A Special Report from Families USA
March 2000

Clouds Over the Sunshine State: Florida's Working Parents Lose Health Coverage

INTRODUCTION 

When families leave the welfare rolls to go to work, they are likely to end up in low-wage jobs that do not offer health insurance. Recognizing that health insurance is crucial to the success of transitions from welfare to work, policymakers at the federal and state levels have taken steps to make sure people leaving welfare can continue to receive health coverage under Medicaid. Since 1988, Congress has required states to provide a period of transitional Medicaid coverage to those who otherwise become ineligible due to increased income from earnings. Then, when federal welfare reform was enacted in 1996, Congress took steps to insulate Medicaid from the new restrictions and limitations placed on welfare. By "de-linking" welfare and Medicaid, Congress tried to ensure that low-income families could continue to receive Medicaid when they went to work.

To find out how families in Florida are faring in terms of health coverage as people move from welfare to work, Families USA gathered data on the insurance status of the state's low-income population and enrollment in the Medicaid program. These data show that low-income working families in Florida have high rates of uninsurance. Two out of five Florida adults with incomes below twice the federal poverty level are uninsured. Only five states in the U.S. have lower rates of employer-provided health insurance than Florida. 1 Now, as more low-income families move from welfare to work, the majority end up in low-wage jobs that do not provide health insurance. 

Our data also show dramatic declines in the number of parents covered by Medicaid in Florida. Between January 1996 and December 1999, enrollment of low-income parents in Medicaid in Florida dropped by 82,682. By contrast, overall enrollment of the children of these parents has held steady, largely because Florida has liberalized coverage for children under its Medicaid and CHIP programs. However, despite several provisions in the federal welfare reform law permitting states to liberalize coverage of low-income parents, Florida has failed to take full advantage of this opportunity. This failure jeopardizes the success of welfare reform and places an undue burden on the thousands of low-income families who are struggling to make work pay in Florida.

KEY FINDINGS

• Two out of every five adults (41 percent) earning less than 200 percent of the federal poverty level in Florida are uninsured. Florida ranks 10th highest in the nation in the percentage of low-income adults who are uninsured. 
• Total Medicaid enrollment of parents in Florida fell from 226,292 in January 1996 to 143,610 in December 1999. This represents a decline of 82,682 people, or 37 percent of the parents enrolled in Medicaid. 
  • The number of parents enrolled in the AFDC/TANF category of Medicaid declined by 100,247, from 218,069 in January 1996 to 117,822 in December 1999. 
  • This decline was offset slightly by an increase in the number of parents enrolled in the Unemployed Parent category of Medicaid, which rose from 8,223 to 25,788 over this period. 
• Florida children are eligible for public health insurance coverage at significantly higher income levels than their parents: Children are eligible with family income up to 200 percent of the federal poverty level ($28,300 for a family of three). Their parents are only eligible if their income is much lower: For a family of three, for example, it must be below 68 percent of poverty ($9,622). 

Table 1. Enrollment of Parents in Florida Medicaid, 1996-1999

Source: Families USA calculations based on data from the Florida Agency for Health Care Administration.

A Note about Terminology "AFDC" refers to the old federal welfare program, Aid to Families with Dependent Children."TANF" refers to the Temporary Assistance for Needy Families program. This program replaced AFDC in 1996.The "AFDC/TANF" category, which consists of parents eligible for "family-related" Medicaid coverage, was called the AFDC category until September 1998, when it was (belatedly) renamed. There are both single-parent and two-parent families in this category.The "Unemployed Parent" category consists of two-parent families. Before welfare reform, eligibility for two-parent families was limited to those who met the definition of "unemployed." After welfare reform, Florida changed this rule to allow two-parent families to receive both welfare and Medicaid if they have low enough income, regardless of whether they work or not.(For more detail, see Appendix III.)

METHODOLOGY 

Families USA requested and received data from the State of Florida showing monthly enrollment in Medicaid by program group and by age. In order to isolate parents, we eliminated the elderly (age 65 and over), disabled persons, and children under age 19. We also eliminated people in Medicaid eligibility categories with benefits that are not comparable to family-based Medicaid coverage (for example, pregnant women who are only eligible for maternity benefits). Using this data, we reviewed the changes in enrollment of parents over the period from January 1996 through December 1999. We also interviewed state officials and advocates about policy and program changes that may have affected enrollment levels. (This is explained in detail in Appendix I.)

