
                       SECTION 15. OTHER PROGRAMS

                                CONTENTS

Overview
Food Stamp Program
  Administration, Program Variations, and Funding
  Eligibility
  Benefits
  Quality Control (QC)
  Interaction With TANF, SSI, and GA Programs
  Recipiency Rates
  Recent Legislative History
Medicaid
  Eligibility
  Families, Pregnant Women, and Children
  Aged and Disabled Persons
  The Medically Needy
  Medicaid and the Poor
  Services
  Financing
  Reimbursement Policy
  Administration
  Medicaid and Managed Care
  Legislative History
  Program Data
State Children's Health Insurance Program
  Eligibility
  Benefits
  Cost Sharing
  Financing
  Legislative History
  Program Data
Federal Housing Assistance
  Types of Assistance
  Trends in Levels and Budgetary Impact of Housing Aid
School Lunch and Breakfast Programs
Special Supplemental Nutrition Program for Women, Infants, and
        Children (WIC)
Child and Adult Care Food Program
  Centers and Outside-of-School Programs
  Family and Group Day Care Homes
Workforce Investment Act
  Description of Major Differences Between WIA and JTPA
Head Start
Low-Income Home Energy Assistance Program (LIHEAP)
  Background
  Program Components
  Allotments to States
  Eligibility and Types of Assistance
  Planning and Administration
Veterans Benefits and Services
Workers' Compensation
  Overview Through 1996
  Recent Developments in Statistical Compilation
References

                                OVERVIEW

    A wide variety of Federal programs outside the jurisdiction
of the Committee on Ways and Means provide benefits to
individuals and families that also receive assistance from
programs within the Committee's jurisdiction (see appendix K).
This section describes several such programs: food stamps;
Medicaid; the State Children's Health Insurance Program
(SCHIP); housing assistance; School Lunch and Breakfast
Programs; the Special Supplemental Nutrition Program for Women,
Infants, and Children (WIC); the Child and Adult Care Food
Program (CACFP); the Workforce Investment Act (WIA); Head
Start; the Low-Income Home Energy Assistance Program (LIHEAP);
veterans benefits and services; and workers' compensation.
    Most families receiving Temporary Assistance for Needy
Families (TANF) or Supplemental Security Income (SSI) would
have incomes low enough to qualify them for assistance under
these programs. Unlike the principal assistance programs under
the jurisdiction of the Committee on Ways and Means,
participation in Head Start, LIHEAP, and other programs is
limited by appropriations. Income received from TANF is counted
in determining eligibility and benefit levels for these
programs. However, because these programs provide in-kind
rather than cash assistance, benefits are not counted in
determining eligibility for TANF.
    Tables 15-1 and 15-2 describe the overlap in recipients
between programs within the jurisdiction of the Committee on
Ways and Means and other major Federal assistance programs.
Table 15-1 illustrates that 81.0 percent of TANF recipient
households also received food stamps during the first quarter
of 1998; 30.6 percent received WIC; 97.3 percent received
Medicaid; 60.3 percent received free or reduced-price school
meals; and 32.2 percent received housing assistance.
    Table 15-2 presents the percentage of recipients of other
means-tested programs who are participating in programs under
Ways and Means jurisdiction. For example, 35.1 percent of food
stamp households received TANF benefits at some time during the
first quarter of 1998; 30.1 percent received SSI; 30.5 percent
received Social Security; 1.6 percent received unemployment
benefits; and 27.9 percent received Medicare.
    Table 15-3 shows the percentage of households receiving Aid
to Families with Dependent Children (AFDC)/TANF or SSI and also
receiving assistance from other programs for selected time
periods. The figures at the bottom of the AFDC/TANF portion of
the table show that the number of households receiving AFDC/
TANF increased rapidly between 1990 and 1994, declined somewhat
in

    TABLE 15-1.--PERCENT OF RECIPIENTS IN PROGRAMS WITHIN THE JURISDICTION OF THE COMMITTEE ON WAYS AND MEANS
                   RECEIVING ASSISTANCE FROM OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS, 1997-98
----------------------------------------------------------------------------------------------------------------
                                                                      Ways and Means assistance program
                                                           -----------------------------------------------------
                 Other assistance program                                        Social   Unemployment
                                                              TANF       SSI    Security  compensation  Medicare
----------------------------------------------------------------------------------------------------------------
Food stamps...............................................      81.0      43.7       7.3         7.0         7.3
WIC.......................................................      30.6       5.5       1.3         7.9         0.9
Medicaid..................................................      97.3      95.0      16.9        16.9        17.2
Free or reduced-price school meals........................      60.3      18.4       4.0        18.0         2.9
Public or subsidized rental housing.......................      32.2      23.4       5.7         4.0         5.8
VA compensation or pensions...............................       1.1       2.8       4.9         1.2         4.9
    Number of households receiving benefits (in thousands)     3,008     4,772    28,833       1,546      26,525
----------------------------------------------------------------------------------------------------------------
Note.--Table shows number of households for December 1997-March 1998. Table reads that 81.0 percent of TANF
  households also receive food stamps. SSI recipients living in California receive a higher SSI payment in lieu
  of food stamps, and thus are not included in the food stamp percentages.

Source: U.S. Census Bureau, Survey of Income and Program Participation.

    TABLE 15-2.--PERCENT OF RECIPIENTS IN OTHER MAJOR FEDERAL ASSISTANCE PROGRAMS RECEIVING ASSISTANCE UNDER
                  PROGRAMS WITHIN THE JURISDICTION OF THE COMMITTEE ON WAYS AND MEANS, 1997-98
----------------------------------------------------------------------------------------------------------------
                                                                     Other assistance program
                                                ----------------------------------------------------------------
                                                                    Free or
       Ways and Means assistance program                            reduced-   Public or                 VA
                                                   Food     WIC      price    subsidized  Medicaid  compensation
                                                  stamps             school     rental               or pensions
                                                                     meals      housing
----------------------------------------------------------------------------------------------------------------
TANF...........................................     35.1     25.6       21.5       21.6       22.5         1.4
SSI............................................     30.1      7.4       10.4       24.9       34.8         5.7
Social Security................................     30.5     10.2       13.6       36.3       37.4        59.3
Unemployment compensation......................      1.6      3.4        3.3        1.4        2.0         0.8
Medicare.......................................     27.9      6.3        9.0       34.3       35.2        55.2
    Number of households receiving benefits (in    6,932    3,585      8,444      4,487     13,014       2,369
     thousands)................................
----------------------------------------------------------------------------------------------------------------
Note.--Table shows households for December 1997-March 1998. Table reads that 35.1 percent of food stamp
  recipient households receive TANF. SSI recipients living in California receive a higher SSI payment in lieu of
  food stamps, and thus are not included in the food stamp percentages.

Source: U.S. Census Bureau, Survey of Income and Program Participation.

 TABLE 15-3.--PERCENT OF HOUSEHOLDS RECEIVING AFDC/TANF OR SSI AND ALSO RECEIVING ASSISTANCE FROM OTHER PROGRAMS
                                            FOR SELECTED TIME PERIODS
----------------------------------------------------------------------------------------------------------------
                                                                               Year
               Assistance program               ----------------------------------------------------------------
                                                  1984    1987    1990    1992    1993    1994    1995   1997-98
----------------------------------------------------------------------------------------------------------------
AFDC/TANF:
    Food stamps................................    81.4    81.7    82.7    86.2    88.9    88.3    87.2     81.0
    WIC........................................    15.3    18.6    18.7    21.5    18.5    21.4    24.7     30.6
    Free or reduced-price school meals.........    49.2    55.6    52.7    55.5    56.9    57.5    63.1     60.3
    Public or subsidized rental housing........    23.0    19.4    34.7    29.5    33.1    30.3    31.1     32.2
    Medicaid...................................    93.2    95.5    97.6    96.2    97.6    96.4    97.2     97.3
    VA compensation or pensions................     2.8     1.9     1.3     1.9     1.1     1.1     0.8      1.1
        Number of households receiving benefits   3,585   3,527   3,434   4,057   4,831   4,906   4,652    3,008
         (in thousands)........................
SSI:
    Food stamps................................    46.5    39.7    41.3    46.2    48.0    50.1    50.0     43.7
    WIC........................................     2.5     2.5     3.0     4.3     3.7     5.4     5.6      5.5
    Free or reduced-price school meals.........    12.7    11.9    15.3    18.2    21.3    23.8    25.2     18.4
    Public or subsidized rental housing........    21.6    20.0    21.4    23.8    23.9    24.9    24.1     23.4
    Medicaid...................................   100.0    99.6    99.7    99.8    99.5   100.0   100.0     95.0
    VA compensation or pensions................     4.7     7.7     5.7     4.0     4.5     3.9     3.6      2.8
        Number of households receiving benefits   3,008   3,341   3,037   3,957   3,861   4,223   4,580    4,772
         (in thousands)........................
----------------------------------------------------------------------------------------------------------------
Note.--Data on households interviewed between December 1997 and March 1998. SSI recipients living in California
  receive a higher SSI payment in lieu of food stamps, and thus are not included in the food stamp percentages;
  in 1997, the TANF Program replaced the Aid to Families with Dependent Children (AFDC) Program.

Source: U.S. Census Bureau, Survey of Income and Program Participation.

1995, and then fell rapidly between 1995 and 1997/1998. Due to
the rapid decline after 1994, the AFDC/TANF rolls declined by
16 percent over the entire period. The number of households
receiving SSI declined slightly in 1990 and 1993, but otherwise
increased throughout the period between 1984 and 1998. The
rolls increased by nearly 60 percent over this period.
    The percentage of AFDC/TANF households receiving other
benefits fluctuated over the 1984-98 period, but the biggest
programs--food stamps, school meals, housing assistance, and
Medicaid--increased and then declined. Food stamps experienced
increased coverage until 1993, after which it fell off by
nearly 9 percent between 1994 and 1998. School lunches also
fell off somewhat between 1995 and 1998. Medicaid coverage
increased between 1984 and 1990, but the pattern was erratic
after that and 1990 proved to be the high-water mark of
coverage. The high-water mark for housing was 1990. The pattern
of receiving other benefits for SSI households is broadly
similar; namely, initial increases and then declines. For every
program, except Medicaid which was received by 100 percent of
SSI households, and veterans benefits, coverage increased
between 1984 and 1994 but then declined either between 1994 and
1995 or between 1995 and 1998. Medicaid too declined from its
100 percent coverage in 1995 to 95 percent in 1998. The
explanation for declining coverage probably varies from program
to program, but the pattern of general decline after 1994 or
1995 deserves careful study, especially if it continues to
occur over the next several years.

