Performance Improvement 2001. Welfare Reform




Welfare Leavers and Medicaid Dynamics: Five States in 1995

State welfare caseloads have been declining at an unprecedented rate since 1994, partly as a result of state and federal welfare reform efforts and partly because of a strong economy. Medicaid enrollment for children and their parents has been shrinking as well (although less so than welfare), in spite of state efforts to expand their Medicaid eligibility policies. This study analyzed the 1995 Medicaid enrollment patterns of children and their parents in five states--Alabama, California, Florida, Michigan and New Jersey--to assess the impact of welfare declines on overall Medicaid enrollment. The findings showed that:

  • declines in the welfare caseload which began in 1995 are likely to have a noticeable effect on state Medicaid programs, in terms of overall enrollment, caseload mix, and per capita expenditure levels.
  • some of the states were able to increase enrollment through the non-welfare eligibility groups by making greater use of the child poverty-related, transitional assistance, and medically needy groups.
  • many welfare leavers are not staying on Medicaid and are at risk of becoming uninsured.
  • states are experiencing considerable turnover in their Medicaid caseloads.
  • since state welfare caseloads declined at much greater rates after 1995, there is concern that Medicaid enrollment will drop even more, and that Medicaid reductions may be contributing to the continuing problem of the uninsured.
  • state officials report that many families leave welfare without providing the information needed to redetermine their continued eligibility for Medicaid.

One conclusion of the study is that while states may continue to make policy changes to expand Medicaid coverage provisions in an effort to reduce the number of uninsured, these changes are not likely to be effective unless steps are also taken to improve individual continuity in Medicaid coverage.

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Dynamics of Children’s Movement Among the AFDC, Medicaid, and Foster Care Programs Prior to Welfare Reform: 1995-1996

This study examined patterns of program utilization by children before and after welfare reform to assess how the social safety net programs and human service utilization have been affected by ending the entitlement to cash assistance and placing new work-related requirements on their parents. Three programs affected by welfare reform were studied: Temporary Assistance for Needy Families (TANF), Medicaid, and foster care during 1995-1996, or the years immediately prior to welfare reform, which was implemented first in 1997. The major findings were:

  • the consistency across states in the numbers participating in AFDC and Medicaid prior to foster care entry suggests that poverty, or perhaps participation in welfare program, plays an important role in the entry of children into foster care.
  • transitions from AFDC to a system exit are most likely among the oldest children in all three states, suggesting that families with the youngest children are the most acutely needy and likely to remain on AFDC longer than families with older children.
  • With the emphasis on work and time limits, welfare reform is likely to result in more and earlier exits from cash assistance.

The major conclusions of the study are that welfare reform is likely to have many effects on children and their families. Each state will differ based on its program practice and policies, economy, demographic characteristics and other factors. Each state will have to tailor its plans accordingly.

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Final Results from Florida’s Family Transition

In 1994, Florida started the Family Transition Program (FTP) in Escambia Country as a pilot test site, the first welfare reform initiative to test time limits for eligibility and continued benefits. Families were limited to only 24 months of assistance during a 60-month period (36 months out of 72 for the least job-ready persons) and were provided services and incentives to find work. The evaluation was a random assignment comparison group study of welfare recipients placed in FTP and others receiving traditional Aid to Families with Dependent Children (AFDC) benefits. The findings showed that:

  • FTP recipients, compared to those in the AFDC group spent less time on welfare over the four follow-up periods. There were fewer impacts on children, with the exception of some negative impacts on adolescents’ school performance; and
  • FTP families gained in income more than they lost in welfare payments. Slightly less than half of the FTP families who reached their time limits worked steadily in the subsequent18 months, many relying on family, friends, Food Stamps, and housing assistance.

The conclusion was that time limits can be imposed without widespread impact on families, but that the robustness of the local economy may be a strong contributing factor.

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Reforming Welfare and Rewarding Work: Final Report on the Minnesota Family Investment Program (Summary; Volume I: Impact on Adults; Volume II: Impact on Children)

The Minnesota Family Investment Programs (MFIP) combined financial work incentives with participation or work requirements for long-term welfare recipients. The MFIP evaluation examined ways that states could increase the probability that long-term welfare recipients will be able to support themselves before they reach their time limit on welfare benefits; how states support the efforts of low-income workers to stay in their jobs and provide for their families in this era of time-limited welfare; how social policies avoid penalizing marriage; and the policy adjustments that states have made in changing their welfare systems from Aid to Families with Dependent Children (AFDC) to Temporary Assistance to Needy Families (TANF) affect families and children. The evaluation findings show that:

  • single-parent, long-term welfare recipients benefitted most from the MFIP program, mainly in employment and increased earnings compared to AFDC participants. However, total costs were higher, since families retained their welfare benefits even as their earnings increased.
  • MFIP families showed improvements in family well-being, as evidenced by positive parental reports on children’s behavior, decreases in reported domestic abuse, and modest increases in marriage rates.
  • For two-parent recipient families, the proportion of parents who stayed married increased, compared to AFDC families, and the program enabled second earners to work less.
  • Results on parent or child outcomes between the experimental and control groups were not significantly different for more recent welfare applicants for whom job preparation services were not mandatory.

