SECTION 16. OTHER PROGRAMS * --------------------------------------------------------------------------- * The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 changed several of these programs; see appendix L for details. --------------------------------------------------------------------------- CONTENTS Overview Food Stamp Program Administration, Program Variations, and Funding Eligibility Benefits Quality Control (QC) Interaction with Cash Assistance Programs Recipiency Rates Legislative History Medicaid Eligibility Optional Coverage: The Medically Needy Medicaid and the Poor Services Financing Reimbursement Policy Administration Medicaid and Managed Care Legislative History Program Data Federal Housing Assistance School Lunch and Breakfast Programs Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Job Training Partnership Act Head Start Low-Income Home Energy Assistance Program (LIHEAP) Background Program Components Allotments to States Eligibility and Types of Assistance Planning and Administration Veterans Benefits and Services Workers' Compensation References OVERVIEW A wide variety of Federal programs outside the jurisdiction of the Committee on Ways and Means provide benefits to individuals and families that also receive assistance from programs within the committee's jurisdiction (see appendix K). This section describes several such programs: food stamps; Medicaid; housing assistance; school lunch and breakfast programs; the Special Supplemental Food Program for Women, Infants, and Children (WIC); the Job Training Partnership Act; Head Start; the Low-Income Home Energy Assistance Program (LIHEAP); Veterans' benefits and services; and workers' compensation. Most families receiving Aid to Families with Dependent Children (AFDC) or Supplemental Security Income (SSI) would have incomes low enough to qualify them--or particular members of their families--for assistance under these programs. Unlike the principal assistance programs under the jurisdiction of the Committee on Ways and Means, participation in Head Start, LIHEAP, and other programs is limited by appropriations. Income received from AFDC is counted in determining eligibility and benefit levels for these programs. However, because these programs provide in-kind rather than cash assistance, benefits are not counted in determining eligibility for AFDC. Tables 16-1 and 16-2 describe the overlap in recipients between programs within the jurisdiction of the Committee on Ways and Means and other major Federal assistance programs. Table 16-1 illustrates that 87.2 percent of AFDC recipient households received food stamps during the first quarter of 1995; 24.7 percent received WIC; 97.2 percent received Medicaid; 63.1 percent received free or reduced-price school meals; and 31.1 percent received housing assistance. TABLE 16-1.--PERCENT OF RECIPIENTS IN PROGRAMS WITHIN THE JURISDICTION OF THE COMMITTEE ON WAYS AND MEANS RECEIVING ASSISTANCE FROM OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS, 1995 ---------------------------------------------------------------------------------------------------------------- Ways and Means assistance program ----------------------------------------------------- Other assistance program Social Unemployment AFDC SSI Security compensation Medicare ---------------------------------------------------------------------------------------------------------------- Food stamps............................................. 87.2 50.0 7.7 9.1 7.4 WIC..................................................... 24.7 5.6 1.0 4.4 0.6 Medicaid................................................ 97.2 100.0 14.0 16.2 14.3 Free or reduced-price school meals...................... 63.1 25.2 4.0 16.5 2.6 Public or subsidized rental housing..................... 31.1 24.1 6.8 4.1 7.2 VA compensation or pensions............................. 0.8 3.6 5.3 1.7 5.6 Number of households receiving benefits (in thousands).... 4,652 4,580 27,654 2,246 25,271 ---------------------------------------------------------------------------------------------------------------- Note.--Table shows number of households in the first quarter of 1995. Table reads that 87.2 percent of AFDC households, also receive food stamps. SSI recipients living in California receive a higher SSI payment in lieu of food stamps, and thus are not included in the food stamp percentages. Source: U.S. Bureau of the Census. Table 16-2 presents the percentage of recipients of other means-tested programs who are participating in programs under Ways and Means jurisdiction. For example, 48.9 percent of food stamp households received AFDC benefits at some time during the first quarter of 1995; 27.6 percent received SSI; 25.6 percent received Social Security; 2.5 percent received unemployment benefits; and 22.5 percent received Medicare. TABLE 16-2.--PERCENT OF RECIPIENTS IN OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS RECEIVING ASSISTANCE UNDER PROGRAMS WITHIN THE JURISDICTION OF THE COMMITTEE ON WAYS AND MEANS, 1995 ---------------------------------------------------------------------------------------------------------------- Other assistance program ------------------------------------------------------------- Free or Public or Ways and Means assistance program Food reduced subsidized VA stamps WIC school rental Medicaid compensation meals housing or pensions ---------------------------------------------------------------------------------------------------------------- AFDC............................................ 48.9 41.7 30.3 28.7 35.6 1.6 SSI............................................. 27.6 9.3 11.9 22.0 36.1 6.7 Social Security................................. 25.6 9.9 11.4 37.6 30.6 59.3 Unemployment compensation....................... 2.5 3.6 3.8 1.8 2.9 1.6 Medicare........................................ 22.5 5.8 6.8 36.2 28.4 57.7 Number of households receiving benefits (in thousands)....................................... 8,298 2,757 9,681 5,031 12,685 2,465 ---------------------------------------------------------------------------------------------------------------- Note.--Table shows households in the first quarter of 1995. Table reads that 48.9 percent of food stamp recipient households receive AFDC. SSI recipients living in California receive a higher SSI payment in lieu of food stamps, and thus are not included in the food stamp percentages. Source: U.S. Bureau of the Census. Table 16-3 shows the percentage of households receiving AFDC or SSI and also receiving assistance from other programs for selected time periods. The figures at the bottom of the AFDC and SSI portions of the table show that the number of households receiving AFDC increased rapidly between 1990 and 1994 and then declined somewhat in 1995. The AFDC rolls increased by nearly one-third over the entire period. The number of households receiving SSI declined slightly in 1990 and 1993, but otherwise increased throughout the period between 1984 and 1995. The rolls increased by more than 50 percent over this period. The percentage of AFDC and SSI households receiving other benefits fluctuated somewhat over the period, but the general trend was toward increased coverage for all benefits except VA compensation or pensions. The percentage of AFDC households receiving food stamps, for example, increased from 81 percent in 1984 to 87 percent in 1995; receipt of Medicaid over the same period increased from 93 to 97 percent of households. Similarly, the percentage of SSI households receiving food stamps increased from 46 to 50 percent while Medicaid coverage held at or very near 100 percent over the period. The percentage of AFDC and SSI households receiving WIC, school meals, and housing also increased over the period 1984-95. TABLE 16-3.--PERCENT OF HOUSEHOLDS RECEIVING AFDC OR SSI AND ALSO RECEIVING ASSISTANCE FROM OTHER PROGRAMS FOR SELECTED TIME PERIODS ---------------------------------------------------------------------------------------------------------------- Year Assistance program ------------------------------------------------------- 1984 1987 1990 1992 1993 1994 1995 ---------------------------------------------------------------------------------------------------------------- AFDC: Food stamps......................................... 81.4 81.7 82.7 86.2 88.9 88.3 87.2 WIC................................................. 15.3 18.6 18.7 21.5 18.5 21.4 24.7 Free or reduced-price school meals.................. 49.2 55.6 52.7 55.5 56.9 57.5 63.1 Public or subsidized rental housing................. 23.0 19.4 34.7 29.5 33.1 30.3 31.1 Medicaid............................................ 93.2 95.5 97.6 96.2 97.6 96.4 97.2 VA compensation or pensions......................... 2.8 1.9 1.3 1.9 1.1 1.1 0.8 Number of households receiving benefits (in thousands)..................................... 3,585 3,527 3,434 4,057 4,831 4,906 4,652 SSI: Food stamps......................................... 46.5 39.7 41.3 46.2 48.0 50.1 50.0 WIC................................................. 2.5 2.5 3.0 4.3 3.7 5.4 5.6 Free or reduced-price school meals.................. 12.7 11.9 15.3 18.2 21.3 23.8 25.2 Public or subsidized rental housing................. 21.6 20.0 21.4 23.8 23.9 24.9 24.1 Medicaid............................................ 100.0 99.6 99.7 99.8 99.5 100.0 100.0 VA compensation or pensions......................... 4.7 7.7 5.7 4.0 4.5 3.9 3.6 Number of households receiving benefits (in thousands)..................................... 3,008 3,341 3,037 3,957 3,861 4,223 4,580 ---------------------------------------------------------------------------------------------------------------- Note.--SSI recipients living in California receive a higher SSI payment in lieu of food stamps, and thus are not included in the food stamp percentages. Source: U.S. Bureau of the Census. FOOD STAMP PROGRAM Food stamps are designed primarily to increase the food purchasing power of eligible low-income households to a point where they can buy a nutritionally adequate low-cost diet. Participating households are expected to be able to devote 30 percent of their counted monthly cash income to food purchases. \1\ Food stamp benefits then make up the difference between the household's expected contribution to its food costs and an amount judged to be sufficient to buy an adequate low-cost diet. This amount, the maximum food stamp benefit level, is derived from the U.S. Department of Agriculture's lowest cost food plan (the Thrifty Food Plan), varied by household size, and adjusted annually for inflation. Thus, a participating household with no counted cash income receives the maximum monthly allotment for its household size while a household with some counted income receives a lesser allotment, normally reduced from the maximum at the rate of 30 cents for each dollar of counted income. --------------------------------------------------------------------------- \1\ Because not all of a household's income is actually counted when determining its food stamp benefits, the program, in effect, assumes that most participants are able to spend about 20 percent of their total cash monthly income on food. --------------------------------------------------------------------------- Benefits are available to nearly all households that meet Federal eligibility tests for limited monthly income and liquid assets, as long as certain household members fulfill work registration and, when imposed, employment and training program requirements. In addition, recipients in the two primary Federal/State cash welfare programs, the AFDC and SSI Programs, generally are automatically eligible for food stamps, as are recipients of State general assistance payments, if the household is composed entirely of AFDC, SSI, or general assistance beneficiaries. \2\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- Administration, Program Variations, and Funding The regular Food Stamp Program operates in all 50 States, the District of Columbia, Guam, and the Virgin Islands. The Federal Government is responsible for virtually all of the rules that govern the program and, with limited variations for Alaska, Hawaii, and the territories, these rules are nationally uniform. States, the District of Columbia, and the territories may choose to offer the program or not. However, if they do offer food stamp assistance, it must be made available throughout the jurisdiction and comply with Federal rules. Sales taxes on food stamp purchases may not be charged, and food stamp benefits do not affect other assistance available to low-income households, nor are they taxed as income. Alternative programs are offered in Puerto Rico, the Northern Mariana Islands, and American Samoa, and program variations occur in a number of demonstration projects and in those jurisdictions that have elected to exercise the limited number of program options allowed. Funding is overwhelmingly Federal, although the States and other jurisdictions have financial responsibility for significant administrative costs, as well as liability for erroneous benefit determinations (as assessed under the food stamp ``quality control'' system). Federal administrative responsibilities At the Federal level, the program is administered by the Agriculture Department's Food and Consumer Service (FCS). The FCS gives direction to welfare agencies through Federal regulations that define eligibility requirements, benefit levels, and administrative rules. It is also responsible for arranging for printing food stamp coupons and distributing them to welfare agencies and for approving and overseeing participation by retail food stores and other outlets that may accept food stamps. Other Federal agencies that have administrative roles to play include: the Federal Reserve System (through which food stamps are redeemed for cash, and which has some jurisdiction over ``electronic benefit transfer'' methods for issuing food stamp benefits), the Social Security Administration (responsible for providing the Social Security numbers recipients must have, for providing limited application ``intake'' services, and for providing information to verify recipients' income), the Internal Revenue Service (providing assistance in verifying recipients' income and assets), the Immigration and Naturalization Service (helping welfare offices confirm alien applicants' status), and the Secret Service and the Agriculture Department's Inspector General (responsible for counterfeiting and trafficking investigations). State and local administrative responsibilities States, the District of Columbia, Guam, and the Virgin Islands, through their local welfare offices, have primary responsibility for the day-to-day administration of the Food Stamp Program. They determine eligibility, calculate benefits, and issue food stamp allotments following Federal rules. They also have a significant voice in carrying out employment and training programs and in determining some administrative features of the program (e.g., the extent to which verification of household circumstances is pursued). Most often, the Food Stamp Program is operated through the same welfare agency and staff that runs the Federal/State AFDC and Medicaid Programs. Puerto Rico, the Northern Mariana Islands, and American Samoa In addition to the regular Food Stamp Program, the Food Stamp Act directs funding for a nutrition assistance program in the Commonwealth of Puerto Rico and another in American Samoa. Separate legislation authorizes a variant of the Food Stamp Program in the Commonwealth of the Northern Mariana Islands. Since July 1982, Puerto Rico has operated a nutrition assistance program of its own design, funded by an annual Federal ``block grant.'' \3\ The Commonwealth's nutrition assistance program differs from the regular Food Stamp Program primarily in that: (1) funding is limited to an annual amount specified by law \4\; (2) the Food Stamp Act allows the Commonwealth a great deal of flexibility in program design, as opposed to the regular program's extensive Federal rules; (3) benefits are paid in cash (checks) rather than food stamp coupons; (4) income and liquid assets eligibility limits are about half those used in the regular Food Stamp Program; (5) maximum benefit levels are about one-quarter less than in the 48 contiguous States and the District of Columbia; and (6) different rules are used in counting income for eligibility and benefit purposes. In fiscal year 1995, Puerto Rico's nutrition assistance program aided approximately 1.37 million persons each month with monthly benefits averaging $66 a person. --------------------------------------------------------------------------- \3\ Prior to July 1982, the regular Food Stamp Program operated in Puerto Rico, although with slightly different eligibility and benefit rules. \4\ For fiscal year 1995, $1.143 billion was earmarked. The block grant funds the full cost of benefits and half the cost of administration. --------------------------------------------------------------------------- Under the terms of the 1976 Covenant with the Commonwealth of the Northern Mariana Islands and implementing legislation (Public Law 96-597), a variant of the Food Stamp Program was negotiated with the Commonwealth and began operations in July 1982. The program in the Northern Marianas differs primarily in that: (1) it is funded entirely by Federal money, up to a maximum grant of $5.1 million a year; (2) a portion of each household's food stamp benefit must be used to purchase locally produced food; (3) maximum allotments are about 20 percent higher than in the 48 contiguous States and the District of Columbia; and (4) income eligibility limits are about half those in the regular program. In fiscal year 1995, the Northern Marianas' program assisted some 4,200 people each month with monthly benefits averaging $77 a person. As with the Northern Marianas, American Samoa operates a variant of the regular Food Stamp Program. Under the Secretary of Agriculture's authority to extend Agriculture Department programs to American Samoa (Public Law 96-597) and a 1996 amendment to the Food Stamp Act made by the Federal Agriculture Improvement and Reform Act (Public Law 104-127), American Samoa receives an annual grant of up to $5.3 million to operate a Food Stamp Program limited to low-income elderly and disabled persons. In fiscal year 1995 (the first full fiscal year of operations), the program aided about 2,700 persons a month with average monthly benefits of about $100 a person. Program options The Food Stamp Act authorizes demonstration projects to test program variations that might improve operations, so long as benefits are not reduced and the projects are cost neutral. At present, five types of demonstration projects are underway: (1) a limited number of projects that ``cash out'' food stamp benefits (these projects cash out food stamps for the elderly and SSI recipients, very poor households that are eligible for expedited service, and households that are part of State welfare reform efforts); (2) some 20 welfare reform demonstrations in which food stamp rules are changed to support AFDC reform efforts (e.g., food stamps are used as a wage supplement or cashed out; food stamps are consolidated with AFDC benefits; food stamp income and asset rules are changed to encourage employment); (3) demonstrations conforming the operations of the AFDC JOBS Program and the Food Stamp Program's employment and training activities; (4) a project granting quarterly (instead of monthly) benefit payments to SSI recipients eligible for very small benefits; and (5) awards to nonprofit organizations to test ways to improve program responsiveness to specific low-income groups. In addition to demonstration projects, States are allowed to implement a few optional aspects of the Food Stamp Program. States may require ``monthly reporting'' and ``retrospective budgeting'' for parts of their food stamp caseload. They may disregard the first $50 a month in child support payments if they pay the benefit cost of doing so. With 50-percent Federal cost-sharing, they can operate ``outreach'' programs to inform low-income persons about food stamps and support nutrition education efforts. They may choose to issue food stamp benefits through electronic benefit transfer systems. Finally, States or localities may opt to run ``workfare'' programs, and States determine which type(s) of employment or training programs in which recipients must participate. Funding The Food Stamp Act provides 100 percent Federal funding of food stamp benefits. The Federal Government is also responsible for its own administrative costs: overseeing program operations (including oversight of participating food establishments), printing and distributing food stamp coupons to welfare agencies, redeeming food stamp benefits through the Federal Reserve, and paying the Social Security Administration for certain intake services. In most instances, the Federal Government provides half the cost of State welfare agency administration. \5\ However, the 50-percent Federal share can be increased to as much as 60 percent if the State has a very low rate of erroneous benefit determinations. In addition, the cost of carrying out employment and training programs for food stamp recipients is shared in two ways: (1) each State receives a Federal grant for basic operating costs (a formula share of $75 million a year); and (2) additional operating costs, as well as expenses for support services to participants (e.g., transportation, child care) are eligible for a 50-percent Federal match. Finally, States are allowed to retain a portion of improperly issued benefits they recover (other than those caused by welfare agency error): 25 percent of recoveries in fraud cases and 10 percent in other circumstances. As shown in table 16-4, food stamp spending has grown from $7.4 billion in 1979 to $27.4 billion in 1995. --------------------------------------------------------------------------- \5\ Until April 1994, the cost of certain activities was matched at more than the 50-percent rate: costs associated with the development of computer capability and fraud control activities were eligible for 63 and 75 percent Federal sharing, respectively; costs for implementing the Systematic Alien Verification for Entitlements (SAVE) Program were fully reimbursed by the Federal Government. --------------------------------------------------------------------------- Eligibility The Food Stamp Program has financial, employment/training- related, and ``categorical'' tests for eligibility. Its financial tests require that most of those eligible have monthly income and liquid assets below limits set by food stamp law. Under the employment/training-related tests, certain household members must register for work, accept suitable job offers, and fulfill work or training requirements (such as looking or training for a job) established by State welfare agencies. The limited number of categorical eligibility rules make some automatically eligible for food stamps (most AFDC, SSI, and general assistance recipients), and categorically deny eligibility to others (e.g., strikers, illegal and temporarily resident aliens, most postsecondary students, people living in institutional settings). Applications cannot be denied because of the length of a household's residence in a welfare agency's jurisdiction or because the household has no fixed mailing address or does not reside in a permanent dwelling. TABLE 16-4.--RECENT FOOD STAMP ACT EXPENDITURES [In millions of dollars] ------------------------------------------------------------------------ Administration \2\ -------------------- Fiscal year Benefits \1\ State Total (Federal) Federal and local ------------------------------------------------------------------------ 1979......................... 6,480 515 388 7,383 1980......................... 8,685 503 375 9,563 1981......................... 10,630 678 504 11,812 1982......................... 10,408 709 557 11,674 1983......................... 11,955 778 612 13,345 1984......................... 11,499 971 805 13,275 1985......................... 11,556 1,043 871 13,470 1986......................... 11,415 1,113 935 13,463 1987......................... 11,344 1,195 996 13,535 1988......................... 11,999 1,290 1,080 14,369 1989......................... 12,483 1,332 1,101 14,916 1990......................... 15,090 1,422 1,174 17,686 1991......................... 18,249 1,516 1,247 21,012 1992......................... 21,883 1,656 1,375 24,914 1993......................... 23,033 1,716 1,572 26,321 1994......................... 23,736 1,789 1,643 27,168 1995......................... 23,761 1,917 1,748 27,426 ------------------------------------------------------------------------ \1\ All benefit costs associated with the Food Stamp Program and Puerto Rico's block grant are included. The benefit amounts shown in the table reflect small downward adjustments for overpayments collected from recipients and, beginning in 1989, issued but unredeemed benefits. Over time, the figures reflect both changes in benefit levels and numbers of recipients. \2\ All Federal administrative costs associated with the Food Stamp Program and Puerto Rico's block grant are included: Federal matching for the various administrative and employment and training expenses of States and other jurisdictions, and direct Federal administrative costs. Figures for Federal administrative costs beginning with fiscal year 1989 include only those paid out of food stamp appropriation and the food stamp portion of the general appropriation for food program administration. Figures for earlier years include estimates of food stamp related Federal administrative expenses paid out of other Agriculture Department accounts. State and local costs are estimated based on the known Federal shares and represent an estimate of all administrative expenses of participating States and other jurisdictions (including Puerto Rico). Source: U.S Department of Agriculture budget justification materials for fiscal years 1981-97. Compiled by the Congressional Research Service. The food stamp household The basic food stamp beneficiary unit is the ``household.'' A food stamp household can be either a person living alone or a group of individuals living together; there is no requirement for cooking facilities. The food stamp household is unrelated to recipient units in other welfare programs (e.g., AFDC families with dependent children, elderly or disabled individuals or couples in the SSI Program). Generally speaking, individuals living together constitute a single food stamp household if they customarily purchase food and prepare meals in common. Members of the same household must apply together, and their income, expenses, and assets normally are aggregated in determining food stamp eligibility and benefits. However, persons who live together can sometimes be considered separate households for food stamp purposes, some related coresidents are required to apply together, and special rules apply to those living in institutional settings. Most often, persons living together receive larger aggregate benefits if they are treated as more than one food stamp household. Persons who live together, but purchase food and prepare meals separately, may apply for food stamps separately, except for: (1) spouses; (2) parents and their children (21 years or younger), other than children who themselves have a spouse or children; and (3) minors 18 years or younger (excluding foster children, who may be treated separately) who live under the parental control of a caretaker. In addition, persons 60 years or older who live with others and cannot purchase food and prepare meals separately because of a substantial disability may apply separately from their coresidents as long as their coresidents' income is below prescribed limits. Although those living in institutional settings generally are barred from food stamps, individuals in certain types of group living arrangements may be eligible and are automatically treated as separate households, regardless of how food is purchased and meals are prepared. These arrangements must be approved by State or local agencies and include: residential drug addict or alcoholic treatment programs, small group homes for the disabled, shelters for battered women and children, and shelters for the homeless. Thus, different food stamp households can live together, food stamp recipients can reside with nonrecipients, and food stamp households themselves may be ``mixed'' (include recipients and nonrecipients of other welfare benefits). Income eligibility Except for households composed entirely of AFDC, SSI, or general assistance recipients (who generally are automatically eligible for food stamps), monthly cash income is the primary food stamp eligibility determinant. \6\ In establishing eligibility for households without an elderly or disabled member, \7\ the Food Stamp Program uses both the household's basic (or ``gross'') monthly income and its counted (or ``net'') monthly income. When judging eligibility for households with elderly or disabled members, only the household's counted monthly income is considered; in effect, this procedure applies a more liberal income test to elderly and disabled households. --------------------------------------------------------------------------- \6\ Although they do not have to meet food stamp income and assets tests, AFDC, SSI, and general assistance households must still have their income calculated under food stamp rules to determine their food stamp benefits. \7\ In the Food Stamp Program, ``elderly'' persons are those 60 years or older. The ``disabled'' generally are beneficiaries of governmental disability-based payments (e.g., Social Security or SSI disability recipients, disabled veterans, certain disability retirement annuitants, and recipients of disability-based Medicaid or general assistance). --------------------------------------------------------------------------- Basic (or gross) monthly income includes all of a household's cash income except the following ``exclusions'' (disregards): (1) most payments made to third parties (rather than directly to the household); (2) unanticipated, irregular, or infrequent income, up to $30 a quarter; (3) loans (deferred repayment student loans are treated as student aid, see below); (4) income received for the care of someone outside the household; (5) nonrecurring lump-sum payments such as income tax refunds and retroactive lump-sum Social Security payments (these are instead counted as liquid assets); (6) energy assistance; (7) expense reimbursements that are not a ``gain or benefit'' to the household; (8) income earned by schoolchildren; (9) the cost of producing self-employment income; (10) Federal postsecondary student aid (e.g., Pell grants, student loans); (11) advance payments of Federal earned income credits; (12) ``on-the-job'' training earnings of dependent children under 19 in Job Training Partnership Act (JTPA) Programs, as well as JTPA monthly ``allowances''; (13) income set aside by disabled SSI recipients under an approved ``plan to achieve self-sufficiency'' (PASS); and (14) payments required to be disregarded by provisions of Federal law outside the Food Stamp Act (e.g., various payments under laws relating to Indians, payments under the Older Americans Act Employment Program for the Elderly). Counted (or net) monthly income is computed by subtracting certain ``deductions'' from a household's basic (or gross) monthly income. This procedure is based on the recognition that not all of a household's income is equally available for food purchases. Thus, a standard portion of income, plus amounts representing work expenses or excessively high nonfood living expenses, are disregarded. For households without an elderly or disabled member, counted monthly income equals their gross monthly income less the following deductions: --An inflation-indexed (each October) standard deduction set at $134 a month in fiscal year 1996, regardless of household size; different standard deductions are used for Alaska ($229), Hawaii ($189), Guam ($269), and the Virgin Islands ($118). The normal October 1995 adjustment was suspended under terms of the fiscal year 1996 appropriation for food stamps; --Any amounts paid as legally obligated child support; --Twenty percent of any earned income, in recognition of taxes and work expenses; --Out-of-pocket dependent care expenses, when related to work or training, up to $175 a month per dependent, $200 a month for children under age 2; --Shelter expenses that exceed 50 percent of counted income after all other deductions, up to a periodically adjusted ceiling now standing at $247 a month. Different ceilings prevail in Alaska, Hawaii, Guam, and the Virgin Islands: $429, $353, $300, and $182, respectively. Under current law, ceilings on shelter expense deductions will be completely lifted as of January 1997. For households with an elderly or disabled member, counted monthly income equals gross monthly income less the following deductions: --The same standard, child support, earned income, and dependent care deductions noted above; --Any shelter expenses, to the extent they exceed 50 percent of counted income after all other deductions, with no limit; and --Any out-of-pocket medical expenses (other than those for special diets) that are incurred by an elderly or disabled household member, to the extent they exceed a ``threshold'' of $35 a month. Except for those households comprised entirely of AFDC, SSI, or general assistance recipients, in which case food stamp eligibility generally is automatic, all households must have net monthly income that does not exceed the Federal poverty guidelines, as adjusted for inflation each October. Households without an elderly or disabled member also must have gross monthly income that does not exceed 130 percent of the inflation-adjusted Federal poverty guidelines. Both these income eligibility limits are uniform for the 48 contiguous States, the District of Columbia, Guam, and the Virgin Islands; somewhat higher limits (based on higher poverty guidelines) are applied in Alaska and Hawaii. The net and gross eligibility limits on income are summarized in table 16-5. TABLE 16-5.--COUNTED (NET) AND BASIC (GROSS) MONTHLY INCOME ELIGIBILITY LIMITS FOR THE FOOD STAMP PROGRAM, FISCAL YEAR 1996 ------------------------------------------------------------------------ 48 States, the District of Household size Columbia, and Alaska Hawaii the territories ------------------------------------------------------------------------ COUNTED (NET) MONTHLY INCOME ELIGIBILITY LIMITS \1\ ------------------------------------------------------------------------ 1 person..................... $623 $779 $718 2 persons.................... 836 1,045 963 3 persons.................... 1,050 1,312 1,208 4 persons.................... 1,263 1,579 1,453 5 persons.................... 1,426 1,845 1,698 6 persons.................... 1,690 2,112 1,943 7 persons.................... 1,903 2,379 2,188 8 persons.................... 2,116 2,645 2,433 Each additional person....... +214 +267 +245 ------------------------------------------------------------------------ BASIC (GROSS) MONTHLY INCOME ELIGIBILITY LIMITS \2\ ------------------------------------------------------------------------ 1 person..................... $810 $1,012 $933 2 persons.................... 1,087 1,359 1,252 3 persons.................... 1,364 1,706 1,570 4 persons.................... 1,642 2,052 1,889 5 persons.................... 1,919 2,399 2,207 6 persons.................... 2,196 2,746 2,526 7 persons.................... 2,474 3,092 2,844 8 persons.................... 