Information Outreach
A Study of the Relationship of Health Coverage
to Welfare Dependency
Prepared by Sarah C. Shuptrine, Vicki C. Grant & Genny
G. McKenzie
Southern Institute on Children and Families
March 1994
Executive Summary
According to Welfare Recipients . . . .
When you work, they take everything away.
The more you try to do on your own, the more
they hold you back. You're constantly being
pulled back when you try to take a step ahead.
It gets real frustrating at times.
I could keep a job if I had child care
for my children.
Help me out - I am trying. Medicaid is
the biggest thing, especially if you have
small children.
Give people incentives. Don't take everything
away once they get a job because it makes
the struggle that much harder.
Listening to the views of persons who are most affected by proposed
changes is essential to the development of sound public policy. This
is especially important with welfare reform since changes to the current
system will have a profoundly personal impact on the lives of disadvantaged
families across the nation.
This report presents the views of those on the front line of the
welfare reform debate - the recipients themselves, as well as persons
in the public and private sectors who labor daily to prepare recipients
for jobs and to link them to employment opportunities. The report
is the result of an exploratory study conducted in Charlotte, North
Carolina, and Nashville, Tennessee, during the fall of 1993. The study
was designed to examine the impact of the potential or actual loss
of Medicaid on welfare dependency. In this context, other needs such
as child care, housing and transportation also are examined.
During on-site visits to Charlotte and Nashville, personal interviews
were conducted with 34 recipients of Aid to Families With Dependent
Children (AFDC) and 35 recipients of Transitional Mediciaid benefits.
In addition, discussion sessions were held with agency staff, advocates
and employers. The report is described below:
- Chapter 1 describes the intent of the study
and the process. Previous research is briefly
discussed.
- Chapter 2 provides information on factors
that influence employment decisions. It also
discusses the likelihood that study recipients
will seek and accept minimum wage jobs with
no health coverage and examines the costs versus
the benefits of work.
- Chapter 3 outlines basic eligibility criteria
and discusses misconceptions that many study
recipients, staff and advocates had regarding
eligibility rules related to working parents.
- Chapter 4 describes the type of assistance
most important to study recipients in supporting
their decision to go to work full time and
outlines recipient suggestions on how to improve
the welfare system to support a parent's decision
to go to work.
- Chapter 5 discusses the need for support
services that build the capacity of recipients
to leave welfare.
- Chapter 6 provides the conclusion and outlines
actions that would address the fundings of
the study.
Findings
The study found evidence that Medicaid is a major factor in recipient
decisions regarding work, but it also identified child care as the
benefit recipients ranked first in importance related to their ability
to leave welfare for work.
The most often cited suggestions made by recipients for improving
the welfare system were that benefits should be gradually reduced
as a family moves from welfare to work and that more support services
are needed to better prepare recipients for employment.
A disturbing finding is that far too many study recipients and organizations
that worked with them did not have an adequate understanding of Medicaid
and AFDC eligibility rules related to working parents. If staff and
advocates lack an understanding of how Medicaid and AFDC benefits
are affected when a parent begins working, they are unable to help
recipients with decisions regarding work. Recipients who do not have
adequate information or, even worse, who have wrong information, are
unable to correctly weigh the cost benefit of going to work. It is
especially troublesome that parents of young children are unaware
that their children can be eligible for Medicaid, even if the parent's
salary is well above the minimum wage. A major factor contributing
to eligibility misconceptions held by recipients, advocates, staff
and others is the complexity of eligibility rules across AFDC, Medicaid
and Food Stamps.
To examine the cost benefit of leaving AFDC for work, family budget
examples are displayed to compare income and expenses for a family
without earnings, a family with income at $8,840 (full time minimum
wage) and a family with $15,000 annual income. The family budget comparisons
demonstrate why many AFDC parents feel that it doesn't pay to work.
Even though the combined benefits received from AFDC and Food Stamps
fall short of lifting the family out of poverty, the increased expenses
incurred as a result of employment significantly erode the gains of
increased income due to earnings.
Additionally, information gained during the study indicates that
the building of self-esteem, often considered a "soft" approach,
is an important strategy in helping recipients to give up the security
of public assistance for the risks of employment. The following comments
were made by staff and advocates who attended the discussion sessions:
People who try to succeed get a lot of
pressure to stay like they are - from mothers,
sisters, brothers and friends who they grew
up with.
Boyfriends don't want them to be independent.
They need self dignity. A lot would do
more if they felt better about themselves.
Finally, it must be noted that the slow pace at which the Family
Support Act has been implemented by some states has resulted in limiting
opportunities for AFDC parents who want to acquire the skills necessary
to become gainfully employed.
Recommendations
-
Assure Understanding of Eligibility
Rules. State social services officials
should take actions to determine whether
recipients, staff, advocates and employers
are adequately informed on basic eligibility
rules and, if not, should implement aggressive
information outreach initiatives.
- Simplify Federal Eligibility Rules. The
President and Congress should work together
to enact simplification of the program rules
across AFDC, Medicaid and Food Stamps
- Support and Build Upon the 1988 Family
Support Act. Governors and state legislative
leaders should take action to fully implement
the education, training and support service
opportunities made available by passage of the 1988 Family Support Act.
- Help Families Maintain the Transition
from Welfare to Work. State and federal
policymakers should enact policies to extend
assistance to parents who have moved from
welfare to work by making child care and
health coverage available on a sliding scale
basis once transitional benefits expire.
- Support Special Initiatives to Build
Self-Esteem. Local, state and federal
policymakers should make self-esteem initiatives
a central component of welfare reform efforts.
Copies of the full report are available for $10 each. To order, call
the Southern Institute at 803.779.2607 or email us at info@thesoutherninstitute.org.
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