In addition to Florida Medicaid data, we requested information from the U.S. Census Bureau about the number of uninsured adults in Florida age 19 to 64 by income level. The Census Bureau provided a three-year average, 1996-1998, in order to ensure a large enough sample size for accurate measurement.

BACKGROUND 

Medicaid enrollment for parents in Florida is declining rapidly at the same time that many low-income adults are moving from welfare to work. Because Medicaid eligibility levels are so low in Florida (parents are only eligible for Medicaid if they earn less than about 68 percent of the federal poverty level for a family of three), for many families, finding a job means becoming ineligible for Medicaid.

When federal welfare reform was enacted in 1996, Congress recognized that low-income working parents needed health insurance in order to make a successful transition from welfare to work. The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 "de-linked" welfare and Medicaid in order to protect Medicaid eligibility for families leaving welfare. The legislation replaced welfare-related Medicaid coverage with a new "family coverage" category for Medicaid. As a result, Medicaid eligibility for families is now dependent only on income and resource levels, not on eligibility for welfare. In 1996, Florida implemented federal welfare reform by replacing the federal Aid to Families with Dependent Children (AFDC) program with the state WAGES (Work and Gain Economic Self-sufficiency) program. Among other new policies, WAGES requires families to work or participate in work-related activities in order to receive public assistance and places limits on the length of time families can receive cash assistance.

This emphasis on moving families off welfare and into the workforce, coupled with a booming economy, has led to a dramatic decline in welfare participation in Florida as well as in other states. From September 1996 through December 1999, Florida's welfare rolls declined by 116,288 parents. Growing evidence from researchers shows that this decline in welfare participation has led directly to fewer families participating in Medicaid despite the de-linking of welfare and Medicaid. Because state Medicaid and CHIP programs provide coverage to children at higher income levels, the decline in

Medicaid participation has disproportionately affected the parents of those children. When Florida's welfare rolls fell from 1996 to 1999, Medicaid coverage of parents declined by 37 percent (82,682 parents). While some of the children in these families are covered under Florida KidCare, parents who lose Medicaid often have nowhere else to turn for health coverage.

Too often, when families move from welfare to work, they join the ranks of other low-income, uninsured working adults. While 93 percent of workers in the U.S. who earn more than $15 an hour are offered health insurance coverage by their employer, only 43 percent of those earning $7 an hour or less are offered such coverage. Even when coverage is offered, it is often too expensive for low-wage workers to purchase. In fact, it is often more expensive for low-wage workers than for higher-paid workers. The average monthly contribution for the lowest cost family coverage plan is $130 in firms where the typical wage is less than $7 an hour and $84 in firms where the typical wage is more than $15 an hour. Consequently, low-income families are less likely to have employer-sponsored insurance: Only 13 percent of people with incomes below poverty, and only 43 percent of those with incomes between 100 and 200 percent of poverty, have coverage from their employer. Florida's low-wage workers may face even more difficulty than low-wage workers nationally: Only five states in the U.S. have lower rates of employer-provided health insurance than Florida.

Roughly three out of four (about 75 percent) of the parents who left Florida's WAGES program are working. A recent survey of families who left welfare for work in Florida found that the top five jobs for these former welfare recipients are telemarketer, housekeeper, nursing aide, fast food worker, and cashier. Their average wage is $6.09 an hour. The majority of them (59 percent) have jobs that provide no benefits at all and more than half are uninsured. Almost half (44.3 percent) of those uninsured welfare leavers reported that they were unable to obtain health care that they need. As more low-income parents enter the workforce and lose access to Medicaid coverage, the problem is likely to get worse.

