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 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 means-tested 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 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 ---------------------------------------------------------------------------------------------------------------- Ways and Means assistance program ----------------------------------------------------- Other assistance program Social Unemployment TANF SSI Security 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 ---------------------------------------------------------------------------------------------------------------- Other assistance program ---------------------------------------------------------------- Free or Ways and Means assistance program reduced- Public or VA Food WIC price subsidized Medicaid compensation stamps school rental or pensions meals housing ---------------------------------------------------------------------------------------------------------------- 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 6,932 3,585 8,444 4,487 13,014 2,369 thousands)................................ ---------------------------------------------------------------------------------------------------------------- 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 SELECTED TIME PERIODS ---------------------------------------------------------------------------------------------------------------- Year Assistance program ---------------------------------------------------------------- 1984 1987 1990 1992 1993 1994 1995 1997-98 ---------------------------------------------------------------------------------------------------------------- AFDC/TANF: Food stamps................................ 81.4 81.7 82.7 86.2 88.9 88.3 87.2 81.0 WIC........................................ 15.3 18.6 18.7 21.5 18.5 21.4 24.7 30.6 Free or reduced-price school meals......... 49.2 55.6 52.7 55.5 56.9 57.5 63.1 60.3 Public or subsidized rental housing........ 23.0 19.4 34.7 29.5 33.1 30.3 31.1 32.2 Medicaid................................... 93.2 95.5 97.6 96.2 97.6 96.4 97.2 97.3 VA compensation or pensions................ 2.8 1.9 1.3 1.9 1.1 1.1 0.8 1.1 Number of households receiving benefits 3,585 3,527 3,434 4,057 4,831 4,906 4,652 3,008 (in thousands)........................ SSI: Food stamps................................ 46.5 39.7 41.3 46.2 48.0 50.1 50.0 43.7 WIC........................................ 2.5 2.5 3.0 4.3 3.7 5.4 5.6 5.5 Free or reduced-price school meals......... 12.7 11.9 15.3 18.2 21.3 23.8 25.2 18.4 Public or subsidized rental housing........ 21.6 20.0 21.4 23.8 23.9 24.9 24.1 23.4 Medicaid................................... 100.0 99.6 99.7 99.8 99.5 100.0 100.0 95.0 VA compensation or pensions................ 4.7 7.7 5.7 4.0 4.5 3.9 3.6 2.8 Number of households receiving benefits 3,008 3,341 3,037 3,957 3,861 4,223 4,580 4,772 (in thousands)........................ ---------------------------------------------------------------------------------------------------------------- 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 stamps, and 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. 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 high-water 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. --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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 assistance (GA) payments, if their household is composed entirely of TANF, SSI, or GA beneficiaries.\2\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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 Department's Inspector General (responsible for counterfeiting and trafficking investigations). State and local administrative responsibilities States, the District of Columbia, Guam, and the Virgin Islands, through their local welfare offices, have primary responsibility for the day-to-day administration of the Food Stamp Program. They determine eligibility, calculate benefits, and issue food stamp allotments (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). --------------------------------------------------------------------------- \3\ Prior to July 1982, the regular Food Stamp Program operated in Puerto Rico, although with slightly different eligibility and benefit rules. \4\ For fiscal 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. --------------------------------------------------------------------------- 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 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 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. --------------------------------------------------------------------------- \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. \6\ The 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. --------------------------------------------------------------------------- Eligibility The Food Stamp Program has financial, employment/training- related, and ``categorical'' tests for eligibility. Its financial tests require that most of those eligible have monthly income and liquid assets below limits set by law. Under the employment/training-related tests, certain household members must register for work, accept suitable job offers, and fulfill work or training requirements (such as looking or training for a job) established by State welfare agencies. 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 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] ------------------------------------------------------------------------ Administration \2\ -------------------- Fiscal year Benefits \1\ State Total (Federal) Federal and local ------------------------------------------------------------------------ 1979......................... $6,480 $515 $388 $7,383 1980......................... 8,685 503 375 9,563 1981......................... 10,630 678 504 11,812 1982......................... 10,408 709 557 11,674 1983......................... 11,955 778 612 13,345 1984......................... 11,499 971 805 13,275 1985......................... 11,556 1,043 871 13,470 1986......................... 11,415 1,113 935 13,463 1987......................... 11,344 1,195 996 13,535 1988......................... 11,999 1,290 1,080 14,369 1989......................... 12,483 1,332 1,101 14,916 1990......................... 15,090 1,422 1,174 17,686 1991......................... 18,249 1,516 1,247 21,012 1992......................... 21,883 1,656 1,375 24,914 1993......................... 23,033 1,716 1,572 26,321 1994......................... 23,736 1,789 1,643 27,168 1995......................... 23,759 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 facilities. 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 income is considered; in effect, this procedure applies a more liberal income test to elderly and disabled households. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- 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) ``on-the-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; --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 ------------------------------------------------------------------------ 48 States, the District of Household size Columbia, and Alaska Hawaii the territories ------------------------------------------------------------------------ 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. 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 another assistance program's work, training, or job search requirements; otherwise eligible postsecondary students; and residents of drug addiction and alcoholic treatment programs. Those not exempted by one of the above-listed rules must, at least, register for work and accept suitable job offers. However, 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 potentially 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 eligibility 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). TABLE 15-6.--MAXIMUM MONTHLY FOOD STAMP ALLOTMENTS, FISCAL YEAR 2000 ---------------------------------------------------------------------------------------------------------------- 48 States and the Virgin Household size District Alaska \1\ Hawaii Guam Islands of Columbia ---------------------------------------------------------------------------------------------------------------- 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 ---------------------------------------------------------------------------------------------------------------- \1\ Maximum monthly allotments for designated urban areas of Alaska. Two separate higher allotment levels are applied in remote rural areas of Alaska. They are 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 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 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] ------------------------------------------------------------------------ Overpayment Underpayment Combined State error rate error rate 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 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 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 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). TABLE 15-8.--FOOD STAMP PARTICIPATION RATES IN THE UNITED STATES, 1975- 98 ------------------------------------------------------------------------ Number of Food stamp participation food stamp as a percent of---- Year participants --------------------------- (in Total Poor millions) population \1\ 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 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. --------------------------------------------------------------------------- \9\ Participation 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). --------------------------------------------------------------------------- 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\ 1999 \3\ -------------------------------------------------------------------------------------------------------------------------------------------------------- Alabama............................................. 393 525 588 449 551 525 509 486 427 405 Alaska.............................................. 12 25 22 25 46 45 46 45 42 41 American Samoa...................................... NA NA NA NA 2 3 3 3 3 3 Arizona............................................. 166 129 206 317 512 480 427 364 296 257 Arkansas............................................ 268 277 253 235 283 272 274 266 256 253 California.......................................... 1,517 1,334 1,615 1,936 3,155 3,175 3,143 2,815 2,259 2,027 Colorado............................................ 162 145 170 221 268 252 244 217 191 173 Connecticut......................................... 189 155 145 133 223 227 223 210 196 178 Delaware............................................ 39 45 40 33 59 57 58 54 46 39 District of Columbia................................ 112 100 72 62 91 94 93 90 85 84 Florida............................................. 767 828 630 781 1,474 1,395 1,371 1,192 991 933 Georgia............................................. 569 559 567 536 830 816 793 698 632 617 Guam................................................ 21 18 20 12 15 16 18 18 25 20 Hawaii.............................................. 84 96 99 77 115 125 130 127 122 125 Idaho............................................... 39 47 59 59 82 80 80 70 62 57 Illinois............................................ 948 837 1,110 1,013 1,189 1,151 1,105 1,020 923 820 Indiana............................................. 