                           FOOD STAMP PROGRAM

    Food stamps are designed primarily to increase the food
purchasing power of eligible low-income households to a point
where they can buy a nutritionally adequate low-cost diet.
Participating households are expected to devote 30 percent of
their counted monthly cash income to food purchases.\1\ Food
stamp benefits then make up the difference between the
household's expected contribution to its food costs and an
amount judged to be sufficient to buy an adequate low-cost
diet. This amount, the maximum food stamp benefit, is set at
the level of the U.S. Department of Agriculture's lowest cost
food plan (the Thrifty Food Plan or TFP), varied by household
size, and adjusted annually for inflation. Thus, a
participating household with no counted cash income receives
the maximum monthly allotment for its household size while a
household with some counted income receives a lesser allotment,
normally reduced from the maximum at the rate of 30 cents for
each dollar of counted income.
---------------------------------------------------------------------------
    \1\ Because not all of a household's income is actually counted
when determining its food stamp benefits, the program, in effect,
assumes that most participants are able to spend about 20-25 percent of
their total cash monthly income on food.
---------------------------------------------------------------------------
    Benefits are available to most households that meet Federal
eligibility tests for limited monthly income and liquid assets.
But household members must fulfill requirements related to work
effort and, in general, must be U.S. citizens. Recipients in
the two primary cash welfare programs (TANF and SSI) generally
are automatically eligible for food stamps, as are recipients
of State general assistance (GA) payments, if their household
is composed entirely of TANF, SSI, or GA beneficiaries.\2\
---------------------------------------------------------------------------
    \2\ Except for (1) SSI recipients in California, where a State-
financed adjustment to SSI benefits has replaced food stamp assistance;
and (2) General Assistance Programs that do not meet minimum Federal
standards for determining need.
---------------------------------------------------------------------------

             Administration, Program Variations, and Funding

    The regular Food Stamp Program operates in all 50 States,
the District of Columbia, Guam, and the Virgin Islands. The
Federal Government is responsible for most of the rules that
govern the program, and, with limited variations for Alaska,
Hawaii, and the territories, these rules are nationally
uniform. However, by law and regulation, States have a number
of significant options to vary from Federal administrative,
benefit calculation, and eligibility rules, especially for
those who also are recipients of their State's cash welfare
programs, and a number of waivers from regular rules and
procedures have been (and continue to be) granted. Sales taxes
on food stamp purchases may not be charged, and food stamp
benefits do not directly affect other assistance available to
low-income households, nor are they taxed as income.
    Alternative programs are offered in Puerto Rico, the
Northern Mariana Islands, and American Samoa, and program
variations occur in a number of demonstration projects and in
those jurisdictions that have elected to exercise the limited
number of program options allowed.
    Funding is overwhelmingly Federal, although the States and
other jurisdictions have financial responsibility for
significant administrative costs, as well as liability for
erroneous benefit determinations (as assessed under the food
stamp ``quality control'' system, discussed below).
 Federal administrative responsibilities
    At the Federal level, the program is administered by the
Agriculture Department's Food and Nutrition Service (FNS). The
FNS gives direction to welfare agencies through Federal
regulations that define eligibility requirements, benefit
levels, and administrative rules. It is also responsible for
arranging for printing food stamp coupons and distributing them
to welfare agencies, for overseeing State programs for the
electronic issuance of food stamp benefits, and for approving
and overseeing participation by retail food stores and other
outlets that may accept food stamps. Other Federal agencies
that have administrative roles to play include: the Federal
Reserve System (through which food stamp benefits are redeemed
for cash, and which has some jurisdiction over ``electronic
benefit transfer (EBT)'' methods for issuing food stamp
benefits), the Social Security Administration (responsible for
providing the Social Security numbers recipients must have, for
providing limited application ``intake'' services, and for
providing information to verify recipients' income), the
Internal Revenue Service (providing assistance in verifying
recipients' income and assets), the Immigration and
Naturalization Service (helping welfare offices confirm alien
applicants' status), and the Secret Service and the Agriculture
Department's Inspector General (responsible for counterfeiting
and trafficking investigations).
State and local administrative responsibilities
    States, the District of Columbia, Guam, and the Virgin
Islands, through their local welfare offices, have primary
responsibility for the day-to-day administration of the Food
Stamp Program. They determine eligibility, calculate benefits,
and issue food stamp allotments (using coupons or electronic
benefit transfers) following Federal rules. They also have a
significant voice in carrying out employment and training
programs and in determining some administrative features of the
program (e.g., the extent to which verification of household
circumstances is pursued, the length of eligibility
certification periods, the structure of EBT systems). Most
often, the Food Stamp Program is operated through the same
welfare agency and staff that runs the State's TANF Program.
 Puerto Rico, the Northern Mariana Islands, and American Samoa
    In addition to the regular Food Stamp Program, the Food
Stamp Act directs funding for a Nutrition Assistance Program in
the Commonwealth of Puerto Rico and another in American Samoa.
Separate legislation authorizes a variant of the Food Stamp
Program in the Commonwealth of the Northern Mariana Islands.
    Since July 1982, Puerto Rico has operated a Nutrition
Assistance Program of its own design, funded by an annual
Federal ``block grant.'' \3\ The Commonwealth's Nutrition
Assistance Program differs from the regular Food Stamp Program
primarily in that: (1) funding is limited to an annual amount
specified by law \4\; (2) the Food Stamp Act allows the
Commonwealth a great deal of flexibility in program design, as
opposed to the regular program's extensive Federal rules (e.g.,
benefits are paid in cash (checks) rather than food stamp
coupons); (3) income eligibility limits are about one-third
those used in the regular Food Stamp Program; (4) maximum
benefit levels are about 40 percent less than in the 48
contiguous States and the District of Columbia; and (5)
different rules are used in counting income for eligibility and
benefit purposes. In fiscal year 1999, Puerto Rico's Nutrition
Assistance Program aided approximately 1.1 million persons each
month with monthly benefits averaging $74.50 a person ($193 a
household).
---------------------------------------------------------------------------
    \3\ Prior to July 1982, the regular Food Stamp Program operated in
Puerto Rico, although with slightly different eligibility and benefit
rules.
    \4\ For fiscal years 2000 and 2001, $1.268 billion and $1.301
billion are earmarked. The block grant funds the full cost of benefits
and half the cost of administration.
---------------------------------------------------------------------------
    Under the terms of the 1976 Covenant with the Commonwealth
of the Northern Mariana Islands and implementing legislation
(Public Law 96-597), a variant of the Food Stamp Program was
negotiated with the Commonwealth and began operations in July
1982. The program in the Northern Marianas differs primarily in
that: (1) it is funded entirely by Federal money, up to a
maximum grant of $5.1 million a year (increased to $6.1 million
for fiscal year 2000); (2) a portion of each household's food
stamp benefit must be used to purchase locally produced food;
(3) maximum allotments are about 5 percent higher than in the
48 contiguous States and the District of Columbia; and (4)
income eligibility limits are about half those in the regular
program. As of the end of fiscal year 1999, the Northern
Marianas' program assisted 5,100 people each month with monthly
benefits averaging about $75 a person (see section 12).
    As with the Northern Marianas, American Samoa operates a
variant of the regular Food Stamp Program. Under the Secretary
of Agriculture's authority to extend Agriculture Department
programs to American Samoa (Public Law 96-597) and a 1996
amendment to the Food Stamp Act made by the Federal Agriculture
Improvement and Reform Act (Public Law 104-127), American Samoa
receives an annual grant of up to $5.3 million to operate a
Food Stamp Program limited to low-income elderly and disabled
persons. While maximum monthly allotments are similar to those
in the regular Food Stamp Program ($125 a person), income
eligibility limits are about 25 percent lower. In fiscal year
1999, the program aided about 3,200 persons a month with
average monthly benefits of just over $100 a person (see
section 12).
Program options
    The Food Stamp Act authorizes demonstration projects to
test program variations that might improve operations. However,
because of the law's substantial limits on how much any
demonstration can reduce benefits or restrict eligibility, an
administration policy that effectively bars demonstrations that
have a significant cost to the Food Stamp Program, and
implementation of the 1996 welfare reform law's provisions for
State flexibility, no major demonstration projects are
operational. Instead: (1) a few small demonstrations are
operating in some States (these deal with joint application
processing and standardized food stamp benefits for SSI
recipients, cash benefits for the elderly and SSI recipients,
and evaluation of earlier welfare reform demonstrations); and
(2) extensive waivers of administrative rules are routinely
granted.
    In addition to demonstration projects, States are allowed
to implement some options. States may change administrative
requirements such as those pertaining to application processing
and reporting of household circumstances. They may issue
benefits (at their own cost) to ineligible noncitizens and
those ineligible under the new work rule for able-bodied adults
without children (discussed below). With 50-percent Federal
cost sharing, they can operate ``outreach'' programs to inform
low-income persons about food stamps and support nutrition
education efforts. They may choose to issue food stamp benefits
through EBT systems. They may choose to operate a
``simplified'' program under which they can use many of their
TANF rules and procedures when determining food stamp benefits
for TANF recipients. They largely determine the length of
eligibility certification periods. They may sanction food stamp
recipients failing to meet other public assistance program
rules or failing to cooperate in child support enforcement.
They may, to a certain extent, waive the application of the new
work rule for able-bodied adults without dependents (ABAWDs)
(discussed below); and they may choose to disqualify an entire
household if the head of household fails to fulfill work-
related requirements. They may include the cash value of food
stamp benefits when using welfare to subsidize some recipients'
wages and can pay food stamp benefits in cash to other working
households getting off cash welfare. Finally, States and
localities may opt to run ``workfare'' programs, and States
determine the type(s) of employment or training programs in
which recipients must participate.
Funding
    The Food Stamp Act provides 100 percent Federal funding of
food stamp benefits, except where States choose to ``buy into''
the program and pay for issuing food stamp benefits to
ineligible noncitizens or those made ineligible by the new work
rule for ABAWDs (discussed below). The Federal Government also
is responsible for its own administrative costs: overseeing
program operations (including oversight of participating food
establishments), printing and distributing food stamp coupons
to welfare agencies, redeeming food stamp benefits through the
Federal Reserve, and paying the Social Security Administration
for certain intake services.
    In most instances, the Federal Government provides half the
cost of State welfare agency administration.\5\ However, the
50-percent Federal share can be increased to as much as 60
percent if the State has a very low rate of erroneous benefit
determinations. In addition, the Federal Government shares the
cost of carrying out employment and training programs for food
stamp recipients: (1) each State receives a Federal grant for
basic operating costs (a formula share of $172 million in
fiscal year 2000 and $219 million in fiscal year 2001); and (2)
additional operating costs, as well as expenses for support
services to participants (e.g., transportation, child care) are
eligible for a 50-percent Federal match.\6\ Finally, States are
allowed to retain a portion of improperly issued benefits they
recover (other than those caused by welfare agency error): 35
percent of recoveries in fraud cases and 20 percent in other
circumstances. Federal and State Food Stamp Act spending since
1979 is shown in table 15-4.
---------------------------------------------------------------------------
    \5\ Under the terms of Public Law 105-185, most States are subject
to an annual reduction in their normal Federal share totaling about
$200 million nationwide.
    \6\ The overwhelming majority (80 percent) of the formula grant
funds must be spent on services to those covered by a new work
requirement for able-bodied adults without dependents.
---------------------------------------------------------------------------

                               Eligibility

    The Food Stamp Program has financial, employment/training-
related, and ``categorical'' tests for eligibility. Its
financial tests require that most of those eligible have
monthly income and liquid assets below limits set by law. Under
the employment/training-related tests, certain household
members must register for work, accept suitable job offers, and
fulfill work or training requirements (such as looking or
training for a job) established by State welfare agencies. And,
under a new work requirement established in 1996, food stamp
eligibility for ABAWDs is limited to 3-6 months in any 36-month
period unless they are working at least half time or in a work
or training activity. Categorical eligibility rules make some
automatically eligible for food stamps (many TANF, SSI, and GA
recipients), and categorically deny eligibility to others
(e.g., strikers and most noncitizens, postsecondary students,
and people living in institutional settings). Applications
cannot be denied because of the length of a household's
residence in a welfare agency's jurisdiction or because the
household has no fixed mailing address or does not reside in a
permanent dwelling.