Florida does, however, have an option available to remedy this problem. In addition to creating a new family coverage category for Medicaid, Congress gave states an opportunity to provide Medicaid coverage to more low-income working parents. By using more liberal rules for counting income and assets when determining whether a family is eligible for Medicaid, states can provide Medicaid to working parents at higher income levels. Thus far, Florida has taken only a small step toward liberalizing income guidelines for working parents. Its revised income limit still does not allow a working parent with two children to retain Medicaid coverage if that parent works full time at the minimum wage.

Eligible Families May Lose MedicaidAlthough some families who leave welfare for work lose Medicaid because they become ineligible when their earnings become too high, many families leave welfare for other reasons and should not lose Medicaid. These other reasons include hitting a time limit or being sanctioned for failure to comply with new welfare rules. Some leave because they feel that welfare caseworkers treat them badly or because they want to save their remaining eligibility time for a future time when their need may be even greater. About 40 percent of people who left WAGES between 1996 and 1998 left for such reasons. Because states have delayed actually de-linking the administrative systems for processing Medicaid and welfare eligibility, many families lose Medicaid coverage when they leave welfare, even when they are still eligible. A report released by the Florida Agency for Health Care Administration in March 2000 found that nearly half of welfare leavers who are uninsured are probably eligible for Medicaid.In August 1999, Florida Legal Services and the Florida Justice Institute filed a class-action lawsuit alleging that families were illegally cut off Medicaid when they left welfare because the state failed to make appropriate policy changes to implement the de-linking of welfare and Medicaid. In October 1999, Florida began the process of de-linking its welfare and Medicaid administrative systems.

FINDINGS 

•  Two out of every five adults earning less than 200 percent of the federal poverty level in Florida are uninsured. Approximately one out of every five (21 percent) Floridians is uninsured. Among low-income adults in Florida, over 1.0 million (1,043,000) are uninsured. This figure represents 41 percent, or two out of every five low-income adults in Florida. According to a survey conducted recently by the state, nearly 75 percent of uninsured people in Florida cite the high cost of coverage as their reason for going without health insurance. The same survey found that almost two-thirds (65 percent) of uninsured workers in Florida are not offered coverage by their employers.

Source: U.S. Census Bureau calculations of Current Population Survey data for 1996-1998.

Florida's high rate of uninsurance disproportionately affects the state's large Hispanic population. Hispanics in the U.S. generally are uninsured at very high levels: a recent report found that the number of uninsured Hispanics nearly doubled from 1987 to 1998. The same study found that 82 percent of uninsured Hispanics live in working families, and Hispanic workers are about half as likely as white workers with low wages or in small firms to have employer-sponsored health insurance. More than one-third of Hispanic residents in Florida are uninsured and Hispanics comprise nearly 25 percent of the uninsured in Florida.   In addition, the rate of uninsurance among Hispanics in Florida is more than twice that of white non-Hispanics and almost 50 percent higher than that of African-Americans.

•  Total Medicaid enrollment of parents in Florida declined from 226,292 in January 1996 to 143,610 in December 1999. This represents a decline of 82,682 people.

Between 1996 and 1999, the combined effects of welfare reform and a robust national economy led to a steep decline in the welfare rolls as families moved from welfare to work. In Florida, the welfare rolls dropped by over 100,000. At the same time, enrollment of parents in Florida's Medicaid program declined by more than one-third (37 percent). In fact, the largest eligibility category for parents, the AFDC/TANF category, declined by nearly one-half (46 percent). (See Table 1.) This decline occurred despite two changes in Florida's Medicaid eligibility policy that made more working parents eligible for Medicaid. Without these changes, the decline in working parents enrolled in Florida's Medicaid program would have been much more precipitous. 

Looking more closely at the annual changes in total parent enrollment (see Chart 2), the overall decline in parents' enrollment from January 1996 to December 1999 slowed during calendar year 1997. During that time, there was an increase in enrollment of two-parent families (in the misleadingly named "Unemployed Parent" Medicaid category) that temporarily offset the overall decline in parents' enrollment. In 1998, enrollment of two-parent families leveled off, and the decline in parents' enrollment resumed its downward trend (see Appendix II for more detail). 

