1980–2001; and (2) monthly

‘‘Program Information Report’’ summaries prepared by the FCS.

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,

nutrition risk screening, and related services (e.g., nutrition education and breastfeeding support) 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 family income at or below 185 percent of poverty, and must be judged to be

nutritionally at risk. Nutrition risk is defined as detectable abnormal nutritional conditions; documented nutritionally-related medical conditions; health-impairing dietary deficiencies; or conditions

960

that predispose people to inadequate nutrition or nutritionally related medical problems.

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 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 nutrition risk

screening, breastfeeding 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 1999, the national average Federal cost of a WIC food package

(after rebates) was $32.50 a month, and, for each participant, the

average monthly ‘‘administrative’’ cost (including nutrition risk assessments and nutrition education) was about $12.

The WIC Program has categorical, income, and nutrition risk requirements for eligibility. Only pregnant and postpartum women,

infants, and children under age 5 may participate. As noted above,

WIC applicants must show evidence of health or nutrition 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 (about $25,700 a year for a threeperson family in 1999). State WIC agencies may (but seldom do) set

lower income eligibility cutoff points. Receipt of TANF, 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 1996 study, over 60 percent of WIC enrollees had family income below the Federal poverty guidelines, 25

percent of WIC enrollees were cash welfare recipients, 36 percent

received food stamps, and 55 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.

961

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 1999, Federal spending was

$3.956 billion, and the program served a monthly average of 7.3

million women, infants, and children: 23 percent women, 26 percent infants, and 51 percent children. The administration’s most recent estimate of the total number of persons eligible and likely to

apply for WIC benefits is 7.5 million persons, although other

sources suggest the number exceeds 8 million people. Table 15–36

summarizes WIC participation and Federal costs.

TABLE 15–36.—SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS,

AND CHILDREN (WIC) PARTICIPATION AND FEDERAL SPENDING, SELECTED FISCAL

YEARS 1977–99

[Dollars in millions]

Fiscal year

Participation (in thousands) Federal spending

Women Infants Children Total 1 Current

dollars 2

Constant 1999

dollars

1977 ............... 165.0 213.0 471.0 848.0 $255.9 $710.0

1980 ............... 411.0 507.0 995.0 1,913.0 724.7 1,499.1

1981 ............... 446.0 585.0 1,088.0 2,119.0 874.4 1,628.1

1982 ............... 478.0 623.0 1,088.0 2,189.0 948.2 1,644.2

1983 ............... 542.0 730.0 1,265.0 2,537.0 1,123.1 1,881.5

1984 ............... 657.0 825.0 1,563.0 3,045.0 1,386.3 2,230.8

1985 ............... 665.0 874.0 1,600.0 3,138.0 1,488.9 2,310.7

1986 ............... 712.0 945.0 1,655.0 3,312.0 1,580.5 2,394.1

1987 ............... 751.0 1,019.0 1,660.0 3,429.0 1,663.6 2,449.9

1988 ............... 815.0 1,095.0 1,683.0 3,593.0 1,802.4 2,549.2

1989 ............... 951.8 1,259.6 1,907.0 4,118.4 1,929.4 2,604.9

1990 ............... 1,035.0 1,412.5 2,069.4 4,516.9 2,125.9 2,733.8

1991 ............... 1,120.1 1,558.8 2,213.8 4,892.6 2,301.1 2,817.0

1992 ............... 1,221.5 1,684.1 2,505.2 5,410.8 2,566.5 3,050.0

1993 ............... 1,364.9 1,741.9 2,813.4 5,920.3 2,819.5 3,252.0

1994 ............... 1,499.2 1,786.3 3,191.7 6,477.2 3,159.8 3,551.2

1995 ............... 1,576.8 1,817.3 3,500.1 6,894.2 3,451.0 3,772.6

1996 ............... 1,648.2 1,827.3 3,712.3 7,187.8 3,688.2 3,922.2

1997 ............... 1,710.5 1,863.0 3,835.4 7,408.9 3,845.7 3,983.5

1998 ............... 1,733.3 1,882.8 3,749.2 7,365.3 3,895.8 3,970.6

1999 ............... 1,742.5 1,897.6 3,671.4 7,311.5 3,955.6 3,955.6

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 (FCS): (1) budget justification materials prepared by the FCS for appropriations requests for fiscal years 1980–2001; and (2) monthly

‘‘Program Information Report’’ summaries prepared by the FCS.

962

39 CACFP subsidies also are available for meal services to chronically impaired adults and the

elderly in adult day care centers under the same general terms and conditions as child care centers. However, few adult care centers participate (about 1,900 sites serving some 63,000 persons

daily in fiscal year 1999), and Federal spending for them is a minor fraction of the total cost

of the CACFP ($36 million in fiscal year 1999, or about 2 percent of overall CACFP spending).

In limited cases, residential child care facilities may receive CACFP subsidies for snacks served

in afterschool programs.

CHILD AND ADULT CARE FOOD PROGRAM

The Child and Adult Care Food Program (CACFP) is a permanently authorized entitlement under section 17 of the Richard B.

Russell National School Lunch Act. It provides Federal subsidies

for breakfasts, lunches, suppers, and snacks served in participating

nonresidential child care centers (including homeless shelters,

Head Start centers, and afterschool care centers) and family or

group day care homes, as well as for snacks offered in outside-ofschool programs.39 Sponsors giving administrative support for providers also are paid limited amounts for their costs. Subsidized

meals and snacks must meet Federal nutrition standards, and providers must fulfill any State or local licensing/approval requirements or minimum alternative Federal requirements (or otherwise

demonstrate that they comply with government-established standards for other child-care programs). Federal assistance is made up

overwhelmingly of cash subsidies based on the number of meals/

snacks served or paid for administration; about 3 percent is in the

form of federally donated food commodities. CACFP subsidies to

participating centers, homes, and outside-of-school programs are

available for meals and snacks served to children age 12 or under

(through age 18 in outside-of-school settings), migrant children age

15 or under, and handicapped children of any age, but preschool

children form the majority.

At the Federal level, the program is administered by the Agriculture Department’s Food and Nutrition Service (FNS). At the

State level, a variety of agencies have been designated as responsible by the individual States, and, in one State (Virginia), the FNS

is the designated State agency. Federal CACFP payments flow to

individual providers either directly from the State agency (this is

the case with many child care centers able to handle their own administrative responsibilities) or through ‘‘sponsors’’ who oversee

and provide support for a number of local providers (this is the

case with some child care centers and all day care homes). The

CACFP dates back to 1968, when Federal assistance for programs

serving children outside of school (‘‘special food service’’ programs)

was first authorized. In 1975, the summer food service and child

care components of this assistance were first formally separated as

individual programs.