        TABLE 15-4.--RECENT FOOD STAMP ACT EXPENDITURES, 1979-99
                  [Obligations in millions of dollars]
------------------------------------------------------------------------
                                             Administration \2\
                                            --------------------
         Fiscal year           Benefits \1\              State    Total
                                 (Federal)    Federal     and
                                                         local
------------------------------------------------------------------------
1979.........................       $6,480       $515      $388   $7,383
1980.........................        8,685        503       375    9,563
1981.........................       10,630        678       504   11,812
1982.........................       10,408        709       557   11,674
1983.........................       11,955        778       612   13,345
1984.........................       11,499        971       805   13,275
1985.........................       11,556      1,043       871   13,470
1986.........................       11,415      1,113       935   13,463
1987.........................       11,344      1,195       996   13,535
1988.........................       11,999      1,290     1,080   14,369
1989.........................       12,483      1,332     1,101   14,916
1990.........................       15,090      1,422     1,174   17,686
1991.........................       18,249      1,516     1,247   21,012
1992.........................       21,883      1,656     1,375   24,914
1993.........................       23,033      1,716     1,572   26,321
1994.........................       23,736      1,789     1,643   27,168
1995.........................       23,759      1,917     1,748   27,424
1996.........................       23,510      1,984     1,842   27,336
1997.........................       20,810      2,058     1,904   24,772
1998.........................       18,228      2,169     1,988   22,385
1999.........................       17,217      2,100     1,874   21,191
------------------------------------------------------------------------
\1\ All benefit costs associated with the Food Stamp Program, Puerto
  Rico's block grant, and grants to American Samoa and the Northern
  Marianas are included. Fiscal year 1998 and 1999 amounts shown in the
  table also cover the cost of State-financed benefits for noncitizens
  (approximately $100 million a year). For certain years, small downward
  adjustments have been made for overpayments collected from recipients
  and issued but unredeemed benefits. Over time, the figures reflect
  both changes in benefit levels and numbers of recipients.
\2\ All Federal administrative costs associated with the Food Stamp
  Program appropriation and grants to Puerto Rico, American Samoa, and
  the Northern Marianas are included: Federal matching spending for the
  various administrative and employment and training program expenses of
  States and other jurisdictions, and direct Federal administrative
  costs. Figures for Federal administrative costs beginning with fiscal
  year 1993 are for those paid out of food stamp appropriations; for
  earlier years, these figures include estimates of food-stamp-related
  Federal administrative expenses paid out of other Agriculture
  Department appropriations accounts ($40-$60 million a year). Fiscal
  year 1998 and 1999 Federal amounts shown in the table also cover the
  administrative cost of State-financed benefits for noncitizens. State
  and local costs are estimated based on the known Federal shares of
  administrative and employment and training program expenses and
  represent an estimate of these costs to States and other
  jurisdictions; however, the State/local figures shown in the table do
  not include administrative expenses for State-financed benefits to
  noncitizens.

Source: U.S Department of Agriculture budget justification materials for
  fiscal years 1981-2000. Compiled by the Congressional Research
  Service.

 The food stamp household
    The basic food stamp beneficiary unit is the ``household.''
A food stamp household can be either a person living alone or a
group of individuals living together; there is no requirement
for cooking facilities. The food stamp household is unrelated
to recipient units in other welfare programs (e.g., TANF
families with dependent children, elderly or disabled
individuals or couples in the SSI Program).
    Generally speaking, individuals living together constitute
a single food stamp household if they customarily purchase food
and prepare meals in common. Members of the same household must
apply together, and their income, expenses, and assets normally
are aggregated in determining food stamp eligibility and
benefits. However, persons who live together can sometimes be
considered separate ``households'' for food stamp purposes,
related coresidents generally are required to apply together,
and special rules apply to those living in institutional
settings. Most often, persons living together receive larger
aggregate benefits if they are treated as more than one food
stamp household.
    Persons who live together, but purchase food and prepare
meals separately, may apply for food stamps separately, except
for: (1) spouses; (2) parents and their children (21 years or
younger), and (3) minors 18 years or younger (excluding foster
children, who may be treated separately) who live under the
parental control of a caretaker. In addition, persons 60 years
or older who live with others and cannot purchase food and
prepare meals separately because of a substantial disability
may apply separately from their coresidents as long as their
coresidents' income is below prescribed limits (165 percent of
the Federal poverty guidelines).
    Although those living in institutional settings generally
are barred from food stamps, individuals in certain types of
group living arrangements may be eligible and are automatically
treated as separate households, regardless of how food is
purchased and meals are prepared. These arrangements must be
approved by State or local agencies and include: residential
drug addict or alcoholic treatment programs, small group homes
for the disabled, shelters for battered women and children, and
shelters for the homeless.
    Thus, different food stamp households can live together,
food stamp recipients can reside with nonrecipients, and food
stamp households themselves may be ``mixed'' (include
recipients and nonrecipients of other welfare benefits).
Income eligibility
    Except for households composed entirely of TANF, SSI, or GA
recipients (who generally are automatically eligible for food
stamps), monthly cash income is the primary food stamp
eligibility determinant.\7\ In establishing eligibility for
households without an elderly or disabled member,\8\ the Food
Stamp Program uses both the household's basic (or ``gross'')
monthly income and its counted (or ``net'') monthly income.
When judging eligibility for households with elderly or
disabled members, only the household's counted monthly income
is considered; in effect, this procedure applies a more liberal
income test to elderly and disabled households.
---------------------------------------------------------------------------
    \7\ Although they do not have to meet food stamp financial
eligibility tests, TANF, SSI, and general assistance households must
still have their income calculated under food stamp rules to determine
their food stamp benefits.
    \8\ In the Food Stamp Program, ``elderly'' persons are those 60
years or older. The ``disabled'' generally are beneficiaries of
governmental disability-based payments (e.g., Social Security or SSI
disability recipients, disabled veterans, certain disability retirement
annuitants, and recipients of disability-based Medicaid or general
assistance).
---------------------------------------------------------------------------
    Basic (or gross) monthly income includes all of a
household's cash income except the following ``exclusions''
(disregards): (1) most payments made to third parties (rather
than directly to the household); (2) unanticipated, irregular,
or infrequent income, up to $30 a quarter; (3) loans (deferred
repayment student loans are treated as student aid, see below);
(4) income received for the care of someone outside the
household; (5) nonrecurring lump-sum payments such as income
tax refunds and retroactive lump-sum Social Security payments
(these are instead counted as liquid assets); (6) Federal
energy assistance; (7) expense reimbursements that are not a
``gain or benefit'' to the household; (8) income earned by
schoolchildren 17 or younger; (9) the cost of producing self-
employment income; (10) Federal postsecondary student aid
(e.g., Pell grants, student loans); (11) advance payments of
Federal earned income credits; (12) ``on-the-job'' training
earnings of dependent children under 19 in the Workforce
Investment Act (WIA), formerly the Job Training Partnership Act
(JTPA), Programs, as well as monthly ``allowances''; (13)
income set aside by disabled SSI recipients under an approved
``plan for achieving self-support''; and (14) payments required
to be disregarded by provisions of Federal law outside the Food
Stamp Act (e.g., various payments under laws relating to
Indians, payments under the Older Americans Act Employment
Program for the Elderly).
    Counted (or net) monthly income is computed by subtracting
certain ``deductions'' from a household's basic (or gross)
monthly income. This procedure is based on the recognition that
not all of a household's income is equally available for food
purchases. Thus, a standard portion of income, plus amounts
representing work expenses or excessively high nonfood living
expenses, are disregarded.
    For households without an elderly or disabled member,
counted monthly income equals gross monthly income less the
following deductions:
  --A standard deduction set at $134 a month, regardless of
        household size; different standard deductions are used
        for Alaska ($229), Hawaii ($189), Guam ($269), and the
        Virgin Islands ($118).
  --Any amounts paid as legally obligated child support;
  --Twenty percent of any earned income, in recognition of
        taxes and work expenses;
  --Out-of-pocket dependent care expenses, when related to work
        or training, up to $175 a month per dependent, $200 a
        month for children under age 2;
  --Shelter expenses that exceed 50 percent of counted income
        after all other deductions, up to a periodically
        adjusted ceiling now standing at $275 a month.
        Different ceilings prevail in Alaska, Hawaii, Guam, and
        the Virgin Islands: $478, $393, $334, and $203,
        respectively.
    For households with an elderly or disabled member, counted
monthly income equals gross monthly income less:
  --The same standard, child support, earned income, and
        dependent care deductions noted above;
  --Any shelter expenses, to the extent they exceed 50 percent
        of counted income after all other deductions, with no
        limit; and
  --Any out-of-pocket medical expenses (other than those for
        special diets) that are incurred by an elderly or
        disabled household member, to the extent they exceed a
        threshold of $35 a month.
    Except for those households comprised entirely of TANF,
SSI, or GA recipients, in which case food stamp eligibility
generally is automatic, all households must have net monthly
income that does not exceed the Federal poverty guidelines.
Households without an elderly or disabled member also must have
gross monthly income that does not exceed 130 percent of the
inflation-adjusted Federal poverty guidelines. Both these
income eligibility limits are uniform for the 48 contiguous
States, the District of Columbia, Guam, and the Virgin Islands;
somewhat higher limits (based on higher poverty guidelines) are
applied in Alaska and Hawaii. The net and gross eligibility
limits on income are summarized in table 15-5.