255 275 406 311 521 470 390 348 313 298 Iowa................................................ 118 117 203 170 196 184 177 161 141 129 Kansas.............................................. 63 73 119 142 192 184 172 149 119 115 Kentucky............................................ 449 405 560 458 522 520 478 444 412 396 Louisiana........................................... 502 523 644 727 756 711 670 575 537 516 Maine............................................... 151 121 114 94 136 132 131 124 115 109 Maryland............................................ 273 299 291 254 387 399 375 354 323 264 Massachusetts....................................... 560 429 337 347 442 410 374 340 293 261 Michigan............................................ 685 706 985 917 1,031 971 935 839 772 683 Minnesota........................................... 191 143 228 263 316 308 295 260 220 208 Mississippi......................................... 390 452 495 499 511 480 457 399 329 288 Missouri............................................ 299 280 362 431 593 576 554 478 411 408 Montana............................................. 38 33 58 57 71 71 71 67 62 61 Nebraska............................................ 50 55 94 95 111 105 102 97 95 92 Nevada.............................................. 34 27 32 50 97 99 97 82 72 62 New Hampshire....................................... 66 44 28 31 62 58 53 46 40 37 New Jersey.......................................... 565 524 464 381 545 540 541 490 425 385 New Mexico.......................................... 154 159 157 157 244 239 235 205 175 178 New York............................................ 1,398 1,704 1,834 1,546 2,154 2,183 2,099 1,919 1,627 1,545 North Carolina...................................... 537 517 474 419 630 614 631 586 528 505 North Dakota........................................ 19 20 33 39 45 41 40 38 34 33 Northern Mariana Islands............................ NA NA 4 4 4 4 4 4 4 4 Ohio................................................ 924 760 1,133 1,078 1,245 1,155 1,045 874 734 640 Oklahoma............................................ 184 184 263 267 376 375 354 309 288 271 Oregon.............................................. 208 160 228 216 286 289 288 259 238 224 Pennsylvania........................................ 893 923 1,032 954 1,208 1,173 1,124 1,009 907 835 Puerto Rico......................................... 1,800 1,822 1,480 1,480 1,410 1,370 1,330 1,240 1,180 1,140 Rhode Island........................................ 104 80 69 64 93 100 91 85 73 76 South Carolina...................................... 421 369 373 299 385 364 358 349 333 309 South Dakota........................................ 31 37 48 50 53 50 49 47 45 44 Tennessee........................................... 435 531 518 527 735 662 638 586 538 511 Texas............................................... 1,085 1,027 1,263 1,880 2,730 2,564 2,372 2,034 1,636 1,401 Utah................................................ 50 44 75 99 128 119 110 98 92 88 Vermont............................................. 46 40 44 38 65 59 56 53 46 44 Virginia............................................ 293 320 360 346 547 546 538 476 397 362 Virgin Islands...................................... 25 34 32 18 20 23 31 20 17 17 Washington.......................................... 239 205 281 337 468 476 476 442 362 307 West Virginia....................................... 204 182 278 262 321 329 300 287 269 247 Wisconsin........................................... 163 171 363 286 330 320 283 232 193 182 Wyoming............................................. 11 11 27 28 34 34 33 29 25 23 --------------------------------------------------------------------------------------------------- Total......................................... 19,199 18,926 21,385 21,510 28,888 27,995 26,871 24,106 20,974 19,334 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Year end participation, July 1975. Total does not match totals in other tables, which are annual average participation. \2\ Year end participation, September 1979. Total does not match totals in other tables, which are annual average participation. During fiscal year 1979, and into 1980, participation increases were largely due to the elimination of the food stamp purchase requirement. Figures for Alabama and Mississippi are estimates. \3\ Annual average monthly participation. NA--Not available. 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. on food stamps was projected for a net reduction of $23.3 billion through fiscal year 2002 (or 13 percent less than under then-current 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] -------------------------------------------------------------------------------------------------------------------------------------------------------- 1980 1985 1989 1990 1991 1992 1993 1994 1995 1996 1997 Food stamp recipient households (August) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Annual) (Annual) (Annual) -------------------------------------------------------------------------------------------------------------------------------------------------------- With gross monthly income: Below the Federal poverty levels...... 87 94 92 92 91 92 91 90 92 91 92 Between the poverty levels and 130 10 6 8 8 9 8 8 9 8 8 8 percent of the poverty levels........ Above 130 percent of the poverty 2 (\1\) (\1\) (\1\) (\1\) (\1\) 1 1 (\1\) 1 (\1\) levels............................... With earnings............................. 19 20 20 19 20 21 21 21 21 23 24 With public assistance income \2\......... 65 68 73 73 70 66 68 69 68 67 67 With AFDC/TANF income................. NA 39 42 43 41 40 40 38 38 37 35 With SSI income....................... 18 19 21 19 19 19 20 23 23 24 26 With children............................. 60 59 60 61 61 62 60 61 60 59 58 And female heads of household......... NA 46 50 51 51 51 52 51 50 50 49 With elderly members \3\.................. 23 21 20 18 17 15 16 16 16 16 18 With elderly female heads of household NA 16 14 11 10 9 NA 11 NA NA \4\ 12 \3\.................................. ------------------------------------------------------------------------------------------------------------- Average household size.................... 2.8 2.7 2.6 2.6 2.6 2.5 2.6 2.5 2.5 2.5 2.4 -------------------------------------------------------------------------------------------------------------------------------------------------------- \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 households with multiple sources of public assistance income. The proportion of households with elderly female heads shown in this table for years prior to 1994 is an estimate that generally undercounts them because it counts only single-person female households. 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 Service. TABLE 15-11.--HISTORICAL FOOD STAMP STATISTICS, SELECTED YEARS, 1972-99 ---------------------------------------------------------------------------------------------------------------- Total Federal spending Average monthly (in millions) \1\ Average benefits (per person) Four-person ------------------------ monthly ------------------------ maximum Fiscal year Constant participation Constant monthly Current (1999) (in millions Current (1999) allotment \3\ dollars dollars \2\ of persons) dollars 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. 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: low-income 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, 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\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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 low-income 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 countable 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 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 pathway 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. --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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) 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.) --------------------------------------------------------------------------- \12\ Section 1115 waivers have been used to create managed care delivery systems to provide acute and long-term care services to the aged and disabled. --------------------------------------------------------------------------- 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 policies 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 eligibility 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\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- Qualified Medicare beneficiaries and related groups Certain low-income individuals are entitled to assistance in paying their Medicare part B premiums and other Medicare cost-sharing 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 cost-sharing 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. --------------------------------------------------------------------------- \14\ The levels are actually higher since $20 per month of unearned income is disregarded in the calculation. --------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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 home health visits ($1.07 in 1998; $2.23 in 1999 and $2.87 in 2000).\16\ --------------------------------------------------------------------------- \16\ See footnote number 6. --------------------------------------------------------------------------- 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 home- and 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. --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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 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 133\1/ 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 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] ------------------------------------------------------------------------ Percent Age Covered by Persons in with Medicaid age group 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 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. 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 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 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 Medicaid-covered 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 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 ``risk-based'' 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 risk-based 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 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 dual-eligible 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 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. 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 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 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] ---------------------------------------------------------------------------------------------------------------- Total Federal State ----------------------------------------------------------------- Fiscal year Program Percentage Program Percentage Program Percentage costs change costs change costs 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\ 22,6 12.9 \6\ 18,2 4.3 55 62 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 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. TABLE 15-14.