In fiscal year 1999, the cost of CACFP cash and commodity subsidies for meals/snacks, sponsors’ administrative costs, and a separate payment to State agencies for audit and oversight was $1.599

billion, approximately the same as it was in fiscal years 1996–98.

Total average daily attendance in participating centers, homes, and

outside-of-school programs was 2.6 million children, up from 2.4

million in fiscal year 1996.

963

40 Children in participating homeless shelters represent a very minor fraction of those served

under the CACFP; only about 100 shelter sites participate. 41FNS guidelines, however, allow proprietary centers to participate where Child Care and Development Block Grant and title XX funds are ‘‘pooled’’ in such a way as to meet the 25-percent

requirement, thus requiring relatively minimal contributions under title XX itself if this arrangement is used. In two States (Iowa and Kentucky), a demonstration project allows proprietary centers to participate in the CACFP if children representing at least 25 percent of their

enrollment or licensed capacity have family income below 185 percent of the Federal poverty

income guidelines (i.e., would be eligible for free or reduced-price meals and snacks).

CENTERS AND OUTSIDE-OF-SCHOOL PROGRAMS

Child care centers in the CACFP serve an average of 40–60 children and are of 5 types: (1) public or private nonprofit centers (including afterschool care centers), (2) Head Start centers, (3) forprofit proprietary centers (see restrictions noted below), (4) outsideof-school programs (often operated by schools), and (5) shelters for

homeless families. In fiscal year 1999, some 37,000 centers/sites

(15,000 sponsors) with an average daily attendance of 1.66 million

children participated in the CACFP. Over 60 percent of children in

the CACFP are reached through centers or outside-of-school programs. Of these, about half are in public or private nonprofit centers/programs, and some 30 percent are in Head Start centers; just

under 20 percent are in for-profit centers.40 On the other hand,

CACFP funding for centers/programs represents half of total

CACFP spending, primarily because their subsidies are, for the

most part, differentiated by individual children’s family income and

larger administrative cost payments generally are provided for

sponsors of day care homes (see below). Proprietary centers are eligible for CACFP subsidies only if they receive title XX funding for

at least 25 percent of their enrollment or licensed capacity, regardless of the income status of the children they serve.41

Day care centers may receive daily subsidies for up to two meals

and one snack or one meal and two snacks for each child. All meals

and snacks served in centers are federally subsidized to at least

some degree; different subsidies are provided for breakfasts,

lunches/suppers, and snacks, and subsidy rates are set in law and

indexed for inflation annually. However, cash subsidies vary according to the family income of each child, and applications for free

or reduced-price meals and snacks normally must be taken. The

largest subsidies are paid for meals and snacks served to children

with family income below 130 percent of the Federal poverty income guidelines: for July 1999–June 2000, these subsidies are 54

cents for each snack, $1.09 for each breakfast, and $1.98 for each

lunch/supper. Smaller subsidies are available for meals and snacks

served at a reduced price (no more than 15 cents for snacks, 30

cents for breakfasts, and 40 cents for lunches/suppers) to children

with family income between 130 and 185 percent of the poverty

guidelines: for July 1999–June 2000, these are 27 cents for snacks,

79 cents for breakfasts, and $1.58 for lunches/suppers. The smallest subsidies are paid for meals and snacks served to children who

do not qualify or apply for free or reduced-price meals and snacks:

for July 1999–June 2000, these are 5 cents for snacks, 21 cents for

breakfasts, and 19 cents for lunches and suppers. ‘‘Independent’’

centers (those without sponsors handling administrative responsibilities) must pay for administrative costs associated with the

CACFP out of non-Federal funds or a portion of their meal subsidy

964

payments. In other cases, center sponsors may retain a proportion

of the meal subsidy payments they receive on behalf of their centers to cover their costs. Finally, Federal commodity assistance is

available to centers, generally valued at about 15 cents a meal.

In addition to the regular CACFP for centers described above,

the 1998 child nutrition reauthorization law allows public and private nonprofit organizations (including schools and child care centers) operating outside-of-school programs to get Federal CACFP

subsidies for snacks served free in their programs to children

(through age 18) in low-income areas—at the free snack rate noted

above.

FAMILY AND GROUP DAY CARE HOMES

CACFP-subsidized day care homes serve an average of 4–6 children; just under 40 percent of children in the CACFP are in day

care homes, and about half the money spent under the CACFP supports meals and snacks served in homes. In fiscal year 1999,

175,000 home sites (with almost 1,200 sponsors) received subsidies

for an average daily attendance of some 970,000 children. As with

centers, payments are provided for no more than two meals and

one snack (or one meal and two snacks) a day for each child. Unlike centers, day care homes must participate under the auspices

of a public or (most often) private nonprofit sponsor that typically

has 100 or more homes under its supervision; CACFP day care

home sponsors receive monthly administrative payments (separate

from meal subsidies) based on the number of homes for which they

are responsible. Also unlike centers, day care homes receive cash

subsidies (but not commodities) that generally do not differ by individual children’s family income. Instead, there are two distinct subsidy rates. ‘‘Tier I’’ homes (those located in low-income areas or operated by low-income providers) receive higher subsidies for each

meal/snack they serve: for July 1999–June 2000, all lunches and

suppers are subsidized at $1.69 each, all breakfasts at 92 cents,

and all snacks at 50 cents. ‘‘Tier II’’ homes (those not located in

low-income areas or without low-income providers) receive smaller

subsidies: for July 1999–June 2000, these are $1.02 for lunches/

suppers, 34 cents for breakfasts, and 13 cents for snacks. However,

tier II providers may seek the higher tier I subsidy rates for individual low-income children for whom financial information is collected and verified.

WORKFORCE INVESTMENT ACT

Title II of the Job Training Partnership Act of 1982 (JTPA) provided block grants to States to fund training and related services

for economically disadvantaged youths and adults. Title II consisted 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, title II–A provided services to both adults and youth.

In 1998, Congress passed the Workforce Investment Act (WIA,

Public Law 105–220), which repealed and replaced JTPA on July

1, 2000. Program information in this edition of the Green Book is

965

taken from data available under JTPA. The 2002 edition will contain program data for WIA. A brief description of the major differences between WIA and JTPA concludes this section of the

Green Book. Table 15–37 cross references the authorization for the

JTPA Programs discussed in this section with their authorization

under WIA.