 TABLE 15-5.--COUNTED (NET) AND BASIC (GROSS) MONTHLY INCOME ELIGIBILITY
           LIMITS FOR THE FOOD STAMP PROGRAM, FISCAL YEAR 2000
------------------------------------------------------------------------
                                    48 States, the
                                      District of
          Household size             Columbia, and    Alaska     Hawaii
                                          the
                                      territories
------------------------------------------------------------------------
Counted (net) monthly income
 eligibility limits \1\:
    1 person......................            $687       $860       $791
    2 persons.....................             922      1,154      1,061
    3 persons.....................           1,157      1,447      1,331
    4 persons.....................           1,392      1,740      1,601
    5 persons.....................           1,627      2,034      1,871
    6 persons.....................           1,862      2,327      2,141
    7 persons.....................           2,097      2,620      2,411
    8 persons.....................           2,332      2,914      2,681
    Each additional person........            +235       +294       +270
Basic (gross) monthly income
 eligibility limits \2\:
    1 person......................             893      1,118      1,029
    2 persons.....................           1,199      1,500      1,380
    3 persons.....................           1,504      1,881      1,731
    4 persons.....................           1,810      2,262      2,082
    5 persons.....................           2,115      2,644      2,433
    6 persons.....................           2,421      3,025      2,784
    7 persons.....................           2,726      3,406      3,135
     8 persons....................           3,032      3,788      3,486
     Each additional person.......            +306       +382       +351
------------------------------------------------------------------------
\1\ Set at the applicable Federal poverty guidelines, updated for
  inflation through calendar 1998.
\2\ Set at 130 percent of the applicable Federal poverty guidelines,
  updated for inflation through calendar 1998.

Source: U.S. Department of Agriculture, Food and Nutrition Service.

 Allowable assets
    Except for households automatically eligible for food
stamps because they are composed entirely of Temporary
Assistance for Needy Families (TANF), Supplemental Security
Income (SSI), or GA recipients, eligible households must have
counted liquid assets that do not exceed federally prescribed
limits. Households without an elderly member cannot have
counted liquid assets above $2,000. Households with an elderly
member cannot have counted liquid assets above $3,000.
    Counted liquid assets include cash on hand, checking and
savings accounts, savings certificates, stocks and bonds,
individual retirement accounts (IRAs) and Keogh plans (less any
early withdrawal penalties), and nonrecurring lump-sum payments
such as insurance settlements. Certain less liquid assets are
also counted: a portion of the value of vehicles (generally,
the fair market value in excess of $4,650) and the equity value
of property not producing income consistent with its value
(e.g., recreational property).
    Counted assets do not include the value of the household's
residence (home and surrounding property), business assets,
personal property (household goods and personal effects), lump-
sum earned income tax credit payments, burial plots, the cash
value of life insurance policies and pension plans (other than
Keogh plans and IRAs), and certain other resources whose value
is not accessible to the household, would not yield more than
$1,000 if sold (e.g., a car with a small equity value), or are
required to be disregarded by other Federal laws.
Work-related requirements
    To gain or retain eligibility, most able-bodied adults
must: (1) register for work (typically with the welfare agency
or a State employment service office); (2) accept a suitable
job if offered one; (3) fulfill any work, job search, or
training requirements established by administering welfare
agencies; (4) provide the administering welfare agency with
sufficient information to allow a determination with respect to
their job availability; and (5) not voluntarily quit a job
without good cause or reduce work effort below 30 hours a week.
If the household head fails to fulfill any of these
requirements, the entire household may, at State option, be
disqualified for up to 180 days. Individual disqualification
periods differ according to whether the violation is the first,
second, or third; minimum periods, which may be increased by
the State welfare agency, range from 1 to 6 months.
    Those who are exempt by law from these basic work
requirements include: persons physically or mentally unfit for
work; those under age 16 or over age 59; and individuals
between 16 and 18 if they are not head of household or are
attending school or a training program; persons working at
least 30 hours a week or earning the minimum wage equivalent;
persons caring for dependents who are disabled or under age 6;
those caring for children between ages 6 and 12 if adequate
child care is not available (this second exemption is limited
to allowing these persons to refuse a job offer if care is not
available); individuals already subject to and complying with
another assistance program's work, training, or job search
requirements; otherwise eligible postsecondary students; and
residents of drug addiction and alcoholic treatment programs.
    Those not exempted by one of the above-listed rules must,
at least, register for work and accept suitable job offers.
However, their State welfare agency may require them to fulfill
some type of work, job search, or training obligation. Welfare
agencies must operate an employment and training program of
their own design for work registrants whom they designate.
Welfare agencies may require all work registrants to
participate in one or more components of their program, or
limit participation by further exempting additional categories
and individuals for whom participation is judged impracticable
or not cost effective. Program components can include any or
all of the following activities: supervised job search or
training for job search, workfare, work experience or training
programs, education programs to improve basic skills, or any
other employment or training activity approved by the
Agriculture Department. However, at least 80 percent of
unmatched Federal money provided for States' employment and
training programs must be spent on services to those covered by
the new work rule for ABAWDs (see below).
    Recipients who take part in an employment or training
activity beyond work registration cannot be required to work
more than the minimum wage equivalent of their household's
benefit. Total hours of participation (including both work and
any other required activity) cannot exceed 120 hours a month.
Welfare agencies also must provide support for costs directly
related to participation (e.g., transportation and child care).
Agencies may limit this support to $25 per participant per
month for all support costs other than dependent care, and to
local market rates for necessary dependent care.
    In addition to these work-related requirements, the 1996
welfare reform law (Public Law 104-193) added a new work
requirement for most able-bodied adults between 18 and 50
without dependents. They are ineligible for food stamps if,
during the prior 36 months, they received food stamps for 3
months while not working at least 20 hours a week or
participating in an approved work/training activity. Those
disqualified under this rule are able to reenter the Food Stamp
Program if, during a 30-day period, they work 80 hours or more
or participate in a work/training activity. If they then become
unemployed or leave work/training, they are eligible for an
additional 3-month period on food stamps without working at
least 20 hours a week or participating in a work/training
activity. But they are allowed only one of these added 3-month
eligibility periods in any 36 months for a potential total of 6
months on food stamps in any 36 months without half-time work
or enrollment in a work/training program.
    At State request, this rule can be waived for areas with
very high unemployment (over 10 percent) or lack of available
jobs. Moreover, States may, on their own initiative, exempt up
to 15 percent of those covered under the new work rule.
    In fiscal year 1999, States reported 2 million new work
registrants. Of these, approximately 1.4 million--including an
estimated 700,000 ABAWDs--were subject to employment and
training program placement. Just over 600,000 of the 1.4
million potentially subject to employment and training
participation requirements were reported actually placed in a
work/training component. Work/training slots were not found for
many of the remainder, or they left the Food Stamp Program or
were sanctioned for failure to fulfill their obligation.
 Categorical eligibility rules and other limitations
    Food stamp eligibility is sometimes denied for reasons
other than financial need or compliance with work-related
requirements. Many noncitizens are barred--eligibility is
extended only to children, the elderly, and disabled who were
legally resident before August 1996, refugees and asylees for a
limited period of time, veterans, those with a substantial
history of work covered under the Social Security system, and
certain other limited groups of aliens. Households with members
on strike are denied benefits unless eligible prior to the
strike. With some exceptions, postsecondary students (in school
half time or more) who are fit for work and between ages 18 and
50 are ineligible. Persons living in institutional settings are
denied eligibility, except those in special SSI-approved small
group homes for the disabled, persons living in drug addiction
or alcohol treatment programs, and persons in shelters for
battered women and children or shelters for the homeless.
Boarders cannot receive food stamps unless they apply together
with the household in which they are boarding. Those who
transfer assets for the purpose of qualifying for food stamps
are barred. Persons who fail to provide Social Security numbers
or cooperate in providing information needed to verify
eligibility or benefit determinations are ineligible. Food
stamps are denied those who intentionally violate program
rules, for specific time periods ranging from 1 year (on a
first violation) to permanently (on a third violation or other
serious infraction); and States may impose food stamp
disqualification when an individual is disqualified from
another public assistance program. Automatic disqualification
is required for those applying in multiple jurisdictions,
fleeing arrest, or convicted of a drug-related felony. And
States may disqualify individuals not cooperating with child
support enforcement authorities or in arrears on their child
support obligations.

                                Benefits

    Food stamp benefits are a function of a household's size,
its net monthly income, and maximum monthly benefit levels (in
some cases, adjusted for geographic location). An eligible
household's net income is determined (i.e., the deductions
noted earlier are subtracted from gross income), its maximum
benefit level is established, and a benefit is calculated by
subtracting its expected contribution (30 percent of its
counted net income) from its maximum allotment. Thus, a 3-
person household with $400 in counted net income (after
deductions) would receive a monthly allotment of $215 (the
maximum 3-person benefit in the 48 States, $335, less 30
percent of net income, $120).
    Allotments are not taxable and food stamp purchases may not
be charged sales taxes. Receipt of food stamps does not affect
eligibility for or benefits provided by other welfare programs,
although some programs use food stamp participation as a
``trigger'' for eligibility and others take into account the
general availability of food stamps in deciding what level of
benefits to provide. In fiscal year 1999, monthly benefits
averaged $72 a person and about $170 a household.
Maximum monthly allotments
    Maximum monthly food stamp allotments are tied to the cost
of purchasing a nutritionally adequate low-cost diet, as
measured by the Agriculture Department's Thrifty Food Plan
(TFP). Maximum allotments are set at: the monthly cost of the
TFP for a four-person family consisting of a couple between
ages 20 and 50 and two school-age children, adjusted for family
size (using a formula reflecting economies of scale developed
by the Human Nutrition Information Service), and rounded down
to the nearest whole dollar. Allotments are adjusted for food
price inflation annually, each October, to reflect the cost of
the TFP in the immediately previous June.
    Maximum allotments are standard in the 48 contiguous States
and the District of Columbia; they are higher, reflecting
substantially different food costs, in Alaska, Hawaii, Guam,
and the Virgin Islands (table 15-6).
 Minimum and prorated benefits
    Eligible one-and two-person households are guaranteed a
minimum monthly food stamp allotment of $10. Minimum monthly
benefits for other household sizes vary from year to year,
depending on the relationship between changes in the income
eligibility limits and the adjustments to the cost of the TFP.
In a few cases, benefits can be reduced to zero before income
eligibility limits are exceeded. At present, minimum monthly
allotments for households of three or more persons range from
$2 to over $80.
    In addition, a household's calculated monthly allotment can
be prorated (reduced) for 1 month. On application, a
household's first month's benefit is reduced to reflect the
date of application. If a previously participating household
does not meet eligibility recertification requirements in a
timely fashion, but does become certified for eligibility
subsequently, benefits for the first month of its new
certification period normally are prorated to reflect the date
when recertification requirements were met.
 Application, processing, and issuing food stamps
    Food stamp benefits normally are issued monthly. The local
welfare agency must either deny eligibility or make food stamps
available within 30 days of initial application and must
provide food stamps without interruption if an eligible
household reapplies and fulfills recertification requirements
in a timely manner. Households in immediate need because of
little or no income and very limited cash assets, as well as
the homeless and those with extraordinarily high shelter
expenses, must be given expedited service (provision of
benefits within 7 days of initial application).

