Before the Subcommittee on Health, Committee on Energy and Commerce, House of Representatives

United States General Accounting Office

Medicaid: Transitional Coverage Can Help Families Move From Welfare To Work (GAO-02-679T)

Statement of William J. Scanlon, Director 
Health Care Issues

Federal welfare reform in 1996 significantly changed policy for low-income families with children and established a five-year lifetime limit on cash assistance. The welfare reform law also extended transitional Medicaid assistance through 2001, thus continuing an important link to health insurance coverage for individuals as their economic circumstances changed. States have implemented a variety of initiatives to help families move from cash assistance to the workforce, including some enhancements to transitional Medicaid. These initiatives have likely contributed to reduced cash assistance caseloads of more than 50 percent from 1996 through mid-2001. Employment in low-wage or part-time positions--which is common for newly working individuals--frequently does not provide access to affordable health insurance, thus making transitional Medicaid coverage an important option. For the 21 states GAO reviewed, The implementation of transitional Medicaid assistance varied across the 21 states that GAO reviewed. State practices enhanced beneficiaries' ability to retain Medicaid coverage. However, many families did not receive their full transitional Medicaid assistance benefits because they failed to report their income three times, as required, throughout the 12-month period of coverage. Amending the Medicaid statute to provide states with additional flexibility to ease income-reporting requirements, as has been done for other aspects of the Medicaid program, could facilitate uninterrupted health insurance coverage for families moving from cash assistance to the workforce