2,751 3,439 3,163 Each additional person....... +278 +347 +319 ------------------------------------------------------------------------ \1\ Set at the applicable Federal poverty guidelines, updated for inflation through calendar 1994. \2\ Set at 130 percent of the applicable Federal poverty guidelines, updated for inflation through calendar 1994. Source: U.S. Department of Agriculture. Allowable assets Except for households automatically eligible for food stamps because they are composed entirely of AFDC, SSI, or general assistance recipients, eligible households must have counted or liquid assets that do not exceed federally prescribed limits. Households without an elderly member cannot have counted liquid assets above $2,000. Households with an elderly member cannot have counted liquid assets above $3,000. Counted liquid assets include cash on hand, checking and savings accounts, savings certificates, stocks and bonds, individual retirement accounts (IRAs) and ``Keogh'' plans (less any early withdrawal penalties), and nonrecurring lump-sum payments such as insurance settlements. Certain ``less liquid'' assets are also counted: a portion of the value of vehicles (generally, the fair market value in excess of $4,600) and the equity value of property not producing income consistent with its value (e.g., recreational property). Counted assets do not include the value of the household's residence (home and surrounding property), business assets, personal property (household goods and personal effects), lump- sum earned income tax credit payments, burial plots, the cash value of life insurance policies and pension plans (other than Keogh plans and IRAs), and certain other resources whose value is not accessible to the household or are required to be disregarded by other Federal laws. Work registration, employment, and training requirements Unless exempt, adult applicants for food stamps must register for work, typically with the welfare agency or a State employment service office. To maintain eligibility, they must accept a suitable job if offered one and fulfill any work, job search, or training requirements established by administering welfare agencies. If the household head fails to fulfill any of these requirements, the entire household is disqualified, typically for 2 months; in other cases, failure to comply disqualifies the noncomplying household member only. Those who are exempt by law from these work requirements include: persons physically or mentally unfit for work, those under age 16 or over age 59, and individuals between 16 and 18 if they are not head of household or are attending school or a training program; persons working at least 30 hours a week or earning the minimum wage equivalent; persons caring for dependents who are disabled or under age 6, and those caring for children between ages 6 and 12 if adequate child care is not available (this second exemption is limited to allowing these persons to refuse a job offer if care is not available); individuals already subject to and complying with another assistance program's work, training, or job search requirements; otherwise eligible postsecondary students; and residents of drug addiction and alcoholic treatment programs. Those not exempted by one of the above-listed rules must, at least, register for work and accept suitable job offers. However, the main thrust of the food stamp employment and training program is to ensure that nonexempt recipients also fulfill some type of work, job search, or training obligation. To carry this out, welfare agencies are required to operate an employment and training program of their own design for work registrants whom they designate. Welfare agencies may require all work registrants to participate in one or more components of their program, or limit participation (with the Agriculture Department's approval) by further exempting additional categories and individuals for whom participation is judged impracticable or not cost-effective. But the agency must allow otherwise exempt recipients to participate as volunteers and may set up special programs for them. Once the pool of work registrants who will be required to participate in an employment or training program is identified, welfare agencies must place a minimum proportion (10 percent) in one or more program components. Program components can include any or all of the following activities: supervised job search or training for job search, workfare, work experience or training programs, education programs to improve basic skills, or any other employment or training activity approved by the Agriculture Department. In fiscal year 1995, there were some 5.6 million work registrants, of whom 37 percent were exempted from employment and training program requirements. Of the remainder, 1.5 million persons participated in some employment activity and over 500,000 received ``notices of adverse action'' because they failed to meet participation requirements. The overwhelming majority of those fulfilling an employment activity requirement participated in work or job search or job search training (as opposed to education or other training). Recipients who take part in an employment or training activity beyond work registration cannot be required to work more than the minimum wage equivalent of their household's benefit, and total hours of participation (including both work and any other required activity) cannot exceed 120 hours a month. Welfare agencies also must provide participants support for costs directly related to participation (e.g., transportation and child care). Agencies may limit this support to $25 per participant per month for all support costs other than dependent care, and to local market rates for necessary dependent care. Categorical eligibility rules and other limitations Some rules deny food stamp eligibility for reasons other than financial need or compliance with employment and training requirements. Households in which the head has voluntarily quit a job without good cause are barred for 90 days. Households with members on strike are denied benefits unless eligible prior to the strike. With some exceptions, postsecondary students (in school half time or more) who are fit for work and between ages 18 and 50 are ineligible. Illegal and temporarily resident aliens are barred, and legal aliens may be barred based on their sponsor's income. Persons living in institutional settings are denied eligibility, except those in special SSI-approved small group homes for the disabled, persons living in drug addiction or alcohol treatment programs, and persons in shelters for battered women and children or shelters for the homeless. Boarders cannot receive food stamps unless they apply together with the household they are boarding with. Those who transfer assets for the purpose of qualifying for food stamps are barred. Persons who fail to provide Social Security numbers or cooperate in providing information needed to verify eligibility or benefit determinations are ineligible. And food stamps are denied those who intentionally violate program rules, for specific time periods ranging from 6 months (on a first violation) to permanently (on a third violation or other serious infraction). Benefits Food stamp benefits are a function of a household's size, its net monthly income, and maximum monthly benefit levels (in some cases, adjusted for geographic location). An eligible household's net income is determined (i.e., deductions are subtracted from gross income), its maximum benefit level is established, and a benefit is calculated by subtracting its expected contribution (30 percent of its counted income) from its maximum allotment. Allotments are not taxable and food stamp purchases may not be charged sales taxes. Receipt of food stamps does not affect eligibility for or benefits provided by other welfare programs, although some programs use food stamp participation as a ``trigger'' for eligibility and others take into account the general availability of food stamps in deciding what level of benefits to provide. In fiscal year 1995, monthly benefits averaged $71 a person and about $175 a household. Maximum monthly allotments Maximum monthly food stamp allotments are tied to the cost of purchasing a nutritionally adequate low-cost diet, as measured by the Agriculture Department's Thrifty Food Plan (TFP). Maximum allotments are set at: the monthly cost of the TFP for a four-person family consisting of a couple between ages 20 and 50 and two school-age children, adjusted for family size (using a formula reflecting economies of scale developed by the Human Nutrition Information Service), increased by 3 percent, and rounded down to the nearest whole dollar. Allotments are adjusted for food price inflation annually, each October, to reflect the cost of the TFP in the immediately previous June. Maximum allotments are standard in the 48 contiguous States and the District of Columbia; they are higher, reflecting substantially different food costs, in Alaska, Hawaii, Guam, and the Virgin Islands (table 16-6). Minimum and prorated benefits Eligible one- and two-person households are guaranteed a minimum monthly food stamp allotment of $10. Minimum monthly benefits for other household sizes vary from year to year, depending on the relationship between changes in the income eligibility limits and the adjustments to the cost of the TFP. In a few cases, benefits can be reduced to zero before income eligibility limits are exceeded. At present, minimum monthly allotments for households of three or more persons range from $2 to over $80. In addition, a household's calculated monthly allotment can be prorated (reduced) for 1 month. On application, a household's first month's benefit is reduced to reflect the date of application. If a previously participating household does not meet eligibility recertification requirements in a timely fashion, but does become certified for eligibility subsequently, benefits for the first month of its new certification period normally are prorated to reflect the date when recertification requirements were met. TABLE 16-6.--MAXIMUM MONTHLY FOOD STAMP ALLOTMENTS, FISCAL YEAR 1996 ---------------------------------------------------------------------------------------------------------------- 48 States and the Virgin Household size District Alaska \1\ Hawaii Guam Islands of Columbia ---------------------------------------------------------------------------------------------------------------- 1 person....................................................... $119 $153 $198 $175 $153 2 persons...................................................... 218 280 364 322 281 3 persons...................................................... 313 401 522 461 402 4 persons...................................................... 397 510 663 586 511 5 persons...................................................... 472 605 787 696 607 6 persons...................................................... 566 726 945 835 728 7 persons...................................................... 626 803 1,044 923 805 8 persons...................................................... 716 918 1,193 1,055 920 Each additional person......................................... +90 +115 +149 +132 +115 ---------------------------------------------------------------------------------------------------------------- \1\ Maximum monthly allotments for designated urban areas of Alaska. Two separate higher allotment levels are applied in remote rural areas of Alaska. They are 29 and 56 percent higher than the urban allotments shown here. Source: U.S. Department of Agriculture. Application, processing, and issuing food stamps Food stamp benefits are normally issued monthly. The local welfare agency must either deny eligibility or make food stamps available within 30 days of initial application and must provide food stamps without interruption if an eligible household reapplies and fulfills recertification requirements in a timely manner. Households in immediate need because of little or no income and very limited cash assets, as well as the homeless and those with extraordinarily high shelter expenses, must be given expedited service (provision of benefits within 5 days of initial application). Food stamp issuance is a welfare agency responsibility and issuance practices differ among welfare agencies. Most food stamp coupons are issued by: (1) providing (usually mailing) recipients an authorization-to-participate (ATP) card that is then turned in at a local issuance point (e.g., a bank or post office) when picking up their monthly allotment; or (2) mailing food stamp coupon allotments directly to recipients. However, several pilot projects issue cash benefits, and in a small but growing number of State or substate areas, electronic benefit transfer (EBT) systems are used. EBT systems replace coupons with an ATM-like card used to make food purchases at the point of sale by deducting the purchase amount from the recipient's food stamp benefit account. EBT issuance is used statewide in five States; in eight States benefits are issued through an EBT system in at least part of the State. More than twenty additional States are well along in the process of converting to EBT issuance. Using food stamps Food stamp benefits are usually issued in the form of booklets of coupons. The smallest coupon denomination is $1; if change of less than $1 is due on a food stamp purchase, it is returned in cash. Typically, participating households use their food stamps in approved grocery stores to buy food items for home preparation and consumption. However, the actual list of approved uses for food stamps is more extensive, and includes: (1) food for home preparation and consumption, not including alcohol, tobacco, or hot foods intended for immediate consumption; (2) seeds and plants for use in gardens to produce food for personal consumption; (3) in the case of the elderly and SSI recipients and their spouses, meals prepared and served through approved communal dining programs; (4) in the case of the elderly and those who are disabled to an extent that they cannot prepare all of their meals, home-delivered meals provided by programs for the homebound; (5) meals prepared and served to residents of drug addiction and alcoholic treatment programs, small group homes for the disabled, shelters for battered women and children, and shelters or other establishments serving the homeless; and (6) where the household lives in certain remote areas of Alaska, equipment for procuring food by hunting and fishing (e.g., nets, hooks, fishing rods, and knives). As noted earlier, food stamp benefits also can be used through EBT cards. In this case, the card is swiped through an approved retailer's point-of-sale device, automatically debiting the recipient's food stamp account and crediting the retailer's bank account; unlike coupon transactions, recipients receive no cash change. Quality Control (QC) Since the early 1970s, the Food Stamp Program, like other welfare programs, has had a quality control system to monitor the degree to which erroneous eligibility and benefit determinations are made by State welfare agencies. The system was established by regulation in the 1970s as an administrative tool to enable welfare officials to identify problems and take corrective actions. Today, by legislative directive, the QC system also is used to calculate and impose fiscal sanctions on States that have very high rates of erroneous benefit and eligibility decisions. Under the quality control system, welfare agencies, with Federal oversight, continuously sample their active food stamp caseloads, as well as their decisions to deny or end benefits. The agencies perform in-depth investigations of the eligibility and benefit status of the randomly chosen cases looking for errors in applying Federal rules and otherwise erroneous benefit and eligibility outcomes. Over 90,000 cases are reviewed each year, and each State's sample is designed to provide a statistically valid picture of erroneous decisions and, in most instances, their dollar value in benefits. The resulting error rate information is used by program managers to chart needed changes in administrative practices, and by the Federal Government to assess fiscal sanctions on States with error rates above certain tolerance levels. This information also is used to reward States with error rates below a separate lower tolerance level, and to review welfare agency plans for action to correct procedures to control errors. Both error rate findings and any assessed sanctions are subject to appeal through administrative law judges and the Federal courts. Sanctions may be reduced or waived if the State shows good cause or if it is determined that the sanction amounts should be invested in improved State administration. Interest may be charged on outstanding sanction liabilities if the administrative appeals process takes more than 1 year. Quality control reviews generate annual estimates of the proportion of cases in which an error is made and the dollar value of the errors as a proportion of total benefit dollars. Caseload and dollar error rates are calculated for overpayments (including incorrect payments to eligible and ineligible households) and underpayments. The accuracy of welfare agency decisions denying or terminating assistance also is measured, with an error rate reflecting the proportion of denials and terminations that were improper; no dollar value is calculated. The national weighted average for the dollar value of overpayments was estimated at 7.3 percent in fiscal year 1995. This was slightly higher than the all-time low of 7 percent in 1991. Error rates for underpayments have been relatively unchanged over time. In fiscal year 1995, the national weighted average underpayment dollar error rate was estimated at 2.4 percent. Finally, the rate of denials and terminations found improper in the most recent estimate (1994) was 3.8 percent (table 16-7). TABLE 16-7.--FOOD STAMP QUALITY CONTROL ERROR RATES, FISCAL YEAR 1995 [Percent of benefits paid or not paid in error] ------------------------------------------------------------------------ Underpayment Overpayment Combined State error rate error rate error rate ------------------------------------------------------------------------ Alabama......................... 1.05 5.98 7.02 Alaska.......................... 1.20 3.93 5.12 Arizona......................... 2.88 10.60 13.48 Arkansas........................ 1.50 4.01 5.51 California...................... 3.40 6.08 9.48 Colorado........................ 1.52 4.87 6.39 Connecticut..................... 1.09 7.45 8.54 Delaware........................ 1.45 7.96 9.41 District of Columbia............ 2.89 6.42 9.31 Florida......................... 2.60 8.47 11.07 Georgia......................... 3.38 7.61 10.99 Guam............................ 2.16 5.36 7.53 Hawaii.......................... 1.17 2.61 3.78 Idaho........................... 1.61 5.08 6.69 Illinois........................ 2.20 9.49 11.70 Indiana......................... 3.26 13.09 16.35 Iowa............................ 3.20 8.42 11.63 Kansas.......................... 1.44 6.67 8.11 Kentucky........................ 1.45 3.25 4.70 Louisiana....................... 2.05 5.12 7.17 Maine........................... 2.03 4.44 6.46 Maryland........................ 2.43 9.66 12.09 Massachusetts................... 1.73 3.24 4.97 Michigan........................ 1.88 7.67 9.55 Minnesota....................... 1.92 4.65 6.58 Mississippi..................... 1.55 8.44 9.99 Missouri........................ 3.40 9.56 12.96 Montana......................... 3.00 5.18 8.18 Nebraska........................ 2.41 6.30 8.71 Nevada.......................... 2.50 6.91 9.41 New Hampshire................... 3.94 6.31 10.25 New Jersey...................... 1.99 6.71 8.70 New Mexico...................... 1.43 6.14 7.57 New York........................ 3.41 6.06 9.46 North Carolina.................. 2.66 5.48 8.14 North Dakota.................... 0.98 5.00 5.98 Ohio............................ 3.39 11.18 14.57 Oklahoma........................ 2.32 8.81 11.13 Oregon.......................... 2.08 6.96 9.04 Pennsylvania.................... 2.41 6.55 8.96 Rhode Island.................... 1.30 3.94 5.24 South Carolina.................. 1.81 4.43 6.24 South Dakota.................... 0.62 2.94 3.56 Tennessee....................... 1.50 9.10 10.60 Texas........................... 1.34 7.37 8.71 Utah............................ 1.80 6.16 7.96 Vermont......................... 1.55 7.58 9.13 Virginia........................ 3.17 10.20 13.37 Virgin Islands.................. 1.36 3.98 5.35 Washington...................... 1.41 7.12 8.53 West Virginia................... 2.51 8.61 11.13 Wisconsin....................... 2.62 9.57 12.19 Wyoming......................... 2.70 4.88 7.58 --------------------------------------- U.S. average................ 2.42 7.30 9.72 ------------------------------------------------------------------------ Note.--Underpayment and overpayment rates may not add to combined rates due to rounding. Source: Food and Consumer Service (1995). The dollar error rates reported through the food stamp quality control system are used as the basis for assessing the financial liability of States for overpaid and underpaid benefits. Although about $1 billion in sanctions have been assessed since the early 1980s, less than $10 million has been collected. The appeals process has delayed collection, and sanctions have been forgiven or waived both by Congress and the administration. In amending the rules governing sanctions in 1988 and 1990, Congress forgave accumulated sanctions, and, in late 1992, the administration waived sanctions by allowing States to invest the amounts in improved administration. Permission for States to invest sanction amounts in improved program administration has now become the rule, and States regularly apply and agree to invest sanction amounts under Federal guidelines rather than pay the Federal Government. Rules governing fiscal sanctions have changed a number of times. Under the most recent revision (1993), sanctions are assessed States with combined (overpayment and underpayment) dollar error rates above the national weighted average combined error rate for the year in question (9.7 percent in 1995). Each State's sanction amount is determined by using a ``sliding scale'' so that its penalty assessment equals an amount reflecting the degree to which the State's combined error rate exceeds the national average (the ``tolerance level''). For example, if the tolerance level is 10 percent and a State's error rate is 12 percent, the State would be assessed a sanction of 0.4 percent of benefits paid in the State that year (the State's error rate is 2 percentage points, or 20 percent, above the tolerance level, and it is assessed a sanction representing 20 percent of the amount by which it exceeds the tolerance level; 2 percentage points <greek-e> 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 <greek-e> 0.4 = 1.6). Thus, the degree to which a State is assessed sanctions increases as its error rate rises, rather than having sanctions assessed equally on each dollar above the tolerance level. In fiscal year 1995, 16 States had combined error rates above the 9.7 percent tolerance level and were assessed some $73 million. States also can receive increased Federal funding for administration if their error rates are below a second, much lower threshold. States with a combined error rate below 6 percent are entitled to a larger-than-normal Federal share of their administrative costs. The regular 50-percent Federal match is, depending on the degree to which the State's error rate is below 6 percent, raised to a maximum of 60 percent, as long as the State's rate of improper denials and terminations is below the national average. This ``enhanced'' administrative funding has typically totaled $10-20 million a year; in fiscal year 1995, eight States had combined error rates below 6 percent and received $16 million in enhanced funding. Finally, the quality control system identifies the various sources of error and requires that States develop and carry out corrective action plans to improve payment accuracy. These reviews generally show that the primary responsibility for overpayment errors is almost evenly split between welfare agencies and clients. The most common errors are related to establishing food stamp expense deductions and households' income. Intentional program violations (e.g., fraud) can occur in a number of ways; the most common are intentionally misrepresenting household circumstances in order to obtain food stamps or increase benefits and trafficking in food stamp coupons. About one-quarter of the dollar value of erroneous benefit and eligibility determinations identified through quality control reviews are fraudulent--under 2 percent of all benefits issued in 1995. The most recent Agriculture Department study on the extent of food stamp coupon trafficking estimated it at some $800 million in 1993--3.7 percent of all benefits issued that year. Interaction With Cash Assistance Programs The Food Stamp Program is intertwined with cash assistance in two ways: it is administratively linked to cash welfare aid at the State and local levels, and its recipient population is made up largely of recipients of other government benefits. At the State and local levels, the Food Stamp Program is administered by the same welfare offices and personnel that administer cash assistance such as AFDC and general assistance. Joint food stamp and cash welfare application and interview procedures are the general rule. This coadministration does not apply for most elderly or disabled persons, whose cash assistance from the Supplemental Security Income Program (SSI) is administered through Social Security Administration offices, although these offices do provide limited intake services for the Food Stamp Program. For most persons participating in the Food Stamp Program, food stamp aid represents a second or third form of government payment. Fewer than 20 percent of food stamp households rely solely on nongovernmental sources for their cash income, although over 25 percent have some income from these sources (e.g., earnings, private retirement income). According to quality control data, the AFDC Program contributes to the income of about 41 percent of food stamp households, and for almost all of them AFDC is their only cash income. SSI benefits go to some 19 percent of food stamp households, and almost one- third of these have no other income. About 20 percent of food stamp households receive Social Security or veterans benefits; nearly 15 percent are paid general assistance, unemployment insurance, or workers' compensation benefits. Recipiency Rates Table 16-8 shows food stamp participation rates from 1975 to 1995 using three different measures. Food stamp enrollment has fluctuated widely over the last 20 years, reaching its peak in fiscal year 1994; in that year, it averaged 27.5 million persons a month, with an all-time high of 28 million in the spring of 1994 (not including 1.4 million persons receiving aid in Puerto Rico). A recent (October 1994) report from the U.S. Department of Agriculture provides a more refined analysis of participation rates and the extent to which the program is serving its target population. The report estimates that 74 percent of persons eligible participated (69 percent of eligible households). These participants received 82 percent of benefits payable if all eligibles had been enrolled. However, subgroups of the food-stamp-eligible population participated at very diferent rates: (1) most eligible children were enrolled (86 percent); (2) only one-third of eligible elderly persons participated, and the majority of those not participating lived alone; (3) virtually all eligible single-parent households were enrolled, while only 78 percent of eligible households with children and two or more adults participated; (4) eligible households headed by African-Americans participated at a greater rate (92 percent) than households headed by Hispanics (61 percent) or white non-Hispanics (59 percent); and (5) virtually all eligible households with income below half the Federal poverty guidelines were enrolled, but the participation rate fell for eligible households with larger incomes (e.g., the participation rate for those with income between half the poverty guidelines and the guidelines themselves was 76 percent). Finally, another (December 1995) report from the Agriculture Department notes that about half of the major increase in food stamp enrollment from 1988 to 1993 (a rise of over 40 percent) was a result of a higher participation rate among eligibles--as opposed to an increased number of eligible persons. TABLE 16-8.--FOOD STAMP PARTICIPATION RATES IN THE UNITED STATES, 1975-95 ---------------------------------------------------------------------------------------------------------------- Food stamp participation as a percent Number of of-- food stamp --------------------------------------- Year participants Pre- (in Total Poor transfer millions) population \1\ population poor population ---------------------------------------------------------------------------------------------------------------- 1975...................................................... 16.3 7.6 63.0 NA 1976...................................................... 17.0 7.9 68.1 NA 1977...................................................... 15.6 7.2 63.1 NA 1978...................................................... 14.4 6.5 58.8 NA 1979...................................................... 15.9 7.1 61.0 57.1 1980...................................................... 19.2 8.4 65.6 60.7 1981...................................................... 20.6 9.0 64.7 60.8 1982...................................................... 20.4 8.8 59.3 56.3 1983...................................................... 21.6 9.2 61.2 58.5 1984...................................................... 20.9 8.8 62.0 58.5 1985...................................................... 19.9 8.3 60.2 56.6 1986...................................................... 19.4 8.0 59.9 56.2 1987...................................................... 19.1 7.8 59.1 55.6 1988...................................................... 18.7 7.6 58.9 55.2 1989...................................................... 18.8 7.6 59.6 55.6 1990...................................................... 20.0 8.0 59.6 55.7 1991...................................................... 22.6 9.0 63.3 59.3 1992...................................................... 25.4 10.0 68.9 64.0 1993...................................................... 27.0 10.4 68.7 NA 1994...................................................... 27.5 10.5 72.1 NA 1995...................................................... 26.6 10.1 NA NA ---------------------------------------------------------------------------------------------------------------- \1\ Calculated as a percent of total U.S. resident population at the end of the fiscal year. Total U.S. resident population was 263.2 million persons at the end of fiscal year 1995. NA--Not available. Note.--Participants in Puerto Rico are not included in this table. Source: U.S. Bureau of the Census. Table 16-9 shows the average monthly number of people (in thousands) who received food stamp benefits in each State, the District of Columbia, and the participating Commonwealths and territories for selected years between 1975 (when the Food Stamp Program became nationally available) and 1995. There has been a general increase in food stamp participants since 1975, with enrollment peaking in 1994. The number of recipients has declined significantly since its height in the spring of 1994. TABLE 16-9.--FOOD STAMP RECIPIENTS BY STATE, SELECTED FISCAL YEARS 1975-95 [Thousands of persons] -------------------------------------------------------------------------------------------------------------------------------------------------------- State 1975 \1\ 1979 \2\ 1985 \3\ 1990 \3\ 1991 \3\ 1992 \3\ 1993 \3\ 1994 \3\ 1995 \3\ -------------------------------------------------------------------------------------------------------------------------------------------------------- Alabama....................................................... 393 525 588 449 504 550 560 551 525 Alaska........................................................ 12 25 22 25 30 38 43 46 45 Arizona....................................................... 166 129 206 317 388 457 489 512 480 Arkansas...................................................... 268 277 253 235 258 277 285 283 272 California.................................................... 1,517 1,334 1,615 1,936 2,212 2,558 2,866 3,155 3,175 Colorado...................................................... 162 145 170 221 241 260 273 268 252 Connecticut................................................... 189 155 145 133 171 202 215 223 227 Delaware...................................................... 39 45 40 33 41 51 58 59 57 District of Columbia.......................................... 112 100 72 62 72 82 87 91 94 Florida....................................................... 767 828 630 781 1,021 1,404 1,500 1,474 1,395 Georgia....................................................... 569 559 567 536 648 751 807 830 816 Hawaii........................................................ 84 96 99 77 83 94 103 115 125 Idaho......................................................... 39 47 59 59 65 72 79 82 80 Illinois...................................................... 948 837 1,110 1,013 1,096 1,156 1,178 1,189 1,151 Indiana....................................................... 255 275 406 311 375 448 497 521 470 Iowa.......................................................... 118 117 203 170 180 192 196 196 184 Kansas........................................................ 63 73 119 142 156 175 188 192 184 Kentucky...................................................... 449 405 560 458 496 529 530 522 520 Louisiana..................................................... 502 523 644 727 742 779 779 756 711 Maine......................................................... 151 121 114 94 116 133 138 136 132 Maryland...................................................... 273 299 291 254 304 343 375 387 399 Massachusetts................................................. 560 429 337 347 397 429 443 442 410 Michigan...................................................... 685 706 985 917 978 994 1,022 1,031 971 Minnesota..................................................... 191 143 228 263 286 309 317 316 308 Mississippi................................................... 390 452 495 499 520 536 537 511 480 Missouri...................................................... 299 280 362 431 490 549 591 593 576 Montana....................................................... 38 33 58 57 61 66 70 71 71 Nebraska...................................................... 50 55 94 95 99 107 113 111 105 Nevada........................................................ 34 27 32 50 63 80 93 97 99 New Hampshire................................................. 66 44 28 31 47 58 60 62 58 New Jersey.................................................... 565 524 464 381 441 495 531 545 540 New Mexico.................................................... 154 159 157 157 188 221 244 244 239 New York...................................................... 1,398 1,704 1,834 1,546 1,717 1,885 2,045 2,154 2,183 North Carolina................................................ 537 517 474 419 517 597 627 630 614 North Dakota.................................................. 19 20 33 39 41 46 48 45 41 Ohio.......................................................... 924 760 1,133 1,078 1,171 1,251 1,269 1,245 1,155 Oklahoma...................................................... 184 184 263 267 296 346 370 376 375 Oregon........................................................ 208 160 228 216 240 265 283 286 289 Pennsylvania.................................................. 893 923 1,032 954 1,052 1,137 1,186 1,208 1,173 Rhode Island.................................................. 104 80 69 64 78 87 92 93 100 South Carolina................................................ 421 369 373 299 329 369 394 385 364 South Dakota.................................................. 31 37 48 50 52 55 56 53 50 Tennessee..................................................... 435 531 518 527 608 702 774 735 662 Texas......................................................... 1,085 1,027 1,263 1,880 2,155 2,454 2,659 2,730 2,564 Utah.......................................................... 50 44 75 99 110 123 133 128 119 Vermont....................................................... 46 40 44 38 47 54 58 65 59 Virginia...................................................... 293 320 360 346 414 495 535 547 546 Washington.................................................... 239 205 281 337 385 432 462 468 476 West Virginia................................................. 204 182 278 262 281 310 322 321 329 Wisconsin..................................................... 163 171 363 286 294 334 337 330 320 Wyoming....................................................... 11 11 27 28 31 33 34 34 34 American Samoa................................................ NA NA NA NA NA NA NA 2 3 Guam.......................................................... 21 18 20 12 11 20 13 15 16 Northern Marianas............................................. NA NA 4 4 2 2 3 4 4 Puerto Rico................................................... 1,800 1,822 1,480 1,480 1,490 1,480 1,440 1,410 1,370 Virgin Islands................................................ 25 34 32 18 15 16 18 20 23 ----------------------------------------------------------------------------------------- Total................................................... 