                      TABLE 15-6.--MAXIMUM MONTHLY FOOD STAMP ALLOTMENTS, FISCAL YEAR 2000
----------------------------------------------------------------------------------------------------------------
                                                                    48
                                                                  States
                                                                  and the                                 Virgin
                         Household size                          District  Alaska \1\   Hawaii    Guam   Islands
                                                                    of
                                                                 Columbia
----------------------------------------------------------------------------------------------------------------
1 person.......................................................      $127       $158      $199     $188     $164
2 persons......................................................       234        290       365      345      301
3 persons......................................................       335        415       523      495      431
4 persons......................................................       426        528       664      628      548
5 persons......................................................       506        627       789      746      651
6 persons......................................................       607        752       947      896      781
7 persons......................................................       671        831     1,047      990      863
8 persons......................................................       767        950     1,196    1,131      987
 Each additional person........................................       +96       +119      +150     +141     +123
----------------------------------------------------------------------------------------------------------------
\1\ Maximum monthly allotments for designated urban areas of Alaska. Two separate higher allotment levels are
  applied in remote rural areas of Alaska. They are 28 and 55 percent higher than the urban allotments shown
  here.

Source: U.S. Department of Agriculture.

    Food stamp issuance is a welfare agency responsibility, and
issuance practices differ among welfare agencies. Food stamp
coupons have traditionally been issued by: (1) providing
(usually mailing) recipients an authorization-to-participate
card that is then turned in at a local issuance point (e.g., a
bank or post office) when picking up their monthly allotment;
or (2) mailing food stamp coupon allotments directly to
recipients. However, in a growing number of States, electronic
benefit transfer (EBT) systems are used. EBT systems replace
coupons with an ATM-like card used to make food purchases at
the point of sale by deducting the purchase amount from the
recipient's food stamp benefit account. EBT issuance is used
(either statewide or in part of the State) in the majority of
States (reaching more than half of food stamp recipients). All
remaining States are well along in the process of converting to
EBT issuance, which is expected to be the national norm by
2002.
 Using food stamps
    ``Paper'' food stamp benefits are usually issued in the
form of booklets of coupons. The smallest coupon denomination
is $1; if change of less than $1 is due on a food stamp
purchase, it is returned in cash. Typically, participating
households use their food stamps in approved grocery stores to
buy food items for home preparation and consumption; food stamp
purchases are not taxable. However, the actual list of approved
uses for food stamps is more extensive, and includes: (1) food
for home preparation and consumption, not including alcohol,
tobacco, or hot foods intended for immediate consumption; (2)
seeds and plants for use in gardens to produce food for
personal consumption; (3) food purchased at approved farmers'
markets; (4) in the case of the elderly and SSI recipients and
their spouses, meals prepared and served through approved
communal dining programs; (5) in the case of the elderly and
those who are disabled to an extent that they cannot prepare
all of their meals, home-delivered meals provided by programs
for the homebound; (6) meals prepared and served to residents
of drug addiction and alcoholic treatment programs, small group
homes for the disabled, shelters for battered women and
children, and shelters or other establishments serving the
homeless; and (7) where the household lives in certain remote
areas of Alaska, equipment for procuring food by hunting and
fishing (e.g., nets, hooks, fishing rods, and knives). As noted
earlier, food stamp benefits also can be used through EBT
cards. In this case, the card is swiped through an approved
retailer's point-of-sale device, automatically debiting the
recipient's food stamp account and crediting the retailer's
bank account; unlike coupon transactions, recipients receive no
cash change, and special arrangements must be made for
nontraditional sites like farmers' markets.

                          Quality Control (QC)

    Since the early 1970s, the Food Stamp Program has had a QC
system to monitor the degree to which erroneous eligibility and
benefit determinations are made by State welfare agencies. The
system was established by regulation in the 1970s as an
administrative tool to enable welfare officials to identify
problems and take corrective actions. Today, by legislative
directive, the QC system also is used to calculate and impose
fiscal sanctions on States that have very high rates of
erroneous benefit and eligibility decisions. It also provides
outside evaluators with a general picture of the integrity of
the eligibility and benefit determination process in each
State.
    Under the QC system, welfare agencies, with Federal
oversight, continuously sample their active food stamp
caseloads, as well as their decisions to deny or end benefits.
The agencies perform indepth investigations of the eligibility
and benefit status of the randomly chosen cases looking for
errors in applying Federal rules and otherwise erroneous
benefit and eligibility outcomes. Over 90,000 cases are
reviewed each year, and each State's sample is designed to
provide a statistically valid picture of erroneous decisions
and, in most instances, their dollar value in benefits. The
resulting error rate information is used by program managers to
chart needed changes in administrative practices, and by the
Federal Government to assess fiscal sanctions on States with
error rates above certain tolerance levels. This information
also is used to reward States with error rates below a separate
lower tolerance level, and to review administering agency plans
for action to correct procedures to control errors. Both error
rate findings and any assessed sanctions are subject to appeal
through administrative law judges and the Federal courts.
Sanctions may be reduced or waived if the State shows good
cause or if it is determined that the sanction amounts should
be invested in improved State administration. Interest may be
charged on outstanding sanction liabilities if the
administrative appeals process takes more than 1 year.
    QC reviews generate annual estimates of the proportion of
cases in which administrators or recipients make an ``error''
and the dollar value of those errors. Caseload and dollar error
rates are calculated for overpayments (including incorrect
payments to eligible and ineligible households) and
underpayments. The accuracy of welfare agency decisions denying
or terminating assistance also is measured, with an error rate
reflecting the proportion of denials and terminations that were
improper; no dollar value is calculated. The national weighted
average for the dollar value of overpayments was estimated at
7.6 percent in fiscal year 1998 (table 15-7). This was
noticeably above the all-time low of 7 percent in 1991. Error
rates for underpayments have been relatively unchanged
historically (running about 2 percent), but have risen
recently. In fiscal year 1998, the national weighted average
underpayment dollar error rate was estimated at 3.1 percent.
Finally, the rate of denials and terminations found improper in
the most recent estimate (1994) was 3.8 percent.

  TABLE 15-7.--FOOD STAMP QUALITY CONTROL ERROR RATES, FISCAL YEAR 1998
             [Percent of benefits paid or not paid in error]
------------------------------------------------------------------------
                                  Overpayment  Underpayment    Combined
              State                error rate   error rate    error rate
------------------------------------------------------------------------
Alabama.........................         6.55          1.12         7.67
Alaska..........................        11.82          2.37        14.19
Arizona.........................         4.32          1.58         5.90
Arkansas........................         4.96          1.01         5.96
California......................         8.17          4.35        12.52
Colorado........................         7.67          3.02        10.69
 Connecticut....................        10.34          2.79        13.13
Delaware........................         9.71          2.74        12.45
District of Columbia............         7.41          3.25        10.66
Florida.........................         8.47          4.47        12.94
Georgia.........................         9.90          3.75        13.65
Guam............................         8.15          2.17        10.32
Hawaii..........................         3.23          1.58         4.82
 Idaho..........................         6.12          4.33        10.45
 Illinois.......................        11.04          3.00        14.04
 Indiana........................         4.98          1.81         6.79
 Iowa...........................        10.02          3.35        13.37
 Kansas.........................         8.03          3.08        11.10
Kentucky........................         4.53          2.87         7.40
 Louisiana......................         5.52          2.16         7.67
 Maine..........................         7.43          2.72        10.15
 Maryland.......................        11.56          3.84        15.40
Massachusetts...................         4.96          2.51         7.46
 Michigan.......................        13.13          4.55        17.67
 Minnesota......................         3.35          1.83         5.18
 Mississippi....................         3.70          2.31         6.01
 Missouri.......................         6.73          1.57         8.31
 Montana........................         5.29          2.04         7.33
Nebraska........................        12.51          4.18        16.69
 Nevada.........................         6.25          2.62         8.88
 New Hampshire..................         5.74          4.46        10.19
 New Jersey.....................         8.70          3.21        11.91
 New Mexico.....................         7.80          2.85        10.64
New York........................         8.61          4.33        12.93
 North Carolina.................         7.92          2.86        10.78
 North Dakota...................         6.32          3.03         9.36
 Ohio...........................         6.19          3.10         9.29
 Oklahoma.......................         7.65          3.22        10.87
 Oregon.........................        11.47          1.98        13.45
Pennsylvania....................         7.42          2.43         9.85
Rhode Island....................         4.66          2.37         7.03
 South Carolina.................         6.60          1.46         8.07
 South Dakota...................         1.59          0.52         2.11
Tennessee.......................         6.58          2.16         8.74
Texas...........................         3.82          1.45         5.27
 Utah...........................         7.69          2.01         9.70
 Vermont........................        10.56          2.69        13.25
Virginia........................         6.83          4.30        11.13
 Virgin Islands.................         4.41          2.15         6.56
Washington......................        12.04          3.16        15.21
 West Virginia..................         8.51          2.88        11.39
 Wisconsin......................         9.28          5.30        14.58
 Wyoming........................         3.48          1.33         4.81
                                 ---------------------------------------
    U.S. average................         7.63          3.07        10.69
------------------------------------------------------------------------
Note.--Underpayment and overpayment rates may not add to combined rates
  due to rounding.

Source: Food and Nutrition Service.

    The dollar error rates reported through the food stamp QC
system are used as the basis for assessing the financial
liability of States for overpaid and underpaid benefits.
Although well over $1 billion in sanctions have been assessed
since the early 1980s, less than $10 million has been
collected. The appeals process has delayed collection, and
sanctions have been forgiven or waived both by Congress and the
administration. In amending the rules governing sanctions in
1988 and 1990, Congress forgave accumulated sanctions, and, in
late 1992, the administration waived sanctions by allowing
States to invest the amounts in improved administration.
Permission for States to invest sanction amounts in improved
program administration has now become the rule, and States
regularly apply and agree to invest sanction amounts under
Federal guidelines rather than pay the Federal Government.
Moreover, the administration chose to reduce sanction
assessments for fiscal year 1998 from $78 million (22 States)
to $27 million (16 States) by removing small errors from the
assessment calculations and because of the presumed error-rate
effects of high and increased proportions of households with
earnings and immigrant applicants.
    Legislated rules governing fiscal sanctions have changed a
number of times. Under the most recent revision (1993),
sanctions are assessed against States with combined
(overpayment and underpayment) dollar error rates above the
national weighted average combined error rate for the year in
question (10.7 percent in 1998). Each State's sanction amount
is determined by using a ``sliding scale'' so that its penalty
assessment equals an amount reflecting the degree to which the
State's combined error rate exceeds the national average (the
``tolerance level''). For example, if the tolerance level is 10
percent and a State's error rate is 12 percent, the State would
be assessed a sanction of 0.4 percent of benefits paid in the
State that year (the State's error rate is 2 percentage points,
or 20 percent, above the tolerance level, and it is assessed a
sanction representing 20 percent of the amount by which it
exceeds the tolerance level; 2 percentage points <greek-e> 0.2
= 0.4). A State with a combined error rate of 14 percent would
owe a penalty of 1.6 percent of benefits, or 40 percent of the
amount by which it exceeds the 10-percent tolerance level (4
percentage points <greek-e> 0.4 = 1.6). Thus, the degree to
which a State is assessed sanctions increases as its error rate
rises, rather than having sanctions assessed equally on each
dollar above the tolerance level. In fiscal year 1998, 22
States had combined error rates above the 10.7 percent
tolerance level and were assessed some $78 million in sanctions
(later lowered to $27 million, see above).
    States also can receive increased Federal funding for
administration if their error rates are below a second, much
lower threshold. States with a combined error rate below 6
percent are entitled to a larger-than-normal Federal share of
their administrative costs. The regular 50-percent Federal
match is, depending on the degree to which the State's error
rate is below 6 percent, raised to a maximum of 60 percent, as
long as the State's rate of improper denials and terminations
is below the national average. This ``enhanced'' administrative
funding has typically totaled $10-$20 million a year; in fiscal
year 1998, five States had combined error rates below 6 percent
(and the requisite low rate of improper denials) and received
$27 million in enhanced funding.
    Finally, the QC system identifies the various sources of
error and requires that States develop and carry out corrective
action plans to improve payment accuracy. These reviews
generally show that the primary responsibility for overpayment
errors is almost evenly split between welfare agencies and
clients. The most common errors are related to establishing
food stamp expense deductions and households' income.
    Intentional program violations (e.g., fraud) can occur in a
number of ways; the most common are intentionally
misrepresenting household circumstances in order to obtain food
stamps or increase benefits and trafficking in food stamp
coupons. About one-quarter of the dollar value of erroneous
benefit and eligibility determinations identified through QC
reviews are fraudulent--just under 2 percent of all benefits
issued in 1998. The most recent Agriculture Department study on
the extent of food stamp coupon trafficking estimated it at
some $800 million in 1993--3.7 percent of all benefits issued
that year.