--UNDUPLICATED NUMBER OF MEDICAID RECIPIENTS BY ELIGIBILITY CATEGORY, FISCAL YEARS 1972-98 [In thousands] ---------------------------------------------------------------------------------------------------------------- Age 65 Fiscal year Total or Blind/ Children Adults Other \1\ recipients older disabled ---------------------------------------------------------------------------------------------------------------- 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\ 6,12 15,266 6,803 524 9 1998................................................. 40,649 3,964 \4\ 6,63 18,309 7,908 655 8 ---------------------------------------------------------------------------------------------------------------- \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. TABLE 15-15.--MEDICAID RECIPIENTS BY SERVICE CATEGORY, FISCAL YEAR 1998 [In thousands of people] ------------------------------------------------------------------------ Number of Service category 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 ---------------------------------------------------------------------------------------------------------------- Payments (in Recipients Per Basis of eligibility millions of Percentage (in Percentage capita dollars) thousands) 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 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total Age 65 and Blind/ Foster care/ State recipients older disabled Children Adults children Unknown -------------------------------------------------------------------------------------------------------------------------------------------------------- Alabama...................................................... 527,078 64,651 145,892 262,547 48,049 4,038 1,901 Alaska....................................................... 74,508 50306 8,912 37,429 19,990 1,055 1,816 Arizona...................................................... 507,668 27,473 78,121 282,256 114,360 5,458 NA Arkansas..................................................... 424,727 50,746 96,507 179,405 85,023 4,994 8,052 California................................................... 7,082,175 587,326 926,252 3,345,491 1,646,576 138,609 437,921 Colorado..................................................... 344,916 43,264 62,492 154,206 66,485 14,354 4,115 Connecticut.................................................. 381,208 51,741 51,586 189,083 81,613 7,185 NA Delaware..................................................... 101,436 6,652 13,726 49,425 28,831 461 2,341 District of Columbia......................................... 166,146 7,979 22,551 58,488 25,682 1,664 49,782 Florida...................................................... 1,904,591 186,566 383,978 944,280 354,337 20,311 15,119 Georgia...................................................... 1,221,978 89,197 226,263 666,385 202,223 6,508 31,402 Hawaii....................................................... 184,614 17,022 16,913 75,329 64,575 3,022 7,753 Idaho........................................................ 123,176 12,210 17,395 57,056 17,147 1,351 18,017 Illinois..................................................... 1,363,856 108,132 262,773 620,251 293,879 78,821 NA Indiana...................................................... 607,293 72,880 91,514 313,972 101,228 5,802 21,897 Iowa......................................................... 314,936 39,847 51,219 138,633 78,021 4,836 2,380 Kansas....................................................... 241,933 27,388 43,388 120,383 40,811 4,029 5,934 Kentucky..................................................... 644,482 65,739 178,672 273,114 111,161 6,369 9,427 Louisiana.................................................... 720,615 93,838 160,544 345,723 120,369 141 NA Maine........................................................ 170,456 22,669 37,064 74,213 30,487 2,160 3,863 Maryland..................................................... 561,085 44,502 104,461 264,965 106,312 15,219 25,626 Massachusetts................................................ 908,238 113,876 197,426 409,962 186,362 612 NA Michigan..................................................... 1,362,890 91,663 259,243 616,825 287,617 28,346 79,196 Minnesota.................................................... 538,413 58,701 73,913 293,632 96,443 6,476 9,248 Mississippi.................................................. 485,767 60,567 131,439 218,491 61,217 2,894 11,159 Missouri..................................................... 734,015 88,776 113,652 384,773 115,773 14,859 16,182 Montana...................................................... 100,760 9,130 16,378 45,686 20,665 3,186 5,715 Nebraska..................................................... 211,188 25,162 27,724 106,023 42,199 10,080 NA Nevada....................................................... 128,144 12,320 19,320 65,349 21,460 3,155 6,540 New Hampshire................................................ 93,970 12,291 12,124 51,166 14,838 2,434 1,117 New Jersey................................................... 813,251 94,244 151,050 372,807 172,122 15,605 7,423 New Mexico................................................... 329,418 19,601 44,824 209,014 52,197 1,558 2,224 New York..................................................... 3,073,241 393,567 592,598 1,315,777 689,543 81,756 NA North Carolina............................................... 1,167,988 158,676 198,254 609,190 189,692 12,176 NA North Dakota................................................. 62,280 10,376 8,953 27,779 11,398 1,481 2,293 Ohio......................................................... 1,290,776 168,246 232,986 586,546 276,603 24,395 NA Oklahoma..................................................... 342,475 NA NA NA NA NA 342,475 Oregon....................................................... 511,171 39,401 97,889 129,409 210,350 13,701 20,421 Pennsylvania................................................. 1,523,120 222,458 272,083 745,977 257,602 23,026 1,974 Puerto Rico.................................................. 964,015 NA NA NA NA NA 964,015 Rhode Island................................................. 153,130 17,540 28,524 64,882 30,866 3,583 7,735 South Carolina............................................... 594,962 72,074 102,904 269,751 121,013 6,412 22,808 South Dakota................................................. 89,537 9,496 15,767 48,794 14,154 1,326 NA Tennessee.................................................... 1,843,661 88,948 302,470 554,235 479,727 12,130 406,151 Texas........................................................ 2,324,810 301,368 288,293 1,327,276 391,786 16,087 NA Utah......................................................... 215,801 9,716 20,093 106,259 44,966 3,783 30,984 Vermont...................................................... 123,992 14,101 15,258 53,842 36,814 1,952 2,025 Virginia..................................................... 653,236 86,550 121,112 333,370 107,944 4,260 NA Virgin Islands............................................... 19,764 1,516 1,208 11,424 5,616 NA NA Washington................................................... 1,413,208 61,996 112,306 489,005 181,319 14,342 554,240 West Virginia................................................ 342,668 29,157 73,037 153,021 56,682 5,065 25,706 Wisconsin.................................................... 518,595 63,432 120,136 231,607 82,360 13,094 7,966 Wyoming...................................................... 46,121 4,146 6,793 24,639 9,448 523 572 ------------------------------------------------------------------------------------------ All jurisdictions........................................ 40,649,482 3,964,223 6,637,980 18,309,145 7,907,935 654,684 3,175,515 -------------------------------------------------------------------------------------------------------------------------------------------------------- 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 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. HCFA-2082 Report. TABLE 15-18.--MEDICAID PAYMENTS BY BASIS OF ELIGIBILITY OF RECIPIENT BY STATE, FISCAL YEAR 1998 [In millions of dollars] ---------------------------------------------------------------------------------------------------------------- Age 65 Foster State Total and Blind/ Children Adults care expenditures older disabled 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 0 0 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 0 0 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 Vermont........................................... 351 97 136 55 47 15 Virginia.......................................... 2,118 639 933 336 201 9 Virgin Islands.................................... 10 2 2 3 3 0 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 -------------------------------------------------------------------------------------------------------------------------------------------------------- Foster care/ Service category Aged Blind/disabled Children Adults children Total -------------------------------------------------------------------------------------------------------------------------------------------------------- In millions of dollars ----------------------------------------------------------------------------------------------- Inpatient hospital...................................... $1,871.1 $9,643.4 $4,825.5 $4,211.0 $307.5 $21,498.7 Mental health facility.................................. 854.7 1,142.4 361.6 125.7 288.8 2,800.5 Nursing facility........................................ 25,529.8 5,952.3 90.8 104.8 11.2 31,892.1 Intermediate care facility for the mentally retarded.... 691.7 8,763.3 41.8 37.4 16.4 9,481.7 Physician............................................... 695.0 2,102.0 1,524.6 1,533.2 119.4 6,070.0 Outpatient hospital..................................... 585.2 2,682.7 1,149.6 1,182.6 90.6 5,759.0 Early and periodic screening, diagnosis, and treatment.. 13.9 364.1 822.3 28.7 97.0 1,334.8 Prescribed drugs........................................ 3,805.9 7,618.5 1,011.8 916.1 119.7 13,521.7 Dental.................................................. 58.6 200.8 460.2 156.4 21.4 901.4 Other practitioner...................................... 92.8 218.2 166.4 72.5 34.5 587.1 Clinic.................................................. 223.0 2,240.7 750.0 514.8 138.8 3,921.2 Laboratory and x ray.................................... 55.0 367.6 166.4 311.5 16.2 938.7 Family planning......................................... 2.6 51.4 65.0 316.5 3.7 449.1 Home health............................................. 797.5 1,691.8 101.5 61.2 43.7 2,701.5 Personal care support................................... 2,367.1 4,376.5 856.2 205.2 346.5 8,222.0 Home- and community-based waiver........................ 950.1 5,478.7 72.0 70.2 117.4 6,708.7 Other care.............................................. 719.0 2,382.0 621.3 252.1 361.7 4,386.2 Prepaid health care..................................... 1,281.7 5,061.1 7,258.2 4,716.6 210.2 19,296.2 Primary care case management............................ 4.8 26.0 66.5 18.4 1.7 134.4 Unknown/error........................................... 2.5 11.4 47.4 -1.6 0.2 1,712.8 ----------------------------------------------------------------------------------------------- Total............................................. 40,602.1 60,375.1 20,459.1 14,833.1 2,346.8 142,317.9 =============================================================================================== Percentage ----------------------------------------------------------------------------------------------- Inpatient hospital...................................... 4.6 16.0 23.6 28.4 13.1 15.1 Mental health facility.................................. 2.1 1.9 1.8 0.8 12.3 2.0 Nursing facility........................................ 