Welfare Leavers and Medicaid Dynamics: Five States in 1995. Findings


Study findings add to the body of evidence 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. The findings also point to problems of continuity in Medicaid enrollment, which may be contributing to the lack of insurance among low- income children and their parents. Medicaid enrollment patterns that are cause for concern include:

· Declines in state welfare caseloads are associated with declines in Medicaid enrollment, particularly for parents. Every state showed a decrease in Medicaid enrollment during 1995, among family members qualifying for coverage through welfare. Some of the states were able to increase enrollment through the nonwelfare eligibility groups by making greater use of the child poverty-related, transitional assistance, and medically needy groups. Nevertheless, all the states had a net decline in the Medicaid enrollment of children and their parents. The Medicaid declines ranged from 1 to 4 percent, compared to a 2 to 12 percent decline in welfare caseloads. In every state, declines were greater for adults than children.

· Many welfare leavers are not staying on Medicaid and are at risk of becoming uninsured. At least half the children and adults leaving welfare in every study state also left Medicaid. While we expected that a sizable proportion of parents leaving welfare might not continue on Medicaid, this result was not expected for children, given the availability of the poverty-related expansion coverage in all the states. This pattern is troubling since the work of other researchers suggests that while not all persons leaving welfare and medicaid lose their insurance coverage, a significant number of welfare leavers become uninsured.

· Medicaid programs appear to disproportionately lose low-cost welfare leavers while continuing to cover those with higher costs. Study results show that children and adults who left welfare and Medicaid generally had lower average Medicaid expenditures compared to those who remained enrolled. Findings also showed that adults and children with any amount of Medicaid expenditures were more likely to maintain Medicaid coverage upon leaving welfare. In addition, at least among children, as monthly expenditures increased, so did the probability of remaining enrolled in Medicaid. These findings suggest that the Medicaid casemix may be changing. Medicaid managed care programs are understandably worried that those who remain on Medicaid may have more health problems, and that capitated payments may not adequately reflect casemix changes.

· States are experiencing considerable turnover in their Medicaid caseloads. Turnover in Medicaid enrollment was especially high for adults, ranging from 26 to 40 percent during 1995 across the study states. The annual turnover rates for children went from 21 to 29 percent. Turnover is a problem to the extent that individuals leaving Medicaid continue to be eligible. Other researchers have found that many children who are uninsured were previously enrolled in Medicaid, and that many still appeared to be eligible. The sheer numbers of individuals moving off of Medicaid in 1995 dwarfed the year end declines in enrollment. Across the study states, monthly enrollment had declined about by 180,000 individuals at year end; however, nearly 1.5 million children and almost a million adults disenrolled from Medicaid during the year.

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. The recently implemented State Child Health Insurance Program (SCHIP) expansions for children (and the associated outreach) provide some hope that these Medicaid enrollment declines eventually will be reversed, and that fewer low-income children will be uninsured. However, the situation for parents seems less likely to improve less unless they receive greater attention.

State officials report that many families leave welfare without providing the information needed to redetermine their continued eligibility for Medicaid. Some families leaving welfare may not need Medicaid, since they will be able to secure private insurance through employment; but others who become uninsured may mistakenly believe that they no longer qualify for Medicaid. It is also likely that some welfare leavers perceive the effort associated with maintaining Medicaid coverage not worth the benefit; some families have indicated that they know they can reapply for Medicaid if they need to.

In one sense, it is reassuring that welfare leavers who also leave Medicaid may be healthier (since they appear to have used fewer medical services prior to welfare exit). However, if these individuals leave welfare and become uninsured, they may jeopardize their future health status if they lack ready access to care and delay needed services. Lack of insurance may keep children, in particular, from obtaining appropriate preventive services.

Congress and the states continue to be concerned about the high rate of uninsured. The results from this study suggest that the dynamics of Medicaid enrollment may be at least part of the problem. If state Medicaid programs could increase the number of children and parents leaving welfare who continue on Medicaid, uninsurance rates might decline. In addition, greater attention needs to be given to inappropriate turnover among children and adults qualifying for Medicaid through the nonwelfare groups. Although 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.