               Interaction With TANF, SSI, and GA Programs

    The Food Stamp Program is intertwined with Temporary
Assistance for Needy Families (TANF), SSI, and State/local
General Assistance (GA) Programs in three ways: it is
administratively linked with TANF and GA Programs, most TANF,
SSI, and GA recipients are automatically (categorically)
eligible for food stamps, and the food stamp recipient
population is made up largely of TANF, SSI, and GA
participants.
    State and local offices and personnel administering TANF
and GA Programs are typically the same offices that enroll
people for food stamps and issue food stamp benefits. Joint
food stamp-TANF/GA application and interview procedures are
common. And information about applicants and recipients is
shared. This coadministration does not apply in the case of the
SSI Program, which is administered separately through Social
Security Administration offices--although these offices do
provide limited intake and referral services for the Food Stamp
Program and one small pilot project provides standardized food
stamp benefits through SSI offices.
    Food stamp rules generally make households in which all
members are TANF, SSI, or GA recipients categorically eligible
for food stamps, without reference to regular food stamp
eligibility requirements. TANF recipients are broadly defined
as anyone receiving benefits or services through a State's TANF
Programs. SSI recipients' eligibility for food stamps is barred
in California (see earlier eligibility discussion), and GA
Programs must meet minimal Federal standards to qualify their
recipients for food stamps. Categorical eligibility for food
stamps is particularly important in cases where States have
chosen TANF rules that are more liberal than food stamps (e.g.,
disregarding the value of vehicles for working households) in
order to encourage work effort. However, it is important to
keep in mind that food stamp rules often qualify a household
for food stamps even after loss of TANF, SSI, or GA benefits.
    For most persons participating in the Food Stamp Program,
food stamp aid represents a second or third form of government
assistance. Fewer than 20 percent of food stamp households rely
solely on nongovernmental sources for their cash income,
although over one-quarter have some income from these sources
(e.g., earnings, private retirement income). According to 1997
data from QC surveys, TANF (or Aid to Families with Dependent
Children (AFDC)) contributed to the income of some 35 percent
of food stamps households, and for the large majority of them
TANF/AFDC was their only cash income. Supplemental Security
Income (SSI) benefits went to about 26 percent of food stamp
households; GA payments were received by around 6 percent.

                            Recipiency Rates

    Table 15-8 shows overall food stamp participation rates
from 1975 to 1998 using two measures: as a proportion of the
total U.S. population and as a percentage of the population
with income below the Federal poverty thresholds. Food stamp
enrollment has fluctuated widely over the last 25 years,
reaching its peak in fiscal year 1994; in that year, it
averaged 27.5 million persons a month, with an all-time high of
28 million in the spring of 1994 (not including 1.4 million
persons receiving aid under Puerto Rico's nutrition assistance
grant in lieu of food stamps).

 TABLE 15-8.--FOOD STAMP PARTICIPATION RATES IN THE UNITED STATES, 1975-
                                   98
------------------------------------------------------------------------
                                  Number of    Food stamp participation
                                 food stamp       as a percent of----
             Year               participants ---------------------------
                                     (in           Total         Poor
                                  millions)   population \1\  population
------------------------------------------------------------------------
1975..........................         16.3            7.6          63.0
1976..........................         17.0            7.9          68.1
1977..........................         15.6            7.2          63.1
1978..........................         14.4            6.5          58.8
1979..........................         15.9            7.1          61.0
1980..........................         19.2            8.4          65.6
1981..........................         20.6            9.0          64.7
1982..........................         20.4            8.8          59.3
1983..........................         21.6            9.2          61.2
1984..........................         20.9            8.8          62.0
1985..........................         19.9            8.3          60.2
1986..........................         19.4            8.0          59.9
1987..........................         19.1            7.8          59.1
1988..........................         18.7            7.6          58.9
1989..........................         18.8            7.6          59.6
1990..........................         20.0            8.0          59.6
1991..........................         22.6            9.0          63.3
1992..........................         25.4           10.0          68.9
1993..........................         27.0           10.4          68.7
1994..........................         27.5           10.5          72.1
1995..........................         26.6           10.1          73.0
1996..........................         25.5            9.6          69.8
1997..........................         22.9            8.5          64.3
1998..........................         19.8            8.2          57.4
------------------------------------------------------------------------
\1\ Calculated as a percent of total U.S. resident population at the end
  of the fiscal year through 1996. For later fiscal years, calculated as
  a percent of total U.S. resident population reported in the March
  Current Population Survey (271 million for 1998).

Note.--Participants in Puerto Rico are not included in this table. Data
  are monthly average for each year.

Source: U.S. Census Bureau.

    Food stamp enrollment is responsive to changes in the
economy (i.e., recipients' employment status and earnings),
food stamp eligibility rules (and potential applicants'
perception of their eligibility status), and administrative
practices, as well as recipients getting or losing public
assistance eligibility. With few changes in eligibility rules,
the caseload expanded from a monthly average of 22.6 million
persons in fiscal year 1991 to the 1994 peak. Since 1994,
enrollment has declined continuously, dropping to 19.8 million
persons in 8.2 million households during fiscal year 1998
because of the effects of an improved economy, Federal and
State welfare reform initiatives, and a lower participation
rate among those eligible. In fiscal year 1999, participation
continued to decline, to a monthly average of 18.2 million
people in 7.7 million households, reaching the lowest level
since the 1970s.
    Until recently, Agriculture Department studies (e.g., for
January 1994) have indicated that just over 70 percent of those
individuals eligible for food stamps actually participate.\9\
The improved state of the economy and a number of more
restrictive food stamp eligibility rules implemented in recent
years are acknowledged to be primary factors affecting reduced
food stamp participation. But the relatively dramatic recent
decline in enrollment has led many observers to conclude that
other factors are at work and that the 70+ percent
participation rate noted above (as opposed to the number of
persons eligible) has dropped significantly, to 63 percent in
fiscal year 1997 by one estimate. Reasons cited for this
decline range from changing welfare office administrative
practices to recipients' lack of understanding that being
dropped from (or discouraged from applying for) one public
assistance program does not mean automatic ineligibility for
food stamps. Based on preliminary Department studies, less-
than-optimum participation appears to be concentrated among
needy families with children and the ``working poor,'' but a
full understanding of the dynamics of declining participation
has not emerged.
---------------------------------------------------------------------------
    \9\ Participation rates were and are not uniformly as high as 70+
percent among all segments of the food-stamp-eligible population: e.g.,
participation is very low among the elderly (below one-third) and the
``working poor'' (less than half those eligible) and relatively high
among those enrolled in other public assistance programs. While overall
participation among eligible individuals was estimated at some 70
percent, the proportion of benefits issued as a proportion of potential
benefits to all those eligible was projected to be higher
(approximately 80 percent). Participation rates also varied by State--
from an estimated 40 percent to virtually all those thought to be
eligible in a few States according to one Department study.
Participation also differed by presence of children (higher
participation rates) and income (declining participation rates with
increased income).
---------------------------------------------------------------------------
    Table 15-9 shows the average monthly number of people (in
thousands) who received food stamp benefits in each State, the
District of Columbia, and the participating Commonwealths and
territories for selected years between 1975 (when the Food
Stamp Program became nationally available) and 1999. There has
been a general increase in food stamp participants since 1975,
with enrollment peaking in 1994.

                       Recent Legislative History

    (For legislative history prior to 1996, see previous
editions of the Green Book.)
    The 1996 Omnibus ``farm bill'' (the Federal Agriculture
Improvement and Reform Act; Public Law 104-127) extended the
Food Stamp Act's overall authorization for appropriations
through fiscal year 1997, with no specific dollar limits. It
also: (1) continued the requirement for nutrition assistance
grants to Puerto Rico and American Samoa, and for employment
and training programs, through fiscal year 2002; (2) revised
rules for penalizing food stores in trafficking cases involving
management; and (3) extended authority for several pilot
projects.
    Later in 1996, the omnibus welfare reform law (the Personal
Responsibility and Work Opportunity Act; Public Law 104-193)
made the most extensive changes to the Food Stamp Program since
the Food Stamp Act was rewritten in 1977. Under this law,
spending

                                    TABLE 15-9.--FOOD STAMP RECIPIENTS BY JURISDICTION, SELECTED FISCAL YEARS 1975-99
                                                                     [In thousands]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                        State                         1975 \1\  1979 \2\  1985 \3\  1990 \3\  1994 \3\  1995 \3\  1996 \3\  1997 \3\  1998 \3\  1999 \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.............................................       393       525       588       449       551       525       509       486       427       405
Alaska..............................................        12        25        22        25        46        45        46        45        42        41
American Samoa......................................        NA        NA        NA        NA         2         3         3         3         3         3
Arizona.............................................       166       129       206       317       512       480       427       364       296       257

Arkansas............................................       268       277       253       235       283       272       274       266       256       253
California..........................................     1,517     1,334     1,615     1,936     3,155     3,175     3,143     2,815     2,259     2,027
Colorado............................................       162       145       170       221       268       252       244       217       191       173
Connecticut.........................................       189       155       145       133       223       227       223       210       196       178

Delaware............................................        39        45        40        33        59        57        58        54        46        39
District of Columbia................................       112       100        72        62        91        94        93        90        85        84
Florida.............................................       767       828       630       781     1,474     1,395     1,371     1,192       991       933
Georgia.............................................       569       559       567       536       830       816       793       698       632       617

Guam................................................        21        18        20        12        15        16        18        18        25        20
Hawaii..............................................        84        96        99        77       115       125       130       127       122       125
Idaho...............................................        39        47        59        59        82        80        80        70        62        57
Illinois............................................       948       837     1,110     1,013     1,189     1,151     1,105     1,020       923       820

