The Pew Charitable Trusts

WASHINGTON -- Enrollment in Medicaid -- the nation's health insurance program for the poor and disabled -- has declined in the wake of welfare reform because of eligibility requirements that both beneficiaries and the people who administer the program find too complex and confusing, a new report says.

For the first time in almost a decade, Medicaid enrollment for children and their parents began to fall in 1996, dropping by 2 percent from 1995, despite provisions in the law to assure that poor families who leave welfare remain enrolled in Medicaid.

In addition, opportunities for children of low-income children families to enroll in Medicaid have expanded through the new State Children's Health Insurance Program (CHIP). Despite this, many children and their parents who are eligible for Medicaid have not enrolled, according to the report by Mathematica Policy Research, Inc., an independent policy research firm.

The report was based on a study of five states (California, Colorado, Florida, Minnesota and Wisconsin) for the Urban Institute's Assessing the New Federalism project and the Kaiser Family Foundation's Commission on Medicaid and the Uninsured.

Medicaid enrollment grew steadily from 28.9 million people in 1990 to 41.7 million in 1995, but dropped to 40.6 million by 1997 -- a decline of 2.6 percent -- according to the Health Care Financing Administration. The Kaiser Commission on Medicaid and the Uninsured attributes the drop to welfare recipients who fell off of state welfare rolls and lost their Medicaid benefits at the same time, even though they may have been qualified to stay in the health care program.

"When you have welfare caseloads plummeting 50 percent or more, Medicaid problem areas that have been around for a long time tend to be magnified," said Marilyn Ellwood, author of the report The Medicaid Eligibility Maze: Enrollment Problems Persist Despite Coverage Expansions , and a senior fellow at Mathematica Policy Research, Inc.

"One of the things needed is more training, particularly for welfare staff. They are critical for (enrolling) the poorest families. With welfare reform mandating time limits and work requirements, many families don't stay on welfare for very long, so it is important to communicate to these people they can still apply for Medicaid," Ellwood said.

Key findings of the report, based on interviews with state-level Medicaid and welfare staff, as well as supervisors and eligibility technicians, include:

• Welfare staff continue to play a critical role in educating families about Medicaid, although many are not thoroughly trained in Medicaid policies or objectives.
• Medicaid eligibility rules have been complicated by federal and state policy changes, and even though coverage for the program may have been expanded in some states, the eligibility process has become difficult for applicants and staff to understand.
• Most states depend heavily on automated computer systems to determine Medicaid eligibility, even though these systems were designed to meet welfare, not Medicaid, needs. Occasionally the systems terminate Medicaid coverage erroneously, and developing new systems has not been a state or federal priority.

"Medicaid is so complicated and keeps getting more complicated. In California I was told it can take up to a year to train a new staff member to understand Medicaid eligibility," Ellwood said.

Ellwood suggests that policymakers make Medicaid eligibility requirements easier to understand and improve outreach efforts; improve coordination between welfare and Medicaid; and clarify whether Medicaid should be a long-term health insurance program for the poor and working poor.