How Welfare Reform and Economic Factors Affected Medicaid Participation

Assessing the New Federalism is a multiyear Urban Institute project designed to analyze the devolution of responsibility for social programs from the federal government to the states, focusing primarily on health care, income security, employment and training programs, and social services. Alan Weil is the project director. Researchers monitor program changes and fiscal developments. In collaboration with Child Trends, the project studies changes in family well-being. The project aims to provide timely, nonpartisan information to inform public debate and to help state and local decisionmakers carry out their new responsibilities more effectively.

Key components of the project include a household survey, studies of policies in 13 states, and a database with information on all states and the District of Columbia, available at the Urban Institute's Web site. This paper is one in a series of discussion papers analyzing information from these and other sources.

The project has received funding from the Annie E. Casey Foundation, the W.K. Kellogg Foundation, the Robert Wood Johnson Foundation, the Henry J. Kaiser Family Foundation, the Ford Foundation, the John D. and Catherine T. MacArthur Foundation, the Charles Stewart Mott Foundation, the David and Lucile Packard Foundation, the McKnight Foundation, the Commonwealth Fund, the Stuart Foundation, the Weingart Foundation, the Fund for New Jersey, the Lynde and Harry Bradley Foundation, the Joyce Foundation, and the Rockerfeller Foundation.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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Contents

Executive Summary

Research Approach
Key Findings
Conclusions

How Welfare Reform and Economic Factors Affected Medicaid Participation: 1984-96

Introduction
Background on Medicaid and Welfare Eligibility Policies
Factors That Affect Medicaid Caseload Levels

Methodology

Results: Regression Models
Estimating Effects for 1995-96
Discussion
Conclusions and Policy Implications

Appendix: Definition and Construction of Welfare Reform Variables
References
About the Authors

Executive Summary

Despite longstanding efforts to reduce the number of uninsured people in the United States, between 1995 and 1996 the number of children and parents who had health insurance through the Medicaid program fell by about 700,000. Other recent research indicates that the reduction in Medicaid coverage helped fuel an increase in the number of uninsured Americans and that Medicaid caseloads continued to tumble at least through 1998. Medicaid participation fell the most among those who also received welfare, which traditionally led to automatic Medicaid eligibility. An important reason for welfare caseload reductions was the state welfare reform policies that began in the early 1990s under federal waivers and culminated in the passage of the 1996 federal welfare reform law.

This report addresses how much the recent reduction in Medicaid participation was caused by welfare reform policies, by the strong economy of the mid-1990s, or by other forces. If the economy is the principal reason, then these changes would have occurred regardless of states' policies and there may simply have been less "demand" for Medicaid. If welfare reform policies are the main factor, this signals that the loss of Medicaid coverage and the subsequent increase in uninsurance rates were adverse consequences of state and federal policies.

See the PDF for complete report.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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