The two changes in policy that expanded eligibility for working families had the greatest visible impact on two-parent families enrolled in the "Unemployed Parent" category. The first such change was elimination of the requirement that two-parent families be "unemployed" in order to qualify for Medicaid coverage. This change means that two-parent and single-parent families are now eligible under the same rules, making more working two-parent families eligible for Medicaid coverage. The second change was to raise the income eligibility level, allowing more parents with earned income to qualify for Medicaid. This change raised eligibility for Medicaid from 33 percent of the federal poverty level to 68 percent of the federal poverty level (for a family of three). The combination of these two changes led to the temporary increase in the number of two-parent families. However, they were not sufficient to stop the decline in coverage among all parents. 

Although the state increased the income eligibility level, the increase still does not allow a parent to work full time at minimum wage and retain Medicaid coverage. In addition the state did not adopt administrative simplifications that help working families get and maintain coverage. These simplification measures are discussed later in this report.

When Can Parents Get Medicaid in Florida?In order to qualify for Medicaid, a parent must live with a dependent child under age 18. They must also meet the income and resource standards that Florida sets. A parent with two children can get Medicaid if he/she: 

• Has income less than $806 per month (assumes all income is from earnings and no childcare expenses). 
• Has less than $2,000 in liquid assets and does not have a car worth more than $8,500. 
• Meets reporting requirements and completes redetermination of eligibility when requested by the state. 
• Two-parent families can get Medicaid at the same income level as single-parent families. Income eligibility varies by family size (see Table 2 below)
•  Parents are eligible for Medicaid at much lower income levels than their children. Parents are eligible for Medicaid at approximately 68 percent of the federal poverty level, while children are eligible for public coverage in families earning up to 200 percent of poverty.

* Assumes a family of three, that all income is from earnings, and that only earned income disregards are

Children are eligible for Florida KidCare if they live in families that earn as much as 200 percent of the federal poverty level, regardless of family size, but parents are only eligible at much lower incomes. What is more, Florida uses a different method to determine income eligibility for parents, with the result that, as family size increases, the ability of parents to qualify decreases (see Table 2). This is because parents' income eligibility levels are set at amounts that are not tied to the federal poverty level.

 Table 2.
 2000 Eligibility Levels for Adults in 
Family Medicaid in Florida

 *Families USA calculations of the Medicaid payment standard plus earned income disregard by family size. Assumes all income is from earnings.

Although Florida has increased the income eligibility level for parents since welfare reform, it has not raised it as high as it has for children. Florida implemented the KidCare program with the understanding that low-income children often go uninsured because their families either lack access to, or cannot afford to buy, health insurance. Families have responded strongly to the program: Between its implementation in September 1998 and September 1999, there was an increase of 108,742 children enrolled in child-only health coverage. In addition to raising income eligibility for children, the state made several changes to the process for determining children's eligibility that make it easier for working families to apply for and maintain their children's coverage. Florida KidCare has a short mail-in application form, no resource test, no face-to-face interview requirement, an easy redetermination process, and the state has undertaken an outreach campaign to publicize the program. None of these reforms has been applied to parents' Medicaid coverage.

The response to Florida's KidCare expansion shows that Florida's low-income families have a need for public health coverage. If Florida made similar reforms to their parents' Medicaid coverage, it likely would stem the decline in parents' coverage and decrease the number of low-income uninsured adults in Florida.

DISCUSSION 

WHY IS MEDICAID DECLINING IN FLORIDA? 

Families Moving from Welfare to Work 

Medicaid is declining for a variety of reasons in Florida. One reason is that more poor parents are working. Florida WAGES program data show that as many as 75 percent of families who left welfare are employed. For many parents, moving from welfare to work means that their income is too high to stay on Medicaid. The average wage for parents moving from welfare to work is $6.09 per hour. Even at this low wage, a Florida parent in a family of three must work fewer than 31 hours per week to be eligible for Medicaid.

Families that become ineligible for Medicaid due to increased earnings are still entitled to receive Transitional Medicaid for an additional six to 12 months.When they first become ineligible due to increased earnings, families are entitled to six months of Transitional Medicaid regardless of how much they earn. They are entitled to a second six months of Transitional Medicaid if their earnings (minus childcare expenses) are below 185 percent of the federal poverty level. Although many parents are entitled to Transitional Medicaid, very few actually get it. One recent study found that in 1995, only 14.2 percent of parents leaving AFDC had Transitional Medicaid three months later.