TABLE 15–37.—CROSS REFERENCE OF PROGRAMS AUTHORIZED UNDER JTPA WITH

THEIR AUTHORIZATION UNDER WIA

Job Training Partnership Act (JTPA) Workforce Investment Act (WIA)

Adult Training Program—Title II–A ........... Adult Activities—Title I, Subtitle B, Chapter 5

Youth Training Program—Title II–C .......... Youth Activities—Title I, Subtitle B,

Chapter 4

Summer Youth Employment and Training

Programs—Title II–B.

no separate summer youth program; summer youth activities are included in

Youth Activities above

Job Corps—Title IV–B ................................ Job Corps—Title I, Subtitle C

As shown in table 15–38a, of title II–A participants who terminated during program year 1997, 45 percent were white, 34 percent

were black, and 17 percent were Hispanic. Of participants who terminated benefits, 71 percent entered employment. The average

hourly wage for adult terminees who entered employment was

$7.94.

Among the 36 percent of title II–A terminees who were cash welfare recipients at the time of enrollment in program year 1997, 86

percent received Temporary Assistance for Needy Families (TANF)

payments. Women comprised 86 percent of terminees receiving

cash welfare payments, as compared with 58 percent of terminees

who were not recipients. Among title II–A participants receiving

cash welfare payments, 25 percent did not complete high school,

compared with 19 percent of those participants who were not recipients. Sixty-eight percent of cash welfare recipients entered employment in program year 1997, compared with 73 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 $7.88, compared with $8.46 for nonrecipients.

As shown in table 15–38b, of the youth participants in yearround services who terminated during program year 1997, 38 percent were white, 33 percent were black, and 24 percent were Hispanic. Of the title II–C participants who terminated, 48 percent entered employment, and the average hourly wage for terminees who

entered employment was $6.52.

Among the 26 percent of title II–C (youth) participants receiving

cash welfare payments in program year 1997, 48 percent entered

employment, compared with 48 percent of II–C participants who

did not receive cash welfare payments. The average hourly starting

wage for cash welfare recipients was $6.55, compared with $6.51

for nonrecipients. Among the 53 percent of II–C terminees who had

966

TABLE 15–38a.—CHARACTERISTICS OF JTPA TITLE II–A ADULT TERMINEES, PROGRAM

YEARS 1992–97 1 2

[In percent]

Selected characteristics 1992 1993 1994 1995 1996 1997

Sex:

Male ................. 41 36 33 33 31 32

Female ............. 59 64 67 67 69 68

Ethnic status:

White (excluding Hispanic) 52 53 52 48 46 45

Black (excluding Hispanic) 30 31 31 32 33 34

Hispanic .......... 15 13 14 17 17 17

Other D4 .......... 33455

Age at enrollment:

22–29 .............. 42 42 42 42 42 41

30–54 .............. 56 56 56 56 56 57

55 and older ...322222

Economically disadvantaged ..... NA 97 98 98 98 98

Receiving TANF/

AFDC ................ 28 32 35 35 33 31

Receiving cash

welfare (including TANF/AFDC) 33 40 42 41 39 36

Unemployment

compensation

claimant .......... 13 14 10898

Education status:

Less than high

school graduate ............. 25 24 23 22 22 21

High school

graduate ..... 51 55 56 56 56 57

Post high

school .......... 25 21 21 21 22 21

Average weeks

participated ..... 26 31 37 39 39 37

Entered employment ................ 62 62 63 63 66 71

Average hourly

wage at placement ................ $6.40 $6.86 $7.09 $7.25 $7.58 $7.94

Total

terminees 257,561 180,178 175,647 162,120 151,155 147,717

1 Prior to 1993, title II–A served both adults and youth. Data in this table is for adults only.

2 Numbers (except total terminees, average weeks participated, and average hourly wage at placement)

represent percentages.

Source: U.S. Department of Labor.

967

TABLE 15–38b.—CHARACTERISTICS OF JTPA YEAR-ROUND YOUTH PROGRAM

TERMINEES, PROGRAM YEARS 1992–97 1 2

[In percent]

Selected characteristics 1992 1993 1994 1995 1996 1997

Sex:

Male ..................... 47 45 44 42 41 41

Female ................. 53 55 56 58 59 59

Ethnic status:

White (excluding

Hispanic) ......... 40 41 41 38 38 38

Black (excluding

Hispanic) ......... 36 35 35 34 33 33

Hispanic .............. 21 20 20 24 25 24

Other .................... 4 4 5 445

Age at enrollment:

14–15 .................. 18 16 14 12 9 9

16–17 .................. 33 34 36 35 33 34

18–21 .................. 48 49 50 53 58 57

Economically disadvantaged ......... NA 95 95 95 96 96

Receiving TANF/AFDC 25 27 27 26 25 22

Receiving cash welfare (including

TANF/AFDC) .......... 27 35 31 30 29 26

Unemployment compensation claimant ....................... 1 1 1 111

Education status:

Less than high

school graduate ................. 78 79 77 75 71 71

High school graduate ................. 18 19 20 22 26 26

Post high school 4 3 3 333

Average weeks participated .............. 29 35 36 40 39 37

Entered employment 34 34 37 38 45 48

Average hourly wage

at placement ....... $5.19 $5.45 $5.61 $5.81 $6.17 $6.52

Total terminees 255,268 167,444 158,083 113,563 76,700 74,816

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 Numbers (except total terminees, average weeks participated, and average hourly wage at placement)

represent percentages.

Source: U.S. Department of Labor.

either dropped out of school or were behind in grade level, the average entered employment rate in program year 1997 was 40 percent as compared with 57 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

968

grade level was $6.13 compared with $6.83 for those not in this category. In fiscal year 1999, an estimated $1.1 billion is expected to be

spent for JTPA II–A and II–C grants, providing training and other

services to over 513,000 participants. Data on participation and

budget authority for recent years are provided in table 15–39

below.

For the Summer Youth Employment and Training Program (title II–B), $871 million was appropriated for the summer of 1998, with

495,100 participants served. For the summer of 1999, $871 million

was appropriated to serve an estimated 495,000 individuals. Table

15–40 presents a funding and participation history of the summer

program.

Job Corps, authorized by title IV–B of JTPA, serves economically

disadvantaged youth, ages 16–24, 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 114 centers around the country. Services include basic education, vocational skill training, work experience,

counseling, health care, and other supportive services.

In program year 1997 (July 1, 1997–June 30, 1998), nearly

66,000 new students enrolled in Job Corps Centers, 60 percent of

whom were male. In that same year, 50 percent of new students

were African-American, 28 percent were white, 16 percent were

Hispanic, 4 percent were Native Americans, and 2 percent were

Asian or Pacific Islanders. Seventy-eight percent of new students

had dropped out of high school and 63 percent had never worked

full time. Thirty-three percent of new students in program year

1997 came from families on public assistance.

The average length of stay in Job Corps in program year 1997

was 7.3 months. The Labor Department estimates that 70 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

1997 of 80 percent.