19,199 18,926 21,385 21,510 24,105 26,888 28,426 28,888 27,995 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Year end participation, July 1975. Total does not match totals in other tables, which are annual average participation. \2\ Year end participation, September 1979. Total does not match totals in other tables, which are annual average participation. During fiscal year 1979, and into 1980, participation increases were largely due to the elimination of the food stamp purchase requirement. Figures for Alabama and Mississippi are estimates. \3\ Annual average monthly participation. NA--Not available. Source: U.S. Department of Agriculture, Food and Consumer Service. Compiled by the Congressional Research Service. Legislative History In the early 1980s, Congress enacted major revisions to the Food Stamp Program to hold down costs and tighten administrative rules. The Omnibus Budget Reconciliation Act of 1981, the Agriculture and Food Act of 1981, and the Omnibus Budget Reconciliation Act of 1982 all contained amendments that the Congressional Budget Office has estimated held food stamp spending for fiscal years 1982 through 1985 nearly $7 billion (13 percent) below what would have been spent under pre-1981 law. These laws delayed various inflation indexing adjustments, reduced the maximum benefit guarantee by 1 percent (restored in 1984), established income eligibility ceilings at 130 percent of the Federal poverty levels, initiated prorating of first- month benefits, replaced the Food Stamp Program in Puerto Rico with a nutrition assistance block grant, reduced benefits for those with earnings and high shelter expenses, ended eligibility for most postsecondary students and strikers, and raised fiscal penalties for States with high rates of erroneous benefit and eligibility determinations. In 1985, the Food Security Act (Public Law 99-198) reauthorized food stamp appropriations through fiscal year 1990 and reversed the earlier trend, significantly liberalizing food stamp rules. Major new initiatives included: a requirement for States to implement employment and training programs for food stamp recipients, automatic food stamp eligibility for AFDC and SSI recipients, and a prohibition on collection of sales taxes on food stamp purchases. Benefits were raised for some disabled and those with earnings, high shelter costs, and dependent care costs. Puerto Rico's nutrition assistance block grant was increased. Eligibility standards were liberalized, primarily by increasing and easing limits on assets. This was followed by several laws in 1986 and 1987 that opened up access to and increased benefits for the homeless, liberalized treatment of student aid, energy assistance, and income received from employment programs for the elderly and charitable organizations, further added to benefits for those with high shelter costs, and allowed Washington State to operate a special AFDC/food stamp demonstration project (followed by similar authorization for Minnesota in 1989). Legislation expanding eligibility and benefits continued into 1988 and 1989. The Hunger Prevention Act of 1988 (Public Law 100-435) increased food stamp benefits across the board, liberalized several eligibility and benefit rules, eased program access and administrative rules, and restructured the employment and training program and quality control system. The across-the-board benefit increase in maximum benefits (above normal inflation adjustments) called for by the act was 0.65 percent in fiscal year 1989, 2.05 percent in fiscal year 1990, and 3 percent in later years. Eligibility and benefit liberalizations included higher benefits for those with dependent care expenses, extension of liberal treatment for disabled applicants and recipients to new categories of disability, addition of a new income disregard for earned income tax credits, and liberalized treatment for farm households. Major provisions pertaining to program access and administration authorized 50-percent Federal cost sharing for State-option outreach activities, required coordination with cash welfare program application procedures, loosened rules governing monthly reporting and retrospective budgeting, allowed training of community volunteers to help screen applicants, and required, in some instances, issuance of the first 2 months' worth of benefits in a single allotment. Employment and training rules were revised by allowing some expansion in the types of activities supported (e.g., basic skills education), requiring increased support for participants' dependent care expenses, and mandating new performance standards for States. Finally, the food stamp quality control system was completely revamped to substantially reduce fiscal sanctions on States for erroneous benefit determinations, retroactive to fiscal year 1986. The 1990 Food, Agriculture, Conservation, and Trade Act (Public Law 101-624) reauthorized food stamp appropriations through fiscal year 1995. Although early versions of this act would have significantly liberalized food stamp eligibility and benefit rules, budget constraints dictated minimal expansions. The changes included: limited revisions for postsecondary students, forgiveness of most pre-1986 quality control sanctions on States, a few changes in administrative rules to open up program access and strengthen penalties for trafficking, and new pilot projects and study commissions for welfare program coordination. In addition, other laws eliminated a special requirement for single food stamp/SSI applications for those about to be discharged from institutions and barred the Food Stamp Program from counting (as a liquid asset) lump-sum earned income tax credit payments. The Mickey Leland Childhood Hunger Relief Act (incorporated in the 1993 Omnibus Budget Reconciliation Act, Public Law 103- 66) increased food stamp benefits and eased eligibility rules by: increasing and then removing the limit on special benefit adjustments (deductions) for households with very high shelter expenses, ending a practice of reducing benefits when there are short ``procedural'' breaks in enrollment, disregarding child support payments as income to the payor, increasing the degree to which vehicles are disregarded as assets in judging eligibility, revising the definition of a food stamp household to allow more persons who live together to apply separately, increasing the degree to which dependent care expense deductions can be claimed, expanding the degree to which earned income credits are disregarded as assets and State/local general assistance is disregarded as income, and boosting Puerto Rico's block grant. The Act also lowered the Federal share of some State administrative expenses (to 50 percent), reduced quality control fiscal penalties on States with high rates of erroneous benefit and eligibility determinations, and liberalized the appeals process for those penalties. Finally, it expanded support for employment and training programs for food stamp recipients, added a new method for collecting claims against recipients, and increased penalties for trafficking in food stamps. The net cost of the 1993 amendments was estimated at $2.5 billion over fiscal years 1994-98. Most recently, the 1996 Omnibus ``farm bill'' (the Federal Agriculture Improvement and Reform Act; Public Law 104-127) extended the Food Stamp Act's overall authorization for appropriations through fiscal year 1997, with no specific dollar limits. It also: (1) continued the requirement for nutrition assistance grants to Puerto Rico and American Samoa, and for employment and training programs, through fiscal year 2002; (2) revised rules for penalizing food stores in trafficking cases involving management; and (3) extended authority for several pilot projects. Table 16-10 provides an overview of the characteristics of food stamp households for selected years since 1980; table 16- 11 summarizes annual vital statistics about the program since 1972. MEDICAID Medicaid, authorized under title XIX of the Social Security Act, is a Federal-State matching entitlement program providing medical assistance for low-income persons who are aged, blind, disabled, members of families with dependent children, and certain other pregnant women and children. Within Federal guidelines, each State designs and administers its own program. Thus, there is substantial variation among States in coverage, types and scope of benefits offered, and amounts of payments for services (for additional information, see Committee on Energy and Commerce, 1993). Eligibility Although Medicaid eligibility has traditionally been linked to actual or potential receipt of cash assistance under AFDC or SSI, both of which are under jurisdiction of the Committee on Ways and Means, legislation in the last decade has gradually extended coverage to low-income pregnant women and children who have no ties to the welfare system, and has provided partial coverage for new groups of low-income Medicare beneficiaries. Medicaid is available to two broad classes of eligible persons: the ``categorically needy'' and the ``medically needy.'' The two terms once distinguished between welfare- related beneficiaries and those qualifying only under special Medicaid rules. However, nonwelfare groups have been added to the ``categorically needy'' list over the years. As a result, the terms are no longer especially helpful in sorting out the various populations for whom mandatory or optional Medicaid coverage has been made available, and some analysts believe they should be abandoned. However, the distinction between the categorically and medically needy is still an important one because the scope of covered services that States must provide to the categorically needy is much broader than the minimum scope of services for the medically needy. All States must cover certain mandatory groups of categorically needy individuals. \8\ Coverage of additional categorically needy groups is optional, as is coverage of the medically needy. The following discussion describes the mandatory and optional categorically eligible groups; the medically needy are discussed separately at the end of this section. --------------------------------------------------------------------------- \8\ Arizona does not operate a traditional Medicaid Program. Since 1982 it has operated a federally assisted medical assistance program for low-income persons under a demonstration waiver. TABLE 16-10.--CHARACTERISTICS OF FOOD STAMP HOUSEHOLDS, SELECTED YEARS 1980-94 [In percent] -------------------------------------------------------------------------------------------------------------------------------------------------------- Year and month survey was conducted ----------------------------------------------------------------------------------------------------------- Food stamp recipient households 1980 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 (Aug.) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) (Summer) -------------------------------------------------------------------------------------------------------------------------------------------------------- With gross monthly income: Below the Federal poverty levels........ 87 94 93 94 92 92 92 91 92 91 90 Between the poverty levels and 130 percent of the poverty levels.......... 10 6 6 6 8 8 8 9 8 8 9 Above 130 percent of the poverty levels. 2 (\3\) (\3\) (\3\) (\3\) (\3\) (\3\) (\3\) (\3\) 1 1 With earnings............................... 19 20 21 21 20 20 19 20 21 21 21 With public assistance income \1\........... 65 68 69 74 72 73 73 70 66 68 69 With AFDC income........................ NA 39 38 41 42 42 43 41 40 40 38 With SSI income......................... 18 19 18 21 20 21 19 19 19 20 23 With children............................... 60 59 61 61 61 60 61 61 62 60 61 And female heads of household........... NA 46 48 50 50 50 51 51 51 52 51 With elderly members \2\.................... 23 21 20 21 19 20 18 17 15 16 16 With elderly female heads of household \2\.................................... NA 16 15 15 14 14 11 10 9 NA 11 ----------------------------------------------------------------------------------------------------------- Average household size...................... 2.8 2.7 2.7 2.7 2.6 2.6 2.6 2.6 2.5 2.6 2.5 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Public assistance income includes Aid to Families with Dependent Children, Supplemental Security Income, and general assistance. \2\ Elderly members and heads of household include those age 60 or older. \3\ Less than 0.5 percent. NA--Not available. Note.--The proportion of households with public assistance income shown in this table is an estimate that generally overcounts them because it is not corrected for households with multiple sources of public assistance income. The proportion of households with elderly female heads shown in this table for years prior to 1994 is an estimate that generally undercounts them because it counts only single-person female households. Source: U.S. Department of Agriculture, Food and Consumer Service surveys of the characteristics of food stamp households. Compiled by the Congressional Research Service. TABLE 16-11.--HISTORICAL FOOD STAMP STATISTICS, 1972-95 ---------------------------------------------------------------------------------------------------------------- Total Federal spending Average monthly (in millions) \1\ Average benefits (per person) Four-person ------------------------ monthly ------------------------ maximum Fiscal year Constant participation Constant monthly Current (1995) (in millions Current (1995) allotment \2\ dollars dollars \3\ of persons) dollars dollars \3\ ---------------------------------------------------------------------------------------------------------------- 1972 \4\.......................... $1,871 $6,879 11.1 $13.50 $47.90 $108 1973.............................. 2,211 7,813 12.2 14.60 47.70 112 1974.............................. 2,843 9,230 12.9 17.60 48.10 116 1975 \5\.......................... 4,624 13,520 17.1 21.40 53.40 150 1976.............................. 5,692 15,552 18.5 23.90 56.10 162 Transition quarter \6\............ 1,367 3,597 17.3 24.40 56.10 166 1977.............................. 5,469 13,881 17.1 24.70 55.60 166 1978.............................. 5,573 13,206 16.0 26.80 55.10 170 1979 \7\.......................... 6,995 15,043 17.7 30.60 56.40 182 1980.............................. 9,188 17,401 21.1 34.40 59.00 204 1981.............................. 11,308 19,264 22.4 39.50 62.10 209 1982 \8\.......................... 11,117 17,646 22.0 39.20 59.40 233 1983 \8\.......................... 12,733 19,529 23.2 43.00 64.30 253 1984 \8\.......................... 12,470 18,365 22.4 42.70 62.00 253 1985 \8\.......................... 12,599 17,896 21.4 45.00 64.00 264 1986 \8\.......................... 12,528 17,352 20.9 45.50 63.40 268 1987 \8\.......................... 12,539 16,899 20.6 45.80 61.00 271 1988 \8\.......................... 13,289 17,191 20.1 49.80 64.00 290 1989 \8\.......................... 13,815 17,055 20.2 51.90 62.60 300 1990 \8\.......................... 16,512 19,426 21.5 59.00 66.90 331 1991 \8\.......................... 19,765 22,133 24.1 63.90 69.70 352 1992 \8\.......................... 23,539 25,585 26.9 68.50 74.30 370 1993 \8\.......................... 24,749 26,106 28.4 68.00 72.30 375 1994.............................. 25,525 26,233 28.9 69.00 71.30 375 1995.............................. 25,678 25,678 28.0 71.30 71.30 386 ---------------------------------------------------------------------------------------------------------------- \1\ Spending for benefits and administration, including Puerto Rico. \2\ For the 48 contiguous States and the District of Columbia, as in effect at the beginning of the fiscal year in current dollars. \3\ Constant dollar adjustments were made using the overall Consumer Price Index for All Urban Consumers (CPI-U) for spending and the CPI-U ``food at home'' component for benefits. \4\ The first fiscal year in which benefit and eligibility rules were, by law, nationally uniform and indexed for inflation. \5\ The first fiscal year in which food stamps were available nationwide. \6\ July through September 1976. \7\ The fiscal year in which the food stamp purchase requirement was eliminated, on a phased in basis. \8\ Includes funding for Puerto Rico's nutrition assistance grant; earlier years include funding for Puerto Rico under the regular Food Stamp Program. Participation figures include enrollment in Puerto Rico (averaging 1.4 to 1.5 million persons a month under the nutrition assistance grant and higher figures in earlier years). Average benefit figures do not reflect somewhat lower benefits in Puerto Rico under its nutrition assistance grant. Note.--Figures in this table have been revised from similar tables presented in earlier versions of the Green Book to reflect more recent spending information and more precise inflation adjustments for constant dollar amounts. Source: Compiled by the Congressional Research Service. AFDC-related groups States must provide Medicaid to all persons receiving cash assistance under AFDC, as well as to additional AFDC-related groups that are not actually receiving cash payments. These groups include: persons who do not receive a payment because the amount would be less than $10; persons whose payments are reduced to zero because of recovery of previous overpayments; certain work supplementation participants; certain children for whom adoption assistance agreements are in effect or for whom foster care payments are being made under title IV-E of the Social Security Act; and persons ineligible for AFDC because of a requirement that may not be imposed under Medicaid. States are required to continue Medicaid for specified periods for certain families losing AFDC benefits after receiving them in at least 3 of the preceding 6 months. If the family loses AFDC benefits because of increased income from earnings or hours of employment, Medicaid coverage must be extended for 12 months. (During the second 6 months a premium may be imposed, the scope of benefits may be limited, or alternate delivery systems may be used.) If the family loses AFDC because of increased child or spousal support, coverage must be extended for 4 months. States are also required to furnish Medicaid to certain two-parent families whose principal earner is unemployed and who are not receiving cash assistance because the State is one of those permitted (under the Family Support Act of 1988) to set a time limit on AFDC coverage for such families. States are permitted, but not required, to provide coverage to additional AFDC-related groups. The most important of these are the ``Ribicoff children,'' whose income and resources are within AFDC standards but who do not meet the definition of ``dependent child.'' States may cover these children up to a maximum age of 18, 19, 20, or 21, at the State's option, and may limit coverage to reasonable subgroups, such as children in privately subsidized foster care, or those who live in certain institutional settings. States may also furnish Medicaid to persons who would receive AFDC if the State's AFDC Program were as broad as permitted under Federal law. Non-AFDC pregnant women and children Between 1986 and 1991, Congress gradually extended Medicaid to groups of pregnant women and children defined in terms of family income and resources, rather than in terms of their ties to the AFDC Program. States are required to cover pregnant women and children under age 6 with family incomes below 133 percent of the Federal poverty income guidelines. (The State may impose a resource standard that is no more restrictive than that for SSI, in the case of pregnant women, or AFDC, in the case of children.) Coverage for pregnant women is limited to services related to the pregnancy or complications of the pregnancy; children receive full Medicaid coverage. Since July 1, 1991, States have been required to cover all children who are under age 19, who were born after September 30, 1983, and whose family income is below 100 percent of the Federal poverty level. (Coverage of such children through age 7 has been optional since OBRA 1987.) The 1983 start date means that the age of mandatory coverage will increase each year until reaching age 18 in fiscal year 2002. States are permitted, but not required, to cover pregnant women and infants under 1 year old with incomes below a State- established maximum that is above 133 percent of the poverty level. As of July 1995, 35 States and the District of Columbia had made use of this option; 25 had set their income limits at the maximum of 185 percent. SSI-related groups States are generally required to cover recipients of SSI. However, States may use more restrictive eligibility standards for Medicaid than those for SSI if they were using those standards on January 1, 1972 (before the implementation of SSI). States that have chosen to apply at least one more restrictive standard are known as ``section 209(b)'' States, after the section of the Social Security amendments of 1972 (Public Law 92-603) that established the option. These States may vary in their definition of disability, or in their standards related to income or resources. There are 12 section 209(b) States: Connecticut Hawaii Illinois Indiana Minnesota Missouri New Hampshire North Carolina North Dakota Ohio Oklahoma Virginia States using more restrictive income standards must allow applicants to deduct medical expenses from income (not including SSI or State supplemental payments, SSP) in determining eligibility. This process is known as ``spenddown.'' For example, if an applicant has a monthly income of $400 (not including any SSI or SSP) and the State's maximum allowable income is $350, the applicant would be required to incur $50 in medical expenses before qualifying for Medicaid. As will be discussed below, the spenddown process is also used in establishing eligibility for the medically needy. States must continue Medicaid coverage for several defined groups of individuals who have lost SSI or SSP eligibility. The ``qualified severely impaired'' are disabled persons who have returned to work and have lost eligibility as a result of employment earnings, but still have the condition that originally rendered them disabled and meet all nondisability criteria for SSI except income. Medicaid must be continued if such an individual needs continued medical assistance to continue employment and the individual's earnings are insufficient to provide the equivalent of SSI, Medicaid, and attendant care benefits the individual would qualify for in the absence of earnings. States must also continue Medicaid coverage for persons who were once eligible for both SSI and Social Security payments and who lose SSI because of a cost of living adjustment (COLA) in their Social Security benefits. Similar Medicaid continuations have been provided for certain other persons who lose SSI as a result of eligibility for or increases in Social Security or veterans' benefits. Finally, States must continue Medicaid for certain SSI-related groups who received benefits in 1973, including ``essential persons'' (persons who care for a disabled individual). States are permitted to provide Medicaid to individuals who are not receiving SSI but are receiving State-only supplementary cash payments. Qualified Medicare beneficiaries and related groups Effective January 1, 1991, States must provide limited Medicaid coverage for ``qualified Medicare beneficiaries'' (QMBs). These are aged and disabled persons who are receiving Medicare, whose income is below 100 percent of the Federal poverty level, and whose resources do not exceed twice the allowable amount under SSI. States must pay Medicare part B premiums (and, if applicable, part A premiums) for QMBs, along with required Medicare coinsurance and deductible amounts. In addition, all States must pay part B premiums (but not part A premiums or part A or B coinsurance and deductibles) for beneficiaries who would be QMBs except that their incomes are between 100 and 120 percent of the poverty level. States are also required to pay part A premiums, but no other expenses, for ``qualified disabled and working individuals.'' These are persons who formerly received Social Security disability benefits and hence Medicare, have lost eligibility for both programs, but are permitted under Medicare law to continue to receive Medicare in return for payment of the part A premium. Medicaid must pay this premium on behalf of such individuals who have incomes below 200 percent of poverty and resources no greater than twice the SSI standard. States are permitted to provide full Medicaid benefits, rather than just Medicare premiums and cost sharing, to QMBs who meet a State-established income standard that is no higher than 100 percent of the Federal poverty level. Institutionalized persons and related groups (all optional) States may provide Medicaid to certain otherwise ineligible groups of persons who are in nursing facilities or other institutions, or who would require institutional care if they were not receiving alternative services at home or in the community. States may establish a special income standard for institutionalized persons, not to exceed 300 percent of the maximum SSI benefits payable to a person who is living at home and has no other resources. States may also provide Medicaid to persons who would qualify for SSI but for the fact that they are in an institution. A State may obtain a waiver under section 2176 of OBRA 1981 to provide home and community-based services to a defined group of individuals who would otherwise require institutional care. Persons served under such a waiver may receive Medicaid coverage if they would be eligible if they lived in an institution. Such individuals may also be covered in a State that terminates its waiver program in order to take advantage of a new, no-waiver home and community-based services option created by OBRA 1990. A State may also provide Medicaid to several other classes of persons who need the level of care provided by an institution and who would be eligible if they were in an institution. These include children being cared for at home, persons of any age who are ventilator-dependent, and persons receiving hospice benefits in lieu of institutional services. Optional Coverage: The Medically Needy Forty States and other jurisdictions provide Medicaid to at least some groups of ``medically needy'' persons. These are persons who meet the nonfinancial standards for inclusion in one of the groups covered under Medicaid, but who do not meet the applicable income or resource requirements for categorically needy eligibility. The State may establish higher income or resource standards for the medically needy. In addition, individuals may spend down to the medically needy standard by incurring medical expenses, in the same way that SSI recipients in section 209(b) States may spend down to Medicaid eligibility. For the medically needy, spenddown may involve the reduction of assets and income. The State may set its separate medically needy income standard for a family of a given size at any level up to 133 percent of the maximum payment for a similar family under the State's AFDC Program. States may limit the groups of individuals who may receive medically needy coverage. If the State provides any medically needy program, however, it must include all children under 18 who would qualify under one of the mandatory categorically needy groups, and all pregnant women who would qualify under either a mandatory or optional group, if their income or resources were lower. As of October 1, 1995, the following 40 States and territories covered some groups of the medically needy: American Samoa Arkansas California Connecticut District of Columbia Florida Georgia Hawaii Illinois Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Montana Nebraska New Hampshire New Jersey New York North Carolina North Dakota Northern Mariana Islands Oklahoma Oregon Pennsylvania Puerto Rico Rhode Island Tennessee Texas Utah Vermont Virgin Islands Virginia Washington West Virginia Wisconsin Medicaid and the Poor In 1994, Medicaid covered 12 percent of the total U.S. population (excluding institutionalized persons) and 46.2 percent of those with incomes below the Federal poverty level. Because categorical eligibility requirements for children are less restrictive than those for adults, poor children are much more likely to receive coverage. Table 16-12 shows Medicaid coverage by age and income status in 1994, as reported in the March 1995 Current Population Survey (CPS) conducted by the Census Bureau. Note that persons shown as receiving Medicaid may have had other health coverage as well. Nearly all the elderly, for example, have Medicare and/or private coverage. Children under age 6 with family incomes below poverty are most likely to be covered. Coverage rates drop steadily with age and income until age 65. TABLE 16-12.--MEDICAID COVERAGE BY AGE AND FAMILY INCOME, 1994 [In thousands] ------------------------------------------------------------------------ Percent Age Covered by Persons in with Medicaid age group Medicaid ------------------------------------------------------------------------ In poverty: 0-5.......................... 4,358 6,093 71.5 6-10......................... 2,762 4,228 65.3 11-18........................ 2,940 5,611 52.4 19-44........................ 5,101 13,823 36.9 45-64........................ 1,366 4,639 29.4 65 or older.................. 1,050 3,663 28.7 -------------------------------------- Total...................... 17,577 38,057 46.2 ====================================== Family income between 100 and 133 percent of poverty: 0-5.......................... 875 1,967 44.5 6-10......................... 548 1,472 37.2 11-18........................ 575 1,987 28.9 19-44........................ 1,151 6,258 18.4 45-64........................ 346 1,997 17.3 65 or older.................. 552 2,907 19.0 -------------------------------------- Total...................... 4,047 16,589 24.4 ====================================== Family income between 133 and 185 percent of poverty: 0-5.......................... 825 2,822 29.2 6-10......................... 391 2,166 18.0 11-18........................ 496 3,257 15.2 19-44........................ 1,072 10,175 10.5 45-64........................ 374 3,625 10.3 65 or older.................. 430 4,915 8.8 -------------------------------------- Total...................... 3,588 26,960 13.3 ====================================== Family income greater than 185 percent of poverty: 0-5.......................... 1,109 13,379 8.3 6-10......................... 621 11,401 5.4 11-18........................ 874 19,094 4.6 19-44........................ 2,034 75,164 2.7 45-64........................ 707 41,187 1.7 65 or older.................. 843 19,783 4.3 -------------------------------------- Total...................... 6,189 180,009 3.4 ====================================== All persons: 0-5.......................... 7,167 24,261 29.5 6-10......................... 4,321 19,267 22.4 11-18........................ 4,885 29,949 16.3 19-44........................ 9,358 105,420 8.9 45-64........................ 2,794 51,449 5.4 65 or older.................. 2,876 31,269 9.2 -------------------------------------- Total...................... 31,400 261,614 12.0 ------------------------------------------------------------------------ Source: CRS tabulations from the March 1995 Current Population Survey (CPS). Table excludes persons in institutions and approximately 250,000 children under age 15 living with nonfamily caretakers. Number of recipients is lower than the number on administrative records due to underreporting by CPS respondents. Services States are required to offer the following services to categorically needy recipients under their Medicaid Programs: inpatient and outpatient hospital services; laboratory and x- ray services; nursing facility (NF) services for those over age 21; home health services for those entitled to NF care; early and periodic screening, diagnosis, and treatment (EPSDT) for those under age 21; family planning services and supplies; physicians' services; and nurse-midwife services. OBRA 1989 required States to provide ambulatory services offered by federally qualified health centers, effective April 1, 1990, and services furnished by certified family or pediatric nurse practitioners, effective July 1, 1990. States may also provide additional medical services such as drugs, eyeglasses, and inpatient psychiatric care for individuals under age 21 or over 65 (see table 16-24). OBRA 1990 added two new optional services: home and community-based services for the functionally disabled elderly and community supported living arrangement services for the developmentally disabled. Total expenditures under these services are capped. States are permitted to establish limitations on the amount of care provided under a service category (such as limiting the number of days of covered hospital care or number of physicians' visits). Certain services to children may not be limited. Federal law establishes the following requirements for coverage of the medically needy: (1) if a State provides medically needy coverage to any group, it must provide ambulatory services to children and prenatal and delivery services for pregnant women; (2) if a State provides institutional services for any medically needy group, it must also provide ambulatory services for this population group; and (3) if the State provides medically needy coverage for persons in intermediate care facilities for the mentally retarded (ICF/ MRs) or in institutions for mental diseases, it must offer to all groups covered in its medically needy program the same mix of institutional and noninstitutional services as required under prior law (that is, either all of the mandatory services or alternatively the care and services listed in 7 of the 25 paragraphs in the law defining covered services). Financing The Federal Government helps States pay the cost of Medicaid services by means of a variable matching formula which is adjusted annually. The Federal matching rate, which is inversely related to a State's per capita income, can range from 50 to 83 percent though currently the highest rate is 78.07 percent, with 11 States and the District of Columbia receiving the minimum match of 50 percent. Federal matching for the territories is set at 50 percent with a maximum dollar limit placed on the amount each territory can receive. The Federal share of administrative costs is 50 percent for all States except for certain items where the authorized rate is higher. Reimbursement Policy States establish their own service reimbursement policies within general Federal guidelines. OBRA 1989 codified the regulatory requirement that payments must be sufficient to enlist enough providers so that covered services will be available to Medicaid beneficiaries at least to the extent they are available to the general population in a geographic area. Beginning April 1, 1990, States are required to submit to the Secretary their payment rates for pediatric and obstetrical services along with additional data that will assist the Secretary in evaluating the State's compliance with this requirement. Until 1980, States were required to follow Medicare rules in paying for institutional services. The Boren amendment, enacted with respect to nursing homes in 1980 and extended to hospitals in 1981, authorized States to establish their own payment systems, as long as rates were reasonable and adequate to meet the costs of efficiently and economically operated facilities. Rates for hospitals must also be sufficient to assure reasonable access to inpatient services of adequate quality. A Supreme Court ruling in 1990, Wilder v. Virginia Hospital Association, affirmed that hospitals have the right under this rule to seek Federal court review of State reimbursement levels. Suits alleging inadequate hospital and nursing home payment have been filed in a number of States. In addition to meeting general adequacy tests, State hospital reimbursement systems must provide for additional payments to facilities serving a disproportionate share of low- income patients. Unlike the comparable Medicare payments, Medicaid payments must follow a formula that considers a hospital's charity patients as well as its Medicaid caseload. OBRA 1990 established new rules for Medicaid reimbursement of prescription drugs. The law denies Federal matching funds for drugs manufactured by a firm that has not agreed to provide rebates. Under amendments made by the Veterans Health Care Act of 1992, a manufacturer is not deemed to have a rebate agreement unless the manufacturer has entered into a master agreement with the Secretary of Veterans Affairs. Rebate amounts vary depending on the nature of the drug. The minimum rebate is 11 percent of the average price. OBRA 1990 established a 4-year moratorium on reductions in most payment rates for pharmacists. Practitioners and providers are required to accept payments under the program as payment in full for covered services except where nominal cost-sharing charges may be required. States may generally impose such charges with certain exceptions. They are precluded from imposing cost-sharing on services for children under 18, services related to pregnancy, family planning or emergency services, HMO services for the categorically needy, and services provided to nursing facility inpatients who are required to spend all of their income for medical care except for a personal needs allowance. Administration Medicaid is a State-administered program. At the Federal level, the Health Care Financing Administration (HCFA) of the Department of Health and Human Services is responsible for overseeing State operations. Federal law requires that a single State agency be charged with administration of the Medicaid Program. Generally, that agency is either the State welfare agency, the State health agency, or an umbrella human resources agency. The single State agency may contract with other State entities to conduct some program functions. Further, States may process claims for reimbursement themselves or contract with fiscal agents or health insuring agencies to process these claims. Medicaid and Managed Care To contain escalating health care costs and improve access to the Medicaid Program, States are increasingly adopting managed care delivery systems. Managed care refers to an array of health plans which attempt to control the cost and quality of care by coordinating medical and other health-related services. States wishing to require Medicaid beneficiaries to enroll in managed care plans must obtain one of two types of waivers from the HCFA. Section 1115(a) of the Social Security Act offers States the greatest flexibility, allowing HCFA to waive a broad range of Medicaid requirements. Statewide section 1115(a) waivers have been approved in 13 States, implemented in 9, and are pending in 11 States. These waivers allow States to expand coverage to those not traditionally eligible, to impose premiums and copayments on those new eliginles, and to modify the Medicaid benefit package. A second kind of waiver, known as a ``freedom-of-choice'' waiver, is permitted by section 1915(b) of the Social Security Act. Section 1915(b) waivers allow States to waive specific requirements for a specific population or geographical area, and have been used to require Medicaid beneficiaries to enroll in managed care plans and to restrict the providers from whom enrollees receive Medicaid-covered services. There are currently 91 freedom-of-choice programs operating in 42 States. Managed care includes a wide array of approaches to organizing the delivery of health care. In contrast to traditional ``fee-for-service'' plans, most managed care plans are ``capitated,'' meaning they receive a fixed amount of money per person to provide a set of services for any patient enrolled. However, some plans are a synthesis of partially capitated and fee-for-service care. Arrangements include primary care case managers (PCCMs), preferred provider organizations (PPOs), health maintenance organizations (HMOs), and point-of-service plans (POSs). Medicaid managed care enrollment has increased 140 percent since 1993. Currently there are approximately 11.6 million Medicaid recipients enrolled in some type of managed care: 5.1 million in HMOs, 3.6 million in PCCM, and 2.9 million in other variations. Of these, approximately 7.5 million recipients are in fully capitated plans. Arizona received the first comprehensive statewide section 1115(a) waiver in 1982. Since 1993, Delaware, Hawaii, Minnesota, Oklahoma, Oregon, Rhode Island, Tennessee, and Vermont have received and implemented statewide section 1115(a) waivers. Statewide waivers have been approved but not implemented in Florida, Kentucky, Massachusetts and Ohio. Most of these waivers are designed to move Medicaid beneficiaries into managed care and to expand Medicaid eligibility to low- income and uninsured persons not statutorily entitled to coverage. However, there is significant variability in the degree of expanded coverage offered under each. Many waivers require newly-covered enrollees to contribute to the cost of their medical care by paying premiums and copayments based on income, some limit eligibility to certain populations, and most impose upper income eligibility limits. Section 1115(a) waivers are approved on condition that they are budget neutral to the Federal Government--that Federal costs over the life of the waiver (typically 5 years) are no more than if the State had continued operating its prewaiver Medicaid Program. To enforce budget neutrality, some waivers employ aggregate caps on Federal matching and others use per capita expenditure caps. Many States exempt Medicaid eligibles who are SSI recipients (aged, blind, and disabled), who often incur high medical expenses, from mandatory managed care participation. Research by the Government Accounting Office (GAO) has shown that Arizona's waiver program has succeeded in containing health care costs by developing a competitive Medicaid health care market. GAO questions whether approved section 1115(a) waivers in other States, notably Oregon, Hawaii, and Florida, will be cost neutral, and suggests that statewide section 1115(a) waivers instead could increase Federal Medicaid expenditures significantly by expanding coverage to those ineligible under traditional plans. Until 1982, Arizona was the only State that did not have a Medicaid Program. The State became the first to mandate managed care enrollment for its Medicaid-eligibles when it received a section 1115(a) waiver to implement the Arizona Health Care Cost Containment System. The Arizona system, with an estimated 450,000 enrollees, is fully capitated and includes both acute care and long-term care programs. The waiver has been extended through 1997. Oregon's Health Plan Demonstration, implemented February 1994, is part of the State's health care reform goal of universal coverage. The plan expands Medicaid eligibility to an estimated 120,000 people with incomes below 100 percent of the Federal poverty level. The benefit package, developed by the State in conjunction with health care providers and consumers, consists of a prioritized list of 581 conditions and treatments, in addition to certain preventive services. Most care is delivered through fully capitated managed care health plans. Similarly, Tennessee's TennCare Program is designed to provide benefits to traditional Medicaid beneficiaries, uninsured State residents, and those who are otherwise uninsurable. There is no upper income eligibility limit, expanding eligibility to an estimated additional 500,000 persons. The plan requires new eligibles to share the cost of medical care by paying premiums, deductibles, and copayments based on income. Plan enrollment, capped by the State at 1.4 million, is currently about 1.3 million. Legislative History The following is a summary of the major Medicaid changes enacted as part of the Omnibus Budget Reconciliation Act of 1990 (OBRA 1990), Public Law 101-508: 1. Reimbursement for prescribed drugs.