Lessons learned from this evaluation concern types of families for which the experiment is most effective (e.g., single-parent and two-parent long-term recipients versus single parent and two-parent recent applicants); which program components (financial incentives, mandatory employment and training) contribute most to economic outcomes and social impacts on both families and children.

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Evaluation of North Dakota’s Training, Education, Employment, and Management (TEEM) Program

The North Dakota Training, Education, Employment and Management (TEEM) program is the state’s Temporary Assistance to Needy Families (TANF) program to families, providing the following cash assistance and supportive services: a computerized assessment that results in a social contract and referrals to needed services; incentives to promote work and work effort; sanctions for non-compliance with the program requirements; increased asset limits allowing families to save while on aid; and a benefit cap that precludes TEEM recipients who get pregnant while on aid from receiving additional cash benefits for that child. The evaluation of TEEM monitored program implementation and examined client caseload trends and client characteristics between 1997 and 1999 to measure outcomes. The monitoring effort identified programs improvements needed in providing information to recipients on Earned Income tax Credit, more training for TEEM staff on case manager role; and changes in the client assessment process. The client outcome trend data showed that:

  • TEEM families retained substantial public assistance from other sources after finding employment;
  • Native Americans increased as the proportion of TEEM adults cases between 1998-1999 and had higher TEEM recidivism rates;
  • the child-only cases increased proportionately and were living with parents receiving disability payments;
  • and the proportion of case closures due to employment declined over time, which may have been due to problems with the closure codes.

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Analysis of Administrative Data on Families Receiving Welfare and Diversion Assistance under the Work First Program: Third Quarterly Report

TheNorth Carolina Work First Program’s third quarterly report analyzing administrative data examined patterns of welfare participation, employment, earnings, and other key outcomes among families who enter and leave theWork First program, and persons who receive Diversion Assistance. The findings show that:

  • families in the AFDC entry cohort were more likely to be still on assistance 36 months after going on welfare compared to families in the Work First entry cohort;
  • Work First program has had far less impact on child-only cases than on other cases;
  • length of stay on welfare for all entry cohorts was longer for persons without a work history, persons without a work history and a high school diploma, families that were younger, African American, and living in large cities; and
  • fewer families in theWork First program, compared to the AFDC exit cohorts returned to cash assistance in the followup study period.

No major differences were found between the exit cohorts in employment rates, which seemed to be more influenced by seasonal factors. All cohorts showed evidence of earning progression after leaving welfare, controlling for seasonal variations.

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Study of Families Receiving Diversion Assistance Payments Under the Work First Program

TheNorth Carolina Work First Diversion Assistance program serves families eligible forWork First cash assistance but instead receive diversion assistance in the form of cash payments equal to as much as three months ofWork First benefits. The program goal is to provide assistance to families when they need short-term help to become or remain self-sufficient, as an alternative to going on welfare. The evaluation consists of telephone interviews with 242 families receiving assistance between May 1999 and August 1999. The study found that:

  • client household characteristics, plus prior welfare use and employment, varied by county which was interpreted as variations in the county’s approach to targeting diversion assistance.
  • one quarter of respondents said they were not working;
  • there was evidence of food deprivation among 22 percent of respondents but no evidence of major problems of hunger, homelessness, poor housing conditions, or placement of children.

The results suggest that county administration of the programs should take caution in using diversion for applicants that do not have a recent work experience.

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Study of Families Leaving Work First Due to Time Limits: Results of the Second Round of Follow-up Surveys

The evaluation of theNorth Carolina Work First program includes a report on results of the second round of follow-up surveys in late 1999 on the status of families who left the programs in August 1998 as a result of reaching the 24-month time limit. The first round of surveys were conducted between December 1998 and March 1999. Between the first and second survey rounds, the employment changes experienced by leaving families showed that:

  • employment was slightly higher; the rates of job turnover were not significant; almost half of respondents said they received a raise between interviews (however, the earning progress ion may be unique to the sample and all welfare leavers).
  • as for employer health insurance, participation in such plan when available increased for respondents, but largely because they became eligible to participate in plans by reason of increase time on the job and increased work hours;
  • the two reasons given by respondents who were unemployed at the second round were-- could not find a job or get one after applying, and could not take work because of disability or illness.
  • There was an increase in the number of respondents who said they had experienced adverse events since leaving, with ability to buy food as the one most often mentioned.
  • No significant differences were found for access to health care, child care, and housing, nor differences in children’s school performance.
  • Employed respondents with higher incomes thought they were better off without welfare, but the pattern was inconsistent at the lower income levels.