Table 15–41 provides a funding and participation history of the

Job Corps since 1982. The program was first authorized in the mid60s by the Economic Opportunity Act and has been authorized

under JTPA since 1982.

DESCRIPTION OF MAJOR DIFFERENCES BETWEEN WIA AND JTPA

One of the major differences between WIA and JTPA is that WIA

creates a coordinated service delivery system called the one-stop

system as the basic delivery system for providing services to adults.

(One criticism of JTPA was that programs authorized by it were

not coordinated with each other or with other training programs.)

Under WIA, each local area in a State must have a one-stop delivery system to provide ‘‘core services,’’ such as job search assistance,

‘‘intensive services,’’ such as comprehensive assessments, and job

training. The one-stop system is created by the local workforce investment board with the agreement of the chief elected official, e.g.,

the mayor. The workforce investment board is certified by the Governor and is responsible for setting local workforce investment polVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00968 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
969

TABLE 15–39.—JOB TRAINING PROGRAMS 1 FOR THE DISADVANTAGED: NEW

ENROLLEES, FEDERAL APPROPRIATIONS AND OUTLAYS, FISCAL YEARS 1975–98

Fiscal year

New enrollees/

total participants 2

Appropriations

(millions)

Outlays

(millions)

Budget authority in constant

1990 dollars

Outlays in constant 1990

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 ......... 603,900 1,779 1,746 1,694 1,676

1992 ......... 602,300 1,774 1,767 1,637 1,632

1993 ......... 641,700 1,692 1,747 1,530 1,580

Adult 371,700 1,015 1,048 918 948

Youth 270,000 677 699 612 632

1994 ......... 635,300 1,597 1,693 1,415 1,500

Adult 370,400 988 1,016 875 900

Youth 264,900 609 677 540 600

1995 ......... 536,200 1,124 1,534 971 1,325

Adult 353,500 997 934 861 807

Youth 3 182,700 127 600 110 518

1996 ......... 480,600 977 1,023 825 865

Adult 338,600 850 866 718 732

Youth 142,000 127 157 107 133

1997 ......... 483,100 1,022 949 845 784

Adult 367,300 895 799 740 660

Youth 115,800 127 150 105 124

1998 ......... 452,400 1,085 1,162 886 949

Adult 333,600 955 900 780 735

Youth 118,800 130 262 106 214

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 Figures for 1975–94 are new enrollees. Total participants are shown from 1995 forward.

3 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. This transfer authority continues to be used by States to serve

more year-round youth.

NA—Not available.

Source: U.S. Department of Labor.

970

TABLE 15–40.—SUMMER YOUTH EMPLOYMENT AND TRAINING PROGRAM: FEDERAL

APPROPRIATIONS, OUTLAYS, AND PARTICIPANTS, FISCAL YEARS 1984–98 1

[In millions of dollars]

Appropriations 2

Outlays

Participants 3

Current dollars Constant 1990

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 .................................. 3 995 958 912 782,100

1993 .................................. 4 1,025 915 827 647,400

1994 .................................. 5 888 834 739 574,400

1995 .................................. 6 185 883 763 495,300

1996 .................................. 7 625 1,030 870 410,700

1997 .................................. 8 871 913 754 492,900

1998 .................................. 9 871 787 643 495,100

1 Appropriations and outlays are for fiscal years; participants are for calendar years.

2 Because JTPA is an advance-funded program, appropriations for the Summer Youth Employment and

Training 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. 3 Fiscal year 1992 funding includes a $500 million supplemental appropriation for summer 1992 and

$495 million for summer 1993. 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.

8 Fiscal year 1997 funds are for the summer of 1997.

9 Fiscal year 1998 funds are for the summer of 1998.

Source: Employment and Training Administration, U.S. Department of Labor.

icy. The board is similar to the private industry council under

JTPA. Each local one-stop system must include at least one physical center, which may be supplemented by affiliated sites. The law

mandates 19 ‘‘partners,’’ which must provide ‘‘applicable’’ services

through the one-stop system. Mandated partners include the Employment Service, welfare-to-work, Trade Adjustment Assistance,

and NAFTA Transitional Adjustment Assistance. Partners must

enter into written agreements with the local boards regarding services to be provided, the funding of the services and operating costs

of the system, and methods of referring individuals among partners. A one-stop operator, which could be a single entity or a consortium of entities (e.g., a postsecondary education institution, an

employment service agency, a private nonprofit organization, and

a government agency) must be designated by the board through a

competitive process or through an agreement between the board

and a consortium of at least three partners.

971

TABLE 15–41.—JOB CORPS: FEDERAL APPROPRIATIONS, OUTLAYS, AND NEW

ENROLLEES, FISCAL YEARS 1982–98 1

[In millions of dollars]

Appropriations

Outlays

New enrollees

Current dollars Constant 1990

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 68,540

1996 .................................. 1,094 994 840 67,774

1997 .................................. 1,154 1,165 963 65,705

1998 .................................. 1,246 1,197 977 67,425

1 Appropriations and outlays are for fiscal years; enrollees are for program years.

Source: Employment and Training Administration, U.S. Department of Labor.

A second difference between WIA and JTPA is that there is no

income eligibility requirement for adults in order to receive services. Any adult (defined under WIA as age 18 and older rather than

as age 22 and older under JTPA) is eligible to receive job search

assistance and other core services. To be eligible to receive comprehensive assessments and other intensive services, an individual

has to be unemployed, and unable to obtain employment through

core services or employed but in need of intensive services to obtain

or retain employment that allows for self-sufficiency. To be eligible

to receive job training, an individual has to have met the eligibility

for intensive service and been unable to obtain employment

through those services. A local area is required to give priority for

receiving intensive services and training to recipients of public assistance and other low-income individuals if WIA funds allocated to

the local area under the adult funding stream are limited.

A third difference is that under WIA, training for adults is to be

provided primarily through ‘‘individual training accounts.’’ The purpose of individual training accounts is to provide individuals the

opportunity to choose training courses and providers. Typically,

under JTPA, services were procured for groups of individuals.

Under WIA, the one-stop operator is responsible for arranging payment to the training provider, who must be identified by the Governor as an eligible provider in accordance with statutory provisions. Local boards retain a list of eligible providers along with performance and cost information. Individuals who have individual

972

training accounts may choose providers from this list in consultation with a case manager.

A fourth difference is that under WIA, the Summer Youth Employment and Training Program is eliminated as a separately funded program. Local areas are required, however, to provide summer

employment opportunities under youth activities, which continue to

be for low-income youth.

Regarding Job Corps, WIA includes new provisions to help assure that youth are placed in centers closest to their homes; to

strengthen linkages between centers and local communities; and to

establish performance measures and expected performance levels.

