(Washington, DC) As a direct result of welfare reform, an estimated 675,000 people were uninsured in 1997, according to a new study by the national health consumer group Families USA. Because 1997 was the first year of welfare reform implementation, the number of people who become uninsured is expected to skyrocket in the next several years as the full impact of welfare reform is felt.
The Families USA report, the first national study to examine the connection between welfare reform and the loss of health insurance, found that children made up 62% of the people who lost health insurance as a result of welfare reform. Most of these children were likely still eligible for Medicaid and should not have lost coverage.
"The reward many are receiving for coming off welfare, even when they get jobs, is the loss of health care coverage," said Ron Pollack, Executive Director of Families USA. "And while politicians from both sides of the aisle are celebrating the reduction in the welfare rolls, they are ignoring this nasty side-effect of welfare reform."
Losing Health Insurance: The Unintended Consequences of Welfare Reform highlights three reasons for loss of coverage:
- people who move from welfare to work often lose their Medicaid (either because transitional Medicaid runs out or because they were never offered it in the first place) and are usually in low-wage jobs that do not offer health care;
- termination from welfare often results in illegal closure of Medicaid cases, despite the fact that most people remain eligible for Medicaid; and
- states deter people from applying for welfare and, despite the fact that it is a violation of federal law, make it difficult for some of those people to apply for Medicaid.
"What we are seeing is the tip of the iceberg, in terms of the number of people who will lose health care coverage as a result of welfare reform," added Pollack. "As we enter the next century, welfare reform will cause millions of Americans, including many children, to join the swelling ranks of the uninsured. Surely this isn't what Congress and the President intended, especially since it is a disincentive to move from welfare to work."
By July 1, 1999, current welfare recipients will have reached the two-year time limit when they must be working in order to keep their welfare benefits. Three years later, by July 1, 2002, individual families will have reached the lifetime limit on receiving cash welfare. As these limits are reached, it is likely that many will lose their Medicaid coverage and become uninsured.
"Despite the fact that we have a clear national priority to help low-income people with the costly burden of health insurance, thousands of people are falling through the cracks when they leave welfare," said Pollack. "The federal and state leaders who promoted welfare reform must now work together to fix this problem."
According to the report, states are doing a poor job of ensuring that people who come off welfare do not wrongly lose their health care coverage. Federal law established modest protections for people who move off welfare. The law offers states a new opportunity to expand Medicaid eligibility for low-wage working families and set aside $500 million for states to improve Medicaid administrative and outreach efforts. To date, very few states have availed themselves of either opportunity.
The report uses data from the U.S. Health Care Financing Administration (HCFA) and the U.S. Census Bureau's Current Population Survey to estimate the loss in Medicaid coverage and growth in the uninsured attributable to welfare reform.