62.9 9.9 0.4 0.7 0.5 22.4 Intermediate care facility for the mentally retarded.... 1.7 14.5 0.2 0.3 0.7 6.7 Physician............................................... 1.7 3.5 7.5 10.3 5.1 4.3 Outpatient hospital..................................... 1.4 4.4 5.6 8.0 3.9 4.0 Early and periodic screening, diagnosis, and treatment.. 0.0 0.6 4.0 0.2 4.1 0.9 Prescribed drugs........................................ 9.4 12.6 4.9 6.2 5.1 9.5 Dental.................................................. 0.1 0.3 2.2 1.1 0.9 0.6 Other practitioner...................................... 0.2 0.4 0.8 0.5 1.5 0.4 Clinic.................................................. 0.5 3.7 3.7 3.5 5.9 2.8 Laboratory and x ray.................................... 0.1 0.6 0.8 2.1 0.7 0.7 Family planning......................................... 0.0 0.1 0.3 2.1 0.2 0.3 Home health............................................. 2.0 2.8 0.5 0.4 1.9 1.9 Personal care support................................... 5.8 7.2 4.2 1.4 14.8 5.8 Home- and community-based waiver........................ 2.3 9.1 0.4 0.5 5.0 4.7 Other care.............................................. 1.8 3.9 3.0 1.7 15.4 3.1 Prepaid health care..................................... 3.2 8.4 35.5 31.8 9.0 13.6 Primary care case management............................ 0.0 0.0 0.3 0.1 0.1 0.1 Unknown/error........................................... 0.0 0.0 0.2 -0.0 0.0 1.2 ----------------------------------------------------------------------------------------------- Total............................................. 100 100 100 100 100 100 -------------------------------------------------------------------------------------------------------------------------------------------------------- Note.--Parentheses are used to indicate negative values. Negative values typically result from large negative claims payment adjustments. The data in this table 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. Medicaid 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 ---------------------------------------------------------------------------------------------------------------- Fiscal year Percent Basis of eligibility ------------------------------------------------------------------ change 1975 1980 1985 1990 1995 1998 1975-98 ---------------------------------------------------------------------------------------------------------------- Nominal payments, in millions of dollars ---------------------------------------------------------------------------- Payments: Age 65 and older............... $4,358 $8,739 $14,096 $21,508 $36,527 $40,602 831.7 Blind/disabled................. 3,145 7,621 13,452 24,403 49,418 60,375 1819.7 Children....................... 2,186 3,123 4,414 9,100 17,976 20,459 835.9 Adults......................... 2,062 3,231 4,746 8,590 13,511 14,833 619.4 Other.......................... 492 596 798 1,051 1,499 6,048 1129.3 ---------------------------------------------------------------------------- Total........................ 12,242 23,311 37,508 64,859 120,140 142,318 1062.5 ============================================================================ Per capita payment: Age 65 and older............... 1,205 2,540 4,605 6,717 8,868 10,242 750.0 Blind/disabled................. 2,146 2,619 7,600 11,807 17,678 9,095 323.8 Children....................... 228 335 452 811 1,047 1,117 389.9 Adults......................... 455 663 860 1,429 1,777 1,876 312.3 Other.......................... 273 NR 658 1,062 2,380 1,579 478.4 ---------------------------------------------------------------------------- Total........................ 556 1,079 1,719 2,568 3,311 3,501 529.7 ============================================================================ Constant 1998 dollars in millions ---------------------------------------------------------------------------- Payments: Age 65 and older............... 13,684 17,740 21,426 27,100 39,084 40,602 196.7 Blind/disabled................. 9,875 15,471 20,447 30,748 52,877 60,375 511.4 Children....................... 6,864 6,340 6,709 11,466 19,234 20,459 198.1 Adults......................... 6,475 6,559 7,214 10,823 14,457 14,833 129.1 Other.......................... 1,545 1,210 1,213 1,324 1,604 6,048 291.5 ---------------------------------------------------------------------------- Total........................ 38,440 47,321 57,012 81,722 128,550 142,318 270.2 ============================================================================ Per capita payment: Age 65 and older............... 3,784 5,156 7,000 8,463 9,489 10,242 170.7 Blind/disabled................. 6,738 5,317 31,080 14,877 18,915 9,095 35.0 Children....................... 716 680 687 1,022 1,120 1,117 56.0 Adults......................... 1,429 1,346 1,307 1,801 1,901 1,876 31.3 Other.......................... 857 NR 1,000 1,338 2,547 1,579 84.2 ---------------------------------------------------------------------------- Total........................ 1,746 2,190 2,613 3,236 3,543 3,501 100.5 ---------------------------------------------------------------------------------------------------------------- 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 June; all 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 Price Index for 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 coverage 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 individual 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 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 15-21.--MEDICAID PAYMENTS BY SERVICE CATEGORY, FISCAL YEAR 1998 ------------------------------------------------------------------------ Payments (in Service category millions of Percentage dollars) ------------------------------------------------------------------------ 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 9,482 6.7 retarded..................................... 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-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 15-22.--AVERAGE PAYMENTS BY BASIS OF ELIGIBILITY BY JURISDICTION, FISCAL YEAR 1998 ---------------------------------------------------------------------------------------------------------------- Age 65 Foster State Total and Blind/ Children Adults care/ payments older disabled 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 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. TABLE 15-23.--TOTAL AND PER CAPITA MEDICAID PAYMENTS FOR RECIPIENTS BY MAINTENANCE ASSISTANCE STATUS AND BASIS OF ELIGIBILITY, FISCAL YEAR 1998 ------------------------------------------------------------------------ Total payments Maintenance assistance status and (in Percentage Payments basis of eligibility millions of of total per capita dollars) ------------------------------------------------------------------------ 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. TABLE 15-24.--OPTIONAL MEDICAID SERVICES AND NUMBER OF STATES \1\ OFFERING EACH SERVICE, OCTOBER 1996 ------------------------------------------------------------------------ States States offering Access to offering services to include Service services to both Medicaid categorically categorically services needy only and medically to the needy uninsured ------------------------------------------------------------------------ Podiatrist.................... 9 27 10 Optometrist................... 11 28 10 Chiropractor.................. 4 20 4 Psychologist.................. 6 20 6 Medical social worker......... 1 6 3 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 11 26 5 disorder..................... 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 18 22 10 for the mentally retarded Inpatient psychiatric......... 12 21 9 Christian science nurses...... 1 2 1 Christian science sanitoria... 3 7 4 Skilled nursing facility for 16 26 10 under age 21................. 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. TABLE 15-25.--PREPAID HEALTH CARE MEDICAID RECIPIENTS BY BASIS OF ELIGIBILITY, FISCAL YEAR 1998 [In thousands] ---------------------------------------------------------------------------------------------------------------- Age State Total 65 and Blind/ Child Adult recipients older disabled 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 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] ---------------------------------------------------------------------------------------------------------------- Maintenance Total Age 65 Blind/ assistance State payments and disabled Child Adult status older 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 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. 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. --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \19\ The 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. --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \20\ For 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. \21\ States 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. --------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \23\ When 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. --------------------------------------------------------------------------- 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 reported fiscal year 1999 SCHIP enrollment \3\ (total Fiscal year Type of Date Upper children ever served in 1999 total State SCHIP implemented \1\ eligibility \2\ fiscal year 1999) SCHIP Program (in percent) ------------------------- enrollment Separate Medicaid program 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 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\ ME....... 10/01/97....... NA............. NA.......... NA....... 0 \7\. 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 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). 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 well-child 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 cost-sharing 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). 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. --------------------------------------------------------------------------- \24\ The 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. --------------------------------------------------------------------------- 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 performance 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 General 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 --------------------------------------------------------------------------- \25\ Unspent funds will be redistributed to States that have fully expended their allotments. TABLE 15-28.--ESTIMATED SCHIP FEDERAL ALLOTMENTS AND EXPENDITURES--FISCAL YEAR 1998 ---------------------------------------------------------------------------------------------------------------- Expenditures \1\ Fiscal year -------------------------------------------- State 1998 allotment Percent of S-SCHIP \2\ Total dollars allotment M-SCHIP ---------------------------------------------------------------------------------------------------------------- Alabama............................. 85,975,213 25,421,675 29.6 10,840,371 14,581,304 Alaska.............................. 6,889,296 3,806,310 55.2 3,425,679 380,631 American Samoa \3\.................. 128,850 (\4\) 0.0 (\4\) (\4\) Arizona............................. 116,797,799 8,836,776 7.6 (\4\) 8,836,776 Arkansas............................ 47,907,958 680,106 1.4 612,096 68,010 California.......................... 854,644,807 68,780,451 8.0 7,012,804 61,767,647 Colorado............................ 