Indiana.............................................       255       275       406       311       521       470       390       348       313       298
Iowa................................................       118       117       203       170       196       184       177       161       141       129
Kansas..............................................        63        73       119       142       192       184       172       149       119       115
Kentucky............................................       449       405       560       458       522       520       478       444       412       396

Louisiana...........................................       502       523       644       727       756       711       670       575       537       516
Maine...............................................       151       121       114        94       136       132       131       124       115       109
Maryland............................................       273       299       291       254       387       399       375       354       323       264
Massachusetts.......................................       560       429       337       347       442       410       374       340       293       261

Michigan............................................       685       706       985       917     1,031       971       935       839       772       683
Minnesota...........................................       191       143       228       263       316       308       295       260       220       208
Mississippi.........................................       390       452       495       499       511       480       457       399       329       288
Missouri............................................       299       280       362       431       593       576       554       478       411       408

Montana.............................................        38        33        58        57        71        71        71        67        62        61
Nebraska............................................        50        55        94        95       111       105       102        97        95        92
Nevada..............................................        34        27        32        50        97        99        97        82        72        62
New Hampshire.......................................        66        44        28        31        62        58        53        46        40        37

New Jersey..........................................       565       524       464       381       545       540       541       490       425       385
New Mexico..........................................       154       159       157       157       244       239       235       205       175       178
New York............................................     1,398     1,704     1,834     1,546     2,154     2,183     2,099     1,919     1,627     1,545
North Carolina......................................       537       517       474       419       630       614       631       586       528       505

North Dakota........................................        19        20        33        39        45        41        40        38        34        33
Northern Mariana Islands............................        NA        NA         4         4         4         4         4         4         4         4
Ohio................................................       924       760     1,133     1,078     1,245     1,155     1,045       874       734       640
Oklahoma............................................       184       184       263       267       376       375       354       309       288       271

Oregon..............................................       208       160       228       216       286       289       288       259       238       224
Pennsylvania........................................       893       923     1,032       954     1,208     1,173     1,124     1,009       907       835
Puerto Rico.........................................     1,800     1,822     1,480     1,480     1,410     1,370     1,330     1,240     1,180     1,140
Rhode Island........................................       104        80        69        64        93       100        91        85        73        76

South Carolina......................................       421       369       373       299       385       364       358       349       333       309
South Dakota........................................        31        37        48        50        53        50        49        47        45        44
Tennessee...........................................       435       531       518       527       735       662       638       586       538       511
Texas...............................................     1,085     1,027     1,263     1,880     2,730     2,564     2,372     2,034     1,636     1,401

Utah................................................        50        44        75        99       128       119       110        98        92        88
Vermont.............................................        46        40        44        38        65        59        56        53        46        44
Virginia............................................       293       320       360       346       547       546       538       476       397       362
Virgin Islands......................................        25        34        32        18        20        23        31        20        17        17

Washington..........................................       239       205       281       337       468       476       476       442       362       307
West Virginia.......................................       204       182       278       262       321       329       300       287       269       247
Wisconsin...........................................       163       171       363       286       330       320       283       232       193       182
Wyoming.............................................        11        11        27        28        34        34        33        29        25        23
                                                     ---------------------------------------------------------------------------------------------------
      Total.........................................    19,199    18,926    21,385    21,510    28,888    27,995    26,871    24,106    20,974    19,334
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Year end participation, July 1975. Total does not match totals in other tables, which are annual average participation.
\2\ Year end participation, September 1979. Total does not match totals in other tables, which are annual average participation. During fiscal year
  1979, and into 1980, participation increases were largely due to the elimination of the food stamp purchase requirement. Figures for Alabama and
  Mississippi are estimates.
\3\ Annual average monthly participation.

NA--Not available.

Note.--Data are average monthly number of recipients for each year.

Source: U.S. Department of Agriculture, Food and Nutrition Service. Compiled by the Congressional Research Service.

on food stamps was projected for a net reduction of $23.3
billion through fiscal year 2002 (or 13 percent less than under
then-current law over fiscal years 1997-2002). The food-stamp-
related provisions of the welfare reform act: (1) gave States
significantly more control over program operations and expanded
their administrative options (e.g., allowed States to more
closely conform their TANF and food stamp rules and sanction
food stamp recipients for failure to meet other public
assistance program requirements), (2) established a new work
rule limiting participation by able-bodied adults without
dependents (ABAWDs) who are not working or in training for work
to 3 months in any 3-year period, (3) added other new work
rules (e.g., disqualification for significantly reduced work
effort), (4) instituted an across-the-board benefit reduction,
(5) barred eligibility for most legally resident noncitizens,
(6) increased penalties for violating Food Stamp Program rules,
and (7) encouraged implementation of electronic benefit
transfer (EBT) systems for issuing food stamp benefits
(requiring systems be in place nationwide by 2002).
    In 1997, the Balanced Budget Act's (BBA) food stamp
component followed up on the 1996 welfare reform law with
amendments that allowed States to exempt significant numbers of
ABAWDs from new work requirements and more than doubled Federal
funding for employment and training programs for food stamp
recipients (targeted on adults without dependents). It also
required States to establish systems to ensure that prisoners
are not counted as part of any food stamp household.
Separately, the 1997 emergency supplemental appropriations law
(Public Law 105-18) permitted States to ``buy into'' the Food
Stamp Program and pay for benefits to noncitizens ineligible
for federally financed food stamps and adults without
dependents made ineligible by work requirements.
    Most recently, the 1998 Agricultural Research, Extension,
and Education Reform Act (Public Law 105-185) significantly
reduced spending for the Federal share of State food stamp
administrative costs--some $200 million a year--by imposing a
flat annual dollar reduction on most States' entitlements to
correct for a perceived ``windfall'' extra payment States can
potentially receive through the interaction between food stamp
and TANF funding rules. It also lowered Federal payments to
States for employment and training programs for food stamp
recipients. A portion of the money saved by these reductions
was then used to restore food stamp eligibility to some of the
noncitizens made ineligible by the 1996 welfare reform law
(e.g., elderly and disabled persons legally resident at the
time the 1996 law was enacted).
    Table 15-10 provides an overview of the characteristics of
food stamp households for selected years since 1980; table 15-
11 summarizes annual vital statistics about the program since
1972.

                                MEDICAID

    Medicaid, authorized under title XIX of the Social Security
Act, is a Federal-State matching entitlement program providing
medical assistance to low-income persons who are aged, blind,
disabled, members of families with dependent children, or in
certain other

                                     TABLE 15-10.--CHARACTERISTICS OF FOOD STAMP HOUSEHOLDS, SELECTED YEARS 1980-97
                                                                      [In percent]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              1980      1985      1989      1990      1991      1992      1993      1994      1995      1996      1997
      Food stamp recipient households       (August)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Summer)  (Annual)  (Annual)  (Annual)
--------------------------------------------------------------------------------------------------------------------------------------------------------
With gross monthly income:
    Below the Federal poverty levels......       87        94        92        92        91        92        91        90        92        91        92
    Between the poverty levels and 130           10         6         8         8         9         8         8         9         8         8         8
     percent of the poverty levels........
    Above 130 percent of the poverty              2     (\1\)     (\1\)     (\1\)     (\1\)     (\1\)         1         1     (\1\)         1     (\1\)
     levels...............................
With earnings.............................       19        20        20        19        20        21        21        21        21        23        24
With public assistance income \2\.........       65        68        73        73        70        66        68        69        68        67        67
    With AFDC/TANF income.................       NA        39        42        43        41        40        40        38        38        37        35
    With SSI income.......................       18        19        21        19        19        19        20        23        23        24        26
With children.............................       60        59        60        61        61        62        60        61        60        59        58
    And female heads of household.........       NA        46        50        51        51        51        52        51        50        50        49
With elderly members \3\..................       23        21        20        18        17        15        16        16        16        16        18
    With elderly female heads of household       NA        16        14        11        10         9        NA        11        NA        NA    \4\ 12
     \3\..................................
                                           -------------------------------------------------------------------------------------------------------------
Average household size....................      2.8       2.7       2.6       2.6       2.6       2.5       2.6       2.5       2.5       2.5       2.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Percentage equals 0.5 or less.
\2\ Public assistance income includes Aid to Families with Dependent Children, TANF, SSI, and general assistance.
\3\ Elderly members and heads of household include those age 60 or older.
\4\ Estimate.

NA--Not available.

Note.--The proportion of households with public assistance income shown in this table is an estimate that generally overcounts them because it is not
  corrected for households with multiple sources of public assistance income. The proportion of households with elderly female heads shown in this table
  for years prior to 1994 is an estimate that generally undercounts them because it counts only single-person female households. The 1995-97 figures
  represent characteristics over the full course of each fiscal year.

Source: U.S. Department of Agriculture, Food and Nutrition Service surveys of the characteristics of food stamp households. Compiled by the
  Congressional Research Service.

                     TABLE 15-11.--HISTORICAL FOOD STAMP STATISTICS, SELECTED YEARS, 1972-99
----------------------------------------------------------------------------------------------------------------
                                    Total Federal spending                     Average monthly
                                       (in millions) \1\       Average      benefits (per person)   Four-person
                                   ------------------------    monthly    ------------------------    maximum
            Fiscal year                          Constant   participation               Constant      monthly
                                     Current      (1999)     (in millions   Current      (1999)    allotment \3\
                                     dollars   dollars \2\   of persons)    dollars   dollars \2\
----------------------------------------------------------------------------------------------------------------
1972 \4\..........................     $1,871      $7,516          11.1       $13.50      $52.90          $108
1974..............................      2,843      10,097          12.9        17.60       53.30           116
1975 \5\..........................      4,624      14,774          17.1        21.40       59.00           150
1976..............................      5,692      16,973          18.5        23.90       62.00           162
Transition quarter \6\............      1,367       3,941          17.3        24.40       62.90           166
1977..............................      5,469      15,161          17.1        24.70       61.60           166
1978..............................      5,573      14,434          16.0        26.80       61.00           170
1979 \7\..........................      6,995      16,444          17.7        30.60       62.50           182
1980..............................      9,188      19,008          21.1        34.40       65.30           204
1981..............................     11,308      21,051          22.4        39.50       68.70           209
1982 \8\..........................     11,117      19,286          22.0        39.20       65.70           233
1983 \8\..........................     12,733      21,329          23.2        43.00       71.20           253
1984 \8\..........................     12,470      20,056          22.4        42.70       68.50           253
1985 \8\..........................     12,599      19,560          21.4        45.00       70.80           264
1986 \8\..........................     12,528      18,970          20.9        45.50       70.10           268
1987 \8\..........................     12,539      18,463          20.6        45.80       67.50           271
1988 \8\..........................     13,289      18,798          20.1        49.80       70.90           290
1989 \8\..........................     13,815      18,649          20.2        51.90       69.30           300
1990 \8\..........................     16,512      21,233          21.5        59.00       74.00           331
1991 \8\..........................     19,765      24,195          24.1        63.90       77.10           352
1992 \8\..........................     23,539      27,966          26.9        68.50       82.20           370
1993 \8\..........................     24,749      28,543          28.4        68.00       80.00           375
1994 \8\..........................     25,525      28,679          28.9        69.00       78.90           375
1995 \8\..........................     25,676      28,067          28.0        71.30       78.90           386
1996 \8\..........................     25,494      27,116          26.9        73.30       78.60           397
1997..............................     22,868      23,684          24.1        71.30       73.90           400
1998..............................     20,397      20,786          21.0        71.10       72.50           408
1999..............................     19,317      19,317          19.3        72.30       72.30           419
----------------------------------------------------------------------------------------------------------------
\1\ Spending for benefits and administration, including Puerto Rico.
\2\ Constant dollar adjustments were made using the overall Consumer Price Index for All Urban Consumers (CPI-U)
  for spending and the CPI-U ``food at home'' component for benefits.
\3\ For the 48 contiguous States and the District of Columbia, as in effect at the beginning of the fiscal year
  in current dollars.
\4\ The first fiscal year in which benefit and eligibility rules were, by law, nationally uniform and indexed
  for inflation.
\5\ The first fiscal year in which food stamps were available nationwide.
\6\ July through September 1976.
\7\ The fiscal year in which the food stamp purchase requirement was eliminated, on a phased in basis.
\8\ Includes funding for Puerto Rico's nutrition assistance grant; earlier years include funding for Puerto Rico
  under the regular Food Stamp Program. Participation figures include enrollment in Puerto Rico (averaging 1.1
  to 1.5 million persons a month under the nutrition assistance grant and higher figures in earlier years).
  Average benefit figures do not reflect benefits in Puerto Rico under its nutrition assistance grant. For
  fiscal years 1998 and 1999, State-financed costs for benefits to some noncitizens are included (approximately
  $100 million a year).