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 1999, 835,635 children were served in Head Start Programs, at a total Federal cost of $4.658 billion. In June 1999, 30

percent of Head Start children came from families receiving TANF

benefits. Table 15–42 provides historical data on participation in

and funding of the Head Start Program, while table 15–43 provides

characteristics of children enrolled in the program.

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.

973

TABLE 15–42.—HEAD START ENROLLMENT AND FEDERAL FUNDING, FISCAL YEARS

1965–99

Fiscal year Enrollment

Appropriations

(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

1996 ............................................................................ 752,077 3,569.3

1997 ............................................................................ 793,809 3,980.5

1998 ............................................................................ 822,316 4,347.4

1999 ............................................................................ 835,365 4,658.2

1 After sequestration.

Source: Head Start Bureau, U.S. Department of Health and Human Services.

974

TABLE 15–43.—CHARACTERISTICS OF CHILDREN ENROLLED IN HEAD START, SELECTED

FISCAL YEARS 1980–99

[In percent]

Fiscal year Disabled

Age of children enrolled Enrollment by race

5 and

older 4 3 Under3

Native

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

1996 ...... 13 6 62 29 4 4 25 36 32 3

1997 ...... 13 5 60 30 4 4 26 36 31 3

1998 ...... 13 6 59 31 4 3 26 36 32 3

1999 ...... 13 5 58 33 4 3 27 35 31 3

Source: Head Start Bureau, U.S. Department of Health and Human Services.

In 1981, title XXVI of the Omnibus Budget Reconciliation Act

(OBRA, Public Law 97–35), the Low-Income Home Energy Assistance Act of 1981, authorized the Secretary of Health and Human

Services to make LIHEAP allotments to States for fiscal years

1982–84. The act permitted States to provide three types of energy

assistance. States can: (1) help eligible households pay their home

heating or cooling bills; (2) use up to 15 percent of their LIHEAP

allotment for low-cost weatherization; and (3) provide assistance to

households during energy-related emergencies.

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 1998, Public Law 105–285 reauthorized LIHEAP at ‘‘such sums as may be necessary’’ for fiscal years

2000 and 2001, and $2 billion annually for fiscal years 2002–4. 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 low of about $1.06 billion in 1996 (see

bottom of table 15–44). As noted in the table’s footnotes, the funding allotments include LIHEAP contingency funds released in a

given fiscal year. In fiscal year 2000, $1.1 billion was appropriated

for LIHEAP, with an additional $300 million for emergencies. Due

TABLE 15–44.—LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM STATE ALLOTMENTS, SELECTED FISCAL YEARS 1985–99

[In thousands of dollars]

State 1985 1991 1992 1993 1994 1995 1 1996 2 1997 3 1998 4 

Alabama .......................... $18,234 $15,856 $12,664 $11,344 $12,127 $11,063 $9,077 $9,937 $16,612 Alaska .............................. 7,247 9,594 8,034 7,241 7,741 7,062 5,794 6,343 15,344 Arizona ............................. 8,150 6,200 6,125 5,486 5,865 5,350 4,390 4,806 4,049 Arkansas .......................... 13,973 11,069 9,663 8,656 9,253 8,442 6,926 7,582 12,334 California ......................... 97,894 68,764 67,940 60,855 65,056 59,352 48,693 53,308 44,917 Colorado ........................... 33,299 23,419 23,688 21,218 22,683 20,694 16,978 18,587 15,661 Connecticut ...................... 43,440 35,541 30,902 27,680 34,986 28,011 22,148 24,247 20,430 Delaware .......................... 5,931 5,471 4,102 3,674 4,214 3,583 2,940 3,218 2,712 District of Columbia ........ 6,940 5,269 4,799 4,299 4,595 4,193 3,440 3,766 3,173 Florida .............................. 28,970 21,731 20,039 17,950 19,188 17,506 14,362 15,722 39,195 Georgia ............................ 22,910 17,439 15,844 14,191 15,171 13,841 11,355 12,431 23,142 Hawaii .............................. 2,243 1,531 1,596 1,429 1,528 1,394 1,144 1,252 1,055 Idaho ................................ 12,877 9,493 9,240 8,277 8,848 8,072 6,622 7,250 6,109 Illinois .............................. 123,679 85,711 85,533 76,614 93,921 90,445 61,302 76,588 56,548 Indiana ............................ 55,371 41,069 38,727 34,689 39,408 39,568 27,756 30,386 25,603 Iowa ................................. 38,581 28,719 27,466 24,584 34,335 28,584 19,671 24,576 18,145 Kansas ............................. 18,211 12,901 12,605 11,290 12,069 11,011 9,034 9,890 8,333 Kentucky .......................... 29,141 22,537 20,153 18,052 24,639 22,996 14,444 15,813 13,324 Louisiana ......................... 18,867 13,203 12,947 11,597 12,398 11,311 9,279 10,159 18,193 Maine ............................... 27,914 23,550 20,020 17,932 27,275 17,489 14,349 15,708 13,236 Maryland .......................... 34,214 29,361 23,662 21,194 29,288 20,671 16,959 18,566 15,643 Massachusetts ................. 86,878 69,364 61,815 55,369 73,071 56,312 44,304 48,502 40,868 Michigan .......................... 113,951 86,099 81,206 72,738 126,605 81,746 58,201 63,717 53,687 Minnesota ........................ 82,239 62,063 58,504 52,404 93,421 56,152 41,931 52,386 38,679 Mississippi ....................... 15,683 12,391 10,858 9,725 10,397 9,485 7,782 8,519 11,547 Missouri ........................... 48,026 35,779 34,165 30,603 32,715 37,030 24,487 30,592 22,587 Montana ........................... 12,298 10,938 10,838 9,708 10,378 9,468 7,768 9,705 7,165 Nebraska .......................... 19,032 13,851 13,573 12,158 12,997 14,572 9,728 12,154 8,974 Nevada ............................. 4,151 3,214 2,877 2,577 2,754 2,513 2,062 2,257 1,902 New Hampshire ............... 16,447 13,648 11,700 10,480 14,352 10,535 8,386 9,180 7,735 

TABLE 15–44.—LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM STATE ALLOTMENTS, SELECTED FISCAL YEARS 1985–99—Continue

[In thousands of dollars]