41,790,546 10,024,469 24.0 (\4\) 10,024,469 Connecticut......................... 34,959,075 12,301,470 35.2 9,567,126 2,734,344 Delaware............................ 8,053,463 883,874 11.0 (\4\) 883,874 District of Columbia................ 12,076,002 498,585 4.1 498,585 (\4\) Florida............................. 270,214,724 57,362,492 21.2 27,317,491 30,045,001 Georgia............................. 124,660,136 7,428,825 6.0 (\4\) 7,428,825 Guam \5\............................ 375,812 (\4\) 0.0 (\4\) (\4\) Hawaii \6\.......................... 8,945,304 (\4\) 0.0 (\4\) (\4\) Idaho............................... 15,879,707 5,280,101 33.3 4,752,091 528,010 Illinois............................ 122,528,573 20,812,534 17.0 20,812,534 (\4\) Indiana............................. 70,512,432 61,716,155 87.5 59,547,425 2,168,730 Iowa................................ 32,460,463 10,839,004 33.4 8,901,735 1,937,269 Kansas.............................. 30,656,520 8,790,887 28.7 (\4\) 8,790,887 Kentucky............................ 49,932,527 17,825,116 35.7 17,352,499 472,617 Louisiana........................... 101,736,840 10,361,817 10.2 9,325,635 1,036,182 Maine............................... 12,486,977 5,617,064 45.0 4,060,701 1,556,363 Maryland............................ 61,627,358 14,251,164 23.1 13,527,138 724,026 Massachusetts....................... 42,836,231 35,385,895 82.6 29,961,560 5,424,335 Michigan............................ 91,585,508 15,576,561 17.0 9,076,713 6,499,848 Minnesota........................... 28,395,980 7,189 0.0 7,189 (\4\) Mississippi......................... 56,017,103 8,092,064 14.4 8,092,064 (\4\) Missouri............................ 51,673,123 19,708,219 38.1 19,166,928 541,291 Montana............................. 11,740,395 599,352 5.1 (\4\) 599,352 Nebraska............................ 14,862,926 3,773,847 25.4 3,773,847 (\4\) Nevada.............................. 30,407,067 4,110,173 13.5 (\4\) 4,110,173 New Hampshire....................... 11,458,404 965,340 8.4 395,135 570,205 New Jersey.......................... 88,417,899 23,156,897 26.2 16,266,802 6,890,095 New Mexico.......................... 62,972,705 767,955 1.2 767,955 (\4\) New York............................ 255,626,409 255,626,409 100.0 477,118 255,149,291 North Carolina...................... 79,508,462 34,921,019 43.9 (\4\) 34,921,019 North Dakota........................ 5,040,741 75,874 1.5 74,324 1,550 Northern Mariana Islands \7\........ 118,113 (\4\) 0.0 (\4\) (\4\) Ohio................................ 115,734,364 44,510,120 38.5 44,510,120 (\4\) Oklahoma \8\........................ 85,699,060 (\4\) 0.0 (\4\) (\4\) Oregon.............................. 39,121,663 7,638,628 19.5 (\4\) 7,638,628 Pennsylvania........................ 117,456,520 48,751,058 41.5 (\4\) 48,751,058 Puerto Rico......................... 9,835,550 9,835,550 100.0 9,835,550 (\4\) Rhode Island........................ 10,684,422 2,321,095 21.7 2,321,095 (\4\) South Carolina...................... 63,557,819 63,557,819 100.0 61,250,170 2,307,649 South Dakota........................ 8,541,224 1,546,059 18.1 1,391,453 154,606 Tennesseee \8\...................... 66,153,082 (\4\) 0.0 (\4\) (\4\) Texas............................... 561,331,521 39,799,551 7.1 35,917,987 3,881,564 Utah................................ 24,241,159 7,994,253 33.0 (\4\) 7,994,253 Vermont............................. 3,535,445 524,624 14.8 (\4\) 524,624 Virginia............................ 68,314,914 4,992,151 7.3 (\4\) 4,992,151 Virgin Islands \3\.................. 279,175 (\4\) 0.0 (\4\) (\4\) Washington \6\...................... 46,661,213 (\4\) 0.0 (\4\) (\4\) West Virginia....................... 23,606,744 1,078,823 4.6 247,648 831,175 Wisconsin \3\....................... 40,633,039 (\4\) 0.0 (\4\) (\4\) Wyoming \9\......................... 7,711,638 (\4\) 0.0 (\4\) (\4\) --------------------------------------------------------------------------- Total......................... 4,235,000,000 986,835,400 23.3 441,087,568 545,747,832 ---------------------------------------------------------------------------------------------------------------- \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 funds become 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 have been claimed under regular Medicaid. Beginning with the first quarter of fiscal year 2000, these States plan to report SCHIP expenditures and begin the process of adjusting regular Medicaid claims for prior periods. \9\ Wyoming 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. 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\ --------------------------------------------------------------------------- \26\ This 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. --------------------------------------------------------------------------- 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. 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. --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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' rent payments to a fixed percentage--currently 30 percent--of their income after certain deductions, with the government paying the remaining portion of the rent. Almost all project-based aid is provided through production-oriented programs, which include the Public 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. --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \29\ The 1990 Housing Act repealed the section 8 Moderate Rehabilitation Program at the end of fiscal year 1991, except for single-room occupancy units for the homeless. --------------------------------------------------------------------------- Household-based subsidies 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 addition, because of the tenant protection programs discussed above, aid is gradually being shifted from project-based to household-based 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. --------------------------------------------------------------------------- \30\ The Housing and Community Development Act of 1997 terminated the section 235 program at the end of fiscal year 1989. --------------------------------------------------------------------------- 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 short-term, 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. 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. --------------------------------------------------------------------------- \31\ The Housing and Community Development Act of 1987 terminated the HoDAG Program at the end of fiscal year 1989; the 1990 Housing Act repealed the Rental Rehabilitation Block Grant Program at the end of fiscal year 1991. --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \32\ Prior 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. --------------------------------------------------------------------------- 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 low-income 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 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 ---------------------------------------------------------------------------------------------------------------- Net new commitments for renters Net new ------------------------------------------ commitments Fiscal year Existing New for home housing \1\ construction \2\ Total buyers \3\ ---------------------------------------------------------------------------------------------------------------- 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. 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, 1977-2000 [In thousands of households] -------------------------------------------------------------------------------------------------------------------------------------------------------- Assisted renters ----------------------------------------------------------------- Existing housing Total assisted Start of fiscal year ---------------------------------- Total Total assisted renters and Subtotal New construction assisted homeowners \5\ homeowners \4\ Household- Project- existing \3\ renters \4\ based \1\ based \2\ housing -------------------------------------------------------------------------------------------------------------------------------------------------------- 1977................................................... 162 105 268 1,799 2,067 331 2,398 1978................................................... 297 126 423 1,928 2,350 293 2,643 1979................................................... 427 175 602 1,978 2,580 262 2,842 1980................................................... 521 185 707 2,090 2,797 235 3,032 1981................................................... 599 221 820 2,228 3,212 219 3,431 1982................................................... 651 194 844 2,373 3,379 241 3,619 1983................................................... 691 265 955 2,485 3,615 242 3,857 1984................................................... 728 357 1,086 2,589 3,851 230 4,081 1985................................................... 749 431 1,180 2,657 4,015 210 4,225 1986................................................... 797 456 1,253 2,686 4,135 200 4,336 1987................................................... 893 473 1,366 2,721 4,279 182 4,461 1988................................................... 956 490 1,446 2,736 4,371 159 4,530 1989................................................... 1,025 509 1,534 2,748 4,485 148 4,632 1990................................................... 1,090 527 1,616 2,755 4,569 141 4,710 1991................................................... 1,137 540 1,678 2,778 4,656 130 4,786 1992................................................... 1,166 554 1,721 2,786 4,705 125 4,830 1993................................................... 1,326 574 1,900 2,762 4,861 98 4,959 1994................................................... 1,392 593 1,985 2,764 4,939 95 5,035 1995................................................... 1,474 607 2,081 2,778 5,049 80 5,130 1996................................................... 1,413 608 2,021 2,817 5,028 76 5,104 1997................................................... 1,465 586 2,051 2,822 5,063 68 5,132 1998................................................... 1,481 564 2,045 2,786 5,021 60 5,082 1999................................................... 1,613 542 2,154 2,757 5,101 53 5,154 2000................................................... 1,621 522 2,143 2,728 5,061 43 5,104 -------------------------------------------------------------------------------------------------------------------------------------------------------- \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 Program), and 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, including Indian units originally constructed under the Public Housing Program but currently assisted through the section 8 loan management set-aside (LMSA), PD, conversion (from rent 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 than the 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 homeless (including 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. 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] ---------------------------------------------------------------------------------------------------------------- Other Total net budget Direct housing Homeless housing authority assistance \1\ programs \2\ block ------------------------- Fiscal year in current in current grants \3\ dollars dollars in current Current 2000 dollars dollars 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. 