--The law requires manufacturers of prescription drugs to provide rebates to State Medicaid Programs. States are required to cover all the drugs manufactured by a firm entering into a rebate agreement. The minimum rebate is 10 percent of the average manufacturer price for the product. Beginning in 1993, States are required to have prospective (i.e., point-of-sale) and retrospective drug utilization review (DUR) programs, to assure that prescriptions are appropriate and medically necessary. Until the end of 1993, enhanced Federal matching payments were provided for State administrative costs related to the rebate and DUR programs. The law establishes a 4-year moratorium on reductions in most payment rates for pharmacists. 2. Required payment of premiums and cost sharing for enrollment under group health plans where cost effective.--Effective January 1, 1991, the law requires States to pay premiums for group health plans for which Medicaid beneficiaries are eligible, when it is cost effective to do so. Guidelines for determining cost effectiveness were to be issued by the Secretary. States pay any cost sharing required by a plan and continue to furnish any Medicaid benefits not covered under the plan. Providers under group health plans are required to accept plan payment as payment in full for Medicaid enrollees. 3. Protection of low-income Medicare beneficiaries.--The law accelerates phase in of the requirement that States pay Medicare premiums and cost sharing for QMBs, Medicare beneficiaries with incomes below 100 percent of the Federal poverty level. For all but five States, the requirement was effective January 1, 1991. All States must pay part B premiums (but not part A premiums or cost sharing) for beneficiaries with incomes below 120 percent of the poverty level beginning in 1995. 4. Child health provisions.--Effective July 1, 1991, all States are required to cover children under age 19 who were born after September 30, 1983, and whose family income is below 100 percent of the Federal poverty level. States are required to accept Medicaid applications for mothers and children at locations other than welfare offices, and are required to continue benefits for pregnant women until 2 months after the end of the pregnancy, and for infants through the first year of life. States are required to make additional payments for outlier cases and are prohibited from imposing durational limits on coverage for patients who are under age 1 in any hospital or under age 6 in a disproportionate share hospital. 5. Home and community-based care as optional service.--The law permits States to provide home and community-based services to functionally disabled Medicaid beneficiaries age 65 or over, effective the later of July 1, 1991, or 30 days after the publication of interim rules. States are permitted to limit eligibility for the services without waivers and thus to provide the services without meeting cost- effectiveness tests. Federal matching payments cannot exceed 50 percent of what it would have cost to provide Medicare nursing facility care to the same group of beneficiaries. Total Federal expenditures were limited to $580 million over the period fiscal years 1991 to 1995. 6. Community supported living arrangements.--The law permits between two and eight States to provide community supported living arrangement services to developmentally disabled individuals who live with their families or in small community residential settings, effective the later of July 1, 1991, or 30 days after the publication of interim rules. Services include personal assistance, training and habilitation, and other services needed to help with activities of daily living. Total Federal expenditures were limited to $100 million over the period fiscal years 1991 to 1995. 7. Payments for COBRA continuation coverage.--The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA, Public Law 99-272) provides that employees or dependents leaving an employee health insurance group in a firm with 20 or more employees must be offered an opportunity to continue buying insurance through the group for 18 to 36 months (depending on the reason for leaving the group). OBRA 1990 permits State Medicaid Programs to pay for COBRA continuation coverage, when it is cost effective to do so, effective January 1, 1991. States may pay premiums for individuals with incomes below 100 percent of poverty and resources less than twice the SSI limit who are eligible for continuation coverage under a group health plan offered by an employer with 75 or more employees. 8. Miscellaneous.--The law establishes demonstration projects in three to four States to test the effect of providing Medicaid to families with incomes below 150 percent of the Federal poverty level that do not meet categorical eligibility requirements, and projects in two States to provide Medicaid coverage for early intervention services for HIV-infected individuals who do not meet disability criteria. The law also includes new measures to ensure the quality of physician services under Medicaid, technical corrections in nursing home reform provisions, and numerous other technical and miscellaneous amendments. The following is a summary of the major changes enacted in the Medicaid Voluntary Contribution and Provider-Specific Tax amendments of 1991, Public Law 102-234. 1. Voluntary contributions and provider-specific taxes.--The law caps Federal matching payments for State Medicaid spending that is financed with revenues from provider donations or taxes. Generally effective January 1, 1992, before the Federal share is computed, a State's expenditures for Medicaid are reduced by revenues received by a State or local government from provider- related donations, and health care-related taxes that are not broad based. Broad based taxes are those that are uniformly imposed on all providers in a class, or all businesses in a class furnished by the providers. States with non-broad-based taxes in effect or approved as of November 22, 1991, are permitted to continue them temporarily, but the taxes may not be increased. States with voluntary contribution programs in effect or reported as of September 30, 1991, for States' fiscal year 1992, may continue them temporarily but may not increase them. During fiscal years 1993-95, Federal matching funds for revenue from voluntary contributions, provider specific taxes, and broad-based taxes were limited to the greater of 25 percent of the State share of Medicaid expenditures or the amount of donations and taxes collected in the State in fiscal year 1992. Federal matching funds are allowable for certain donations. These are bona fide provider donations that are not related to Medicaid payments to the provider, and donations in the form of payment for outstationing Medicaid eligibility workers. Beginning in fiscal year 1993, the latter type of donations are limited to 10 percent of a State's Medicaid administrative costs. 2. Payments for disproportionate share hospitals.--The law places an aggregate national cap of 12 percent of Medicaid expenditures on payment adjustments for disproportionate share hospitals (DSH). Beginning with fiscal year 1993, States with DSH payments of 12 percent or more of total Medicaid expenditures in fiscal year 1992 cannot exceed this dollar level in the future; States with DSH payments of less than 12 percent may increase them at the same rate as their overall Medicaid expenditure growth. Two 1991 acts concern enrollment in two health maintenance organizations. The law specifies that no more than 75 percent of the enrollees of an HMO may be Medicaid or Medicare beneficiaries. Public Law 102-276 authorized a waiver of this requirement for the Dayton Area Health Plan; Public Law 102-317 authorized a similar waiver for the Tennessee Primary Care Network. The following is a summary of major Medicaid changes enacted in the Veterans Health Care Act of 1992, Public Law 102-585, pertaining to Medicaid reimbursement policies for prescription drugs. 1. Calculation of best price.--The law excludes certain prices from calculation of best price (the lowest price available from a manufacturer) for Medicaid drug rebates. The law excludes the prices charged to the Indian Health Service, the Department of Veterans Affairs, veterans' State homes, the Department of Defense, the Public Health Service and certain private and nonprofit hospitals, as well as any prices charged under the Federal Supply Schedule of the General Services Administration or under State pharmaceutical assistance programs. 2. Rebate amounts.--The law changes the minimum basic rebates for brand name drugs to 15.7 percent of the average manufacturer price (AMP) in calendar year 1993, 15.4 percent of the AMP in 1994, 15.2 percent of the AMP in 1995, and 15.1 percent of the AMP thereafter. In each calendar year, the basic rebate is the greater of the percentage stated, or the difference between the AMP and the best price. The following is a summary of major Medicaid changes enacted in the Omnibus Budget Reconciliation Act of 1993 (OBRA 1993), Public Law 103-66. 1. Medicaid fraud control units.--The law changed the State option to a requirement that each State operate a Medicaid fraud and abuse control unit unless the State demonstrates that effective operation of a unit would not be cost effective and that, in the absence of a unit, beneficiaries would be protected from abuse and neglect. 2. Prescription drug formularies.--States have been prohibited from using drug formularies (lists of covered and excluded drug products) and from imposing restrictions on new drug products for 6 months after a drug is approved by the Food and Drug Administration. States are allowed to use formularies to cover only the State's designated drug(s) in a class of therapeutic alternatives and impose certain requirements on prescriptions for new drugs. 3. Asset and trust provisions.--Some individuals must spend their assets down to a State-established level before Medicaid pays for nursing facility and other medical care. To try to ensure that these persons apply their assets to the cost of their care and do not give them away in order to gain Medicaid eligibility sooner than they otherwise would, Medicaid prohibits persons from transferring assets for less than fair market value. OBRA 1993 amends Medicaid law to close loopholes that allow individuals to shelter or divest assets in order to become eligible for Medicaid-covered long-term care. States are required to provide for a delay in Medicaid eligibility for institutionalized persons or their spouses who dispose of assets for less than fair market value. A transfer that occurred during the 36-month period prior to an application for coverage would trigger a period of ineligibility beginning with the month the assets were transferred. Under the OBRA 1993 amendments, the period of ineligibility is determined by comparing the cost of care and the fair market value of the assets transferred. States are required to seek recovery of Medicaid expenditures from the estate of a deceased beneficiary who received certain Medicaid benefits. Amounts paid by Medicaid for nursing facility services, home and community-based care, and related hospital and prescription drug services must be recovered from the estates of individuals who were over age 55 when such services were received. OBRA 1993 provides for exemptions to these asset transfer and recovery provisions if application of the law would result in ``undue hardship'' according to criteria established by the Secretary. 4. Child support enforcement.--A child who is covered by Medicaid may also be covered by private health insurance that is carried by a noncustodial parent. To improve medical support for children, Medicaid law is amended to mandate that States have laws in effect to require the cooperation of employers and insurers in obtaining parental coverage. 5. Disproportionate share hospitals (DSH).--States are prohibited from designating a hospital as a DSH unless Medicaid beneficiaries account for at least 1 percent of the hospital's impatient days. In addition, the law requires that DSH payments to a State or locally owned or operated facility cannot exceed the costs the facility incurs in furnishing inpatient or outpatient service to Medicaid beneficiaries or uninsured patients. For this purpose, a facility's cost is net of payments received from Medicaid (other than DSH payments) and from uninsured individuals. 6. Physician referral.--Medicaid payments for designated health services (including clinical laboratory, physical and occupational therapy, radiology, or other diagnostic services, home health and other services) are limited if such services are furnished upon referral from a physician who has a specified financial relationship with the provider furnishing the service. 7. Childhood immunization.--A new entitlement program is established under which States are entitled to receive vaccines purchased by the Federal Government for federally eligible children up to age 18. Providers registered in a State's immunization program are entitled to receive free vaccines for children covered under the new law. Children eligible to receive federally purchased vaccines are Medicaid-eligible, American Indian or Alaska Native, children whose health insurance does not cover the cost of vaccines, and children who receive immunization at federally qualified health centers or rural health clinics. 8. Tuberculosis-related services.--States are permitted to provide Medicaid coverage for outpatient tuberculosis- related services to tuberculosis-infected individuals who meet the income and resource limits that apply to disabled persons. Program Data Under current law, Federal Medicaid outlays are projected to reach $105.8 billion in fiscal year 1997, an 11-percent increase over the $94.9 billion projected for fiscal year 1996. This and other Medicaid Program data are presented in tables 16-13 to 16-24. TABLE 16-13.--HISTORY OF MEDICAID PROGRAM COSTS, 1966-97 ---------------------------------------------------------------------------------------------------------------- Total Federal State -------------------------------------------------------------- Fiscal year Dollars Dollars Dollars (in Percent (in Percent (in Percent millions) increase millions) increase millions) increase ---------------------------------------------------------------------------------------------------------------- 1966 \1\......................................... 1,658 ........ 789 ........ 869 ........ 1967 \1\......................................... 2,368 42.8 1,209 53.2 1,159 33.4 1968 \1\......................................... 3,686 55.7 1,837 51.9 1,849 59.5 1969 \1\......................................... 4,166 13.0 2,276 23.9 1,890 2.2 1970 \1\......................................... 4,852 16.5 2,617 15.0 2,235 18.3 1971............................................. 6,176 27.3 3,374 28.9 2,802 25.4 1972 \2\......................................... 8,434 36.6 4,361 29.3 4,074 45.4 1973............................................. 9,111 8.0 4,998 14.6 4,113 1.0 1974............................................. 10,229 12.3 5,833 16.7 4,396 6.9 1975............................................. 12,637 23.5 7,060 21.0 5,578 26.9 1976............................................. 14,644 15.9 8,312 17.7 6,332 13.5 TQ \3\....................................... 4,106 NA 2,354 NA 1,752 NA 1977............................................. 17,103 \4\ 16.8 9,713 \4\ 16.9 7,389 \4\ 16.7 1978............................................. 18,949 10.8 10,680 10.0 8,269 11.9 1979............................................. 21,755 14.8 12,267 14.9 9,489 14.8 1980............................................. 25,781 18.5 14,550 18.6 11,231 18.4 1981............................................. 30,377 17.8 17,074 17.3 13,303 18.4 1982............................................. 32,446 6.8 17,514 2.6 14,931 12.2 1983............................................. 34,956 7.7 18,985 8.4 15,971 7.0 1984............................................. 37,569 7.5 20,061 5.7 17,508 9.6 1985 \5\......................................... 40,917 8.9 \6\ 22,65 5 12.9 \6\ 18,26 2 4.3 1986............................................. 44,851 9.6 24,995 10.3 19,856 8.7 1987............................................. 49,344 10.0 27,435 9.8 21,909 10.3 1988............................................. 54,116 9.7 30,462 11.0 23,654 8.0 1989............................................. 61,246 13.2 34,604 13.6 26,642 12.6 1990............................................. 72,492 18.4 41,103 18.8 31,389 17.8 1991............................................. 91,519 26.2 52,532 27.8 38,987 24.2 1992............................................. 118,166 29.1 67,827 29.1 50,339 29.1 1993............................................. 132,010 11.7 75,774 11.7 56,236 11.7 1994............................................. 143,919 9.0 82,034 8.3 61,885 10.0 1995............................................. 156,263 8.6 89,070 8.6 67,193 8.6 1996 \7\......................................... 166,477 6.5 94,892 6.5 71,585 6.5 1997 \7\......................................... 185,212 11.2 105,571 11.2 79,641 11.2 ---------------------------------------------------------------------------------------------------------------- \1\ Includes related programs which are not separately identified, though for each successive year a larger portion of the total represents Medicaid expenditures. As of January 1, 1970, Federal matching was only available under Medicaid. \2\ Intermediate care facilities (ICFs) transferred from the cash assistance programs to Medicaid effective January 1, 1972. Data for prior periods do not include these costs. \3\ Transitional quarter (beginning of Federal fiscal year moved from July 1 to October 1). \4\ Represents increase over fiscal year 1976, i.e., five calendar quarters. \5\ Includes transfer of function of State fraud control units to Medicaid from Office of Inspector General. \6\ Temporary reductions in Federal payments authorized for fiscal years 1982-84 were discontinued in fiscal year 1985. \7\ Current law estimate. NA--Not available. Note.--Totals may not add due to rounding. Source: Budget of the U.S. Government, fiscal years 1969-97 (see Office of the President, 1996, in reference list), and Health Care Financing Administration, Division of Budget. TABLE 16-14.--UNDUPLICATED NUMBER OF MEDICAID RECIPIENTS BY ELIGIBILITY CATEGORY, FISCAL YEARS 1972-94 [Numbers in thousands] ---------------------------------------------------------------------------------------------------------------- Adults in Permanent Dependent family Fiscal year Total Age 65 or Blindness and total children with Other recipients over disabled under age dependent 21 children ---------------------------------------------------------------------------------------------------------------- 1972........................ 17,606 3,318 108 1,625 7,841 3,137 1,576 1973........................ 19,622 3,496 101 1,804 8,659 4,066 1,495 1974........................ 21,462 3,732 135 2,222 9,478 4,392 1,502 1975........................ 22,007 3,615 109 2,355 9,598 4,529 1,800 1976........................ 22,815 3,612 97 2,572 9,924 4,774 1,836 1977 \1\.................... 22,832 3,636 92 2,710 9,651 4,785 1,959 1978........................ 21,965 3,376 82 2,636 9,376 4,643 1,852 1979........................ 21,520 3,364 79 2,674 9,106 4,570 1,727 1980 \2\.................... 21,605 3,440 92 2,819 9,333 4,877 1,499 1981 \2\.................... 21,980 3,367 86 2,993 9,581 5,187 1,364 1982 \2\.................... 21,603 3,240 84 2,806 9,563 5,356 1,434 1983 \2\.................... 21,554 3,371 77 2,844 9,535 5,592 1,129 1984 \2\.................... 21,607 3,238 79 2,834 9,684 5,600 1,187 1985 \2\.................... 21,814 3,061 80 2,937 9,757 5,518 1,214 1986 \2\.................... 22,515 3,140 82 3,100 10,029 5,647 1,362 1987 \2\.................... 23,109 3,224 85 3,296 10,168 5,599 1,418 1988 \2\.................... 22,907 3,159 86 3,401 10,037 5,503 1,343 1989 \2\.................... 23,511 3,132 95 3,496 10,318 5,717 1,175 1990 \3\.................... 25,255 3,202 83 3,635 11,220 6,010 1,105 1991 \3\.................... 28,280 3,359 85 3,983 13,415 6,778 658 1992 \3\.................... 30,926 3,742 84 4,378 15,104 6,954 664 1993 \3\.................... 33,432 3,863 84 4,932 16,285 7,505 642 1994 \3\.................... 35,053 4,035 87 5,372 17,194 7,586 573 ---------------------------------------------------------------------------------------------------------------- \1\ Fiscal year 1997 began in October 1976 and was the first year of the new Federal fiscal cycle. Before 1977, the fiscal year began in July. \2\ Beginning in fiscal year 1980, recipients' categories do not add to the unduplicated total due to the small number of recipients that are in more than one category during the year. \3\ Recipient categories do not add to the unduplicated total due to ``unknown.'' Source: Health Care Financing Administration, U.S. Department of Health and Human Services. TABLE 16-15.--MEDICAID RECIPIENTS BY BASIS OF ELIGIBILITY BY STATE, FISCAL YEAR 1994 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total AFDC State recipients Aged Blind Disabled children AFDC adults Other -------------------------------------------------------------------------------------------------------------------------------------------------------- Alabama...................................................... 543,537 71,473 1,580 123,669 244,281 98,852 2,597 Alaska....................................................... 68,854 4,456 95 5,921 38,836 19,546 0 Arizona...................................................... 509,663 26,700 804 58,379 309,537 114,243 0 Arkansas..................................................... 339,920 51,953 1,260 82,221 112,370 58,547 30,669 California................................................... 5,007,635 510,470 24,655 678,923 2,259,597 1,422,414 81,900 Colorado..................................................... 289,423 36,840 154 41,059 142,193 66,733 2,444 Connecticut.................................................. 354,473 63,321 289 44,434 165,726 80,701 2 Delaware..................................................... 74,800 5,819 117 10,907 40,397 15,594 1,614 District of Columbia......................................... 127,208 9,365 168 21,509 67,278 28,774 114 Florida...................................................... 1,727,034 204,302 3,189 247,881 990,980 229,455 51,227 Georgia...................................................... 1,084,929 104,296 10,415 168,190 542,580 246,953 163 Hawaii....................................................... 120,793 16,468 14 12,757 59,680 27,840 0 Idaho........................................................ 110,043 9,022 48 16,737 59,333 24,407 496 Illinois..................................................... 1,441,034 116,261 1,322 258,471 719,431 313,273 32,276 Indiana...................................................... 604,770 69,545 1,037 66,109 319,276 144,423 0 Iowa......................................................... 302,535 38,425 584 46,690 135,634 74,821 5,595 Kansas....................................................... 251,742 25,523 115 35,748 125,396 58,409 136 Kentucky..................................................... 637,558 63,112 1,853 143,295 272,754 134,178 0 Louisiana.................................................... 778,223 100,878 1,795 147,520 375,960 152,070 0 Maine........................................................ 176,998 23,245 254 33,229 76,758 37,922 4,801 Maryland..................................................... 415,101 46,492 288 80,868 198,228 80,217 9,008 Massachusetts................................................ 710,490 102,417 6,842 140,879 304,265 156,087 0 Michigan..................................................... 1,186,621 83,543 2,113 211,069 571,418 316,712 1,766 Minnesota.................................................... 425,563 59,503 564 68,241 196,612 97,779 2,864 Mississippi.................................................. 536,916 65,009 1,580 115,720 258,293 83,153 1,782 Missouri..................................................... 668,765 89,812 1,113 90,881 328,035 157,499 0 Montana...................................................... 96,206 9,119 80 15,155 34,379 23,587 11,917 Nebraska..................................................... 164,440 21,031 239 22,053 73,565 25,153 22,399 Nevada....................................................... 95,411 10,642 425 13,848 46,086 21,868 1,644 New Hampshire................................................ 85,555 12,837 411 10,496 42,247 19,136 150 New Jersey................................................... 789,692 88,479 1,229 135,452 363,967 190,084 153 New Mexico................................................... 268,204 17,922 641 37,049 151,993 60,599 0 New York..................................................... 2,907,963 367,833 3,764 467,563 1,300,163 596,873 171,767 North Carolina............................................... 985,273 137,899 934 112,432 491,043 242,965 0 North Dakota................................................. 62,769 10,943 23 8,383 26,556 13,312 2,496 Ohio......................................................... 1,523,296 185,106 998 209,919 784,774 339,301 3,198 Oklahoma..................................................... 390,628 53,181 696 52,150 197,674 86,329 600 Oregon....................................................... 411,311 33,656 1,269 42,973 172,182 79,421 0 Pennsylvania................................................. 1,255,358 142,712 822 262,758 580,848 236,787 29,980 Rhode Island................................................. 114,850 18,949 219 24,437 43,896 26,895 454 South Carolina............................................... 486,110 77,542 1,852 86,068 231,724 87,582 1,342 South Dakota................................................. 72,151 9,360 163 12,389 36,598 13,542 0 Tennessee.................................................... 938,711 105,085 2,992 199,627 451,584 166,889 12,534 Texas........................................................ 2,513,959 308,543 4,155 246,866 1,407,134 547,261 0 Utah......................................................... 157,099 9,415 155 16,967 86,489 43,511 0 Vermont...................................................... 94,150 10,291 80 13,481 46,907 20,660 12 Virginia..................................................... 642,947 85,077 1,112 95,751 334,420 126,587 0 Washington................................................... 668,363 53,495 393 100,605 328,483 176,968 6,642 West Virginia................................................ 366,638 34,612 305 67,243 160,734 99,890 3,854 Wisconsin.................................................... 473,740 67,960 1,206 103,049 141,358 84,776 73,162 Wyoming...................................................... 50,544 4,627 11 5,458 26,152 10,731 525 Puerto Rico.................................................. 926,518 159,533 415 57,105 709,465 0 0 Virgin Islands............................................... 16,499 1,280 9 967 9,156 4,463 624 ------------------------------------------------------------------------------------------ United States............................................ 34,109,996 3,874,566 86,422 5,313,479 16,475,804 7,581,309 572,283 All jurisdictions........................................ 35,053,013 4,035,379 86,846 5,371,551 17,194,425 7,585,772 572,907 -------------------------------------------------------------------------------------------------------------------------------------------------------- Note.--Total recipients include unknowns which are not reflected in this table. Source: Health Care Financing Administration, U.S. Department of Health and Human Services. TABLE 16-16.--MEDICAID EXPENDITURES BY BASIS OF ELIGIBILITY BY STATE, FISCAL YEAR 1994 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total AFDC AFDC Aged, blind and AFDC State expenditures Aged Blind Disabled children adults Other disabled \2\ children \2\ -------------------------------------------------------------------------------------------------------------------------------------------------------- Alabama................................... 1,312 411 5 524 191 175 5 71.7 14.6 Alaska.................................... 243 42 1 67 76 57 0 45.2 31.5 Arizona................................... 199 13 1 63 73 50 0 38.2 36.8 Arkansas.................................. 1,253 350 7 591 122 77 98 75.7 9.7 California................................ 9,988 2,577 107 3,538 1,468 2,067 179 62.3 14.7 Colorado.................................. 952 302 4 358 138 138 12 69.7 14.5 Connecticut............................... 1,943 902 4 664 213 160 (<SUP>1) 80.8 11.0 Delaware.................................. 277 72 1 126 41 30 5 71.9 14.7 District of Columbia...................... 550 146 1 257 94 52 (<SUP>1) 73.4 17.1 Florida................................... 4,266 1,324 14 1,486 1,052 323 67 66.2 24.7 Georgia................................... 2,845 577 97 971 576 602 (<SUP>1) 57.8 20.2 Hawaii.................................... 338 147 (<SUP>1) 87 50 52 0 69.3 14.8 Idaho..................................... 331 83 (<SUP>1) 149 52 45 1 70.3 15.7 Illinois.................................. 4,826 934 10 2,368 807 586 121 68.6 16.7 Indiana................................... 2,250 769 7 801 381 283 0 70.1 16.9 Iowa...................................... 982 271 2 418 160 123 7 70.5 16.3 Kansas.................................... 782 230 1 314 129 98 (<SUP>1) 69.7 16.5 Kentucky.................................. 1,779 435 8 776 279 265 0 68.5 15.7 Louisiana................................. 2,684 661 12 1,132 519 361 0 67.2 19.3 Maine..................................... 807 286 1 318 101 81 20 75.0 12.5 Maryland.................................. 1,875 474 2 843 300 185 71 70.4 16.0 Massachusetts............................. 3,052 1,308 72 1,073 351 248 0 80.4 11.5 Michigan.................................. 3,274 724 11 1,558 502 473 5 70.1 15.3 Minnesota................................. 1,982 836 7 826 178 133 2 84.2 9.0 Mississippi............................... 1,090 297 5 445 205 132 5 68.6 18.8 Missouri.................................. 1,809 593 5 649 332 229 0 68.9 18.3 Montana................................... 303 98 (<SUP>1) 115 35 38 14 70.7 11.7 Nebraska.................................. 593 199 2 205 85 45 56 68.5 14.4 Nevada.................................... 307 71 3 119 51 43 14 62.9 16.7 New Hampshire............................. 389 181 8 129 43 28 (<SUP>1) 81.6 11.1 New Jersey................................ 3,612 1,132 10 1,601 367 486 1 75.9 10.2 New Mexico................................ 638 118 5 252 163 100 0 58.8 25.5 New York.................................. 18,731 6,906 97 7,439 2,377 1,604 308 77.1 12.7 North Carolina............................ 2,685 832 10 851 557 434 0 63.1 20.8 North Dakota.............................. 284 112 (<SUP>1) 115 30 22 3 80.0 10.7 Ohio...................................... 4,995 1,816 5 1,792 803 578 1 72.3 16.1 Oklahoma.................................. 974 307 2 333 220 111 (<SUP>1) 65.9 22.6 Oregon.................................... 1,036 237 24 367 234 117 0 60.6 22.6 Pennsylvania.............................. 4,224 1,665 3 1,630 534 348 42 78.1 12.6 Rhode Island.............................. 685 208 30 294 87 63 4 77.7 12.6 South Carolina............................ 1,396 387 7 569 257 175 1 69.0 18.4 South Dakota.............................. 284 96 1 124 42 22 0 77.6 14.7 Tennessee................................. 1,965 535 9 770 368 233 52 66.8 18.7 Texas..................................... 6,141 1,637 22 1,810 1,527 1,145 0 56.5 24.9 Utah...................................... 451 83 1 165 95 97 0 55.3 21.1 Vermont................................... 259 80 1 110 40 28 (<SUP>1) 73.6 15.3 Virginia.................................. 1,723 549 6 643 299 226 0 69.6 17.3 Washington................................ 1,574 496 2 558 232 282 2 67.1 14.7 West Virginia............................. 1,107 268 1 432 158 197 50 63.4 14.3 Wisconsin................................. 1,830 756 8 753 102 114 95 82.9 5.6 Wyoming................................... 157 43 (<SUP>1) 60 27 24 1 65.5 17.1 Puerto Rico............................... 233 39 (<SUP>1) 14 180 0 0 22.8 77.2 Virgin Islands............................ 8 2 (<SUP>1) 1 2 2 (<SUP>1) 45.0 26.1 ------------------------------------------------------------------------------------------------------------- United States......................... 