State 1985 1991 1992 1993 1994 1995 1 1996 2 1997 3 1998 4 

New Jersey ....................... 82,849 66,929 57,386 51,402 61,894 50,132 41,129 45,027 37,939 New Mexico ...................... 9,973 8,123 7,668 6,868 7,342 6,698 5,495 6,016 5,069 New York .......................... 263,291 214,983 187,373 167,835 240,880 175,232 134,293 147,019 123,877 North Carolina ................. 40,378 35,612 27,924 25,013 26,739 24,394 20,014 21,910 28,253 North Dakota ................... 14,612 12,503 11,773 10,546 19,376 10,868 8,438 13,302 7,784 Ohio ................................. 109,413 78,365 75,666 67,776 96,381 76,346 54,231 59,370 50,025 Oklahoma ......................... 16,004 12,250 11,641 10,427 11,147 10,169 8,343 9,134 14,606 Oregon ............................. 25,808 19,298 18,360 16,445 17,580 16,039 13,159 14,405 12,138 Pennsylvania .................... 141,479 107,475 100,647 90,152 116,857 95,330 72,135 78,971 66,540 Rhode Island ................... 14,220 11,572 10,175 9,114 11,471 9,341 7,293 7,984 6,727 South Carolina ................. 14,544 12,451 10,058 9,009 9,631 8,787 7,209 7,892 13,753 South Dakota ................... 11,434 10,691 9,562 8,565 11,150 9,319 6,853 10,802 6,322 Tennessee ........................ 29,520 21,652 20,415 18,286 19,548 17,834 14,632 16,018 21,842 Texas ................................ 48,206 36,455 33,337 29,861 31,922 29,123 23,893 26,158 73,089 Utah ................................. 14,827 11,062 11,008 9,860 10,541 9,617 7,890 8,637 7,278 Vermont ........................... 12,328 9,813 8,770 7,855 13,197 7,908 6,285 6,881 5,798 Virginia ............................ 41,677 36,051 28,822 25,817 28,277 25,179 20,657 22,615 19,055 Washington ...................... 40,896 31,495 30,199 27,050 28,917 26,382 21,644 23,695 19,965 West Virginia ................... 19,285 13,676 13,337 11,946 16,503 11,651 9,559 10,465 8,817 Wisconsin ......................... 74,027 56,987 52,662 47,171 65,147 53,718 37,744 41,320 34,816 Wyoming .......................... 6,195 4,605 4,407 3,948 4,220 3,850 3,159 3,458 2,914 

U.S. total ..................... 2,077,577 1,607,819 1,472,503 1,318,961 1,709,998 1,386,368 1,055,364 1,188,225 1,133,512 1

1 Includes $100 million in LIHEAP emergency contingency funds. 2 Includes $180 million in LIHEAP emergency contingency funds. 3 Includes $215 million in LIHE

gency contingency funds. 4 Includes reallotment of $81,913 in fiscal year 1997 block grant funds and $160 million in emergency contingency funds. 5 Includes reall

$2,204,442 in fiscal year 1998 block grant funds and $175,298,765 in emergency contingency funds.

Note.—Columns may not add due to rounding. The table includes payments to Indian tribal organizations and excludes payments to the insular areas.Source: U.S. Department of Health and Human Services.

977

to cold weather emergencies and an increase in the price of home

heating oil, all $300 million in the LIHEAP contingency fund had

been released by President Clinton by midway through the fiscal

year.

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 nonFederal 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 15–44 shows State allotments for selected fiscal years.

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 reVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00977 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
978

ceiving Supplemental Security Income (SSI), Temporary Assistance

for Needy Families (TANF), 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 U.S. 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 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 Residential Energy Assistance

Challenge 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 15–45 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.

979

TABLE 15–45.—LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM ESTIMATED HEATING ASSISTANCE BENEFITS, NUMBER OF HOUSEHOLDS, AND ESTIMATED AVERAGE

BENEFITS, FISCAL YEAR 1996

State Estimated heating

assistance benefits

Number of households assistedEstimated average

benefits

Alabama ............................... $5,621,197 39,706 $142

Alaska .................................. 3,651,347 11,501 313

Arizona ................................. 3,074,995 21,083 146

Arkansas .............................. 3,035,652 36,353 82

California ............................. 35,666,584 156,168 61

Colorado ............................... 14,409,351 44,361 325

Connecticut .......................... 22,051,236 66,111 334

Delaware .............................. 2,270,577 11,594 185

District of Columbia ............ 2,356,837 11,551 178

Florida .................................. 7,285,632 66,117 83

Georgia ................................. 8,670,527 70,577 123

Hawaii .................................. 853,616 5,087 165

Idaho .................................... 3,389,067 15,302 252

Illinois .................................. 46,182,974 178,895 250

Indiana ................................. 17,196,420 94,582 182

Iowa ...................................... 14,425,722 70,248 205

Kansas ................................. 6,076,885 23,732 208

Kentucky ............................... 5,909,767 88,811 87

Louisiana .............................. 2,957,469 251 156

Maine ................................... 9,996,455 38,670 220

Maryland .............................. 16,278,609 79,615 187

Massachusetts ..................... 41,083,489 125,205 325

Michigan .............................. 30,226,450 276,731 109

Minnesota ............................. 30,569,495 87,080 345

Mississippi ........................... 4,209,335 30,019 121

Missouri ................................ 19,221,339 105,010 183

Montana ............................... 4,327,949 18,558 235

Nebraska .............................. 4,286,609 25,990 167

Nevada ................................. 1,414,462 8,752 162

New Hampshire .................... 6,109,284 18,664 341

New Jersey ............................ 30,975,527 141,931 229

New Mexico .......................... 3,717,176 68,467 54

New York .............................. 80,268,491 600,834 135

North Carolina ...................... 10,457,970 187,016 43

North Dakota ........................ 4,728,402 13,573 343

Ohio ...................................... 22,685,929 237,614 96

Oklahoma ............................. 5,660,502 72,396 78

Oregon .................................. 9,004,376 43,659 187

Pennsylvania ........................ 44,064,583 239,378 166

Rhode Island ........................ 4,969,966 17,834 278

South Carolina ..................... 4,685,600 51,735 89

South Dakota ....................... 4,221,823 13,608 310

Tennessee ............................. 9,394,892 64,444 145

Texas .................................... 5,084,520 30,809 165

Utah ..................................... 5,013,975 25,313 198

Vermont ................................ 4,173,735 21,393 196

Virginia ................................. 17,529,360 106,960 164

980

TABLE 15–45.—LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM ESTIMATED HEATING ASSISTANCE BENEFITS, NUMBER OF HOUSEHOLDS, AND ESTIMATED AVERAGE

BENEFITS, FISCAL YEAR 1996—Continued

State Estimated heating

assistance benefits

Number of households assistedEstimated average

benefits

Washington .......................... 15,900,645 48,823 325

West Virginia ........................ 5,278,394 45,508 116

Wisconsin ............................. 33,895,611 109,876 273

Wyoming ............................... 2,280,336 6,657 321

Total ........................ 1 $696,801,144 3,974,152 2 $175

1 Includes leveraging incentive funds.

2 Computed based on dividing the total estimates of obligated heating assistance funds by total number of households receiving heating assistance.