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\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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 de- --------------------------------------------------------------------------- \34\ For 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. TABLE 15-32.--OUTLAYS FOR HOUSING ASSISTANCE ADMINISTERED BY HUD, BY BROAD PROGRAM CATEGORIES, 1977-2000 [In millions of current and 2000 dollars] -------------------------------------------------------------------------------------------------------------------------------------------------------- Direct housing assistance (in Other Total outlays current dollars) housing --------------------- ------------------------------------- Homeless block Fiscal year Section 8 programs \3\ grants \4\ and other Public Subtotal (in current (in Current 2000 assisted housing \2\ assisted dollars) current dollars dollars housing \1\ housing dollars) -------------------------------------------------------------------------------------------------------------------------------------------------------- 1977............................................................... $1,331 $1,564 $2,895 0 0 $5,790 $15,791 1978............................................................... 1,824 1,779 3,603 0 0 7,206 18,460 1979............................................................... 2,374 1,815 4,189 0 0 8,378 19,709 1980............................................................... 3,146 2,218 5,364 0 0 10,728 22,709 1981............................................................... 4,254 2,478 6,732 0 0 13,464 25,901 1982............................................................... 5,293 2,553 7,846 0 0 15,692 28,208 1983............................................................... 6,102 3,318 9,420 0 0 18,840 32,428 1984............................................................... 7,068 3,932 11,000 0 0 22,000 36,331 1985............................................................... 7,771 17,261 25,032 0 $15 50,079 79,760 1986............................................................... 8,320 3,859 12,179 0 142 24,500 38,075 1987............................................................... 8,993 3,517 12,510 $2 165 25,187 38,046 1988............................................................... 9,985 3,699 13,684 37 180 27,585 40,020 1989............................................................... 10,689 3,774 14,463 72 275 29,273 40,553 1990............................................................... 11,357 4,331 15,688 85 276 31,737 41,875 1991............................................................... 12,107 4,786 16,893 125 168 34,079 42,802 1992............................................................... 13,052 5,182 18,234 150 35 36,653 44,694 1993............................................................... 14,032 6,447 20,479 180 276 41,414 49,002 1994............................................................... 15,289 6,857 22,146 225 862 45,379 52,321 1995 \5\........................................................... 16,448 7,505 23,953 359 1,259 49,524 55,542 1996 \5\........................................................... 17,496 7,668 25,164 616 1,273 52,217 56,979 1997............................................................... 17,131 7,809 24,940 718 1,263 51,861 55,104 1998 \5\........................................................... 16,975 8,028 25,003 916 1,316 52,238 54,617 1999 \5\........................................................... 17,171 7,805 24,976 1,032 1,367 52,351 53,710 2000 est. \5\...................................................... 17,443 8,094 25,537 1,174 1,456 53,704 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 Assistance, 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 Distressed Public 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 the Homeless, Emergency Shelter Grants, Supportive Housing, Shelter Plus Care Program, section 8 Moderate Rehabilitation for Single Room Occupancy Dwellings Program, Innovative Homeless Initiatives Demonstration Program. \4\ Includes the following programs: HOME Investment Partnerships Program, Nehemiah Housing Opportunity Grant Program, Rental Housing Development Grants (HoDAG), Rental 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 that should 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 of spending 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-time expenditures. That amount paid off--all at once--the capital cost of public housing construction and modernization activities undertaken between 1974 and 1985, which otherwise would have been paid off over periods of up to 40 years. Because of that expenditure, however, outlays for public housing since that time have been lower than they would have been otherwise. Source: Congressional Budget Office based on data from the U.S. Department of Housing and Urban Development. TABLE 15-33.--PER UNIT OUTLAYS FOR HOUSING AID ADMINISTERED BY HUD, 1977- 97 [In current and 1997 dollars] ------------------------------------------------------------------------ Per unit outlays ------------------------- Fiscal year Current 1997 dollars 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 subsidies.\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. --------------------------------------------------------------------------- \35\ The apparent fluctuations in total number of assisted households between 5.021 and 5.101 million is most likely due to inaccuracies in the data. --------------------------------------------------------------------------- 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. SCHOOL LUNCH AND BREAKFAST PROGRAMS \36\ --------------------------------------------------------------------------- \36\ Other 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). --------------------------------------------------------------------------- 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 reduced-price meals (no more than 40 cents for a lunch or 30 cents for a breakfast) if their family income is between 130 and 185 percent of the poverty guidelines (between about $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). --------------------------------------------------------------------------- \37\ Schools 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. --------------------------------------------------------------------------- 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 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). --------------------------------------------------------------------------- \38\ Subsidies 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. TABLE 15-34.--NATIONAL SCHOOL LUNCH PROGRAM PARTICIPATION AND FEDERAL COSTS, FISCAL YEARS 1977-99 [In millions] ---------------------------------------------------------------------------------------------------------------- Participation 9 month average \1\ Federal costs ------------------------------------------------------------------- Fiscal year Reduced- Full- Constant Free price price Total \3\ Current 1999 meals meals meals \2\ dollars \4\ 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. TABLE 15-35.--SCHOOL BREAKFAST PROGRAM PARTICIPATION AND FEDERAL COSTS, SELECTED FISCAL YEARS 1977-99 [In millions] ---------------------------------------------------------------------------------------------------------------- Participation 9 month average \1\ Federal costs ---------------------------------------------------------------------- Fiscal year Full- Constant Free Reduced- price Total \3\ Current 1999 meals price meals meals \2\ dollars \4\ 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 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 three-person 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. 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] ---------------------------------------------------------------------------------------------------------------- Participation (in thousands) Federal spending ------------------------------------------------------------------ Fiscal year Constant Women Infants Children Total \1\ Current 1999 dollars \2\ 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. 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-of-school 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. --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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. 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) for-profit proprietary centers (see restrictions noted below), (4) outside-of-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\ --------------------------------------------------------------------------- \40\ Children in participating homeless shelters represent a very minor fraction of those served under the CACFP; only about 100 shelter sites participate. \41\ FNS 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). --------------------------------------------------------------------------- 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 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 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 ------------------------------------------------------------------------ Workforce Investment Act Job Training Partnership Act (JTPA) (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 no separate summer youth Programs--Title II-B. 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 year-round 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 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.......................................... 3 3 4 5 5 Age at enrollment: 22-29............................................. 42 42 42 42 42 41 30-54............................................. 56 56 56 56 56 57 55 and older...................................... 3 2 2 2 2 2 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 10 8 9 8 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. 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 4 4 5 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 1 1 1 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 3 3 3 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 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 mid-60s 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 pol- TABLE 15-39.--JOB TRAINING PROGRAMS \1\ FOR THE DISADVANTAGED: NEW ENROLLEES, FEDERAL APPROPRIATIONS AND OUTLAYS, FISCAL YEARS 1975-98 ---------------------------------------------------------------------------------------------------------------- Budget New enrollees/ authority Outlays in Fiscal year total Appropriations Outlays in constant constant participants \2\ (millions) (millions) 1990 1990 dollars dollars ---------------------------------------------------------------------------------------------------------------- 1975................................... 1,126,000 $1,580 $1,304 $3,755 $3,099 1976................................... 1,250,000 1,580 1,697 3,515 3,775 1977................................... 1,119,000 2,880 1,756 5,964 3,636 1978................................... 965,000 1,880 2,378 3,658 4,627 1979................................... 1,253,000 2,703 2,547 4,829 4,550 1980................................... 1,208,000 3,205 3,236 5,154 5,203 1981................................... 1,011,000 3,077 3,395 4,493 4,958 1982................................... NA 1,594 2,277 2,175 3,107 1983................................... NA 2,181 2,291 2,846 2,990 1984................................... 