Welfare-Medicaid De-Linking 

Another reason that Medicaid enrollment is declining in Florida is that some parents who leave welfare lose Medicaid illegally. Advocates and researchers have found that the Medicaid eligibility system in Florida is very complicated and confusing for caseworkers and consumers alike, and this confusion has increased since welfare reform.

In August 1999, Florida Legal Services filed a class action lawsuit maintaining that Florida had failed to fully de-link welfare and Medicaid. They claim that this failure to de-link has caused thousands of Florida families leaving welfare to lose Medicaid, but that this played out primarily when families left Medicaid due to increased earnings. The suit is currently in mediation, and, since October 1999, the state has initiated some changes to the Medicaid eligibility processes to accommodate de-linking. More policy changes have been adopted as of March 2000.

Despite the fact that Florida increased eligibility for parents, Medicaid enrollment of parents declined. A recent study of five states after welfare reform noted that eligibility expansions alone are not enough to keep people enrolled in Medicaid. Complicated eligibility criteria, burdensome application and redetermination processes, and computer systems that have not been updated to reflect the new rules make it more difficult than necessary for parents to get and maintain Medicaid coverage.

WHAT NEW OPTIONS DOES FLORIDA HAVE TO TURN THE DECLINES AROUND? 

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 included new options for states to expand Medicaid eligibility to more working families. States are now permitted to increase their Medicaid coverage of families without a waiver from the federal government. Because states have already expanded coverage for children to much higher income levels, this option will primarily benefit parents who until recently have been left out of Medicaid expansions. 

One way to expand Medicaid coverage for parents would be to tie Medicaid eligibility to a percentage of the federal poverty level rather than a fixed dollar amount. Because the federal poverty level takes family size into account and increases each year to reflect increases in the Consumer Price Index, it eliminates certain inequities inherent in Florida's current approach to determining Medicaid eligibility for parents. Providing coverage to parents at the same eligibility level as children would also simplify the eligibility process and make it easier for families to apply and for caseworkers to determine eligibility for the entire family.

Besides raising eligibility levels, state can undertake more moderate expansions. For example, a few states are using the new flexibility to extend Transitional Medicaid beyond the 12 months required by federal law.

In addition to expanding Medicaid by raising income eligibility thresholds, states can eliminate the resource test for families. Most states, including Florida, have eliminated the asset test for children's health coverage, and 11 states have eliminated it for parents as well. Those states are: Connecticut, District of Columbia, Massachusetts, Mississippi, Illinois, Missouri, Ohio, Oklahoma, Pennsylvania, Rhode Island, and Wisconsin. In Florida, no matter what their income is, parents are not eligible for Medicaid if they have more than $2,000 in liquid assets or a car worth more than $8,500. Eliminating the resource test would reduce the amount of documentation parents need to provide for eligibility determinations and would make the process of getting and keeping Medicaid easier. It would also make more working families eligible for Medicaid.

States also have several options to simplify Medicaid eligibility processes in order to make getting and keeping Medicaid easier for working families. These options include such changes as:

•  conducting outreach campaigns to let families know about the new Medicaid eligibility rules; 
•  simplifying application and redetermination forms for family Medicaid; § allowing mail-in application forms for families and outstationing more eligibility workers at locations in communities where uninsured families are likely to be found; 
•  extending redetermination periods or using disregards to provide continuous eligibility for families; 
•  eliminating face-to-face interview requirements at application and redetermination periods; and 
•  reducing documentation requirements for applications and redeterminations.

Florida has exercised some of these options in its child-only Medicaid coverage and the Healthy Kids program, but none of them in its Medicaid coverage for parents. This means that it is more difficult for parents to apply for Medicaid for themselves than for their children, and it is more difficult for a family to stay on Medicaid if the parent is also covered.

