Welfare Reform May Inadvertently Harm Children

Reforming the welfare system is a hot topic in the United States, particularly in building self-sufficiency among welfare recipients. Encouraging them to work instead of receiving welfare is often a goal of welfare reform. However, welfare reform could inadvertently limit working poor families' support or eliminate safety-net programs by making them more difficult to access.

"Successful welfare reform is integrally intertwined with the maintenance of effective safety-net programs for working families and children," says Earnestine Willis, MD, MPH, Associate Professor of Pediatrics at the Medical College of Wisconsin. She is the lead author of an article in the December 2000 electronic edition of the journal Pediatrics discussing the effect of welfare reform on children in Wisconsin, the first state to conduct a welfare reform demonstration project. Wisconsin's efforts are seen as a leading model by many welfare reformers. Other authors of the study are Marsha Malloy, RN, MBA, Research Nurse in Pediatrics, and Robert M. Kliegman, MD, Chairman and Professor of Pediatrics, both of the Medical College.

Dr. Willis, Dr. Kliegman and Malloy practice at Children's Hospital of Wisconsin, a major affiliate of the Medical College. Dr. Willis is Director of the Medical College's Center for the Advancement of Urban Children.

The study examines the effect of "de-linking" programs from cash assistance certification. Prior to welfare reform, under the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996, several programs including Aid for Dependent Children (AFDC, also known as "welfare" or cash assistance), Medicaid medical assistance, Healthy Start and food stamps were part of a standard certification of a family's income, which determined eligibility. Thus, if a family was eligible for cash assistance, usually it was eligible for other linked programs. Following welfare reform, these programs were no longer linked and families were required to certify separately for medical assistance.

The researchers looked at three periods: before Wisconsin's welfare reform, during the reform pilot project known as Pay for Performance, and after the pilot project when Wisconsin Works (W-2) was instituted. After the pilot program the rate of removals from AFDC and Medicaid declined, but by the end of the study, more than 100,000 children had been removed from AFDC and more than 50,000 no longer benefited from Medicaid, despite growing numbers of uninsured children. Food stamps enrollment declined by more than 70,000 or 41%.

In contrast, enrollment in Healthy Start (a program for pregnant women and children under age seven) increased 183%, by more than 35,000. An extensive outreach program helped Healthy Start increase enrollment during the study period.

When no longer eligible for AFDC, many working poor families were not aware that they still qualified for other safety-net programs, particularly Medicaid. After W-2 was implemented, an outreach program was launched to encourage eligible families to take advantage of Medicaid. Because the state recognized that many working poor families may not qualify for Medicaid, it established a health insurance program, BadgerCare, to bridge the gap between Medicaid and private insurance.

Researchers also examined changes in enrollment of the Special Nutrition Program for Women, Infants/Children (WIC), a non-linked program. It also declined in enrollment (by 5.4%) although not as significantly as those programs traditionally linked together.

Based on the successful outreach program used for Healthy Start and BadgerCare, the authors recommend steps to advert barriers to participation in safety-net programs, including:

• Establishing an efficient information system to determine eligibility
• Statewide public information campaign
• Training providers, school officials, public health agencies, W-2 agencies and community-based agencies
• Regional and local initiatives such as outlying stations to certify eligibility
• State helpdesk function or hotline to resolve specific problems

"As we implement public policy changes, we must anticipate unwarranted consequences to children, especially as we reform the welfare system," Dr. Willis says. Without a demonstration project to assist in identifying problems, the effect on low-income children in Wisconsin would have been worse. "These findings show that altering safety-net programs can result in unintended consequences if not carefully transitioned," she says.

Access to health insurance can affect successful employment of working poor families. One study found that the states with the most generous Medicaid expansion had the highest employment rates. Another study showed that having de-linked or separate enrollments for medical coverage and other programs led individuals to delay enrollment in health insurance plans until catastrophic care was required.

Medicaid eligibility can only be determined in Wisconsin by economic support workers at the county level. A family in Wisconsin is eligible for W-2 if its income is less than 165% of the federal poverty line. In addition, the state now counts the dollar amount for food stamps received by a family as income when determining W-2 eligibility. Eligibility for food stamps is based on income equal to or less than 130% of the poverty line. Eligibility for the nutritional program WIC is based on income at or below 185% of the federal poverty level. Changes in eligibility rules have confused many people. Eligibility for Medicaid is based on AFDC standards of 1996, which are different than W-2. Successful outreach efforts are crucial to help alleviate confusion during the implementation of welfare reform.

"The de-linking of government cash assistance from medical assistance resulted in more eligible children being without health insurance or other safety-net services," Willis notes. "Welfare reform efforts can thus threaten the ability of working poor families to secure needed resources for their children. Welfare reform changes and associated consequences should be continuously monitored with caution and diligence to intervene for the protection of infants and children."

MCW Health News presents up-to-date information on patient care and medical research by the physicians of the Medical College of Wisconsin.