716,200 1,886 1,333 2,361 1,669 1985................................... 803,900 1,886 1,710 2,279 2,066 1986................................... 1,003,900 1,783 1,911 2,101 2,252 1987................................... 960,700 1,840 1,880 2,108 2,154 1988................................... 873,600 1,810 1,902 1,991 2,092 1989................................... 823,200 1,788 1,868 1,877 1,961 1990................................... 630,000 1,745 1,803 1,745 1,803 1991................................... 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. TABLE 15-40.--SUMMER YOUTH EMPLOYMENT AND TRAINING PROGRAM: FEDERAL APPROPRIATIONS, OUTLAYS, AND PARTICIPANTS, FISCAL YEARS 1984-98 \1\ [In millions of dollars] ---------------------------------------------------------------------------------------------------------------- Outlays -------------------------- Appropriations \2\ Constant Participants \3\ Current 1990 dollars dollars ---------------------------------------------------------------------------------------------------------------- 1984............................................ $824 $584 $731 672,000 1985............................................ 724 776 938 767,600 1986............................................ 636 746 879 785,000 1987............................................ 750 723 828 634,400 1988............................................ 718 707 778 722,900 1989............................................ 709 697 732 607,900 1990............................................ 700 699 699 585,100 1991............................................ 683 698 663 555,200 1992............................................ \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. TABLE 15-41.--JOB CORPS: FEDERAL APPROPRIATIONS, OUTLAYS, AND NEW ENROLLEES, FISCAL YEARS 1982-98 \1\ [In millions of dollars] ---------------------------------------------------------------------------------------------------------------- Outlays -------------------------- Appropriations Constant New Current 1990 enrollees dollars dollars ---------------------------------------------------------------------------------------------------------------- 1982..................................................... $590 $595 $812 53,581 1983..................................................... 618 563 735 60,465 1984..................................................... 599 581 727 57,386 1985..................................................... 617 593 716 63,020 1986..................................................... 612 594 701 64,964 1987..................................................... 656 631 723 65,150 1988..................................................... 716 688 757 68,068 1989..................................................... 742 689 724 62,550 1990..................................................... 803 740 740 61,453 1991..................................................... 867 769 769 62,205 1992..................................................... 919 834 789 61,762 1993..................................................... 966 936 846 62,749 1994..................................................... 1,040 981 869 58,460 1995..................................................... 1,089 1,011 873 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 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. TABLE 15-42.--HEAD START ENROLLMENT AND FEDERAL FUNDING, FISCAL YEARS 1965-99 ------------------------------------------------------------------------ Appropriations Fiscal year Enrollment (in millions of dollars) ------------------------------------------------------------------------ 1965 (summer only)...................... 561,000 $96.4 1966.................................... 733,000 198.9 1967.................................... 681,400 349.2 1968.................................... 693,900 316.2 1969.................................... 663,600 333.9 1970.................................... 477,400 325.7 1971.................................... 397,500 360.0 1972.................................... 379,000 376.3 1973.................................... 379,000 400.7 1974.................................... 352,800 403.9 1975.................................... 349,000 403.9 1976.................................... 349,000 441.0 1977.................................... 333,000 475.0 1978.................................... 391,400 625.0 1979.................................... 387,500 680.0 1980.................................... 376,300 735.0 1981.................................... 387,300 818.7 1982.................................... 395,800 911.7 1983.................................... 414,950 912.0 1984.................................... 442,140 995.8 1985.................................... 452,080 1,075.0 1986.................................... 451,732 1,040.0 1987.................................... 446,523 1,130.5 1988.................................... 448,464 1,206.3 1989.................................... 450,970 1,235.0 1990.................................... 548,470 \1\ 1,552.0 1991.................................... 583,471 1,951.8 1992.................................... 621,078 2,201.8 1993.................................... 713,903 2,776.3 1994.................................... 740,493 3,325.7 1995.................................... 750,696 3,534.1 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. TABLE 15-43.--CHARACTERISTICS OF CHILDREN ENROLLED IN HEAD START, SELECTED FISCAL YEARS 1980-99 [In percent] ---------------------------------------------------------------------------------------------------------------- Age of children enrolled Enrollment by race -------------------------------------------------------------------- Fiscal year Disabled 5 and Under Native older 4 3 3 American Hispanic Black White Asian ---------------------------------------------------------------------------------------------------------------- 1980............................. 12 21 55 24 0 4 19 42 34 1 1982............................. 12 17 55 26 2 4 20 42 33 1 1984............................. 12 16 56 26 2 4 20 42 33 1 1986............................. 12 15 58 25 2 4 21 40 32 3 1988............................. 13 11 63 23 3 4 22 39 32 3 1990............................. 14 8 64 25 3 4 22 38 33 3 1991............................. 13 7 63 27 3 4 22 38 33 3 1992............................. 13 7 63 27 3 4 23 37 33 3 1993............................. 13 6 64 27 3 4 24 36 33 3 1994............................. 13 7 62 28 3 4 24 36 33 3 1995............................. 13 7 62 27 4 4 25 35 33 3 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\ 1999 \5\ -------------------------------------------------------------------------------------------------------------------------------------------------------- Alabama......................... $18,234 $15,856 $12,664 $11,344 $12,127 $11,063 $9,077 $9,937 $16,612 $9,225 Alaska.......................... 7,247 9,594 8,034 7,241 7,741 7,062 5,794 6,343 15,344 5,888 Arizona......................... 8,150 6,200 6,125 5,486 5,865 5,350 4,390 4,806 4,049 4,461 Arkansas........................ 13,973 11,069 9,663 8,656 9,253 8,442 6,926 7,582 12,334 7,039 California...................... 97,894 68,764 67,940 60,855 65,056 59,352 48,693 53,308 44,917 49,489 Colorado........................ 33,299 23,419 23,688 21,218 22,683 20,694 16,978 18,587 15,661 17,255 Connecticut..................... 43,440 35,541 30,902 27,680 34,986 28,011 22,148 24,247 20,430 25,633 Delaware........................ 5,931 5,471 4,102 3,674 4,214 3,583 2,940 3,218 2,712 3,682 District of Columbia............ 6,940 5,269 4,799 4,299 4,595 4,193 3,440 3,766 3,173 4,581 Florida......................... 28,970 21,731 20,039 17,950 19,188 17,506 14,362 15,722 39,195 14,596 Georgia......................... 22,910 17,439 15,844 14,191 15,171 13,841 11,355 12,431 23,142 11,541 Hawaii.......................... 2,243 1,531 1,596 1,429 1,528 1,394 1,144 1,252 1,055 1,162 Idaho........................... 12,877 9,493 9,240 8,277 8,848 8,072 6,622 7,250 6,109 6,731 Illinois........................ 123,679 85,711 85,533 76,614 93,921 90,445 61,302 76,588 56,548 78,262 Indiana......................... 55,371 41,069 38,727 34,689 39,408 39,568 27,756 30,386 25,603 35,353 Iowa............................ 38,581 28,719 27,466 24,584 34,335 28,584 19,671 24,576 18,145 23,491 Kansas.......................... 18,211 12,901 12,605 11,290 12,069 11,011 9,034 9,890 8,333 12,488 Kentucky........................ 29,141 22,537 20,153 18,052 24,639 22,996 14,444 15,813 13,324 22,430 Louisiana....................... 18,867 13,203 12,947 11,597 12,398 11,311 9,279 10,159 18,193 9,431 Maine........................... 27,914 23,550 20,020 17,932 27,275 17,489 14,349 15,708 13,236 15,365 Maryland........................ 34,214 29,361 23,662 21,194 29,288 20,671 16,959 18,566 15,643 20,812 Massachusetts................... 86,878 69,364 61,815 55,369 73,071 56,312 44,304 48,502 40,868 52,790 Michigan........................ 113,951 86,099 81,206 72,738 126,605 81,746 58,201 63,717 53,687 63,103 Minnesota....................... 82,239 62,063 58,504 52,404 93,421 56,152 41,931 52,386 38,679 45,696 Mississippi..................... 15,683 12,391 10,858 9,725 10,397 9,485 7,782 8,519 11,547 7,909 Missouri........................ 48,026 35,779 34,165 30,603 32,715 37,030 24,487 30,592 22,587 32,524 Montana......................... 12,298 10,938 10,838 9,708 10,378 9,468 7,768 9,705 7,165 7,895 Nebraska........................ 19,032 13,851 13,573 12,158 12,997 14,572 9,728 12,154 8,974 12,022 Nevada.......................... 4,151 3,214 2,877 2,577 2,754 2,513 2,062 2,257 1,902 2,095 New Hampshire................... 16,447 13,648 11,700 10,480 14,352 10,535 8,386 9,180 7,735 9,297 New Jersey...................... 82,849 66,929 57,386 51,402 61,894 50,132 41,129 45,027 37,939 50,855 New Mexico...................... 9,973 8,123 7,668 6,868 7,342 6,698 5,495 6,016 5,069 5,585 New York........................ 263,291 214,983 187,373 167,835 240,880 175,232 134,293 147,019 123,877 164,971 North Carolina.................. 40,378 35,612 27,924 25,013 26,739 24,394 20,014 21,910 28,253 47,176 North Dakota.................... 14,612 12,503 11,773 10,546 19,376 10,868 8,438 13,302 7,784 8,576 Ohio............................ 109,413 78,365 75,666 67,776 96,381 76,346 54,231 59,370 50,025 63,606 Oklahoma........................ 16,004 12,250 11,641 10,427 11,147 10,169 8,343 9,134 14,606 8,480 Oregon.......................... 25,808 19,298 18,360 16,445 17,580 16,039 13,159 14,405 12,138 13,373 Pennsylvania.................... 141,479 107,475 100,647 90,152 116,857 95,330 72,135 78,971 66,540 86,271 Rhode Island.................... 14,220 11,572 10,175 9,114 11,471 9,341 7,293 7,984 6,727 9,133 South Carolina.................. 14,544 12,451 10,058 9,009 9,631 8,787 7,209 7,892 13,753 7,326 South Dakota.................... 11,434 10,691 9,562 8,565 11,150 9,319 6,853 10,802 6,322 6,965 Tennessee....................... 29,520 21,652 20,415 18,286 19,548 17,834 14,632 16,018 21,842 14,871 Texas........................... 48,206 36,455 33,337 29,861 31,922 29,123 23,893 26,158 73,089 24,284 Utah............................ 14,827 11,062 11,008 9,860 10,541 9,617 7,890 8,637 7,278 8,018 Vermont......................... 12,328 9,813 8,770 7,855 13,197 7,908 6,285 6,881 5,798 6,863 Virginia........................ 