108,029 33,576 644 41,639 17,121 13,583 1,242 70.2 15.8 All jurisdictions..................... 108,270 33,618 644 41,654 17,302 13,585 1,243 70.1 10.0 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Denotes expenditures of less than $500,000. \2\ As percentage of total spending. Note.--In millions; total expenditures include unknowns which are not reflected in this table. Source: Health Care Financing Administration, U.S. Department of Health and Human Services. TABLE 16-17.--TOTAL AND PER CAPITA MEDICAID PAYMENTS FOR CATEGORICALLY NEEDY AND MEDICALLY NEEDY, FISCAL YEARS 1975, 1981, 1992, AND 1994 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 1975 1981 1992 1994 Percent change -------------------------------------------------------------------------------------------------------------------------------- 1975-94 Category of needy Total Total Total Total ------------------- amount Percent Per amount Percent Per amount Percent Per amount Percent Per Total Per (millions) of total capita (millions) of total capita (millions) of total capita (millions) of total capita spending capita ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Categorically needy: Receiving cash payments................... $7,188 58.7 $431 $14,534 53.4 $861 $41,742 46.0 $2,238 $49,682 45.9 $2,519 591.2 484.5 Aged................................ 1,341 11.0 555 2,480 9.1 1,270 5,795 6.4 3,778 6,485 6.0 4,273 383.6 669.9 Blind............................... 61 0.5 717 109 0.4 1,527 334 0.4 4,669 373 0.3 5,464 511.5 662.1 Disabled............................ 2,042 16.7 1,094 5,616 20.6 2,490 19,863 21.9 6,097 25,683 23.7 6,549 1,157.7 498.6 AFDC children....................... 1,850 15.1 222 3,002 11.0 361 8,376 9.2 891 9,259 8.6 963 400.5 333.8 Adults in AFDC families............. 1,895 15.5 478 3,328 12.2 769 7,374 8.1 1,682 7,882 7.3 1,712 315.9 258.2 Not receiving cash payments............. 1,753 14.3 1,261 4,736 17.4 2,641 16,064 17.7 4,243 18,173 16.8 4,057 936.7 221.7 Aged................................ 1,275 10.4 2,331 3,143 11.6 5,273 7,085 7.8 11,658 8,068 7.5 12,977 532.8 456.7 Blind............................... 12 0.1 1,094 19 0.1 2,785 80 0.1 15,310 87 0.1 18,377 625.0 1,579.8 Disabled............................ 353 2.9 1,854 1,214 4.5 5,146 5,065 5.6 11,913 5,236 4.8 11,044 1,383.3 495.7 AFDC children....................... 61 0.5 152 153 0.6 302 1,764 1.9 1,156 2,440 2.3 1,177 3,900.0 674.3 Adults in AFDC families............. 27 0.2 144 87 0.3 298 1,428 1.6 1,606 1,566 1.4 1,637 5,700.0 1,036.8 Other............................... 25 0.2 463 120 0.4 734 643 0.7 1,927 778 0.7 2,232 3,012.0 382.1 --------------------------------------------------------------------------------------------------------------------------------------------------- Total............................. 8,941 73.0 495 19,270 70.8 1,032 57,807 63.7 2,577 67,855 62.7 2,803 658.9 466.3 =================================================================================================================================================== Medically needy: Aged.................................... 1,742 14.2 2,672 4,303 15.8 5,260 8,927 9.8 11,724 9,383 8.7 11,833 438.6 342.9 Blind................................... 20 0.2 1,472 27 0.1 3,132 71 0.1 21,865 69 0.1 18,463 245.0 1,154.3 Disabled................................ 657 5.4 2,202 2,471 9.1 4,924 5,243 5.8 13,876 5,838 5.4 13,064 788.6 493.3 AFDC children........................... 274 2.2 324 353 1.3 460 1,592 1.8 943 1,839 1.7 1,004 571.2 209.9 Adults in AFDC families................. 140 1.1 368 348 1.3 613 1,265 1.4 1,930 1,497 1.4 1,980 969.3 438.0 Other................................... 467 3.8 267 433 1.6 360 268 0.3 1,844 277 0.3 2,135 -40.7 699.6 --------------------------------------------------------------------------------------------------------------------------------------------------- Total................................. 3,301 27.0 838 7,935 29.2 2,145 17,367 19.1 4,782 18,903 17.5 4,771 472.6 469.3 =================================================================================================================================================== Grand total........................... 12,242 100.0 556 27,205 100.0 1,216 90,814 100.0 2,936 108,270 100.0 3,089 784.4 455.6 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Note.--Totals may not addd due to rounding. Fiscal year 1975 ends in June; fiscal years 1981 and 1988 end in September. Total includes other coverage groups and unknowns. Other categories not shown in the total for 1994 are: Other coverage pre-1988, $13,582; coverage from 1988, $7,705; and medical assistance status unknown, $225. Source: Health Care Financing Administration, U.S. Department of Health and Human Services. TABLE 16-18.--MEDICAID RECIPIENTS AND PAYMENTS BY BASIS OF ELIGIBILITY, FISCAL YEAR 1994 ---------------------------------------------------------------------------------------------------------------- Amount Percent Recipients Percent Per Basis of eligibility (in of (in of capita millions) total thousands) total payments ---------------------------------------------------------------------------------------------------------------- Aged........................................................ $33,618 31.0 4,035 11.5 $8,330.8 Blind....................................................... 644 0.6 87 0.2 7,412.0 Disabled.................................................... 41,654 38.5 5,372 15.3 7,754.6 AFDC child.................................................. 17,302 16.0 17,194 49.1 1,006.3 AFDC adult.................................................. 13,585 12.5 7,586 21.6 1,790.8 Other....................................................... 1,243 1.1 573 1.6 2,168.8 --------------------------------------------------- Total................................................. 108,270 100.0 35,053 100.0 3,088.8 ---------------------------------------------------------------------------------------------------------------- Note.--Recipients and payments total include unknowns which are not shown in this table. Source: Health Care Financing Administration, U.S. Department of Health and Human Services. TABLE 16-19.--MEDICAID PAYMENTS AND PER CAPITA PAYMENTS BY BASIS OF ELIGIBILITY, SELECTED FISCAL YEARS 1975-94 [In millions of dollars] -------------------------------------------------------------------------------------------------------------------------------------------------------- Fiscal year Percent Basis of eligibility ------------------------------------------------------------------------------------------------------------- change 1975 1981 1984 1985 1986 1987 1988 1989 1990 1991 1992 1994 1975-94 -------------------------------------------------------------------------------------------------------------------------------------------------------- [In nominal dollars] Payments: Age 65 and over................ 4,358 9,926 12,815 14,096 15,097 16,037 17,135 18,558 21,508 25,453 29,078 33,618 671.4 Blind.......................... 93 154 219 249 277 309 344 409 434 475 530 644 593.0 Disabled....................... 3,052 9,301 11,758 13,203 14,635 16,507 18,250 20,476 23,969 27,798 33,326 41,654 1,264.7 Dependent children under age 21 2,186 3,508 3,979 4,414 5,135 5,508 5,848 6,892 9,100 11,690 14,491 17,302 691.5 Adults in families with dependent children............ 2,062 3,763 4,420 4,746 4,880 5,592 5,883 6,897 8,590 10,439 12,185 13,585 558.9 Other.......................... 492 552 700 798 980 1,078 1,198 1,137 1,051 973 1,032 1,243 152.7 ---------------------------------------------------------------------------------------------------------------------- Total \1\.................... 12,242 27,204 33,891 37,508 41,005 45,050 48,710 54,500 64,859 77,048 90,814 108,270 784.4 ====================================================================================================================== Per capita payment: Age 65 and over................ 1,205 2,948 3,957 4,605 4,808 4,975 5,425 5,926 6,717 7,577 7,770 8,331 591.1 Blind.......................... 850 1,784 2,766 3,104 3,401 3,644 4,005 4,319 5,212 5,572 6,298 7,412 772.1 Disabled....................... 1,296 3,108 4,149 4,496 4,721 5,008 5,366 5,858 6,595 6,979 7,612 7,755 498.3 Dependent children under age 21 228 366 411 452 512 542 583 668 811 871 959 1,006 341.8 Adults in families with dependent children............ 455 725 789 860 864 999 1,069 1,206 1,429 1,540 1,752 1,791 293.4 Other.......................... 273 405 590 658 719 761 891 967 1,062 1,732 1,814 2,169 694.0 ---------------------------------------------------------------------------------------------------------------------- Total, per capita payment.... 556 1,238 1,569 1,719 1,821 1,949 2,126 2,318 2,568 2,725 2,936 3,089 455.2 ====================================================================================================================== [In constant 1994 dollars] Payments: Age 65 and over................ 12,135 16,445 18,348 ....... 20,348 ....... 21,563 22,294 24,609 27,725 30,747 33,618 177.0 Blind.......................... 259 255 314 ....... 373 ....... 433 491 497 517 560 644 148.7 Disabled....................... 8,499 15,410 16,835 ....... 19,725 ....... 22,967 24,598 27,425 30,279 35,238 41,654 390.1 Dependent children under age 21 6,087 5,812 5,697 ....... 6,921 ....... 7,359 8,279 10,412 12,733 15,323 17,302 184.2 Adults in families with dependent children............ 5,742 6,234 6,323 ....... 6,577 ....... 7,403 8,285 9,829 11,371 12,884 13,585 136.6 Other.......................... 1,370 915 1,002 ....... 1,321 ....... 1,508 1,366 1,203 1,360 1,091 1,243 9.3 ---------------------------------------------------------------------------------------------------------------------- Total \1\.................... 34,089 45,070 48,524 ....... 55,267 ....... 61,299 65,470 74,212 83,325 96,025 108,270 217.6 ====================================================================================================================== Per capita payment: Age 65 and over................ 3,355 4,884 5,666 ....... 5,480 ....... 6,827 7,119 7,686 8,253 8,216 8,331 138.3 Blind.......................... 2,367 2,956 3,960 ....... 4,584 ....... 5,040 5,183 5,964 6,069 6,659 7,412 213.2 Disabled....................... 3,609 5,249 5,940 ....... 6,363 ....... 6,753 7,037 7,546 7,602 8,049 7,755 114.9 Dependent children under age 21 635 606 588 ....... 690 ....... 734 802 928 949 1,014 1,006 58.5 Adults in families with dependent children............ 1,267 1,201 1,130 ....... 1,164 ....... 1,345 1,449 1,635 1,677 1,853 1,791 41.4 Other.......................... 760 671 845 ....... 969 ....... 1,021 1,162 1,215 1,887 1,918 2,169 185.3 ---------------------------------------------------------------------------------------------------------------------- Total, per capita payment.... 1,548 2,051 2,246 ....... 2,454 ....... 2,675 2,785 2,938 2,968 3,104 3,089 99.5 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Data includes unknowns. Note.--Total may not add due to rounding. Fiscal year 1975 ends in June; all other fiscal years end in September. Nominal dollars converted of constant dollars using CPI-U price index. Total expenditures includes other coverage groups and unknowns for fiscal year 1994. Source: Health Care Financing Administration, U.S. Department of Health and Human Services, and Congressional Research Service. TABLE 16-20.--MEDICAID PAYMENTS BY SERVICE CATEGORY, FISCAL YEARS 1975, 1981, 1990, AND 1994 [In millions of constant 1994 dollars] -------------------------------------------------------------------------------------------------------------------------------------------------------- 1975 1981 1990 1994 Average -------------------------------------------------------------------------------- annual Service category percent Amount Percent Amount Percent Amount Percent Amount Percent change 1975- of total 92 -------------------------------------------------------------------------------------------------------------------------------------------------------- Inpatient hospital........................................ $9,396 30.9 $11,693 29.7 $18,388 28.4 $28,237 26.1 5.6 General................................................. 8,389 27.6 10,423 26.4 16,674 25.7 26,180 24.2 5.8 Mental.................................................. 1,007 3.3 1,271 3.2 1,714 2.6 2,057 1.9 4.2 Skilled nursing facilities................................ \1\ 6,05 2 19.9 5,846 14.8 8,026 12.4 27,095 25.0 7.8 Intermediate care facilities.............................. 5,632 18.5 10,870 27.6 17,021 26.2 8,347 7.7 (\1\) Intermediate care facilities for the mentally retarded.. 945 3.1 4,341 11.0 7,354 11.3 2.0 Other................................................... 4,687 15.4 6,530 16.6 9,667 14.9 7,189 6.6 3.7 Physician................................................. 3,046 10.0 3,044 7.7 4,018 6.2 969 0.9 -0.4 Dental.................................................... 843 2.8 787 2.0 593 0.9 1,040 1.0 2.7 Other practitioner........................................ 316 1.0 330 0.8 372 0.6 6,342 5.9 10.3 Outpatient hospital....................................... 927 3.0 2,041 5.2 3,324 5.1 3,747 3.5 6.0 Clinic.................................................... 967 3.2 540 1.4 1,688 2.6 1,176 1.1 6.8 Lab and x ray............................................. 313 1.0 213 0.5 721 1.1 7,042 6.5 21.1 Home health............................................... 174 0.6 620 1.6 3,404 5.2 8,875 8.2 6.9 Prescribed drugs.......................................... 2,026 6.7 2,224 5.6 4,420 6.8 516 0.5 6.2 Family planning........................................... 167 0.5 201 0.5 265 0.4 980 0.9 (\1\) Early and periodic screening.............................. (\2\) (\2\) 97 0.2 198 0.3 188 0.2 (\1\) Rural health clinic....................................... (\2\) (\2\) 6 0.0 34 0.1 Other..................................................... 579 1.9 897 2.3 2,385 3.7 6,522 6.0 10.8 --------------------------------------------------------------------------------------------- Total................................................. 30,440 100.0 39,414 100.0 64,859 100 108,270 100.0 6.1 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Prior to fiscal year 1991, there were two categories of Medicaid nursing home care: skilled nursing facilities and intermediate nursing facilities. \2\ 1975 data not available. Note.--Totals may not add due to rounding. Fiscal year 1975 ends in June; all other fiscal years end in September. Spending amounts converted to constant dollars using the Consumer Price Index (CPI-U). Data exclude unknowns. Source: Health Care Financing Administration, U.S. Department of Health and Human Services. TABLE 16-21.--MEDICAID RECIPIENTS BY SERVICE CATEGORY, SELECTED FISCAL YEARS 1975-94 [In thousands] -------------------------------------------------------------------------------------------------------------------------------------------------------- Fiscal year Service category ------------------------------------------------------------------------------------------ 1975 1981 1989 1990 1991 1992 1994 -------------------------------------------------------------------------------------------------------------------------------------------------------- Inpatient hospital: General.................................................. 3,432 3,703 4,171 4,593 5,137 5,768 5,866 Mental................................................... 67 90 90 92 5,072 77 85 Nursing facilities \1\....................................... 1,312 1,385 1,452 1,461 1,499 1,573 1,639 Intermediate care facilities for the mentally retarded....... 69 151 148 147 146 151 159 Physician.................................................... 15,198 14,403 15,686 17,078 19,321 21,627 24,267 Dental....................................................... 3,944 5,173 4,214 4,552 5,209 5,700 6,352 Other practitioner........................................... 2,673 3,582 3,555 3,873 4,282 4,711 5,409 Outpatient hospital.......................................... 7,437 10,018 11,344 12,370 14,137 15,120 16,567 Clinic....................................................... 1,086 1,755 2,391 2,804 3,511 4,115 5,258 Laboratory & x ray........................................... 4,738 3,822 7,759 8,959 10,505 11,804 13,412 Home health.................................................. 343 402 609 719 813 925 1,293 Prescribed drugs............................................. 14,155 14,256 15,916 17,294 19,602 22,030 24,471 Family planning.............................................. 1,217 1,473 1,564 1,752 2,185 2,550 2,566 Early and periodic screening................................. <SUP>(2) 1,969 2,524 2,952 3,957 4,982 6,456 Rural health clinics......................................... <SUP>(2) 81 166 224 405 743 945 Other........................................................ 2,911 2,344 4,583 5,126 5,957 6,702 9,908 ------------------------------------------------------------------------------------------ Unduplicated total..................................... 22,007 21,980 23,511 25,255 28,280 30,926 35,053 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Prior to fiscal year 1991, there were two categories of Medicaid nursing home care: skilled nursing facilities and intermediate nursing facilities. \2\ 1975 data not available. Source: Health Care Financing Administration, U.S. Department of Health and Human Services. TABLE 16-22.--MEDICAL VENDOR PAYMENTS BY BASIS OF ELIGIBILITY AND TYPE OF SERVICE, FISCAL YEAR 1994 ---------------------------------------------------------------------------------------------------------------- AFDC Type of service Aged Blind Disabled ------------------------ Other Total Children Adults ---------------------------------------------------------------------------------------------------------------- (6) [In millions of dollars] Inpatient hospital services. 1,963.7 88.0 10,862.6 6,902.5 5,768.0 494.3 26,079.1 Mental hospital services for the aged................... 782.1 0.5 41.0 6.8 2.3 9.3 842.0 SNF/ICF mental health services for the aged...... 54.9 0.0 4.2 0.0 0.0 0.0 59.1 Inpatient psychiatric services, aged under 21.... 0.5 0.3 428.8 544.5 12.2 165.4 1,151.7 ICF services for the mentally retarded.......... 584.9 103.0 7,598.1 45.5 1.9 3.8 8,337.2 Nursing facilities services. 22,660.3 190.5 4,172.0 24.1 24.3 8.1 27,079.3 Physicians services......... 543.9 27.2 1,911.7 2,270.7 2,290.2 124.0 7,167.7 Dental services............. 55.8 1.5 158.2 516.9 212.3 22.6 967.2 Other practitioners services 84.9 2.9 437.8 311.7 153.1 48.7 1,039.1 Outpatient hospital services 454.0 22.9 2,165.2 1,925.1 1,673.8 89.7 6,330.6 Clinic services............. 218.0 24.5 2,075.8 811.6 545.3 65.4 3,740.6 Home health services........ 2,663.0 69.2 4,005.9 203.5 73.6 24.4 7,039.7 Family planning services.... 1.2 0.5 34.7 53.0 417.9 7.3 514.6 Lab and x-ray services...... 66.0 4.0 364.7 249.6 475.3 13.5 1,173.1 Prescribed drugs............ 2,650.6 62.5 4,084.1 1,063.1 960.9 46.7 8,867.9 Early and periodic screening 0.2 1.7 148.8 768.0 28.2 25.7 972.6 Rural health clinic services 6.9 0.3 32.0 100.2 46.3 2.4 188.1 Other care.................. 823.0 44.3 3,129.4 1,505.1 898.8 91.2 6,491.8 Unknown/error............... 0.6 0.0 2.6 0.6 0.1 0.0 3.8 ----------------------------------------------------------------------------------- Total................. 33,617.8 643.7 41,654.1 17,302.5 13,584.7 1,242.5 108,045.2 (6) [In percent] Inpatient hospital services. 5.8 13.7 26.1 39.9 42.5 39.8 24.1 Mental hospital services for the aged................... 2.3 0.1 0.1 0.0 0.0 0.7 0.8 SNF/ICF mental health services for the aged...... 0.2 0.0 0.0 0.0 0.0 0.0 0.1 Inpatient psychiatric services, aged under 21.... 0.0 0.0 1.0 3.1 0.1 13.3 1.1 ICF services for the mentally retarded.......... 1.7 16.0 18.2 0.3 0.0 0.3 7.7 Nursing facilities services. 67.4 29.6 10.0 0.1 0.2 0.7 25.1 Physicians services......... 1.6 4.2 4.6 13.1 16.9 10.0 6.6 Dental services............. 0.2 0.2 0.4 3.0 1.6 1.8 0.9 Other practitioners services 0.3 0.5 1.1 1.8 1.1 3.9 1.0 Outpatient hospital services 1.4 3.6 5.2 11.1 12.3 7.2 5.9 Clinic services............. 0.6 3.8 5.0 4.7 4.0 5.3 3.5 Home health services........ 7.9 10.8 9.6 1.2 0.5 2.0 6.5 Family planning services.... 0.0 0.1 0.1 0.3 3.1 0.6 0.5 Lab and x-ray services...... 0.2 0.6 0.9 1.4 3.5 1.1 1.1 Prescribed drugs............ 7.9 9.7 9.8 6.1 7.1 3.8 8.2 Early and periodic screening 0.0 0.3 0.4 4.4 0.2 2.1 0.9 Rural health clinic services 0.0 0.1 0.1 0.6 0.3 0.2 0.2 Other care.................. 2.4 6.9 7.5 8.7 6.6 7.3 6.0 Unknown/error............... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ----------------------------------------------------------------------------------- Total................. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 ---------------------------------------------------------------------------------------------------------------- Source: Health Care Financing Administration, U.S. Department of Health and Human Services. TABLE 16-23.--AVERAGE EXPENDITURE PER RECIPIENT BY BASIS OF ELIGIBILITY BY STATE, FISCAL YEAR 1994 ---------------------------------------------------------------------------------------------------------------- AFDC State Total Aged Blind Disabled -------------------- Other Children Adults ---------------------------------------------------------------------------------------------------------------- Alabama................................... $2,414 $5,747 $3,331 $4,241 $783 $1,766 $1,854 Alaska.................................... 3,531 9,443 6,161 11,360 1,970 2,902 0 Arizona................................... 390 469 877 1,076 236 436 0 Arkansas.................................. 3,687 6,737 5,918 7,192 1,083 1,314 3,198 California................................ 1,995 5,048 4,343 5,211 650 1,453 2,180 Colorado.................................. 3,288 8,186 26,386 8,713 973 2,072 4,819 Connecticut............................... 5,482 14,250 13,983 14,936 1,285 1,985 783 Delaware.................................. 3,699 12,330 7,157 11,591 1,008 1,950 2,972 District of Columbia...................... 4,326 15,573 8,337 11,940 1,398 1,805 1,893 Florida................................... 2,470 6,481 4,491 5,995 1,061 1,407 1,313 Georgia................................... 2,623 5,534 9,315 5,771 1,062 2,436 2,229 Hawaii.................................... 2,798 8,920 10,458 6,834 836 1,854 0 Idaho..................................... 3,010 9,216 8,021 8,924 878 1,860 1,785 Illinois.................................. 3,349 8,034 7,454 9,162 1,121 1,869 3,764 Indiana................................... 3,721 11,061 6,820 12,118 1,193 1,957 0 Iowa...................................... 3,244 7,059 4,248 8,959 1,177 1,640 1,274 Kansas.................................... 3,105 9,023 4,736 8,776 1,028 1,684 1,577 Kentucky.................................. 2,790 6,894 4,228 5,414 1,021 1,974 0 Louisiana................................. 3,449 6,553 6,438 7,674 1,380 2,371 0 Maine..................................... 4,558 12,287 5,472 9,562 1,313 2,126 4,127 Maryland.................................. 4,517 10,198 7,549 10,426 1,513 2,307 7,835 Massachusetts............................. 4,296 12,776 10,470 7,620 1,152 1,590 0 Michigan.................................. 2,759 8,670 5,396 7,382 879 1,494 2,752 Minnesota................................. 4,657 14,047 11,873 12,111 906 1,358 682 Mississippi............................... 2,030 4,575 3,335 3,844 793 1,583 2,952 Missouri.................................. 2,705 6,603 4,488 7,138 1,011 1,457 0 Montana................................... 3,148 10,793 4,917 7,614 1,031 1,591 1,174 Nebraska.................................. 3,604 9,462 7,993 9,288 1,162 1,788 2,521 Nevada.................................... 3,213 6,685 6,387 8,592 1,113 1,984 8,330 New Hampshire............................. 4,545 14,074 18,831 12,285 1,019 1,466 462 New Jersey................................ 4,573 12,791 7,879 11,820 1,009 2,555 3,285 New Mexico................................ 2,380 6,574 7,872 6,815 1,071 1,655 0 New York.................................. 6,441 18,774 25,838 15,910 1,828 2,687 1,794 North Carolina............................ 2,725 6,036 11,191 7,569 1,134 1,785 0 North Dakota.............................. 4,522 10,222 7,535 13,709 1,144 1,673 1,317 Ohio...................................... 3,279 9,813 4,595 8,538 1,023 1,704 311 Oklahoma.................................. 2,494 5,770 3,065 6,384 1,114 1,291 799 Oregon.................................... 2,519 7,035 18,731 8,536 1,358 1,474 0 Pennsylvania.............................. 3,365 11,670 3,582 6,204 919 1,469 1,407 Rhode Island.............................. 5,968 10,987 138,766 12,030 1,972 2,325 8,180 South Carolina............................ 2,871 4,990 4,025 6,609 1,108 1,993 867 South Dakota.............................. 3,936 10,243 5,747 9,972 1,141 1,615 0 Tennessee................................. 2,093 5,087 2,887 3,855 814 1,395 4,116 Texas..................................... 2,443 5,305 5,364 7,332 1,085 2,092 0 Utah...................................... 2,871 8,819 4,857 9,752 1,101 2,228 0 Vermont................................... 2,756 7,786 7,442 8,172 845 1,377 2,383 Virginia.................................. 2,680 6,454 5,518 6,720 893 1,783 0 Washington................................ 2,355 9,280 4,564 5,544 705 1,595 332 West Virginia............................. 3,018 7,742 4,633 6,424 982 1,973 13,037 Wisconsin................................. 3,863 11,120 6,810 7,304 724 1,351 1,293 Wyoming................................... 3,111 9,308 1,104 10,976 1,030 2,231 2,021 Puerto Rico............................... 251 244 211 247 254 0 0 Virgin Islands............................ 478 1,938 135 1,105 225 475 263 --------------------------------------------------------------------- United States......................... $3,167 $8,666 $7,447 $7,836 $1,039 $1,792 $2,171 All jurisdictions..................... 3,089 8,331 7,412 7,755 1,006 1,791 2,169 ---------------------------------------------------------------------------------------------------------------- Source: Health Care Financing Administration, U.S. Department of Health and Human Services. TABLE 16-24.--OPTIONAL MEDICAID SERVICES AND NUMBER OF STATES \1\ OFFERING EACH SERVICE, OCTOBER 1995 ------------------------------------------------------------------------ States States offering Access to offering services to include Service services to both Medicaid categorically categorically services needy only and medically to the needy uninsured ------------------------------------------------------------------------ Podiatrists' services......... 11 29 6 Optometrists' services........ 14 30 6 Chiropractors' services....... 5 21 2 Psychologists' services....... 6 18 3 Medical social workers' services..................... 1 5 1 Nurse anesthetists' services.. 8 13 2 Private duty nursing.......... 7 18 3 Clinic services............... 15 35 5 Dental services............... 12 31 6 Physical therapy.............. 11 29 4 Occupational therapy.......... 7 24 4 Speech, hearing and language disorder..................... 11 26 4 Prescribed drugs.............. 16 34 6 Dentures...................... 8 26 5 Prosthetic devices............ 15 32 6 Eyeglasses.................... 13 30 .......... Diagnostic services........... 8 23 4 Screening services............ 7 23 3 Preventive services........... 7 21 4 Rehabilitative services....... 15 31 6 Services for age 65 and older in mental institutions: A. Inpatient hospital services................. 13 22 5 B. SNF services........... 10 17 4 C. ICF/MR services........ 22 23 6 Inpatient psychiatric services 11 24 6 Christian science nurses...... 1 2 1 Christian science sanitoria... 2 8 3 SNF for under age 21.......... 14 27 6 Emergency hospital services... 13 24 5 Personal care services........ 9 19 3 Transportation services....... 14 34 6 Case management services...... 16 26 5 Hospice services.............. 11 23 4 Respiratory care services..... 2 10 4 TB related services........... 2 6 2 ------------------------------------------------------------------------ \1\ Includes the territories. Source: Health Care Financing Administration, U.S. Department of Health and Human Services. FEDERAL HOUSING ASSISTANCE \9\ --------------------------------------------------------------------------- \9\ This discussion draws directly from Congressional Budget Office (1988). For this report, CBO has updated all figures with 7 additional years of data. For a more recent study on these topics, see Congressional Budget Office (1994). --------------------------------------------------------------------------- A number of Federal programs administered by the Department of Housing and Urban Development (HUD) and the Farmers Home Administration (FmHA) address the housing needs of lower income households. Housing assistance has never been provided as an entitlement to all households that qualify for aid. Instead, each year the Congress has appropriated funds for a number of new commitments. Because these commitments generally run from 2 to 50 years, the appropriation is actually spent gradually over many years. These additional commitments have expanded the pool of available aid, thus increasing the total number of households that can be served. They have also contributed to growth in Federal outlays in the past and have committed the Government to continuing expenditures for many years to come. This section describes recent trends in the number and mix of new commitments, as well as trends in expenditures. Types of Assistance The Federal Government has traditionally provided housing aid directly to lower income households in the form of rental subsidies and mortgage-interest subsidies. The 1990 Cranston- Gonzalez National Affordable Housing Act (hereafter referred to as the 1990 Housing Act), authorized a new, indirect approach in the form of housing block grants to State and local governments, which may use these funds for various housing assistance activities specified in the law. Both the number of households receiving aid and total Federal expenditures have steadily increased each year, but the growth in assisted households has slowed since the 1980s. A number of different housing assistance programs evolved over time in response to changing housing policy objectives. The primary purpose of housing assistance has always been to improve housing quality and to reduce housing costs for lower income households. Other goals have included promoting residential construction, expanding housing opportunities for disadvantaged groups and groups with special housing needs, promoting neighborhood preservation and revitalization, increasing home ownership, and, most recently, empowering the poor to become self-sufficient. New housing programs have been developed because of shifting priorities among these objectives as housing-related problems changed and because of the relatively high Federal costs associated with some approaches. Other programs have become inactive as Congress stopped appropriating funds for new assistance commitments through them. Because housing programs traditionally have involved multiyear contractual obligations,however, these so-called inactive programs continue to play an important role by serving a large number of households through commitments for which funds were appropriated some time ago. Traditional rental assistance Most Federal housing aid is now targeted to very-low-income renters through the rental assistance programs administered by HUD and the FmHA (Congressional Research Service, 1991; 1993). Rental assistance is provided through two basic approaches: (1) project-based aid, which is typically tied to projects specifically produced for lower income households through new construction or substantial rehabilitation; and (2) household- based subsidies, which permit renters to choose standard housing units in the existing private housing stock. Some funding is also provided each year to modernize units built with Federal aid. Rental assistance programs generally reduce tenants' rent payments to a fixed percentage--currently 30 percent--of their income after certain deductions, with the Government paying the remaining portion of the rent. Almost all project-based aid is provided through production-oriented programs, which include the Public Housing Program, the section 8 New Construction and Substantial Rehabilitation Program, and the section 236 Mortgage-Interest- Subsidy Program--all administered by HUD--and the section 515 Mortgage-Interest-Subsidy Program administered by the FmHA. \10\ New commitments are being funded through three of the four--the Public Housing Program, a modified version of the section 8 New Construction Program for elderly and disabled families only, and the section 515 program. Some assistance has also been funded annually under two small HUD programs authorized in 1983--the rental housing development grants (HoDAG) and the Rental Rehabilitation Block Grant Programs. \11\ These programs distributed funds through a national competition and by formula, respectively, to units of local government that meet eligibility criteria established by statute. --------------------------------------------------------------------------- \10\ A small number of renters continue to receive project-based subsidies through the now inactive section 221(d)(3) below-market interest rate and rent supplement programs. \11\ The Housing and Community Development Act of 1987 terminated the HoDAG Program at the end of fiscal year 1989; the 1990 Housing Act repealed the Rental Rehabilitation Block Grant Program at the end of fiscal year 1991. --------------------------------------------------------------------------- Some project-based aid is also provided through several components of HUD's section 8 Existing-Housing Program, which tie subsidies to specific units in the existing-housing stock, many of which have received other forms of aid or mortgage insurance through HUD. These components, all of which are currently active, include the section 8 loan management set- aside (LMSA) and property disposition (PD) components, which are designed to improve cash flows in selected financially troubled projects that are or were insured by the Federal Housing Administration (FHA); the section 8 conversion assistance component, which subsidizes units that were previously aided through other programs; and the section 8 Moderate Rehabilitation Program, which provides subsidies tied to units that are brought up to standard by the owner. \12\ --------------------------------------------------------------------------- \12\ The 1990 Housing Act repealed the section 8 Moderate Rehabilitation Program at the end of fiscal year 1991, except for single-room occupancy units for the homeless. --------------------------------------------------------------------------- Household-based subsidies are provided through two other components of the section 8 Existing-Housing Program--section 8 rental certificates and vouchers. These programs, both of which are currently active, tie aid to households that choose standard units in the private housing stock. Certificate holders generally must occupy units with rents that are within guidelines--the so-called fair market rents--established by HUD. Voucher recipients, however, are allowed to occupy units with rents above the HUD guidelines provided they pay the difference. Traditional homeowners' assistance Each year, the Federal Government also assists some low- and moderate-income households in becoming homeowners by making long-term commitments to reduce their mortgage interest. \13\ Most of this aid has been provided through the section 502 program administered by the FmHA. This program supplies direct mortgage loans at low interest rates roughly equal to the long- term government borrowing rates or provides guarantees for private loans with interest rates that may not exceed those set by the Department of Veterans Affairs. Many homebuyers, however, receive much deeper subsidies through the interest- credit component of this program, which reduces their effective interest rate to as low as 1 percent. --------------------------------------------------------------------------- \13\ In addition, a small number of very-low-income homeowners receive grants or loans each year from the FmHA for housing repairs. --------------------------------------------------------------------------- A number of home buyers have received aid through the section 235 program administered by HUD. This program provides interest subsidies for mortgages financed by private lenders. New commitments are now being made only through the section 502 program, but a small number of homeowners continue to receive aid from prior commitments made under the section 235 program. \14\ Both programs generally reduce mortgage payments, property taxes, and insurance costs to a fixed percentage of income, ranging from 20 percent for the FmHA Program to 28 percent for the latest commitments made under the HUD Program. Households with relatively low incomes generally would have to pay larger shares, however, since mortgage payments must cover a minimum interest rate--currently 1 percent and 4 percent for the FmHA and HUD Programs, respectively. Starting in 1991, however, the FmHA has allowed some very-low-income households to defer up to 25 percent of their monthly payments, subject to later repayment. --------------------------------------------------------------------------- \14\ The Housing and Community Development Act of 1987 terminated the section 235 program at the end of fiscal year 1989. --------------------------------------------------------------------------- New directions in housing assistance The 1990 Housing Act authorized several new housing assistance approaches. The major initiatives of the 1990 act are: the HOME Investment Partnerships Block Grant Program, the Home Ownership and Opportunity for People Everywhere (HOPE) Program, and the National Home Ownership Trust Demonstration. For 1996, funds were appropriated only for the HOME Program. The HOME Program is designed to increase the supply of housing affordable to low-income families through the provision of Federal grants to State and local governments. Funds may be used for tenant-based rental assistance or for acquisition, rehabilitation or, in limited circumstances, construction of both rental and ownership housing. Currently, participating jurisdictions must provide matching contributions of at least 25 percent of HOME funds spent in each fiscal year. Trends in Commitments and Payments Trends in commitments Although the Federal Government has been subsidizing the shelter costs of low-income households since 1937, more than half of all currently outstanding commitments were funded over the past 20 years. Between 1977 and 1996, about 2.8 million net new commitments were funded to aid low-income renters. Another 1.1 million new commitments were provided in the form of mortgage assistance to low- and moderate-income homebuyers. Between 1977 and 1983, the number of net new rental commitments funded each year declined steadily, however, from 375,000 to 78,000. Trends have been somewhat erratic since 1983. Over the 20-year period, commitments for new homebuyers generally decreased, ranging from a high of 140,000 in 1980 to a low of less than 24,000 in 1991 (see table 16-25). The production-oriented approach in rental programs has been sharply curtailed since 1982 in favor of the less costly section 8 Existing-Housing and Voucher Programs. Between 1977 and 1982, commitments through programs for new construction and substantial rehabilitation ranged annually from 53 to 73 percent of the total; since then, however, they have ranged between 28 percent and 40 percent of all additional rental commitments. The total number of households receiving assistance has increased substantially, from 3.2 million at the beginning of fiscal year 1977 to over 5.7 million at the beginning of fiscal year 1996--an increase of more than 80 percent (see table 16- 26). This increase results largely from net new commitments over the past 20 years, but also from commitments made before 1977 that have been processed during this period. The number of households receiving rental subsidies increased from 2.1 to 5.1 million. The number of homeowners receiving assistance in a given year rose from less than 1.1 million in 1977 to over 1.2 million in 1983, but then declined steadily to less than 0.7 million by 1996. The latter pattern reflects commitments for newly assisted households being more than offset by loan repayments, prepayments, and foreclosures among previously assisted households, and by sales of 141,000 loans by the FmHA to investors. (Although these 141,000 families continued to benefit from these loans, even after the transfer to the private sector, data are not readily available on the attrition of these loans between 1988 and 1994). Thus, the proportion of all assisted households that receives homeownership assistance has declined from 34 percent at the beginning of 1977 to less than 12 percent at the beginning of 1996. Among rental assistance programs, the shift away from production-oriented programs toward existing housing is reflected in the increasing proportion of renters receiving aid through the latter approach, from 13 percent at the beginning of fiscal year 1977 to about 40 percent at the beginning of 1996, with the proportion of renters receiving household-based subsidies increasing from 8 to 28 percent. TABLE 16-25.