CONCLUSION

While Florida has taken some steps to expand Medicaid coverage for low-income families, the state could do much more. Many low-income parents in Florida are uninsured because they lack access to health insurance through their employers, and they remain ineligible for Medicaid under the current eligibility rules. By implementing currently available federal options for expanding Medicaid to more working families, Florida could provide health coverage to many of these parents and support their efforts to maintain self-sufficiency.

ENDNOTES

1JoAnn Lamphere, Normandy Brangan, Sharon Bee, and Kelly Griffin, Reforming the Health Care System: State Profiles 1999 (Washington, DC: AARP Public Policy Institute, 1999).

2Florida Department of Children and Families, Economic Self-Sufficiency Program data reported on www.wages.org.

3Families USA, Losing Health Insurance: The Unintended Consequences of Welfare Reform (Washington, DC: Families USA, May 1999); Bowen Garrett and John Holahan, "Health Insurance Coverage After Welfare," Health Affairs 19, no. 1 (January/February 2000). Leighton Ku and Bowen Garret, How Welfare Reform and Economic Factors Affected Medicaid Participaion: 1994-1996 (Washington, DC: The Urban Institute, February 2000).

4 Cooper and Schone, 1997, cited in Ellen O'Brien and Judith Feder, Employment-Based Health Insurance Coverage and Its Decline: The Growing Plight of Low-Wage Workers (Washington, DC: Kaiser Commission on Medicaid and the Uninsured,May 1999).

5Peter J. Cunningham, et al., "Who Declines Employer-Sponsored Health Insurance and Is Uninsured?" Issue Brief (Washington, DC: Center for Studying Health System Change, October 1999).

6Ellen O'Brien and Judith Feder, Employment-Based Health Insurance Coverage and Its Decline: The Growing Plight of Low-Wage Workers (Washington, DC: Kaiser Commission on Medicaid and the Uninsured, May 1999).

7JoAnn Lamphere, et al., op. cit.

8 Robert E. Crew,Jr. and Joe Eyerman, After WAGES: Results of the Florida Study (Tallahassee, FL: Florida State University, March 1999).

9Robert E. Crew, Jr.and Joe Eyerman, op. cit.

10Robert E.Crew, Jr. and Joe Eyerman, op. cit.

11Florida Agency for Health Care Administration, Florida Health Insurance Study Summary Report: The 1999 Health Insurance Survey and the Impact of WAGES on the Uninsured (Tallahassee, FL: Agency for Health Care Administration, March 2000).

12Fronstin,Paul, Sources of Health Insurance and Characteristics of the Uninsured: Analysis of the March 1999 Current Population Survey (Washington, DC: Employee Benefit Research Institute, January 2000).

13Census Bureau calculations of Current Population Survey data for 1996-1998.

14Florida Agency for Health Care Administration, op. cit.

15Kevin Quinn, Working Without Benefits: The Health Insurance Crisis Confronting Hispanic Americans (New York, NY: The Commonwealth Fund, February 2000).

16Kevin Quinn, op. cit.

17Florida Agency for Health Care Administration, op. cit.

18Florida Agency for Health Care Administration, op. cit.

19Florida Department of Health, Florida KidCare Status Report 1999 (Tallahassee, FL: Department of Health, October 1999).

20In addition to the increased earnings requirement, families must also have been receiving Medicaid in at least three of the previous six months to qualify for Transitional Medicaid.

21Marilyn Ellwood and Kimball Lewis, On and Off Medicaid: Enrollment Patterns for California and Florida in 1995, Occasional Paper Number 27 (Washington, DC: The Urban Institute, July 1999).

22Marilyn Ellwood, The Medicaid Eligibility Maze: Coverage Expands but Enrollment Problems Persist, Findings from a Five-State Study (Washington, DC: The Urban Institute, December 1999); personal communication with Anne Swerlick, Florida Legal Services, March 2000.

23Marilyn Ellwood, The Medicaid Eligibility Maze, op. cit.

CREDITS

This report was written by:
 Rachel Klein, Health Policy Analyst, Families USA

The following Families USA staff contributed to the preparation of
this report:
Ron Pollack, Executive Director
 Peggy Denker, Director of Publications
 Nancy Magill, Production Assistant
 Christopher Fellabaum, Administrative Assistant