Source: Administration for Children and Families, U.S. Department of Health and Human Services.

PLANNING AND ADMINISTRATION

LIHEAP is administered within the U.S. Department of Health

and Human Services (DHHS) by the Administration for Children

and Families. Grantees are required to submit an application for

funds to the Secretary of DHHS. 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 1999, Federal appropriations for veterans benefits and services were over $44 billion (table 15–46).

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TABLE 15–46.—BUDGET AUTHORITY FOR VETERANS BENEFITS AND SERVICES,

DEPARTMENT OF VETERANS AFFAIRS, FISCAL YEARS 1980–99

[In thousands of dollars]

Fiscal year

Serviceconnected

compensation and

survivor

payments;

meanstested

pensions

Education,

training,

readjustment

Medical

care

Housing

loans 1

Other benefits and

services

Total: veterans benefits and

services

1980 ..................... $11,770 $2,374 $6,409 NA $641 $21,194

1981 ..................... 13,210 2,351 6,919 NA 671 23,150

1982 ..................... 14,510 1,964 7,802 NA 687 24,963

1983 ..................... 14,216 1,667 8,816 ¥$78 721 25,341

1984 ..................... 14,884 1,582 9,078 201 751 26,496

1985 ..................... 15,089 1,066 10,005 306 789 27,256

1986 ..................... 15,363 605 9,964 200 757 26,888

1987 ..................... 15,392 393 10,481 100 824 27,190

1988 ..................... 15,848 395 10,836 1,484 817 29,380

1989 ..................... 16,384 335 11,523 778 871 29,891

1990 ..................... 16,660 251 12,168 548 897 30,524

1991 ..................... 17,790 824 13,194 730 1,013 33,251

1992 ..................... 17,412 600 14,256 815 1,020 34,103

1993 ..................... 18,123 675 15,235 1,181 993 36,208

1994 ..................... 18,597 1,031 16,187 188 1,006 37,009

1995 ..................... 18,824 1,090 16,555 612 1,078 38,159

1996 ..................... 19,703 1,013 16,812 612 1,023 38,763

1997 ..................... 20,660 1,178 17,375 ¥291 1,014 39,936

1998 ..................... 21,517 1,168 17,959 1,145 1,003 42,792

1999 ..................... 22,934 989 18,032 1,087 1,115 44,157

1 Housing loans are net income and expenditures from VA housing program revolving funds. Figures for

the VA housing funds are unavailable in this format before fiscal year 1983.

NA—Not available.

Source: Office of the President (2000).

Service-connected compensation is paid to veterans who have disabilities from injuries and illnesses traceable to a period of activeduty military 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 percent to 100 percent in 10-percent intervals; however, some disabilities are determined to be

service-connected, but are given a zero-percent rating. Death compensation, or dependency and indemnity compensation, is paid to

surviving dependents of veterans who died as a result of serviceconnected causes. In fiscal year 1999, about 2.3 million disabled

veterans and 324,000 survivors received about $18 billion in compensation payments.

Veterans pensions are means-tested cash benefits paid to war

veterans who have become permanently and totally disabled from

non-service-connected causes, and to survivors of such disabled and

982

impoverished war veterans. Under the current or ‘‘improved law’’

program, benefits are based on family size, and the pensions provide a floor of income. For 2000, the basic benefit before subtracting other income sources is $11,773 for a veteran with one dependent, $8,989 for a veteran living alone). Somewhat less generous

benefits are available to survivors; a surviving spouse with no children could receive two-thirds ($6,026) of the basic benefit amount

given a single veteran. About 604,000 persons received about $3.1

billion in veterans pension payments in fiscal year 1999.

Several VA programs support readjustment, education, and job

training for veterans and military personnel who meet certain eligibility criteria. 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 $536 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 1999, spending for VA readjustment programs

was nearly $1 billion (table 15–46). In addition, the Department of

Labor also provides employment counseling and job training for

veterans.

The VA provides a comprehensive array of inpatient and outpatient medical services through 172 medical centers, 134 nursing

homes, 40 domiciliaries, 527 ambulatory clinics, and 206 readjustment counseling centers (Vet centers). Public Law 104–262 reformed eligibility rules for VA medical services. These reforms not

only simplified the rules, but give the VA greater flexibility in how

it provides medical care to veterans. Past eligibility rules were seen

as emphasizing inpatient over outpatient care and, thus, impeded

the efficient use of VA medical resources. Under the new eligibility

rules, the VA provides free medical care, both inpatient and outpatient, to veterans for service-connected conditions and to lowincome veterans for nonservice-connected conditions. For 2000, veterans with an income of $27,468 or less, and married or with one

dependent; plus $1,532 for each additional dependent; or $22,887

or less if single; would meet the low-income criterion for free medical care. As facilities and other resources permit, the VA provides

care to veterans for nonservice-connected conditions with incomes

that exceed these limits; 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 serviceconnected disabilities. The VA also contracts with private facilities

and/or 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 conVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00982 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
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42Largely drawn from Mont et al. (1999).

tracts with private community nursing homes and with per diem

payments for veterans in State-run homes for veterans. In fiscal year 1999, VA medical treatment programs cost $18 billion (table 15–46). VA medical services were provided to about 3.6

million separate applicants, resulting in about 752,000 inpatient

episodes and 38 million outpatient visits (table 15–47).

TABLE 15–47.—NUMBER OF RECIPIENTS OF VETERANS BENEFITS AND SERVICES,

SELECTED FISCAL YEARS 1975–99

[In thousands]

Fiscal year Compensation

and pensions

Readjustment,

education, job

training

Medical care

Housing loans

Inpatient 1 Outpatient 2

1975 ......... 4,855 2,692 1,220 14,630 290

1980 ......... 4,646 1,233 1,359 17,930 297

1981 ......... 4,535 1,081 1,360 17,809 188

1982 ......... 4,407 906 1,358 18,510 103

1983 ......... 4,286 755 1,401 18,616 245

1984 ......... 4,123 629 1,412 19,601 252

1985 ......... 4,005 492 1,435 20,188 179

1986 ......... 3,900 419 1,462 21,635 314

1987 ......... 3,850 365 1,466 21,635 479

1988 ......... 3,762 352 1,224 23,233 235

1989 ......... 3,686 349 1,153 22,629 190

1990 ......... 3,614 360 1,113 22,600 196

1991 ......... 3,546 322 1,072 23,007 181

1992 ......... 3,462 388 988 23,902 266

1993 ......... 3,397 438 974 24,236 383

1994 ......... 3,351 472 963 25,443 602

1995 ......... 3,332 476 930 27,565 263

1996 ......... 3,315 475 850 30,055 292

1997 ......... 3,290 480 700 32,648 239

1998 ......... 3,270 479 632 35,777 369

1999 ......... 3,254 458 752 37,799 396

1 Patients treated: the sum of discharges and deaths during the period plus patients remaining as

bed occupants or absent bed occupants at the end of the report period. 2 Visits for outpatient care.