41,677 36,051 28,822 25,817 28,277 25,179 20,657 22,615 19,055 28,635 Washington...................... 40,896 31,495 30,199 27,050 28,917 26,382 21,644 23,695 19,965 21,997 West Virginia................... 19,285 13,676 13,337 11,946 16,503 11,651 9,559 10,465 8,817 12,607 Wisconsin....................... 74,027 56,987 52,662 47,171 65,147 53,718 37,744 41,320 34,816 42,851 Wyoming......................... 6,195 4,605 4,407 3,948 4,220 3,850 3,159 3,458 2,914 3,210 ----------------------------------------------------------------------------------------------------------------------- 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 1,247,899 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Includes $100 million in LIHEAP emergency contingency funds. \2\ Includes $180 million in LIHEAP emergency contingency funds. \3\ Includes $215 million in LIHEAP emergency contingency funds. \4\ Includes reallotment of $81,913 in fiscal year 1997 block grant funds and $160 million in emergency contingency funds. \5\ Includes reallotment of $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. 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 non-Federal sources. Allotments to States Several sources of Federal and non-Federal funds generally are available to LIHEAP grantees: --Federal LIHEAP block grant allotments; --LIHEAP emergency contingency allotment for weather emergencies (these funds can only be released at the President's directive); --LIHEAP leveraging incentive awards; --LIHEAP carryover (grantees can request that up to 10 percent of their Federal LIHEAP funds be held available for the next fiscal year); --Oil overcharge funds (disbursed by the Department of Energy from settlements of cases of oil price overcharges pursuant to the Emergency Petroleum Act of 1973. States determine how to allocate these funds among several eligible activities, including LIHEAP); and --State and other funds (States use their own funds to supplement LIHEAP benefits or administrative costs. Other funds include reimbursements to LIHEAP agencies for taking application for low-income weatherization programs or winter heating protection programs.). Table 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 receiving 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. TABLE 15-45.--LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM ESTIMATED HEATING ASSISTANCE BENEFITS, NUMBER OF HOUSEHOLDS, AND ESTIMATED AVERAGE BENEFITS, FISCAL YEAR 1996 ---------------------------------------------------------------------------------------------------------------- Estimated heating Number of Estimated State assistance households average benefits assisted 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 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). TABLE 15-46.--BUDGET AUTHORITY FOR VETERANS BENEFITS AND SERVICES, DEPARTMENT OF VETERANS AFFAIRS, FISCAL YEARS 1980-99 [In thousands of dollars] ---------------------------------------------------------------------------------------------------------------- Service- connected Total: compensation Education, Other veterans Fiscal year and survivor training, Medical Housing benefits benefits payments; readjustment care loans \1\ and and means-tested services services pensions ---------------------------------------------------------------------------------------------------------------- 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 active-duty 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 service-connected 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 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 low-income 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 service- connected 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 contracts 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] ---------------------------------------------------------------------------------------------------------------- Readjustment, Medical care Fiscal year Compensation education, ------------------------------- Housing and pensions job training Inpatient \1\ Outpatient \2\ loans ---------------------------------------------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \42\ Largely drawn from Mont et al. (1999). --------------------------------------------------------------------------- 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 disabilities without regard to fault. Prior to the enactment of workers' compensation laws (the first of which was enacted in 1908), a worker was only protected in cases in which employer negligence could be proven as the cause of injury or death. By 1949, all States and the Federal Government had enacted laws to cover workers and their dependents in any case of occupational disability or death. Most workers' compensation benefits are paid by insurance companies through policies purchased by private employers that are keyed to the benefits required by the State or Federal workers' compensation law covering the employer. In addition, benefits may be paid by special State or Federal insurance funds, by employers themselves acting as self-insurers, and by the Federal Government (for Federal employees and some black lung beneficiaries). State laws generally are administered by entities such as industrial commissions or special units within State labor departments. Federal laws are administered by the U.S. Department of Labor, although the Social Security Administration has responsibility for paying some black lung claims. Federal involvement in the workers' compensation system is minimal. Federal laws cover work-related disability and death benefits for Federal employees, certain maritime and railroad employees, and benefits for black-lung-related disability or death.\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). --------------------------------------------------------------------------- \43\ The 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). --------------------------------------------------------------------------- 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 unable to work, or must work at a reduced level, but is expected to recover fully. Permanently disabled workers receiving workers' compensation also may be eligible for benefits under the Social Security Disability Insurance (DI) Program if they meet generally more stringent DI tests. However, the Social Security Act stipulates that total benefits under workers' compensation and DI cannot exceed 80 percent of a worker's former earnings (or, if higher, 80 percent of the total family Social Security benefit). If there is an excess, the Social Security benefit is reduced by the amount of the excess, or, in 13 States, the workers' compensation benefit is reduced. Workers' compensation laws require that all injury-related medical and hospital care be paid for. As a result, medical expenses made up 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. --------------------------------------------------------------------------- \45\ Coverage in Wyoming is mandatory for extra-hazardous occupations. --------------------------------------------------------------------------- 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 disability 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 State-established ``high-risk'' insurance pool. In two States (North Dakota and Wyoming), employers must purchase insurance from their State fund, and, in four other States (Nevada, Ohio, Washington, West Virginia), they must either self-insure or buy insurance from the State fund. And nearly half of the remaining States have fully ``competitive'' State funds that allow employers to buy private insurance, self insure, or buy from a State fund. In 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\ --------------------------------------------------------------------------- \46\ Federal program disbursements were for black lung benefits and payments for Federal employees. Some of the payments financed through private insurers, self-insurance, and State funds were mandated by Federal laws covering private-sector employers (e.g., the LHWCA). --------------------------------------------------------------------------- Total workers' compensation costs to employers in a given year are greater than annual benefits paid out because of the built-in cost of long-term benefits. In 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. 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 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\ --------------------------------------------------------------------------- \47\ Further updated information is also available from the National Academy of Social Insurance and in Burton et al. (1997) and National Foundation (1997). --------------------------------------------------------------------------- REFERENCES Bureau of Labor Statistics. (1999, October). Survey of occupational injuries and illness, 1997 (Bulletin No. 25-18). Washington, DC: Department of Labor. 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, 1-11. Committee on Energy and Commerce, U.S. House of Representatives. (1993). Medicaid source book: Background data and analysis (Committee Print 103A). Washington, DC: U.S. Government Printing Office. Congressional Budget Office. (1988). Current housing problems and possible Federal responses. Washington, DC: Author. Congressional Budget Office. (1994). The challenges facing Federal rental assistance program. Washington, DC: Author. Congressional Budget Office. (1998, February). Expanding Health Insurance Coverage for Children Under title XXI of the Social Security Act (CBO Memorandum). Washington, DC: Author. Congressional Budget Office. (2000, January). The Budget and Economic Outlook: Fiscal years 2001-2010. Washington, DC: Author. Congressional Research Service. (1991). Housing assistance in the United States (91-872E). Washington, DC: Author. Congressional Research Service. (1993). HUD housing assistance programs: Their current status (93-222E). Washington, DC: Author. Federal Register. (2000, February 15). 65(31), 7555-57. Health Care Financing Administration. (undated). The State Children's Health Insurance Program: Annual enrollment report (October 1, 1998-September 30, 1999). Washington, DC: Author. Kaiser Commission on Medicaid and the Uninsured. (1999, December). Medicaid for children and CHIP-funded separate State programs (Fact sheet). Washington, DC: Kaiser Foundation. Mont, D., Burton, J.F., & Reno, V. (1999, March). Workers' compensation: Benefits, coverage, and costs, 1996 (New estimates). Washington, DC: National Academy of Social Insurance. National Academy for State Health Policy. (1999). Medicaid managed care: Program characteristics and State survey results (Volume 1). Washington, DC: Author. National Academy of Social Insurance. (1999, March). Workers Compensation: Benefits, coverage, and costs, 1996 new estimates. Washington, DC: Author. 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, and costs, 1988. Social Security Bulletin, 54(3), 12- 20. Nelson, W.J. (1993). Workers' compensation: Coverage, benefits, and costs, 1990-91. Social Security Bulletin, 56(3), 18-74. Office of the President. (2000). Budget of the United States Government: 2001. (Historical tables). Washington, DC: Author. Schmulowitz, J. (1995). Workers' compensation: Coverage, benefits, and costs, 1992-93. Social Security Bulletin 58(2), 51-57. Schussheim, M.J. (2000, March). Housing the poor: Federal programs for low-income families (RL 30486). Washington, DC: Congressional Research Service.