Poor Children Falling Out of Medicaid’s Safety Net

When Congress voted last year to overhaul the nation’s much-maligned welfare system, it explicitly sought to prevent poor children from losing their government-paid medical care.

A year later, however, thousands of poor children have fallen out of the Medicaid program, even though they are still eligible.

Child-health advocates blame a variety of factors, ranging from mistakes by the nation’s sprawling welfare bureaucracy to fear on the part of immigrants in California and elsewhere that continued reliance on government benefits of any kind will hurt their chances to become citizens.

Estimates of the decline in children’s Medicaid enrollment vary widely. Some researchers believe that the drop is no more than 200,000 out of the 16.5 million children eligible for Medicaid before welfare reform. A recent Census Bureau survey suggests that the figure may be closer to 1 million--and that those children are not being picked up by private insurance.

Regardless of the exact magnitude, health policy experts believe that the trend may accelerate because the welfare changes are just beginning to go into effect in most states.

“We’ve got . . . fear, confusion and people being told they are not eligible for benefits that they are eligible for, and people who are misinformed when they come in to apply for benefits,” said Diane Rowland, director of the Kaiser Foundation on the Future of Medicaid.

Before welfare reform, many poor children qualified automatically for Medicaid because their parents were receiving Aid to Families With Dependent Children, the national cash benefits program for poor children.

Welfare reform ended that link because it abolished AFDC. So in the welfare reform law, Congress decreed that children should remain eligible for Medicaid if their parents would have qualified for AFDC under the old law.

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At least that’s how things were supposed to work. The reality, however, is not always living up to the theory.

Poverty lawyers point to 27-year-old Annabelle, a poor mother in the Milwaukee area with three daughters, ages 4 to 8. Annabelle stopped getting welfare benefits when her husband landed a minimum-wage job. But because the family income remained below the federal poverty level ($16,050 for a family of four), her children remained eligible for Medicaid--particularly crucial for her 6-year-old, who is diabetic.

However, when Annabelle’s welfare benefits were cut off, the family was mistakenly dropped from Medicaid as well. That left Annabelle without a way to pay for her daughter’s daily insulin doses and the equipment for her blood-sugar tests.

“I have 50 Medicaid terminations on my desk right now, and for the most part it’s very difficult for me to figure out why the people and their children were cut off,” said Sharin Cabraal, an attorney at Legal Services of Wisconsin who represents Annabelle.

After numerous phone calls to Annabelle’s caseworker, Cabraal said, she eventually reached a supervisor who concluded that the children had been erroneously removed from the program. But a month elapsed before benefits were restored.

“A month is a long time for a diabetic kid,” Cabraal said.

The situation in Wisconsin--whose Medicaid rolls have 43,000 fewer children younger than 18 than there were three years ago, a 17% decline--may be a harbinger of things to come nationally. Wisconsin is one of a handful of states that had special programs allowing them to end welfare benefits ahead of the rest of the country.

Wisconsin officials said caseworkers are strictly prohibited from automatically dropping former welfare recipients from Medicaid without determining whether they or their children are still eligible for the program.

But officials acknowledged that Wisconsin’s aggressive implementation of welfare reform may be a factor in the lapse in children’s Medicaid coverage. Congress’ General Accounting Office reported last summer that in Wisconsin and two other states with similar programs, Medicaid enrollment dropped by 40% to 50% among those who were forced off the welfare rolls.

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“For three generations of families, they got welfare, food stamps and Medicaid all rolled into one,” said Peggy Bartels, director of the Wisconsin Bureau of Health Care Financing. “Now the programs are separate. Medicaid does not automatically come to you. It’s an era of responsibility. We’re trying to reach out to those families. Believe me, we’re trying.”

Many women who are leaving welfare for work do not realize that, because they are still poor, their children are still eligible for Medicaid.

Similarly, women who are forced off welfare because they are not willing to abide by the new rules--such as going into a work program or providing documentation that their children have been inoculated against childhood diseases--may decide that they want nothing more to do with the welfare office.

“Many women believe erroneously that there are work requirements or time limits attached to Medicaid, and some seem not to be applying,” said Pat Redmond, health director of Philadelphia Citizens for Children and Youth, a child advocacy group.

Federal officials do not dispute the enrollment decline but said they have not analyzed the cause.

“There may be some fallout from welfare reform, and we will step in and try to correct that whenever we see it happening,” said Sally Richardson, director of the Center for Medicaid and State Operations at the Department of Health and Human Services.

At the top of the list of other forces that may be driving down the Medicaid rolls is the booming economy.

However, researchers who track poverty point out that, despite the robust economy, census data show that the poor are no better off than they were a year ago. In addition, adult Medicaid enrollment has held steady over the last year, suggesting that economic factors are working selectively on children.

In fact, additional children should be gaining Medicaid eligibility each year through 2001 as the program is gradually becoming available to older children--up to age 19 in families with incomes below the poverty line.

Nor is the broken AFDC-Medicaid link the only one affecting children’s Medicaid rolls. The federal Health and Human Services Department recently helped make Georgia restore Medicaid coverage to 1,700 children who had been mistakenly dropped because their families had lost eligibility for Supplemental Security Income, a welfare program for the disabled.

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Different obstacles are surfacing in California and other states with large numbers of immigrants, many of whom have good reason to fear that accepting government benefits could put their citizenship applications in jeopardy and make it harder for them to bring relatives from overseas. Medicaid enrollment among California children dropped by 57,000 from 1994 to 1996.

Yolanda Vera, an attorney at the Center for Western Law and Poverty in Los Angeles, described a client who came to her office after petitioning the Immigration and Naturalization Service to bring his mother to the United States from El Salvador.

When his mother went to the consulate in El Salvador for her visa, she learned that unless her son paid back to Medi-Cal (the California Medicaid program) the $40,000 he had received in medical care for his infant son, his mother would be designated as likely to become a “public charge,” meaning that she probably would need government assistance once in the United States.

The need for that assistance would virtually rule out the possibility of her winning permission to enter the United States legally, said Vera, who is appealing the case.

“Immigrants rely on each other for information, and, when something like this gets around, it creates enormous anxiety about going forward to seek any benefits you or your children are entitled to,” Vera said.

Ken August, a spokesman for the California Department of Health Services, said that the department is seeking out immigrants and others who are not receiving the medical benefits to which they are entitled.

“There’s clearly some confusion out there . . . ,” August said. “Some people who may qualify may not be taking advantage of the program.”