--NET NEW COMMITMENTS FOR RENTERS AND NEW COMMITMENTS FOR HOMEBUYERS, 1977-96 ---------------------------------------------------------------------------------------------------------------- Net new commitments for renters New ---------------------------------------- commitments Fiscal year Existing New for housing construction Total homebuyers ---------------------------------------------------------------------------------------------------------------- 1977....................................................... 127,581 247,667 375,248 112,234 1978....................................................... 126,472 214,503 340,975 112,214 1979....................................................... 102,669 231,156 333,825 107,871 1980....................................................... 58,402 155,001 213,403 140,564 1981....................................................... 83,520 94,914 178,434 74,636 1982....................................................... 37,818 48,157 85,975 66,711 1983....................................................... 54,071 23,861 77,932 54,550 1984....................................................... 78,648 36,719 115,367 44,409 1985....................................................... 85,741 42,667 128,408 45,387 1986....................................................... 85,476 34,375 119,851 25,479 1987....................................................... 72,788 37,247 110,035 24,132 1988....................................................... 65,295 36,456 101,751 26,200 1989....................................................... 68,858 30,049 98,907 25,264 1990....................................................... 61,309 23,491 84,800 24,968 1991....................................................... 55,900 28,478 84,378 23,879 1992 \1\................................................... 62,595 38,324 100,919 25,690 1993 \1\................................................... 50,593 34,065 84,658 30,982 1994 \1\................................................... 66,907 29,194 96,101 38,588 1995 \1\................................................... 25,822 19,440 45,262 31,985 1996 (estimate) \1\........................................ 8,172 17,731 25,903 42,350 ---------------------------------------------------------------------------------------------------------------- \1\ Figures are not adjusted for units for which funds were deobligated because data were unavailable. Note.--Net new commitments for renters represent net additions to the available pool of rental aid and are defined as the total number of commitments for which new funds are appropriated in any year. To avoid double- counting, these numbers are adjusted for the number of commitments for which such funds are deobligated or canceled that year (except where noted otherwise); the number of commitments for units converted from one type of assistance to another; in the FmHA section 515 program, the number of units that receive more than one subsidy; starting in 1985, the number of commitments specifically designed to replace those lost because private owners of assisted housing opt out of the programs or because public housing units are demolished; and, starting in 1989, the number of commitments for units whose section 8 contracts expire. New commitments for homebuyers are defined as the total number of new loans that the FmHA or HUD makes or subsidizes each year. This measure of program activity is meant to indicate how many new homebuyers can be helped each year and is therefore not adjusted to account for homeowners who leave the programs in any year because of mortgage repayments, prepayments, or foreclosures. Thus, it does not represent net additions to the total number of assisted homeowners and therefore cannot be added to net new commitments for renters. Source: Congressional Budget Office based on data provided by the U.S. Department of Housing and Urban Development and the Farmers Home Administration. Trends in commitments, budget authority, and outlays Funding for most additional commitments for housing assistance is provided each year through appropriations of long-term budget authority for subsidies to households and through appropriations of budget authority for grants, direct loans, and loan guarantees to public housing agencies, homebuyers, and developers of rental housing. TABLE 16-26.--TOTAL HOUSEHOLDS RECEIVING ASSISTANCE BY TYPE OF SUBSIDY, 1977-96 [In thousands] ---------------------------------------------------------------------------------------------------------------- Assisted renters ------------------------------------------------------ Total Existing housing Total assisted assisted Fiscal year ------------------------------ New Total homeowners \1\ homeowners Household Project construction assisted and renters based based Subtotal renters \1\ ---------------------------------------------------------------------------------------------------------------- 1977......................... 162 105 268 1,825 2,092 1,071 3,164 1978......................... 297 126 423 1,977 2,400 1,082 3,482 1979......................... 427 175 602 2,052 2,654 1,095 3,749 1980......................... 521 185 707 2,189 2,895 1,112 4,007 1981......................... 599 221 820 2,379 3,012 1,127 4,139 1982......................... 651 194 844 2,559 3,210 1,201 4,411 1983......................... 691 265 955 2,702 3,443 1,226 4,668 1984......................... 728 357 1,086 2,836 3,700 1,219 4,920 1985......................... 749 431 1,180 2,931 3,887 1,193 5,080 1986......................... 797 456 1,253 2,986 3,998 1,176 5,174 1987......................... 893 473 1,366 3,047 4,175 1,126 5,301 1988......................... 956 490 1,446 3,085 4,296 918 5,213 1989......................... 1,025 509 1,534 3,117 4,402 892 5,295 1990......................... 1,090 527 1,616 3,141 4,515 875 5,390 1991......................... 1,137 540 1,678 3,180 4,613 853 5,465 1992......................... 1,166 554 1,721 3,204 4,680 826 5,506 1993......................... 1,326 574 1,900 3,196 4,851 774 5,625 1994......................... 1,392 593 1,985 3,213 4,962 751 5,714 1995......................... 1,487 595 2,081 3,242 5,087 705 5,792 1996......................... 1,413 608 2,021 3,293 5,079 670 5,748 ---------------------------------------------------------------------------------------------------------------- \1\ Starting 1988, figures reflect a one-time decrease of 141,000 in the number of assisted homeowners because of asset sales by the FmHA to private investors. Note.--Figures for total assisted renters have been adjusted since 1980 to avoid double-counting households receiving more than one subsidy. Data are for beginning of fiscal year. Source: Congressional Budget Office based on data provided by the U.S. Department of Housing and Urban Development and the Farmers Home Administration. Annual appropriations of new budget authority for housing assistance were cut dramatically during the 1980s. These cuts reflect four underlying factors: the previously mentioned reduction in the number of newly assisted households; the shift toward cheaper existing-housing assistance; a systematic reduction in the average term of new commitments from more than 24 years in 1977 to about 8 years in 1994; and changes in the method for financing the construction and modernization of public housing and the construction of housing for the elderly and the disabled. \15\ For HUD's programs alone, appropriations of budget authority declined (in 1996 dollars) from a high of $75.5 billion in 1978 to a low of $11.3 billion in 1989 (see table 16-27). The increased levels of budget authority since 1990 reflect primarily the cost of renewing section 8 contracts that expire. --------------------------------------------------------------------------- \15\ Before 1987, new commitments for the construction and modernization of public housing were financed over periods ranging from 20 to 40 years, with the appropriations for budget authority reflecting both the principal and interest payments for this debt. Starting in 1987, these activities were financed with up front grants, which reduce their budget authority requirements by between 51 percent and 67 percent. Similarly, prior to 1991, housing for the elderly and the disabled was financed by direct Federal loans for construction, coupled with 20 year section 8 rental assistance, which helped repay the direct loan. Starting in 1991, the loans have been replaced by grants, which has reduced the amount of budget authority required for annual rental assistance. TABLE 16-27.--NET BUDGET AUTHORITY APPROPRIATED FOR HOUSING AID ADMINISTERED BY HUD, 1977-96 [In millions of current and 1996 dollars] ------------------------------------------------------------------------ Net budget authority ------------------------------- Fiscal year Current dollars 1996 dollars ------------------------------------------------------------------------ 1977.................................... 28,579 71,377 1978.................................... 32,169 75,466 1979.................................... 25,123 54,121 1980.................................... 27,435 53,183 1981.................................... 26,022 45,841 1982.................................... 14,766 24,307 1983.................................... 10,001 15,764 1984.................................... 11,425 17,278 1985.................................... 11,071 16,147 1986.................................... 10,032 14,277 1987.................................... 8,979 12,421 1988.................................... 8,592 11,415 1989.................................... \1\ 8,879 11,264 1990.................................... \1\ 10,557 12,755 1991.................................... \1\ 19,239 22,128 1992.................................... \1\ 18,855 21,054 1993.................................... \1\ 20,236 21,927 1994.................................... \1\ 19,710 20,811 1995.................................... \1\ 13,240 13,598 1996 (estimate)......................... \1\ 14,926 14,926 ------------------------------------------------------------------------ \1\ Includes $99 million, $1,164 million, $8,814 million, $7,585 million, $6,926 million, $5,202, $2,197 million, and $4,351 million for renewing expiring section 8 contracts in 1989, 1990, 1991, 1992, 1993, 1994, 1995, and 1996 respectively. Note.--All figures are net of funding rescissions, exclude reappropriations of funds, but include supplemental appropriations. Totals include funds appropriated for public housing operating subsidies, and, starting in 1992, for HOME and HOPE grants. Excludes budget authority for HUD's section 202 loan fund and for programs administered by the Farmers Home Administration. Source: Congressional Budget Office based on data provided by the U.S. Department of Housing and Urban Development. On the other hand, with the continuing increase in the number of households served, total outlays (expenditures on behalf of all households actually receiving aid in a given year) for all of HUD's housing assistance programs combined have risen steadily (in 1996 dollars), from $7.3 billion in fiscal year 1977 to an estimated $26 billion in fiscal year 1996, an increase of 256 percent (see table 16-28). Moreover, despite measures to contain costs, and the increase in household contributions from 25 to 30 percent of adjusted income, average Federal outlays per unit for all programs combined have generally continued to rise in real terms, from around $2,900 in 1977 to an estimated $5,480 in 1996--an increase of 89 percent (see table 16-29). \16\ --------------------------------------------------------------------------- \16\ The change in the method for financing the construction and modernization of public housing caused a large one-time expenditure in 1985, when most of the outstanding debt incurred since 1974 for construction and modernization was paid off (see table 16-29). Without that bulge in expenditures, average outlays per unit in 1985 would have been about $3,950 in 1994 dollars. TABLE 16-28.--OUTLAYS FOR HOUSING AID ADMINISTERED BY HUD, 1977-96 [In millions of current and 1996 dollars] ------------------------------------------------------------------------ Outlays ------------------------- Fiscal year Current 1996 dollars dollars ------------------------------------------------------------------------ 1977.......................................... 2,928 7,312 1978.......................................... 3,592 8,427 1979.......................................... 4,189 9,025 1980.......................................... 5,364 10,399 1981.......................................... 6,733 11,861 1982.......................................... 7,846 12,915 1983.......................................... 9,419 14,846 1984.......................................... 11,000 16,635 1985.......................................... 25,064 36,555 1986.......................................... 12,179 17,332 1987.......................................... 12,509 17,304 1988.......................................... 13,684 18,180 1989.......................................... 14,466 18,352 1990.......................................... 15,690 18,958 1991.......................................... 16,897 19,435 1992.......................................... 18,242 20,370 1993.......................................... 20,487 22,198 1994.......................................... 22,183 23,422 1995.......................................... \1\ 24,002 24,651 1996 (estimate)............................... \1\ 25,954 25,954 ------------------------------------------------------------------------ \1\ Figures have been adjusted to account for $1.2 billion of advance spending that occurred in 1995 but that should have occurred in 1996. Note.--The bulge in outlays in 1985 is caused by a change in the method of financing public housing, which generated close to $14 billion in one-time expenditures. This amount paid off--all at once--the capital cost of public housing construction and modernization activities undertaken between 1974 and 1985, which otherwise would have been paid off over periods of up to 40 years. Because of this one-time expenditure, however, outlays for public housing since that time have been lower than they would have been otherwise. Source: Congressional Budget Office based on data provided by the U.S. Department of Housing and Urban Development. Several factors have contributed to this growth. First, rents in assisted housing have probably risen faster than the income of assisted households, causing subsidies to rise faster than the inflation index used here--the revised Consumer Price Index, for all urban consumers (CPI-U-X1). \17\ Second, the number of households that occupy units completed under the section 8 New Construction Program rose during the 1980s. These units require larger subsidies compared with the older units that were built prior to the 1980s under the Mortgage-Interest Subsidy Programs and the Public Housing Program. Third, the share of households receiving less costly home ownership assistance has decreased. Fourth, housing aid is being targeted toward a poorer segment of the population, requiring larger subsidies per assisted household. --------------------------------------------------------------------------- \17\ For example, between 1980 and 1990, the CPI-U-X1 increased 59 percent. Over the same period, median household income of renters and the Consumer Price Index for residential rents increased by 70 and 71 percent, respectively, but the maximum rents allowed for section 8 existing-housing rental certificates--the so-called fair market rents-- rose 85 percent. TABLE 16-29.--PER UNIT OUTLAYS FOR HOUSING AID ADMINISTERED BY HUD, 1977- 96 [In current and 1996 dollars] ------------------------------------------------------------------------ Per unit outlays ------------------------- Fiscal year Current 1996 dollars dollars ------------------------------------------------------------------------ 1977.......................................... 1,160 2,900 1978.......................................... 1,310 3,070 1979.......................................... 1,430 3,070 1980.......................................... 1,750 3,390 1981.......................................... 2,100 3,710 1982.......................................... 2,310 3,800 1983.......................................... 2,600 4,100 1984.......................................... 2,900 4,380 1985.......................................... 6,420 9,360 1986.......................................... 3,040 4,320 1987.......................................... 3,040 4,210 1988.......................................... 3,270 4,340 1989.......................................... 3,390 4,300 1990.......................................... 3,610 4,360 1991.......................................... 3,830 4,410 1992.......................................... 4,060 4,540 1993.......................................... 4,450 4,830 1994.......................................... 4,720 4,980 1995.......................................... 5,070 5,200 1996 (estimate)............................... 5,480 5,480 ------------------------------------------------------------------------ Note.--The peak in outlays per unit in 1985 of $6,420 is attributable to the bulge in 1985 expenditures associated with the change in the method for financing public housing. Without this change, outlays per unit would have amounted to around $2,860. Source: Congressional Budget Office based on data provided by the U.S. Department of Housing and Urban Development. SCHOOL LUNCH AND BREAKFAST PROGRAMS \18\ --------------------------------------------------------------------------- \18\ Other major Federal child nutrition programs include: the Child and Adult Care Food Program (discussed in section 10) and the Summer Food Service Program (which provides subsidies for meals served during the summer months to some 2 million children participating in recreational and other programs in low-income areas). --------------------------------------------------------------------------- The School Lunch and School Breakfast Programs provide Federal cash and commodity support for meals served by public and private nonprofit elementary and secondary schools and residential child care institutions (RCCIs) that opt to enroll and guarantee to offer free or reduced-price meals to eligible low-income children. The programs are ``entitlement'' programs, and both subsidize participating schools and RCCIs for all meals served that meet Federal nutrition standards at specific, inflation-indexed rates for each meal. Each program has a three-tiered system for per-meal Federal reimbursements to schools and RCCIs that: (1) allows children to receive free meals if they have family income below 130 percent of the Federal poverty guidelines (about $16,400 for a three-person family in the 1995-96 school year); (2) permits children to receive reduced-price meals (no more than 40 cents for a lunch or 30 cents for a breakfast) if their family income is between 130 and 185 percent of the poverty guidelines (between about $16,400 and $23,300 for a three-person family in the 1995-96 school year); and (3) provides a small per-meal subsidy for ``full-price'' meals (the price is set by the school or RCCI) served to children whose families do not apply, or whose family income does not qualify them for free or reduced-price meals. Children in AFDC and food stamp households may automatically qualify for free school meals without an income application, and the majority actually receive them. The School Lunch Program subsidizes lunches (nearly 4.3 billion in fiscal year 1995) to children in over 5,000 RCCIs and almost all schools (90,000 in 1995). During fiscal year 1995, average daily participation was 25.7 million students (57 percent of all 45.1 million enrolled students); of these, 48 percent received free lunches, and 7 percent ate reduced-price lunches (see table 16-30). However, although just over half the meals served go to children from low-income families, more than 90 percent of Federal funding is used to subsidize their lunches, as opposed to full-price lunches, because subsidies for free and reduced-price lunches are much higher. In the 1995-96 school year, per-lunch Federal subsidies (cash and commodity support) ranged from about 32 cents for full-price lunches to $1.94 and $1.54 for free and reduced-price lunches. \19\ Fiscal year 1995 Federal school lunch costs (including commodity assistance) totaled nearly $5.3 billion (see table 16-30). --------------------------------------------------------------------------- \19\ Schools and RCCIs with very high proportions of low-income children receive an extra 2 cents a meal. Federally donated commodity assistance made up about 14 cents of each cited subsidy rate. --------------------------------------------------------------------------- The School Breakfast Program serves far fewer students than does the School Lunch Program; about 1.1 billion breakfasts in 60,000 schools (and 5,000 RCCIs) were subsidized in fiscal year 1995. Average daily participation was 6.3 million children (20 percent of all 31.8 million enrolled students). Unlike the School Lunch Program, the great majority received free or reduced-price meals: 81 percent received free meals, and 6 percent purchased reduced-price meals (see table 16-31). In the 1995-96 school year, per-breakfast Federal subsidies (cash only) ranged from about 20 cents for full-price meals to $1 and 70 cents for free and reduced-price breakfasts, respectively. \20\ Fiscal year 1995 Federal school breakfast funding totaled about $1.1 billion (see table 16-31). --------------------------------------------------------------------------- \20\ Subsidies are substantially higher (about 19 cents more) for schools in which breakfast service is required by State law or at least 40 percent of lunches are served free or at reduced price. TABLE 16-30.--THE NATIONAL SCHOOL LUNCH PROGRAM PARTICIPATION AND FEDERAL COSTS, FISCAL YEARS 1977-95 [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Participation 9 month average (in Federal costs millions) \1\ ---------------------- ------------------------------------------ Fiscal year Reduced- Full- Current Constant Free price price Total \3\ dollars \4\ 1995 meals meals meals \2\ dollars ---------------------------------------------------------------------------------------------------------------- 1977........................................... 10.5 1.3 14.5 26.3 $2,111.1 $5,358.1 1978........................................... 10.3 1.5 14.9 26.7 2,293.6 5,435.1 1979........................................... 10.0 1.7 15.3 27.0 2,659.0 5,718.3 1980........................................... 10.0 1.9 14.7 26.6 3,044.9 5,766.8 1981........................................... 10.6 1.9 13.3 25.8 2,959.5 5,041.7 1982........................................... 9.8 1.6 11.5 22.9 2,611.5 4,145.2 1983........................................... 10.3 1.5 11.2 23.0 2,828.6 4,338.3 1984........................................... 10.3 1.5 11.5 23.3 2,948.2 4,342.0 1985........................................... 9.9 1.6 12.1 23.6 3,034.4 4,334.9 1986........................................... 10.0 1.6 12.2 23.8 3,160.2 4,377.0 1987........................................... 10.0 1.6 12.4 24.0 3,245.6 4,374.1 1988........................................... 9.8 1.6 12.8 24.2 3,383.7 4,377.4 1989........................................... 9.7 1.6 12.7 24.2 3,479.4 4,295.6 1990........................................... 9.9 1.6 12.8 24.1 3,676.4 4,325.2 1991........................................... 10.3 1.8 12.1 24.2 4,072.9 4,560.9 1992........................................... 11.1 1.7 11.7 24.5 4,474.5 4,863.6 1993........................................... 11.8 1.7 11.3 24.8 4,663.8 4,919.6 1994........................................... 12.2 1.8 11.3 25.3 4,994.5 5,133.1 1995........................................... 12.4 1.9 11.3 25.6 5,254.0 5,254.0 ---------------------------------------------------------------------------------------------------------------- \1\ In order to reflect participation for the actual school year (September through May), these estimates are based on 9 month averages of October through May, plus September, rather than averages of the 12 months of the fiscal year (October through September). \2\ The Federal Government provides a small subsidy for these meals. \3\ Details may not sum to total because of rounding. \4\ Includes cash payments and the value of ``entitlement'' commodities; does not include the value of ``bonus'' commodities. Overstates actual support for school lunches only because a small portion (less than $75 million a year) of commodity support included in the figures is used for other child nutrition programs. Note.--Constant dollars were calculated using the fiscal year CPI-U. Source: U.S. Department of Agriculture, Food and Consumer Service. For fiscal years 1994 and 1995: (1) budget justification materials prepared by the U.S. Department of Agriculture for fiscal year 1996 and 1997 appropriations requests; and (2) monthly ``Program Information Report'' summaries prepared by the U.S. Department of Agriculture's Food and Consumer Service, Program Information Division. SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN (WIC) The Special Supplemental Nutrition Program for Women, Infants, and Children (the WIC Program) provides food assistance and nutritional screening to low-income pregnant and postpartum women and their infants, as well as to low-income children up to age 5. Participants in the program must have incomes at or below 185 percent of poverty, and must be nutritionally at risk. Nutritional risk is defined as detectable abnormal nutritional conditions; documented nutritionally-related medical conditions; health-impairing dietary deficiencies; or conditions that predispose people to inadequate nutrition or nutritionally related medical problems. TABLE 16-31.--THE SCHOOL BREAKFAST PROGRAM PARTICIPATION AND FEDERAL COSTS, FISCAL YEARS 1977-95 [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Participation 9 month average (in Federal costs millions) \1\ ---------------------- ------------------------------------------ Fiscal year Reduced- Full- Current Constant Free price price Total \3\ dollars \4\ 1995 meals meals meals \2\ dollars ---------------------------------------------------------------------------------------------------------------- 1977........................................... 2.0 0.1 0.4 2.5 $148.6 $377.2 1978........................................... 2.2 0.2 0.4 2.8 181.2 429.4 1979........................................... 2.6 0.2 0.5 3.3 231.0 496.8 1980........................................... 2.8 0.2 0.6 3.6 287.8 545.1 1981........................................... 3.0 0.2 0.5 3.8 331.7 565.1 1982........................................... 2.8 0.2 0.4 3.3 317.3 503.6 1983........................................... 2.9 0.1 0.3 3.4 343.8 527.3 1984........................................... 2.9 0.1 0.4 3.4 364.0 536.1 1985........................................... 2.9 0.2 0.4 3.4 379.3 538.8 1986........................................... 2.9 0.2 0.4 3.5 406.3 562.7 1987........................................... 3.0 0.2 0.4 3.7 446.8 602.2 1988........................................... 3.0 0.2 0.5 3.7 482.0 623.5 1989........................................... 3.1 0.2 0.5 3.8 507.0 625.9 1990........................................... 3.3 0.2 0.5 4.0 589.1 693.1 1991........................................... 3.6 0.2 0.6 4.4 677.2 758.3 1992........................................... 4.0 0.3 0.6 4.9 782.6 850.6 1993........................................... 4.4 0.3 0.7 5.4 868.4 916.0 1994........................................... 4.8 0.3 0.7 5.8 958.7 985.3 1995........................................... 5.1 0.4 0.8 6.3 1,181.8 1,181.8 ---------------------------------------------------------------------------------------------------------------- \1\ In order to reflect participation for the actual school year (September through May), these estimates are based on 9 month averages of October through May, plus September, rather than averages of the 12 months of the fiscal year (October through September). \2\ The Federal Government provides a small subsidy for these meals. \3\ Details may not sum to totals due to rounding. \4\ Does not include the value of any federally donated commodities. Fiscal year 1995 figure for Federal costs is not reduced for a ``write-down'' of approximately $50-$80 million for obligations not expected to be paid. Note.--Constant dollars were calculated using the fiscal year CPI-U. Source: U.S. Department of Agriculture, Food and Consumer Service. For fiscal years 1994 and 1995: (1) budget justification materials prepared by the U.S. Department of Agriculture for fiscal year 1996 and 1997 appropriations requests; and (2) monthly ``Program Information Report'' summaries prepared by the U.S. Department of Agriculture's Food and Consumer Service, Program Information Division. Beneficiaries of the WIC Program receive supplemental foods each month in the form of actual food items or, more commonly, vouchers for purchases of specific items in retail stores. The law requires that the WIC Program provide foods containing protein, iron, calcium, vitamin A, and vitamin C, and allows Federal limits on the foods that may be provided by the WIC Program. Among the items that may be included in a food package are milk, cheese, eggs, infant formula, cereals, and fruit or vegetable juices. U.S. Department of Agriculture (USDA) regulations require tailored food packages that provide specified types and amounts of food appropriate for six categories of participants: (1) infants from birth to 3 months; (2) infants from 4 to 12 months; (3) women and children with special dietary needs; (4) children from 1 to 5 years of age; (5) pregnant and nursing mothers; and (6) postpartum nonnursing mothers. In addition to food benefits, recipients also must receive nutrition education and breast feeding support (where called for). The Federal cost of providing WIC benefits varies widely depending on the recipient and the foods included in the food package, as well as differences in retail prices (where vouchers are used), food costs (where the WIC agency buys and distributes food), and administrative costs (including the significant costs of nutritional risk screening, breast feeding support, and nutrition education). Moreover, the program's food costs are significantly influenced by the degree to which States gain rebates from infant formula manufacturers under a requirement to pursue ``cost containment'' strategies; these rebates total over $1 billion a year nationwide. In fiscal year 1995, the national average Federal cost of a WIC food package (after rebates) was just over $30 a month, and, for each participant, the average monthly administrative cost (including nutritional risk assessments) was about $11. The WIC Program has categorical, income, and nutritional risk requirements for eligibility. Only pregnant and postpartum women, infants, and children under age 5 may participate. WIC applicants must show evidence of health or nutritional risk, medically verified by a health professional, in order to qualify. They must also have family income below 185 percent of the most recent Federal poverty guidelines (currently, about $24,000 a year for a three-person family). But State WIC agencies may, and in some cases do, set lower income eligibility cutoff points; they can set them as low as poverty guidelines themselves (about $12,500 for three persons in 1996). Receipt of AFDC, food stamps, or Medicaid assistance also can satisfy the WIC Program's income test, and States may consider pregnant women meeting the income test ``presumptively'' eligible until a nutritional risk evaluation is made. Drawing on a 1994 study, over 60 percent of WIC enrollees had family income below the Federal poverty guidelines, 27 percent of WIC enrollees were AFDC recipients, 36 percent received food stamps, and 53 percent were covered by Medicaid. WIC participants receive benefits for a specified period of time, and in some cases must be recertified during this period to show continuing need. Pregnant women may continue to receive benefits throughout their pregnancy and for up to 6 months after childbirth, without recertification. Nursing mothers are certified at 6-month intervals, ending with their infant's first birthday. The WIC Program, which is federally funded but administered by State and local health agencies, does not serve all who are eligible. It is not an ``entitlement'' program, and participation is limited by the amount of Federal funding appropriated, whatever State supplementary funding is provided, and the extent of manufacturers' infant formula rebates. In fiscal year 1995, $3.45 billion in Federal funds were spent, and the program served a monthly average of 6.9 million women, infants, and children: 23 percent women, 26 percent infants, and 51 percent children. With an increased appropriation for fiscal year 1996, participation is likely to surpass 7.2 million persons a month. The most recent estimate of the total number of persons eligible and likely to apply for WIC benefits (incorporated in the Administration's fiscal year 1997 budget request) is 7.5 million persons, although earlier estimates by the Administration and the Congressional Budget Office have placed the figure somewhat higher (perhaps as high as 8 million). Table 16-32 summarizes WIC participation and Federal costs. TABLE 16-32.