Source: Department of Veterans Affairs.

WORKERS’ COMPENSATION

OVERVIEW THROUGH 1996 42

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 1996, workers’ compensation laws protected

approximately 115 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 disabilVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00983 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
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43The Federal Employees’ Compensation Account 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 covers interstate railroad employees. The Black Lung Benefits Act

provides for benefits to coal mine employees and survivors for disability or death related to black

lung disease. 44 Under the Federal Employees’ Compensation Account, 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-72 claimants

and, standing in the place of a State, the administrative costs of the system. Under the Jones

Act and the Federal Employers’ Liability Act, there are few Federal costs, limited to some Federal court costs and potential effects on the Federal appropriation for Amtrak. Under the Black

Lung Benefits Act, 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).

ities 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.43 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.44

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).

Cash compensation for lost earnings made up 61 percent of total

workers’ compensation benefits in 1996. 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 unVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00984 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
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45 Coverage in Wyoming is mandatory for extra-hazardous occupations.

able 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 39 percent of total workers’ compensation benefits in

1996. 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 Texas and Wyoming.45 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.

In 1996, 114.6 million employees were covered by State or Federal workers’ compensation laws, which represented 90 percent of

employed persons, and was up from 88 percent in 1991 (National

Academy, 1999).

The total of 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. Of the 1996 total of $42.4 billion of benefits,

some $25.8 billion, or 61 percent, was in the form of cash compensation for lost wages, and the rest was in the form of medical

treatment and rehabilitation (table 15–48).

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 disabilVerDate 20-JUL-2000 13:14 Sep 29, 2000 Jkt 061710 PO 00000 Frm 00985 Fmt 6601 Sfmt 6601 J:\SKAYNE\GB96\61710.015 WAYS3 PsN: WAYS3
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46Federal 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).

ity ranged from $1,402 for Federal employees ($872 for those covered by the Federal LHWCA) to $947 for Iowa (the highest State

figure) and $293 for Mississippi (the lowest State figure).

The Bureau of Labor Statistics reported a 1999 workplace injury

and illness incidence rate of 7.1 cases per 100 full-time equivalent

private industry workers. The incidence rate for lost workday cases

was 2.1. These were down almost 20 to 40 percent, respectively,

since 1990. According to the Survey of Occupational Injuries and

Illnesses, the total number of private sector workplace injuries/illnesses in 1997 was 6.1 million, of which 1.8 million resulted in

days away from work. In addition, the Bureau of Labor Statistics

Census of Fatal Occupational Injuries reported 6,026 fatalities resulting from on-the-job injuries in 1998, down 3 percent from 1997

(Bureau of Labor, 1999).

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 Stateestablished ‘‘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 1996, 48 percent ($20.5 billion) of the total of $42.4 billion in

workers’ compensation benefits (including all cash and medical

costs under Federal and State laws) was paid by private insurers;

26 percent ($10.9 billion) was provided through self-insurance; 19

percent ($7.9 billion) came from State funds; and 7 percent ($3.1

billion) was paid under Federal programs.46

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 1996, employer costs totaled $55.2 billion. These costs included benefits paid, administration of insurance operations, insurer profits and taxes, and reserves for future

benefit payments. Benefits to workers represent about 77 cents of

each dollar of employers’ costs. 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 1996 cost to employers was: 55 percent paid to private insurers, 18 percent paid to State funds, 22

percent financed by self-insured employers, and 5 percent from the

Federal Government for Federal employees and black lung beneficiaries.

987

In 1996, average employer costs per covered employee were $483; as a proportion of employers’ payrolls, this represented $1.67 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 $2.16 per $100 of payroll in 1991.

Table 15–48 illustrates benefit payments under workers’ compensation laws by type of benefit for the period 1987–96. In 1996,

total benefits paid equaled $42.4 billion, of which $41.2 billion was

paid out under regular State and Federal workers’ compensation

laws and nearly $1.2 billion was provided through the Federal

Black Lung Benefit Programs.

TABLE 15–48.—ESTIMATED WORKERS’ COMPENSATION BENEFIT PAYMENT AMOUNTS BY

TYPE OF BENEFIT, SELECTED YEARS 1987–96

[In millions of dollars]

Type of benefit 1987 1990 1993 1996

Regular program:

Medical and hospitalization ............................... $9,794 $15,067 $17,409 $16,514

Compensation ................... 15,979 21,737 24,160 24,694

Disability ................. 15,046 20,635 22,930 NA

Survivor ................... 933 1,102 1,229 NA

Total ............... 25,773 36,804 41,569 41,208

Black Lung Program:

Medical and hospitalization ............................... 118 120 112 95

Compensation ................... 1,426 1,314 1,243 1,059

Disability ................. 698 577 520 NA

Survivor ................... 729 737 723 NA

Total ............... 1,545 1,434 1,355 1,154

Regular and Black Lung:

Medical and hospitalization ............................... 9,912 15,187 17,521 16,609

Compensation ................... 17,406 23,051 25,403 25,753

Disability ................. 15,775 21,212 23,450 NA

Survivor ................... 1,631 1,839 1,952 NA

Total ............... 27,318 38,238 42,925 42,362

NA—Not available.

Source: Mont (1999); Nelson (1991, 1993); Schmulowitz (1995).

RECENT DEVELOPMENTS IN STATISTICAL COMPILATION

The historical data series providing national information on the

costs, benefits, and coverage of the workers’ compensation system

(used in the above overview through 1993) was discontinued by the

988

47Further updated information is also available from the National Academy of Social Insurance and in Burton et al. (1997) and National Foundation (1997).

Social Security Administration (SSA) after publication of data for

1993. However, while not directly comparable to the historical SSA

series, estimates from other sources, including the now-retired author of the SSA series (Jack Schmulowitz) and John F. Burton (editor of John Burton’s Workers’ Compensation Monitor) are available

to portray recent cost trends.47

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Burton, J.F., Yates, E.H., & Blum, F. (1997, March/April). The employers’ costs of workers’ compensation in the 1990s: The $100

billion gap. John Burton’s Workers’ Compensation Monitor, 1–

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National Foundation for Unemployment Compensation and Workers’ Compensation. (1997, September 15). Fiscal data for State

workers’ compensation systems 1986–95. Research Bulletin,

97(WC–2), 1–17.

Nelson, W.J. (1991). Workers’ compensation: Coverage, benefits,

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