--THE SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN (WIC) PARTICIPATION AND FEDERAL SPENDING, FISCAL YEARS 1977-95 [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Participation (in thousands) Federal spending --------------------------------------------------------------- Fiscal year Constant Women Infants Children Total \1\ Current 1995 dollars \2\ dollars ---------------------------------------------------------------------------------------------------------------- 1977............................................ 165.0 213.0 471.0 848.0 $255.9 $649.5 1978............................................ 240.0 308.0 633.0 1,181.0 379.6 899.5 1979............................................ 312.0 389.0 782.0 1,483.0 525.4 1,129.9 1980............................................ 411.0 507.0 995.0 1,913.0 724.7 1,372.5 1981............................................ 446.0 585.0 1,088.0 2,119.0 874.4 1,489.6 1982............................................ 478.0 623.0 1,088.0 2,189.0 948.2 1,505.1 1983............................................ 542.0 730.0 1,265.0 2,537.0 1,123.1 1,719.9 1984............................................ 657.0 825.0 1,563.0 3,045.0 1,386.3 2,041.7 1985............................................ 665.0 874.0 1,600.0 3,138.0 1,488.9 2,114.9 1986............................................ 712.0 945.0 1,655.0 3,312.0 1,580.5 2,189.1 1987............................................ 751.0 1,019.0 1,660.0 3,429.0 1,663.6 2,242.2 1988............................................ 815.0 1,095.0 1,683.0 3,593.0 1,802.4 2,331.7 1989............................................ 951.8 1,259.6 1,907.0 4,118.4 1,929.4 2,382.0 1990............................................ 1,035.0 1,412.5 2,069.4 4,516.9 2,125.9 2,501.1 1991............................................ 1,120.1 1,558.8 2,213.8 4,892.6 2,301.1 2,576.8 1992............................................ 1,221.5 1,684.1 2,505.2 5,410.8 2,566.5 2,789.7 1993............................................ 1,364.9 1,741.9 2,813.4 5,920.3 2,819.5 2,974.2 1994............................................ 1,499.2 1,786.3 3,191.7 6,477.2 3,159.8 3,247.5 1995............................................ 1,576.8 1,817.3 3,500.1 6,894.2 3,451.0 3,451.0 ---------------------------------------------------------------------------------------------------------------- \1\ Details may not sum to totals due to rounding. \2\ Includes funding for studies, surveys, pilots, and farmers' market programs. Spending figures include adjustments for significant interyear carryovers and reflect spending by State WIC agencies derived both from current-year appropriations and prior-year amounts, adjusted for amounts carried forward into the next year. Note.--Constant dollars were calculated using the fiscal year CPI-U. Source: U.S. Department of Agriculture, Food and Consumer Service. For fiscal years 1994 and 1995: (1) budget justification materials prepared by the U.S. Department of Agriculture for fiscal year 1996 and 1997 appropriations requests; and (2) monthly ``Program Information Report'' summaries prepared by the U.S. Department of Agriculture's Food and Consumer Service, Program Information Division. JOB TRAINING PARTNERSHIP ACT Title II of the Job Training Partnership Act of 1982 (JTPA) provides block grants to States to fund training and related services for economically disadvantaged youths and adults. Title II consists of three programs: the II-A adult training program, the II-B summer youth employment and training program, and the II-C (year-round) youth training program. Prior to the 1992 amendments to JTPA, which became effective July 1, 1993-- the beginning of program year 1993--title II-A provided services to both adults and youth. JTPA's title II programs are administered by States and localities, which select participants and design projects within Federal guidelines. The programs are intended to increase participants' future employment and earnings and reduce their dependence on welfare. Services authorized under title II-A include institutional and on-the-job training, work experience, job search assistance, counseling, and other work- related assistance. In general, participants must be economically disadvantaged, which is defined as being a member of a family whose total income for the 6-month period prior to application (exclusive of unemployment compensation, child support payments, and welfare payments) does not exceed the higher of the poverty line or 70 percent of the Bureau of Labor Statistics' lower living standard. Members of families receiving Aid to Families With Dependent Children (AFDC) or other cash welfare payments and those eligible for food stamps are also defined as economically disadvantaged. As shown in table 16-33a, of title II-A participants who terminated during program year 1994, 52 percent were white, 31 percent were black, and 14 percent were Hispanic. Of participants who terminated benefits, 63 percent entered employment. The average hourly wage for adult terminees who entered employment was $7.09. Among the 40 percent of title II-A terminees who were cash welfare recipients at the time of enrollment in program year 1993, 80 percent received AFDC payments. Women comprised 80 percent of terminees receiving cash welfare payments, as compared with 52 percent of terminees who were not recipients. Among title II-A participants receiving cash welfare payments, 27 percent did not complete high school, compared with 21 percent of those participants who were not recipients. Fifty- six percent of cash welfare recipients entered employment in program year 1993, compared with 67 percent for those II-A terminees who did not receive cash welfare payments. The average hourly starting wage for cash welfare recipients entering employment was $6.62, compared with $6.99 for nonrecipients. As shown in table 16-33b, of the youth participants in year-round services who terminated during program year 1994, 41 percent were white, 35 percent were black, and 20 percent were Hispanic. Of the title II-C participants who terminated, 37 percent entered employment, and the average hourly wage for terminees who entered employment was $5.61. Among the 35 percent of title II-C (youth) participants receiving cash welfare payments in program year 1993, 29 percent entered employment, compared with 36 percent of II-C participants who did not receive cash welfare payments. The average hourly starting wage for cash welfare recipients and nonrecipients was nearly identical. Among the almost 55 percent of II-C terminees who had either dropped out of school or were behind in grade level, the average entered employment rate in program year 1993 was 30 percent as compared with 41 percent for those not in this legislatively defined hard-to-serve category. The average hourly starting wage for youths who had dropped out of school or were behind in their grade level was $5.20 compared with $5.70 for those not in this category. TABLE 16-33a.--CHARACTERISTICS OF JTPA TITLE II-A ADULT TERMINEES, PROGRAM YEARS 1990-94 \1\ ---------------------------------------------------------------------------------------------------------------- Program years Selected characteristics ------------------------------------------------- 1990 1991 1992 1993 1994 ---------------------------------------------------------------------------------------------------------------- Total terminees............................................... 307,935 276,227 257,561 180,178 175,647 Sex: Male...................................................... 42 42 41 36 33 Female.................................................... 58 58 59 64 67 Ethnic status: White (excluding Hispanic)................................ 52 54 52 53 52 Black (excluding Hispanic)................................ 31 29 30 31 31 Hispanic.................................................. 14 13 15 13 14 Other..................................................... 4 4 4 3 3 Age at enrollment: 22-29..................................................... 43 42 42 42 42 30-54..................................................... 54 55 56 56 56 55 and older.............................................. 3 3 3 2 2 Economically disadvantaged.................................... \2\ 93 \2\ 93 NA 97 98 Receiving AFDC................................................ 26 27 28 32 35 Receiving public assistance (including AFDC).................. 31 35 33 40 42 U.C. claimant................................................. 8 10 13 14 10 Education status: High school graduate...................................... 49 50 51 55 56 Post high school.......................................... 24 24 25 21 21 Average weeks participated.................................... 23 25 26 31 37 Entered employment............................................ 63 63 62 62 63 Average hourly wage at placement.............................. $5.85 $6.08 $6.40 $6.86 $7.09 ---------------------------------------------------------------------------------------------------------------- \1\ Prior to 1993, title II-A served both adults and youth. Data in this table is for adults only. \2\ The Job Training Quarterly Survey. Source: U.S. Department of Labor. In fiscal year 1996, an estimated $1 billion is expected to be spent for JTPA II-A and II-C grants, providing training and other services to about 329,000 new enrollees. Data on participation (new enrollees) and budget authority for recent years are provided in table 16-34 below. Figures for 1996 are estimates based on assumptions of continued spending. For the summer youth program (title II-B), approximately $867 million was appropriated for the summer of 1995, with an estimated 489,200 participants served. The funding included $682 million appropriated in fiscal year 1994 plus $185 million added in fiscal year 1995. For the summer of 1996, $625 million was appropriated to serve an estimated 521,000 individuals. Funds originally appropriated in fiscal year 1995 were rescinded by Public Law 104-19; funds currently available for the summer of 1996 were appropriated in fiscal year 1996. TABLE 16-33b.--CHARACTERISTICS OF JTPA YEAR-ROUND YOUTH PROGRAM TERMINEES, PROGRAM YEARS 1990-94 \1\ ---------------------------------------------------------------------------------------------------------------- Program years Selected characteristics ------------------------------------------------- 1990 1991 1992 1993 1994 ---------------------------------------------------------------------------------------------------------------- Total terminees............................................... 266,623 257,503 255,268 167,444 158,083 Sex: Male...................................................... 48 47 47 45 44 Female.................................................... 52 53 53 55 56 Ethnic status: White (excluding Hispanic)................................ 42 43 40 41 41 Black (excluding Hispanic)................................ 36 35 36 35 35 Hispanic.................................................. 18 19 21 20 20 Other..................................................... 4 4 4 4 5 Age at enrollment: 14-15..................................................... 15 16 18 16 14 16-17..................................................... 32 32 33 34 36 18-21..................................................... 53 51 48 49 50 Economically disadvantaged.................................... \2\ 93 \2\ 92 NA 95 95 Receiving AFDC................................................ 21 23 25 27 27 Receiving public assistance (including AFDC).................. 23 25 27 35 31 U.C. claimant................................................. 1 2 1 1 1 Education status: Less than high school graduate............................ 74 76 78 79 77 High school graduate...................................... 21 20 18 19 20 Post high school.......................................... 5 4 4 3 3 Average weeks participated.................................... 26 28 29 35 36 Entered employment............................................ 39 36 34 34 37 Average hourly wage at placement.............................. $4.93 $5.07 $5.19 $5.45 $5.61 ---------------------------------------------------------------------------------------------------------------- \1\ Prior to 1993, youth were served under title II-A. Since that time, year-round services for youth are provided under title II-C. \2\ The Job Training Quarterly Surveys issued by Employment and Training Administration, U.S. Department of Labor. Source: U.S. Department of Labor. In the summer of 1994, 45 percent of title II-B enrollees were ages 14 and 15, 37 percent were either 16 or 17 years old, and 18 percent were between the ages of 18 and 21. During that summer, 84 percent of summer enrollees were students and 8 percent were high school graduates. Black youth comprised 41 percent of enrollees, while 27 percent were white, 27 percent were Hispanic, 3 percent were Asian or Pacific Islanders, and 1 percent were Native American. Eight percent had limited English-speaking ability, and 15 percent had disabilities. TABLE 16-34.--JOB TRAINING PROGRAMS \1\ FOR THE DISADVANTAGED: NEW ENROLLEES, FEDERAL APPROPRIATIONS AND OUTLAYS, FISCAL YEARS 1975-96 ---------------------------------------------------------------------------------------------------------------- Budget authority Outlays in Fiscal year New Appropriations Outlays in constant constant enrollees (millions) (millions) 1990 1990 dollars dollars ---------------------------------------------------------------------------------------------------------------- 1975........................................ 1,126,000 $1,580 $1,304 $3,755 $3,099 1976........................................ 1,250,000 1,580 1,697 3,515 3,775 1977........................................ 1,119,000 2,880 1,756 5,964 3,636 1978........................................ 965,000 1,880 2,378 3,658 4,627 1979........................................ 1,253,000 2,703 2,547 4,829 4,550 1980........................................ 1,208,000 3,205 3,236 5,154 5,203 1981........................................ 1,011,000 3,077 3,395 4,493 4,958 1982........................................ NA 1,594 2,277 2,175 3,107 1983........................................ NA 2,181 2,291 2,846 2,990 1984........................................ 716,200 1,886 1,333 2,361 1,669 1985........................................ 803,900 1,886 1,710 2,279 2,066 1986........................................ 1,003,900 1,783 1,911 2,101 2,252 1987........................................ 960,700 1,840 1,880 2,108 2,154 1988........................................ 873,600 1,810 1,902 1,991 2,092 1989........................................ 823,200 1,788 1,868 1,877 1,961 1990........................................ 630,000 1,745 1,803 1,745 1,803 1991........................................ \2\ 603,900 1,779 1,746 1,694 1,676 1992........................................ \2\ 602,300 1,774 1,767 1,637 1,632 1993........................................ \2\ 584,547 1,692 1,747 1,530 1,580 Adult................................... 316,687 1,015 1,048 918 948 Youth................................... 267,860 677 699 612 632 1994........................................ \2\ 541,463 1,597 1,693 1,415 1,500 Adult................................... 312,297 988 1,016 875 900 Youth................................... 229,166 609 677 540 600 1995........................................ \2\ 340,354 1,124 1,534 971 1,325 Adult................................... 310,123 997 934 861 807 Youth................................... \3\ 30,231 127 600 110 518 1996........................................ \2\ 329,178 977 1,023 824 862 Adult................................... 254,318 850 866 717 730 Youth................................... 74,860 127 157 107 132 ---------------------------------------------------------------------------------------------------------------- \1\ Figures shown in years 1975-83 are for training activities under the Comprehensive Employment and Training Act (CETA); public service employment under CETA is not included. Figures shown in years 1984-92 are for activities under title II-A of the Job Training Partnership Act (JTPA). For 1993-96 figures are for titles II- A (adult) and II-C (youth) of the JTPA, as amended in 1992. \2\ Estimate. \3\ According to the Department of Labor, reduced budget authority in fiscal year 1995 was insufficient to serve those already enrolled and to enroll a comparable number of new participants. In fiscal year 1996, transfers from II-B (summer youth) enabled more participants to be enrolled. NA--Not available. Source: U.S. Department of Labor. Table 16-35 presents a funding and participation history of the summer program. TABLE 16-35.--SUMMER YOUTH EMPLOYMENT PROGRAM: FEDERAL APPROPRIATIONS, OUTLAYS, AND PARTICIPANTS, FISCAL YEARS 1984-96 [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Outlays -------------------------- Fiscal or calendar year Appropriations Constant Participants \1\ Current 1990 dollars dollars ---------------------------------------------------------------------------------------------------------------- 1984................................................ $824 $584 $731 672,000 1985................................................ 724 776 938 767,600 1986................................................ 636 746 879 785,000 1987................................................ 750 723 828 634,400 1988................................................ 718 707 778 722,900 1989................................................ 709 697 732 607,900 1990................................................ 700 699 699 585,100 1991................................................ 683 698 663 555,200 1992................................................ \2\ 995 958 \3\ 912 782,100 1993................................................ \4\ 1,025 915 827 \3\ 647,400 1994................................................ \5\ 888 834 739 \3\ 574,400 1995................................................ \6\ 185 883 763 \3\ 489,200 1996................................................ \7\ 625 NA NA \3\ 521,000 ---------------------------------------------------------------------------------------------------------------- \1\ Because JTPA is an advance-funded program, appropriations for the summer youth program in a particular fiscal year are generally spent the following summer. For example, fiscal year 1991 appropriations were spent during the summer of calendar year 1992. The pattern has varied somewhat in recent years. These variations are noted. \2\ Fiscal year 1992 funding includes a $500 million supplemental appropriation for summer 1992 and $495 million for summer 1993. \3\ Estimate. \4\ Fiscal year 1993 funding includes $354 million for summer 1993 and $671 million for summer 1994. \5\ Fiscal year 1994 funding includes $206 million for summer 1994 and $682 million for summer 1995. \6\ Public Law 104-19 rescinded $682 million in fiscal year 1995 funds which were to be available for the summer of 1996. The remaining $185 million was for the summer of 1995. \7\ Fiscal year 1996 funds are for the summer of 1996. NA--Not available. Note.--Appropriations and outlays are for fiscal years; participants are for calendar years. Source: Employment and Training Administration, U.S. Department of Labor. Job Corps, authorized by title IV-B of JTPA, serves economically disadvantaged youth, ages 14-24, who demonstrate both the need for, and the ability to benefit from, an intensive and wide range of services provided in a residential setting. The program is administered directly by the Federal Government through contractors and currently operates at 110 centers around the country. Services include basic education, vocational skill training, work experience, counseling, health care, and other supportive services. In program year 1994 (July 1, 1994-June 30, 1995), 61 percent of Job Corps enrollees were male. In that same year, 51 percent of enrollees were black, 28 percent were white, 15 percent were Hispanic, 4 percent were Native Americans, and 3 percent were Asian or Pacific Islanders. Seventy-nine percent of the enrollees had dropped out of high school and 69 percent had never worked full time. Forty-three percent of Job Corps enrollees in program year 1994 came from families on public assistance. The average length of stay for Job Corps enrollees in program year 1994 was 7.5 months. The Labor Department estimates that 63 percent of terminees entered employment after leaving the program, while another 10 percent either continued their education or entered another training program, for a total positive termination rate in 1994 of 73 percent. Table 16-36 provides a funding and participation history of the Job Corps since 1982. The program was first authorized in the mid-1960s by the Economic Opportunity Act and has been authorized under JTPA since 1982. TABLE 16-36.--JOB CORPS: FEDERAL APPROPRIATIONS, OUTLAYS, AND NEW ENROLLEES, FISCAL YEARS 1982-96 [Dollars in millions] ---------------------------------------------------------------------------------------------------------------- Outlays -------------------------- Appropriations Constant New Current 1990 enrollees dollars dollars ---------------------------------------------------------------------------------------------------------------- 1982..................................................... $590 $595 $812 53,581 1983..................................................... 618 563 735 60,465 1984..................................................... 599 581 727 57,386 1985..................................................... 617 593 716 63,020 1986..................................................... 612 594 701 64,964 1987..................................................... 656 631 723 65,150 1988..................................................... 716 688 757 68,068 1989..................................................... 742 689 724 62,550 1990..................................................... 803 740 740 61,453 1991..................................................... 867 769 769 62,205 1992..................................................... 919 834 789 61,762 1993..................................................... 966 936 846 62,749 1994..................................................... 1,040 981 869 58,460 1995..................................................... 1,089 1,011 873 59,422 1996..................................................... 1,094 \1\ 1,049 \1\ 885 \1\ 63,955 ---------------------------------------------------------------------------------------------------------------- \1\ Estimate. Note.--Appropriations and outlays are for fiscal years; enrollees are for calendar years. Source: Employment and Training Administration, U.S. Department of Labor. HEAD START Head Start began operating in 1965 under the general authority of the Economic Opportunity Act of 1964. Head Start provides a wide range of services to primarily low-income children, ages 0 to 5, and their families. Its goals are to improve the social competence, learning skills, and health and nutrition status of low-income children so that they can begin school on an equal basis with their more advantaged peers. The services provided include cognitive and language development; medical, dental, and mental health services (including screening and immunizations); and nutritional and social services. Parental involvement is extensive, through both volunteer participation and employment of parents as Head Start staff. Formal training and certification as child care workers is provided to some parents through the Child Development Associate Program. Head Start's eligibility guidelines require that at least 90 percent of the children served come from families with incomes at or below the poverty line. At least 10 percent of the enrollment slots in each local program must be available for children with disabilities. In fiscal year 1995, 750,696 children were served in Head Start programs, at a total Federal cost of $3.534 billion. In June 1995, 51 percent of Head Start children came from families receiving AFDC benefits. Table 16- 37 provides historical data on participation in and funding of the Head Start Program, while table 16-38 provides characteristics of children enrolled in the program. TABLE 16-37.--HEAD START ENROLLMENT AND FEDERAL FUNDING, FISCAL YEARS 1965-95 ------------------------------------------------------------------------ Appropriations Fiscal year Enrollment (in millions of dollars) ------------------------------------------------------------------------ 1965 (summer only)...................... 561,000 $96.4 1966.................................... 733,000 198.9 1967.................................... 681,400 349.2 1968.................................... 693,900 316.2 1969.................................... 663,600 333.9 1970.................................... 477,400 325.7 1971.................................... 397,500 360.0 1972.................................... 379,000 376.3 1973.................................... 379,000 400.7 1974.................................... 352,800 403.9 1975.................................... 349,000 403.9 1976.................................... 349,000 441.0 1977.................................... 333,000 475.0 1978.................................... 391,400 625.0 1979.................................... 387,500 680.0 1980.................................... 376,300 735.0 1981.................................... 387,300 818.7 1982.................................... 395,800 911.7 1983.................................... 414,950 912.0 1984.................................... 442,140 995.8 1985.................................... 452,080 1,075.0 1986.................................... 451,732 1,040.0 1987.................................... 446,523 1,130.5 1988.................................... 448,464 1,206.3 1989.................................... 450,970 1,235.0 1990.................................... 548,470 \1\ 1,552.0 1991.................................... 583,471 1,951.8 1992.................................... 621,078 2,201.8 1993.................................... 713,903 2,776.3 1994.................................... 740,493 3,325.7 1995.................................... 750,696 3,534.1 ------------------------------------------------------------------------ \1\ After sequestration. Source: Head Start Bureau, U.S. Department of Health and Human Services. TABLE 16-38.--CHARACTERISTICS OF CHILDREN ENROLLED IN HEAD START, SELECTED FISCAL YEARS 1980-95 [In percent] ---------------------------------------------------------------------------------------------------------------- Age of children enrolled Enrollment by race ------------------------------------------------------------------------------ Fiscal year 5 and Under Native Disabled older 4 3 3 American Hispanic Black White Asian ---------------------------------------------------------------------------------------------------------------- 1980............................. 12 21 55 24 0 4 19 42 34 1 1982............................. 12 17 55 26 2 4 20 42 33 1 1984............................. 12 16 56 26 2 4 20 42 33 1 1986............................. 12 15 58 25 2 4 21 40 32 3 1988............................. 13 11 63 23 3 4 22 39 32 3 1990............................. 14 8 64 25 3 4 22 38 33 3 1991............................. 13 7 63 27 3 4 22 38 33 3 1992............................. 13 7 63 27 3 4 23 37 33 3 1993............................. 13 6 64 27 3 4 24 36 33 3 1994............................. 13 7 62 28 3 4 24 36 33 3 1995............................. 13 7 62 27 4 4 25 35 33 3 ---------------------------------------------------------------------------------------------------------------- Source: Head Start Bureau, U.S. Department of Health and Human Services. LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM (LIHEAP) Background The Federal Government has been involved in providing energy assistance for the poor since 1973. But in 1980, in response to the 1973-74 Organization of Petroleum Exporting Countries (OPEC) oil embargo and the accompanying shortages and increased petroleum prices, Congress passed the Crude Oil Windfall Profit Tax Act (Public Law 96-223), title III of which was officially named the Home Energy Assistance Act of 1980. The 1980 program generally is considered the predecessor to the present Low Income Home Energy Assistance Program (LIHEAP). In 1981, title XXVI of the Omnibus Budget Reconciliation Act (Public Law 97-35), the Low-Income Home Energy Assistance Act of 1981, authorized the Secretary of Health and Human Services to make LIHEAP allotments to States for fiscal years 1982-84. The Act permitted States to provide three types of energy assistance. States can: (1) help eligible households pay their home heating or cooling bills; (2) use up to 15 percent of their LIHEAP allotment for low-cost weatherization; and (3) provide assistance to households during energy-related emergencies. LIHEAP is a block grant program under which the Federal Government gives States, the District of Columbia, U.S. territories and commonwealths (American Samoa, Commonwealth of Puerto Rico, Commonwealth of the Northern Mariana Islands, Guam, Palau, and the U.S. Virgin Islands), and Indian tribal organizations annual grants to operate multicomponent home energy assistance programs for needy households. Public Law 103-252, the Human Services Reauthorization Act of 1994, reauthorized LIHEAP through fiscal year 1999. In fiscal year 1981, more than $1.8 billion was appropriated for the program. Over the years, LIHEAP funding has reached a high of $2.1 billion in 1985 and a current low of about $0.87 billion (see bottom of table 16-39). Program Components Federal LIHEAP funds may be used by grantees for the following activities: --Home heating and cooling assistance; --Energy crisis intervention (with a reasonable amount reserved, based on prior years' data, until March 15 of each program year); --Low-cost weatherization or other energy-related home repairs (not to exceed 15 percent of the funds allotted to or available to a grantee, although a grantee may request a waiver that increases the amount of LIHEAP funds for weatherization from 15 to 25 percent); --Administrative and planning costs (not to exceed 10 percent of funds net of set-asides for Indian tribal grants); --Carryover of funds to the next fiscal year (not to exceed 10 percent of funds net of set-asides for Indian tribal grants); and --Development or implementation of a leveraging incentive program that may be used by States to attract funds from non-Federal sources. Allotments to States Several sources of Federal and non-Federal funds generally are available to LIHEAP grantees: --Federal LIHEAP block grant allotments; --LIHEAP emergency contingency allotment for weather emergencies (these funds can only be released at the President's directive); --LIHEAP leveraging incentive awards; --LIHEAP carryover (grantees can request that up to 10 percent of their Federal LIHEAP funds be held available for the next fiscal year); --Oil overcharge funds (disbursed by the Department of Energy from settlements of cases of oil price overcharges pursuant to the Emergency Petroleum Act of 1973. States determine how to allocate these funds among several eligible activities, including LIHEAP.); and --State and other funds (States use their own funds to supplement LIHEAP benefits or administrative costs. Other funds include reimbursements to LIHEAP agencies for taking application for low income weatherization programs or winter heating protection programs.). Table 16-39 shows State allotments for selected fiscal years. TABLE 16-39.--LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM STATE ALLOTMENTS, SELECTED FISCAL YEARS 1981-96 -------------------------------------------------------------------------------------------------------------------------------------------------------- Fiscal year States ------------------------------------------------------------------------------------------------------------------- \1\ 1981 1985 1990 1991 1992 1993 1994 1995 1996 -------------------------------------------------------------------------------------------------------------------------------------------------------- Alabama............................. 15,674 18,234 11,961 15,856 12,664 11,344 12,127 11,604 7,445 Alaska.............................. 7,505 7,247 7,635 9,594 8,034 7,241 7,741 7,062 4,752 Arizona............................. 6,426 8,150 5,785 6,200 6,125 5,486 5,865 5,350 3,600 Arkansas............................ 11,960 13,973 9,127 11,069 9,663 8,656 9,253 8,442 5,681 California.......................... 84,088 97,894 64,168 68,764 67,940 60,855 65,056 59,352 39,939 Colorado............................ 29,319 33,299 22,373 23,419 23,688 21,218 22,683 20,694 13,925 Connecticut \2\..................... 38,247 43,440 29,187 35,541 30,902 27,680 34,986 26,996 18,166 Delaware \2\........................ 5,077 5,931 3,874 5,471 4,102 3,674 4,214 3,583 2,411 District of Columbia................ 5,940 6,940 4,533 5,269 4,799 4,299 4,595 4,193 2,821 Florida............................. 25,921 28,970 18,926 21,731 20,039 17,950 19,188 17,506 11,780 Georgia............................. 19,609 22,910 14,964 17,439 15,844 14,191 15,171 13,841 9,314 Hawaii.............................. 1,975 2,243 1,507 1,531 1,596 1,429 1,528 1,394 938 Idaho............................... 11,181 12,877 8,727 9,493 9,240 8,277 8,848 8,072 5,432 Illinois \2\........................ 105,862 123,679 80,784 85,711 85,533 76,614 93,921 74,721 50,281 Indiana \2\......................... 47,431 55,371 36,577 41,069 38,727 34,689 39,408 33,831 22,766 Iowa \2\............................ 29,470 38,581 25,922 28,719 27,466 24,584 34,335 23,977 16,134 Kansas.............................. 15,515 18,211 11,905 12,901 12,605 11,290 12,069 11,011 7,410 Kentucky \2\........................ 24,943 29,141 19,034 22,537 20,153 18,052 24,639 17,606 11,847 Louisiana........................... 16,024 18,867 12,228 13,203 12,947 11,597 12,398 11,311 7,611 Maine \2\........................... 27,513 27,914 18,908 23,550 20,020 17,932 27,275 17,489 11,769 Maryland \2\........................ 29,285 34,214 22,348 29,361 23,662 21,194 29,288 20,671 13,910 Massachusetts \2\................... 82,707 86,878 58,383 69,364 61,815 55,369 73,071 54,001 36,338 Michigan \2\........................ 111,598 113,951 76,697 86,099 81,206 72,738 126,605 70,941 47,737 Minnesota \2\....................... 72,409 82,239 55,256 62,063 58,504 52,404 93,421 51,109 34,392 Mississippi......................... 13,930 15,683 10,255 12,391 10,858 9,725 10,397 9,485 6,383 Missouri............................ 37,885 48,026 32,268 35,779 34,165 30,603 32,715 29,846 20,084 Montana............................. 11,350 12,298 10,236 10,938 10,838 9,708 10,378 9,468 6,371 Nebraska............................ 13,799 19,032 12,820 13,851 13,573 12,158 12,997 11,857 7,979 Nevada.............................. 3,560 4,151 2,717 3,214 2,877 2,577 2,754 2,513 1,691 New Hampshire \2\................... 14,481 16,447 11,051 13,648 11,700 10,480 14,352 10,221 6,878 New Jersey \2\...................... 71,025 82,849 54,200 66,929 57,386 51,402 61,894 50,132 33,735 New Mexico.......................... 8,867 9,973 7,242 8,123 7,668 6,868 7,342 6,698 4,507 New York \2\........................ 231,907 263,291 176,970 214,983 187,373 167,835 240,880 163,688 110,149 North Carolina...................... 34,561 40,378 26,374 35,612 27,924 25,013 26,739 24,394 16,415 North Dakota \2\.................... 7,995 14,612 11,120 12,503 11,773 10,546 19,376 10,285 6,921 Ohio \2\............................ 93,651 109,413 71,465 78,365 75,666 67,776 96,381 66,102 44,481 Oklahoma............................ 15,998 16,004 10,995 12,250 11,641 10,427 11,147 10,169 6,843 Oregon.............................. 22,723 25,808 17,340 19,298 18,360 16,445 17,580 16,039 10,793 Pennsylvania \2\.................... 124,568 141,479 95,059 107,475 100,647 90,152 116,857 87,924 59,166 Rhode Island \2\.................... 12,594 14,220 9,610 11,572 10,175 9,114 11,471 8,889 5,981 South Carolina...................... 13,822 14,544 9,500 12,451 10,058 9,009 9,631 8,787 5,913 South Dakota \2\.................... 10,241 11,434 9,031 10,691 9,562 8,565 11,150 8,353 5,621 Tennessee........................... 25,267 29,520 19,281 21,652 20,415 18,286 19,548 17,834 12,001 Texas............................... 41,261 48,206 31,487 36,455 33,337 29,861 31,922 29,123 19,598 Utah................................ 13,289 14,827 10,397 11,062 11,008 9,860 10,541 9,617 6,471 Vermont \2\......................... 10,854 12,328 8,283 9,813 8,770 7,855 13,197 7,661 5,155 Virginia \2\........................ 39,019 41,677 27,222 36,051 28,822 25,817 28,277 25,179 16,943 Washington.......................... 33,104 40,896 28,522 31,495 30,199 27,050 28,917 26,382 17,753 West Virginia \2\................... 16,507 19,285 12,596 13,676 13,337 11,946 16,503 11,651 7,840 Wisconsin \2\....................... 61,679 74,027 49,738 56,987 52,662 47,171 65,147 46,005 30,958 Wyoming............................. 3,561 6,195 4,163 4,605 4,407 3,948 4,220 3,850 2,591 ------------------------------------------------------------------------------------------------------------------- U.S. total...................... 1,813,177 2,077,577 1,390,749 1,607,819 1,472,503 1,318,961 1,709,998 1,286,368 865,626 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\ Includes reallocation of funds and crisis intervention funds. \2\ Includes $300 million in LIHEAP contingency funds released in February 1994 to States hit by unusually harsh winter weather. Note.--Columns may not add due to rounding. The table includes payments to Indian tribal organizations and excludes minor costs. Source: U.S. Department of Health and Human Services. Eligibility and Types of Assistance States have considerable discretion to determine eligibility criteria for LIHEAP and the types of energy assistance to be provided. At State option, LIHEAP payments can be made to households, based on categorical eligibility, where one or more persons are receiving Supplemental Security Income (SSI), Aid to Families with Dependent Children (AFDC), food stamps, or needs-tested veterans' benefits. States can also elect to make payments to households with incomes of up to 150 percent of the Federal poverty income guidelines or 60 percent of the State's median income, whichever is greater. Individuals who are denied benefits are entitled to an administrative hearing. The term ``household'' is defined as any individual or group of individuals who are living together as one economic unit and for whom residential energy is customarily purchased in common, or who make undesignated payments for energy in the form of rent. States cannot establish an income eligibility ceiling that is below 110 percent of the poverty level, but may give priority to those households with the highest energy costs in relation to household income, taking into consideration the presence of very young children, frail elderly, or persons with disabilities. States also are prohibited from treating categorically eligible and income eligible households differently with respect to LIHEAP. However, Public Law 103-185 permits States to reduce benefits to tenants of federally assisted housing if it is determined that such a reduction is reasonably related to any utility allowance they may receive. LIHEAP benefits cannot be used to calculate income or resources, or affect other benefits, under Federal or State law, including public assistance programs. Section 607(a) of Public Law 98-558 directs the Department of Health and Human Services to collect annual data, including information on the number of LIHEAP households in which at least one household member is 60 years old or handicapped. In addition, Public Law 103-252 authorized the establishment of the Residential Energy Assistance Challenge (REACH) Program, an incentive grant program designed to increase efficient energy use, minimize health and safety risks, and prevent hopelessness among low-income families with high energy burdens. Up to 25 percent of leveraging incentive moneys may be used to fund REACH Programs. States have considerable discretion in the methods they may use to provide assistance to eligible households, including cash payments, vendor payments, two-party checks, vouchers/ coupons, and payments directly to landlords. When paying home energy suppliers directly, States are required to give assurances that suppliers will charge the eligible households the difference between the amount of the assistance and the actual cost of home energy. Also, States may use Federal funds to provide tax credits to energy suppliers that supply home energy to low-income households at reduced rates. Table 16-40 presents estimates by State for 1996 of total dollars spent on heating assistance, the number of households receiving benefits from the single largest program component (heating assistance), and average heating benefits. TABLE 16-40.--HEATING ASSISTANCE BENEFITS, NUMBER OF HOUSEHOLDS ASSISTED, AND AVERAGE BENEFIT BY STATE, FISCAL YEAR 1996 ---------------------------------------------------------------------------------------------------------------- Estimated Total heating Estimated number average State assistance \1\ of households benefit (in benefits assisted dollars) ---------------------------------------------------------------------------------------------------------------- Alabama.................................................... $6,763,061 55,435 $122 Alaska..................................................... 4,220,958 12,229 345 Arizona.................................................... 3,421,066 21,019 163 Arkansas................................................... 4,848,231 51,877 87 California................................................. 32,768,699 350,000 93 Colorado................................................... 18,117,579 61,237 303 Connecticut................................................ 28,915,128 75,636 411 Delaware................................................... 2,636,007 13,623 194 District of Columbia....................................... 3,068,303 14,607 210 Florida.................................................... 11,292,706 122,747 92 Georgia.................................................... 10,325,887 65,689 157 Hawaii..................................................... 1,033,936 6,519 159 Idaho...................................................... 4,883,453 27,005 181 Illinois................................................... 57,164,769 217,693 267 Indiana.................................................... 28,440,973 108,210 254 Iowa....................................................... 14,458,451 73,558 197 Kansas..................................................... 4,436,830 27,093 164 Kentucky................................................... 9,242,136 144,087 64 Louisiana.................................................. 3,398,538 24,071 141 Maine...................................................... 10,650,000 53,000 201 Maryland................................................... 19,272,857 85,722 225 Massachusetts.............................................. 48,846,902 140,176 348 Michigan................................................... 68,200,000 375,500 182 Minnesota.................................................. 39,829,936 103,760 383 Mississippi................................................ 5,317,082 35,447 150 Missouri................................................... 21,549,728 115,248 187 Montana.................................................... 6,187,090 21,787 284 Nebraska................................................... 5,350,000 31,000 173 Nevada..................................................... 2,331,140 9,534 245 New Hampshire.............................................. 8,191,877 22,349 366 New Jersey................................................. 44,016,381 164,956 283 New Mexico................................................. 5,645,250 68,358 89 New York................................................... 103,025,580 957,442 108 North Carolina............................................. 14,926,921 186,152 80 North Dakota............................................... 6,026,140 14,650 411 Ohio....................................................... 27,788,359 287,629 97 Oklahoma................................................... 7,010,932 75,205 95 Oregon..................................................... 11,089,195 54,709 215 Pennsylvania............................................... 49,307,783 287,993 171 Rhode Island............................................... 7,956,629 22,787 349 South Carolina............................................. 5,772,063 74,134 78 South Dakota............................................... 6,758,611 17,138 394 Tennessee.................................................. 13,894,707 69,494 200 Texas...................................................... 5,096,583 35,149 145 Utah....................................................... 7,291,447 33,225 219 Vermont.................................................... 6,772,740 22,745 281 Virginia................................................... 20,657,059 118,709 174 Washington................................................. 17,224,663 63,727 209 West Virginia.............................................. 6,601,747 56,913 116 Wisconsin.................................................. 32,625,604 120,000 300 Wyoming.................................................... 3,278,725 11,303 232 ------------------------------------- Total................................................ $887,930,442 5,208,276 ---------------------------------------------------------------------------------------------------------------- \1\ Includes leveraging awards. Source: Administration for Children and Families, U.S. Department of Health and Human Services. Planning and Administration LIHEAP is administered within the Department of Health and Human Services by the Administration for Children and Families. Grantees are required to submit an application for funds to the Secretary of Health and Human Services. As part of the annual application, the chief executive officer of the State (Indian tribe, or territory), or her designee, is required to make several assurances related to eligibility requirements, anticipated use of funds, as well as to satisfy planning and administrative requirements. States are prohibited from using more than 10 percent of their total LIHEAP allotment for planning and administrative costs. States must provide for public participation and public hearings in the development of the State plan, including making it, and any substantial revisions, available for public inspection and allowing public comment on the plan. Public Law 98-558 requires States to engage an independent person or organization to prepare an audit at least once every 2 years. However, the Single Audit Act of 1984 (Public Law 98-502) supersedes this requirement in most instances, and requires grantees to conduct an annual audit of all Federal financial assistance received. VETERANS BENEFITS AND SERVICES The Department of Veterans Affairs (VA) offers a wide range of benefits and services to eligible veterans, members of their families, and survivors of deceased veterans. VA programs include veterans compensation and pensions, readjustment benefits, medical care, and housing and loan guaranty programs. The VA also provides life insurance, burial benefits, and special counseling and outreach programs. In fiscal year 1995, Federal outlays for veterans' benefits and services were $37.9 billion. Service-connected compensation is paid to veterans who have disabilities from injuries and illnesses sustained while in service. The amounts of monthly payments are determined by disability ratings that are based on presumed average reductions in earning capacities caused by the disabilities. Disability ratings generally range from 10 to 100 percent in 10-percent intervals; multiple injuries may result in combined- degree ratings, however, and some injuries are compensable at a zero-percent rating. Death compensation, or dependency and indemnity compensation, is paid to survivors of veterans who died as a result of service-connected causes. In fiscal year 1995, about 2.2 million disabled veterans and 307,443 survivors received about $14.8 billion in compensation payments. Veterans pensions are means-tested cash benefits paid to war veterans who have become permanently and totally disabled from nonservice-connected causes, and to survivors of war veterans. Under the current or ``improved law'' program, benefits are based on family size and the pensions provide a floor of income. For 1996, the basic benefit before subtracting other income sources is $10,801 for a veteran with one dependent ($8,246 for a veteran living alone). Somewhat less generous benefits are available to survivors; a surviving spouse with no children could receive two-thirds of the basic benefit amount given a single veteran. About 798,721 persons received $3.0 billion in veterans pension payments in fiscal year 1995. Several VA programs support readjustment, education, and job training for veterans and military personnel who meet certain eligibility criteria. In 1992, the largest of these programs was the Montgomery GI bill (MGIB). The MGIB provides educational assistance to persons, who as members of the Armed Forces or the Selected Reserve, elect to participate in the program after June 30, 1985. The purposes of the MGIB are to assist service members leaving the Armed Forces in their readjustment into civilian life, to provide an incentive for the recruitment and retention of qualified personnel in the Armed Forces, and to develop a more educated and productive work force. To participate in the MGIB, active duty military personnel contribute $100 per month, for the first 12 months of enlistment. Benefit levels are contingent upon length of service. To receive the maximum benefit of $416.62 per month for 36 months, service members must generally serve continuously for 3 years. The VA also provides vocational rehabilitation to disabled veterans. In fiscal year 1995, the net outlay for VA readjustment programs was $1.124 billion. In addition, the Department of Labor provides employment counseling and job training for veterans. The VA provides a comprehensive array of inpatient and outpatient medical services through 173 medical centers, 131 nursing homes, 39 domiciliaries, and 391 ambulatory clinics. Eligibility rules for VA medical services are complex and vary by types of care and groups of veterans. The VA is required to provide free priority medical care, both inpatient and outpatient, to veterans for service-connected conditions. In addition, the VA is required to provide free inpatient medical care, and may provide outpatient care, to low-income veterans for nonservice-connected conditions if they meet certain income criteria. For 1996, the low-income criterion for free medical care is $21,001 or less for single veterans and $25,204 or less for married veterans and veterans with one dependent; each additional dependent adds another $1,404 to the family total. As facilities and other resources permit, the VA provides care to veterans for nonservice-connected conditions with incomes that exceed the limits enumerated above; however, copayments are required. Again, as facilities and other resources permit, the VA provides nursing home care to veterans, with priority going to those with service-connected disabilities. The VA also contracts with private facilities and medical providers when it is determined to be in the interests of the veteran and cost- effective for the VA. VA-operated nursing home care is augmented by VA-supported care through contracts with private community nursing homes and with per diem payments for veterans in state-run homes for veterans. In fiscal year 1995, VA medical programs cost $16.4 billion, and medical services were provided to about 2.9 million separate applicants, resulting in 1 million inpatient episodes and 29 million outpatient visits. Table 16-41 summarizes annual expenditures on the various veterans programs and services for selected years between 1975 and 1995; table 16-42 summarizes the annual number of recipients of the various benefits over the period. TABLE 16-41.--EXPENDITURES FOR VETERANS BENEFITS AND SERVICES, SELECTED FISCAL YEARS 1975-95 [In millions of dollars] ---------------------------------------------------------------------------------------------------------------- Other Compensation Readjustment, veterans Fiscal year and pensions education, Medical Housing benefits Total \1\ job training programs \2\ loans \3\ and services ---------------------------------------------------------------------------------------------------------------- 1975.................................. 7,860 4,593 3,665 24 458 16,599 1980.................................. 11,688 2,342 6,515 -23 665 21,185 1981.................................. 12,909 2,254 6,965 201 662 22,991 1982.................................. 13,710 1,947 7,517 102 682 23,958 1983.................................. 14,250 1,625 8,272 3 696 24,846 1984.................................. 14,400 1,359 8,861 244 751 25,614 1985.................................. 14,714 1,059 9,547 214 758 26,292 1986.................................. 15,031 526 9,872 114 813 26,356 1987.................................. 14,962 454 10,266 330 769 26,782 1988.................................. 15,963 454 10,842 1,292 877 29,428 1989.................................. 16,544 459 11,343 878 843 30,066 1990.................................. 15,241 278 12,134 517 943 29,112 1991.................................. 16,961 427 12,889 85 987 31,349 1992.................................. 17,296 783 14,091 901 1,067 34,138 1993.................................. 17,758 826 14,812 1,299 1,025 35,720 1994.................................. 19,613 1,115 15,678 197 1,039 37,642 1995.................................. 18,966 1,124 16,428 329 1,091 37,938 ---------------------------------------------------------------------------------------------------------------- \1\ Primarily compensation and pension benefits; includes amounts for insurance and burial benefits. \2\ Medical program expenditure data include outlays for direct medical services, medical research and training, and construction programs. \3\ Numbers provided for expenditures under housing loans are not comparable to program expenditures in the other columns because they are revolving funds with loan outlays and repayments. Source: Office of the President (1996). TABLE 16-42.--NUMBER OF RECIPIENTS OF VETERANS BENEFITS AND SERVICES, SELECTED FISCAL YEARS 1975-95 [In thousands] ---------------------------------------------------------------------------------------------------------------- Readjustment, Fiscal year Compensation education, Medical Housing and pensions job training programs \1\ loans ---------------------------------------------------------------------------------------------------------------- 1975.................................................... 4,855 2,692 1,985 290 1980.................................................... 4,646 1,233 2,671 297 1981.................................................... 4,535 1,081 2,765 188 1982.................................................... 4,407 906 2,720 103 1983.................................................... 4,286 755 2,933 245 1984.................................................... 4,123 629 3,026 252 1985.................................................... 4,005 492 2,963 179 1986.................................................... 3,900 419 2,942 314 1987.................................................... 3,850 365 2,900 479 1988.................................................... 3,762 352 2,922 235 1989.................................................... 3,686 349 3,344 190 1990.................................................... 3,614 360 3,018 196 1991.................................................... 3,546 322 2,963 181 1992.................................................... 3,462 388 2,927 266 1993.................................................... 3,397 438 2,800 383 1994.................................................... 3,351 472 2,965 602 1995.................................................... 3,332 476 2,696 263 ---------------------------------------------------------------------------------------------------------------- \1\ Recipients are the number of applicants during the year. Source: U.S. Department of Veterans Affairs. WORKERS' COMPENSATION \21\ --------------------------------------------------------------------------- \21\ Largely drawn from Schmulowitz (1995). --------------------------------------------------------------------------- Workers' compensation laws provide for cash and medical benefits to persons with job-related disabilities and survivors' benefits to dependents of those whose death resulted from a work-related accident or illness. In 1993, workers' compensation laws protected approximately 96.1 million workers in 51 jurisdictions, including the District of Columbia. Although the laws vary from State to State, and among the Federal programs, the underlying principle is that employers should assume the costs of occupational disabilities without regard to fault. Prior to the enactment of workers' compensation laws (the first of which was enacted in 1908), a worker was only protected in cases in which employer negligence could be proven as the cause of injury or death. By 1949, all States and the Federal Government had enacted laws to cover workers and their dependents in any case of occupational disability or death. Most workers' compensation benefits are paid by insurance companies through policies purchased by private employers that are keyed to the benefits required by the State or Federal workers' compensation law covering the employer. In addition, benefits may be paid by special State or Federal insurance funds, by employers themselves acting as self-insurers, and by the Federal Government (for Federal employees and some black lung beneficiaries). State laws generally are administered by entities such as industrial commissions or special units within State labor departments. Federal laws are administered by the U.S. Department of Labor, although the Social Security Administration has responsibility for paying some black lung claims. Federal involvement in the workers' compensation system is minimal. Federal laws cover work-related disability and death benefits for Federal employees, certain maritime and railroad employees, and benefits for black-lung-related disability or death. \22\ In general, Federal funding extends only to benefits for Federal employees and some black lung beneficiaries and administrative costs at the Labor Department and Social Security Administration. \23\ There are no Federal standards for or controls over the State laws that cover most of the work force, although they are structured similarly, and a 1972 Federal commission issued a still-current set of recommended goals for State laws. Workers' compensation benefits are not taxed at any level of government; if taxed as income by the Federal Government, the Joint Committee on Taxation estimates revenues would be about $4 billion (for tax year 1995). --------------------------------------------------------------------------- \22\ The Federal Employees' Compensation Act (FECA) covers Federal employees and certain others (e.g., some law enforcement officers and volunteers, postal service employees). The Longshore and Harbor Workers' Compensation Act (LHWCA) and the Jones Act cover certain workers in maritime endeavors (including, for example, workers on the outer continental shelf). The Federal Employers' Liability Act (FELA) covers interstate railroad employees. The Black Lung Benefits Act (BLBA) provides for benefits to coal mine employees and survivors for disability or death related to black lung disease. \23\ Under the FECA, the Federal Government pays all administrative and benefit costs from annual appropriations to the employing agencies and the Labor Department. Under the LHWCA, private employers are responsible for virtually all benefits; the Federal Government pays for a very small and declining payment to pre-1972 claimants and, standing in the place of a State, the administrative costs of the system. Under the Jones Act and the FELA, there are few Federal costs, limited to some Federal court costs and potential effects on the Federal appropriation for Amtrak. Under the BLBA, Federal appropriations pay for benefits and administrative costs for claims filed before 1974 (through the Social Security Administration) and Department of Labor administrative expenses (for claims filed later). Black lung benefits for claims filed after 1973 are paid directly by responsible coal mine operators or the Black Lung Disability Trust Fund (which is financed through an excise tax on coal and borrowing from the Federal Treasury). --------------------------------------------------------------------------- Cash compensation for lost earnings made up 59 percent of total workers' compensation benefits in 1993. Some 70 percent of cash payments are for permanent partial disabilities of either major or minor severity. These payments cover loss (or loss of use) of body parts and partial, but permanent, loss of earning capacity due to work-related injuries. About 5-8 percent of cash benefits are awarded to survivors because of work-related deaths. The remainder is paid for temporary disabilities in which an employee is unable to work, or must work at a reduced level, but is expected to recover fully. Permanently disabled workers receiving workers' compensation also may be eligible for benefits under the Social Security Disability Insurance (DI) Program if they meet generally more stringent DI tests. However, the Social Security Act stipulates that total benefits under workers' compensation and DI cannot exceed 80 percent of a worker's former earnings (or, if higher, 80 percent of the total family Social Security benefit). If there is an excess, the Social Security benefit is reduced by the amount of the excess, or, in 13 States, the workers' compensation benefit is reduced. Workers' compensation laws require that all injury-related medical and hospital care be paid for. As a result, medical expenses made up 41 percent of total workers' compensation benefits in 1993. Medical benefits are typically paid on an ``as-charged'' basis; the majority of States and the Federal Government allow relatively unfettered employee choice of physician/care provider. However, the medical benefit component of workers' compensation has grown substantially in recent years, and a growing number of States (now over half) have instituted at least some form of ``managed care'' or ``fee schedules'' to control these costs. Workers' compensation laws make coverage compulsory for most private employers, except in South Carolina and Texas. \24\ If employers reject coverage in these States, they lose the use of common-law negligence defenses if sued. However, many State laws exempt from coverage employees of nonprofit, charitable, or religious institutions, as well as very small employers, domestic and agricultural employment, and casual labor. Coverage of State and local government employees differs widely from State to State. --------------------------------------------------------------------------- \24\ While coverage in New Jersey is technically elective, no employer has chosen an exemption from the workers' compensation statute, which requires that the election be made in writing prior to an accident. --------------------------------------------------------------------------- In 1993, 96.1 million employees were covered by State or Federal workers' compensation laws, and wages and salaries of covered workers totaled $2.5 trillion, about 82 percent of all civilian wages and salaries. However, while the number of covered employees grew from 1991, when 93.6 million workers were covered, the proportion of the civilian payroll covered by workers' compensation laws declined from 84 percent. The total of $42.9 billion in 1993 workers' compensation benefit costs (including those for black lung recipients) is driven by the level of benefits provided under workers' compensation laws, the cost of medical benefits, and injury rates, as well as ``administrative'' factors such as the degree of litigation involved. Cash compensation levels are established by formulas set in State and Federal workers' compensation laws and are typically a percentage of weekly earnings at the time of injury or death. Most laws provide benefits equal to two-thirds of gross (pretax) lost earnings (or earning capacity); but several States calculate benefits as a percentage of lost ``spendable'' (aftertax) earnings, usually replacing 75 or 80 percent. Workers' compensation laws also set maximum weekly benefit amounts. While maximum benefits are most often set at between two-thirds and 100 percent of the State's average weekly wage, they vary widely. For example, as of January 1996, maximum weekly compensation for permanent total disability ranged from $1,299 for Federal employees ($782 for those covered by the Federal LHWCA) to $846 for Iowa (the highest State figure) and $264 for Mississippi (the lowest State figure). In 1993, compensation under regular Federal and State Workers' Compensation Programs totaled $24.2 billion, of which $1.2 billion was paid to survivors. In addition, $1.2 billion in black lung cash benefits were provided, almost 60 percent of which went to survivors. In 1993, medical and hospitalization payments under regular Federal and State workers' compensation laws totaled $17.4 billion, and an additional $100 million was paid out for black lung beneficiaries. The Bureau of Labor Statistics (BLS) reported a 1993 workplace injury and illness incidence rate of 8.5 cases per 100 full-time equivalent private industry workers. The incidence rate for lost workday cases was 3.8. Since 1989, the overall incidence rate has ranged between 8.9 and 8.4, and the lost-workday rate has varied between 3.8 and 4.1. According to the Survey of Occupational Injuries and Illnesses, the total number of private sector workplace injuries/illnesses in 1993 was 6.7 million, of which nearly 3 million involved lost workdays. In addition, the BLS Census of Fatal Occupational Injuries reported some 6,300 fatalities resulting from on-the- job injuries (see Schmulowitz, 1995). Generally, employers insure against their workers' compensation liability through commercial insurance companies. However, they also may self-insure by providing proof of financial ability to carry their own risk (normally, large employers), purchase their insurance through a State ``fund'' (essentially, a State-run insurance company), or buy insurance commercially through a State-established ``high-risk'' insurance pool. In two States (North Dakota and Wyoming), employers must purchase insurance from their State fund, and, in four other States (Nevada, Ohio, Washington, West Virginia), they must either self-insure or buy insurance from the State fund. And nearly half of the remaining States have fully ``competitive'' State funds that allow employers to buy private insurance, self insure, or buy from a State fund. In 1993, 51 percent ($21.8 billion) of the total of $42.9 billion in workers' compensation benefits (including all cash and medical costs under Federal and State laws) was paid by private insurers; 23 percent ($9.9 billion) was provided through self-insurance; 19 percent ($8.1 billion) came from State funds; and 7 percent ($3.1 billion) was paid under Federal programs. \25\ --------------------------------------------------------------------------- \25\ Federal program disbursements were for black lung benefits and payments for Federal employees. Some of the payments financed through private insurers, self-insurance, and State funds were mandated by Federal laws covering private-sector employers (e.g., the LHWCA). --------------------------------------------------------------------------- Total workers' compensation costs to employers in a given year are greater than annual benefits paid out because of the built-in cost of long-term benefits. In 1993, employer costs totaled $57.3 billion. These costs included benefits paid, administration of insurance operations, insurer profits and taxes, and reserves for future benefit payments. Where insurance is purchased, the premium paid by employers varies with the risk involved in the covered employment and the industrial classification of the employer's particular industry, although it may be modified by ``experience rating'' for some moderate to large employers and other factors judged relevant by the insurer. By type of insurer, the total 1993 cost to employers was: $33.6 billion (59 percent) paid to private insurers, $10.9 billion (19 percent) paid to State funds, $10.6 billion (18 percent) financed by self-insured employers, and $2.3 billion (4 percent) from Federal appropriations for Federal employees and from that portion of black lung benefits financed by coal mine employers (as opposed to Federal appropriations). In 1993, average employer costs per covered employee were $597; as a proportion of employers' payrolls, this represented $2.30 per $100 of payroll. Although substantial increases in employers' workers' compensation costs were recorded in the 1980s, these costs actually decreased in real terms in the early 1990s, dropping from a high of $2.40 per $100 of payroll in 1991. Table 16-43 shows the estimated number of workers covered and the total annual payroll in covered employment for selected years between 1948 and 1993. Over that time, the number of workers covered in an average month increased from 36 to 96.1 million, and covered payroll rose from $105 billion to $2.5 trillion. TABLE 16-43.--ESTIMATED NUMBER OF WORKERS COVERED BY WORKERS' COMPENSATION IN AVERAGE MONTH AND TOTAL ANNUAL PAYROLL IN COVERED EMPLOYMENT, SELECTED YEARS 1948-93 \1\ ---------------------------------------------------------------------------------------------------------------- Workers covered in average Total payroll in covered month employment ---------------------------------------------------------- Percent of Year employed Percent of Number (in wage and Amount (in civilian wage millions) salary billions) and salary workers \2\ disbursements ---------------------------------------------------------------------------------------------------------------- 1948................................................. 36.0 77.0 $105 79.9 1953................................................. 40.7 80.0 154 81.5 1958................................................. 42.5 80.2 192 83.1 1963................................................. 47.3 80.5 254 83.7 1968................................................. 56.8 83.8 376 83.0 1973................................................. 66.3 86.3 578 84.2 1978................................................. 75.6 86.7 922 84.3 1983................................................. 78.0 85.6 1,382 84.6 1988................................................. 91.3 87.0 2,000 84.2 1990................................................. 95.1 87.0 2,250 84.0 1991................................................. 93.6 87.0 2,300 84.0 1993................................................. 96.1 NA 2,500 82.0 ---------------------------------------------------------------------------------------------------------------- \1\ Before 1963, excludes Alaska and Hawaii. \2\ Beginning in 1968, excludes those under age 16 and includes certain workers previously classified as self- employed. NA--Not available. Source: Nelson (1991, 1993); Schmulowitz (1995). Table 16-44 illustrates benefit payments under workers' compensation laws by type of benefit for the years 1987-93 (except 1992). In 1993, total benefits paid equaled $42.9 billion, of which $41.6 billion was paid out under regular State and Federal workers' compensation laws and nearly $1.4 billion was provided through the Federal Black Lung Benefit Programs. TABLE 16-44.--ESTIMATED WORKERS' COMPENSATION BENEFIT PAYMENT AMOUNTS BY TYPE OF BENEFIT 1987-93 [In millions] ---------------------------------------------------------------------------------------------------------------- Type of benefit 1987 1988 1989 1990 1991 1993 ---------------------------------------------------------------------------------------------------------------- Regular program............................... $25,773 $29,234 $32,837 $36,804 $40,778 $41,569 ----------------------------------------------------------- Medical and hospitalization......................... 9,794 11,401 13,299 15,067 16,715 17,409 Compensation........................................ 15,979 17,833 19,538 21,737 24,063 24,160 Disability...................................... 15,046 16,956 18,553 20,635 22,840 22,930 Survivor........................................ 933 877 985 1,102 1,223 1,229 =========================================================== Black Lung Program............................ 1,545 1,499 1,479 1,434 1,391 1,355 ----------------------------------------------------------- Medical and hospitalization......................... 118 117 125 120 117 112 Compensation........................................ 1,426 1,381 1,354 1,314 1,274 1,243 Disability...................................... 698 657 618 577 533 520 Survivor........................................ 729 725 736 737 741 723 =========================================================== Total (Regular and Black Lung)................ 27,318 30,733 34,316 38,238 42,169 42,925 Medical and hospitalization......................... 9,912 11,518 13,424 15,187 16,832 17,521 Compensation........................................ 17,406 19,215 20,892 23,051 25,337 25,403 Disability...................................... 15,775 17,613 19,171 21,212 23,373 23,450 Survivor........................................ 1,631 1,602 1,721 1,839 1,964 1,952 ---------------------------------------------------------------------------------------------------------------- Source: Nelson (1991, 1993); Schmulowitz (1995). 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Workers' compensation: Coverage, benefits, and costs, 1990-91. Social Security Bulletin, 56(3), pp. 18-74. Office of the President. (1996). Budget of the U.S. Government, Fiscal Year 1997 (Historical Tables volume). Washington, DC: U.S. Government Printing Office. Schmulowitz, J. (1995). Workers' compensation: Coverage, benefits, and costs, 1992-93. Social Security Bulletin 58(2), pp. 51-57. U.S. Department of Agriculture. (1994, October). Food stamp participation rates: January 1992. Washington, DC: Author. U.S. Department of Agriculture. (1995, December). Trends in FSP participation rates: Focus on August 1993. Washington, DC: Author.