Note.--Figures in this table have been revised from similar tables presented in earlier versions of the Green
  Book to reflect more recent spending information and more precise inflation adjustments for constant dollar
  amounts.

Source: Compiled by the Congressional Research Service.

categories of pregnant women and children. Within Federal
guidelines, each State designs and administers its own program.
Thus, there is substantial variation among States in coverage,
types and scope of benefits offered, and amount of payment for
services.
    Legislation passed in the 105th Congress changed the rules
governing Medicaid reimbursement to hospitals and community
health centers, increased States' flexibility to enroll
Medicaid recipients into managed care programs, and gave States
additional options for conducting outreach and eligibility
determinations. Recent legislation in the 106th Congress made
further changes to Medicaid law. In addition to technical
amendments to the Balanced Budget Act of 1997, Public Law 106-
113 included provisions allowing for increased disproportionate
share allotments to certain States and the District of
Columbia. The legislation also extended access to a special
$500 million fund to pay for Medicaid eligibility
determinations resulting from welfare reform and modified the
phase-out schedule of cost-based reimbursement for federally
qualified health centers and rural health clinics. The Foster
Care Independence Act of 1999 (Public Law 106-169) allowed
States to extend health insurance coverage under Medicaid for
former foster care youth under age 21. Finally, the Ticket to
Work and Work Incentives Improvement Act of 1999 (Public Law
106-170) gave States the option to eliminate upper income and
assets eligibility limits for workers with disabilities.

                               Eligibility

    The requirements of Federal law, coupled with the decisions
of individual States in structuring their Medicaid Programs,
determine who is actually eligible for Medicaid in a given
State. In general, Federal law places limitations on the
categories of individuals that can be covered and establishes
specific eligibility rules for groups within those broad
categories. Traditionally, Medicaid eligibility was limited to
the following categories of individuals: low-income families
with dependent children (in which one parent was absent,
incapacitated or unemployed), low-income persons with
disabilities, and low-income elderly. In addition, certain
individuals with higher income, especially those facing large
costs for medical care, were eligible as ``medically needy.''
Beginning in the 1980s, additional coverage categories were
added to Medicaid for higher income children and pregnant
women. Other coverage groups are identified in the statute as
needing special protection against the high cost of medical
care. Over 50 distinct population groups are identified in the
Federal law. Some are mandatory groups that all States must
cover; some are optional eligibility groups.
    Contributing to the complexity of the Medicaid Program are
financial criteria. Medicaid is a means-tested entitlement
program. To qualify, applicants' income and resources must be
within certain limits, most of which are determined by States,
again within Federal statutory parameters. Further complicating
this picture is the flexibility States have in defining
countable income and assets. Consequently, income and resource
standards vary considerably among States, and different
standards apply to different population groups within a State.
In general, individuals in similar circumstances may be
automatically eligible for coverage in one State, but required
to assume a certain portion of their medical expenses before
they can obtain coverage in a second State, and not eligible at
all in a third State.

                 Families, Pregnant Women, and Children

    Prior to the enactment of the 1996 welfare reform law
(Public Law 104-193), there were two major routes to Medicaid
for low-income families and children. The first was through
cash welfare: individuals who qualified for Aid to Families
with Dependent Children (AFDC), cash assistance, or
Supplemental Security Income (SSI) were automatically eligible
for Medicaid. The second was through legislation enacted during
the last two decades that extended coverage to low-income
pregnant women and children with no ties to the welfare system.
The 1996 reforms replaced the AFDC Program with a block grant
to States for Temporary Assistance for Needy Families (TANF),
severing the automatic connection between cash assistance
received by low-income families with children and Medicaid. The
following categories describe eligibility pathways for
families, pregnant women, and low-income children since welfare
reform.\10\
---------------------------------------------------------------------------
    \10\ Children can also qualify for Medicaid as a result of
disability. For a detailed description of eligibility for persons with
disabilities, see the subsequent section on SSI-related groups.
---------------------------------------------------------------------------
Persons who would be eligible for cash assistance under the old AFDC
        Program
    Unlike AFDC, TANF eligibility does not confer automatic
Medicaid eligibility. Nonetheless, current law (section 1931)
preserves Medicaid entitlement for individuals who meet the
requirements for the former AFDC Programs that were in effect
in their States on July 16, 1996, even if they do not qualify
for assistance under TANF. This categorical group was created
to ensure that low-income families do not lose their Medicaid
eligibility as a result of welfare reform. States are required
to use the eligibility determination processes that were
already in place for AFDC and Medicaid, including the same
income and resource standards and other rules formerly used to
determine if a family's income and composition made it eligible
for AFDC and Medicaid. The 1996 welfare reform law allows
States to modify their ``prereform'' AFDC income and resource
standards as follows: (1) States may lower their income
eligibility standards, but not below those used on May 1, 1988;
(2) States may increase their income and resource standards up
to the percentage increase in the Consumer Price Index (CPI);
and (3) States may use less restrictive income and resource
methodologies than those in effect on July 16, 1996.
    The 1996 income standards for AFDC Programs are well below
the current Federal poverty level (FPL). For example, the
maximum AFDC payment levels on July 16, 1996, range from about
14 percent of the current poverty level in Alabama to about 86
percent in Connecticut. The median level nationwide is 45
percent. In addition, for most eligibility categories in most
States, individuals must have resources valued at less than a
specified amount (typically $1,000 for an adult with one or
more dependent children) to be eligible for Medicaid. States
determine what items constitute countable resources and the
dollar value assigned to those countable items. Assets may
include, for example, cars, savings accounts, real estate,
trust funds, and tax credits.
    A number of States have established more generous standards
for determining Medicaid eligibility than those in place in
1996 and some States have taken advantage of the flexibility
offered under section 1931 to realign Medicaid eligibility with
eligibility for the new TANF Programs. By using less
restrictive methods for calculating income and/or resources,
those States effectively raised the income and resource
standards in determining Medicaid eligibility for persons
living in families with dependent children.
    In the near term, the flexibility afforded by section 1931
is not likely to become a major pathway for children into the
Medicaid Program. Children with income too high to qualify for
cash assistance have a number of other pathways to Medicaid. On
the other hand, this provision may hold important promise for
extending coverage to the parents of children who have fewer
alternative pathways to Medicaid, or for simplifying Medicaid
eligibility while at the same time qualifying entire families
for coverage--an option that could help to raise participation
in a program that has become increasingly complex for States to
administer and for qualifying family members to navigate.
Poverty level pregnant women and children
    Between 1986 and 1991, Congress gradually extended Medicaid
to groups of pregnant women and children defined in terms of
family income, rather than in terms of their ties to the AFDC
Program. These are groups who, prior to the 1996 welfare
reforms, did not qualify for cash assistance.
    States are required to cover pregnant women and children
under age 6 with family incomes below 133 percent of the
Federal poverty income guidelines. In 2000, the poverty
guideline in the 48 contiguous States and the District of
Columbia is $14,150 for a family of three. Coverage for
pregnant women is limited to services related to the pregnancy
or complications of the pregnancy. Eligibility extends to 60
days after termination of the pregnancy. Children receive full
Medicaid coverage.
    Since July 1, 1991, States have been required to cover all
children who are under age 19, who were born after September
30, 1983, and whose family income is below 100 percent of the
FPL. The 1983 start date means that the mandatory coverage is
extended to children by one age cohort each year until reaching
all those under age 19 in fiscal year 2002.
    States are permitted, but not required, to cover pregnant
women and infants under 1 year of age whose family income is
between 133 and 185 percent of the FPL. In 1999, 41 States and
the District of Columbia extended coverage to some or all
pregnant women and infants in this category. States wishing to
further expand eligibility have several options under Medicaid
law, including waivers of Federal rules. The Balanced Budget
Act of 1997 (Public Law 105-33), gives States the option of
providing 12 months of continuous Medicaid coverage for
children regardless of whether they continue to meet income
eligibility tests, and to presume that certain low-income
children are eligible in advance of completing the application
process, allowing the States to provide services during the
time that eligibility is being determined. States have been
able to use ``presumptive eligibility'' for providing coverage
to pregnant women before enrollment is finalized since 1986.
Transitional medical assistance
    An increasingly important eligibility group for families
with children is called ``transitional medical assistance'' or
TMA. TMA was created to address the concern that the loss of
Medicaid for individuals who could successfully obtain
employment would provide a disincentive to seek and to keep
jobs. States are required to continue Medicaid for 6 months for
families that were covered by Medicaid under section 1931 in at
least 3 of the last 6 months preceding the month in which the
family lost such assistance due to increased hours of
employment, increased earnings of the caretaker relative, or
the family member's loss of one of the time limited earned
income disregards. States must extend Medicaid coverage for an
additional 6 months for families that were covered during the
entire first 6-month period, and are earning below 185 percent
of the Federal poverty line. The eligibility pathway for these
groups will sunset at the end of fiscal year 2001.
    A small additional group of TMA-eligible persons are those
who lose Medicaid coverage under section 1931 because of
increased child or spousal support. Families eligible for this
4 month extension must have been receiving Medicaid under
section 1931 in at least 3 of the preceding 6 months.
Other AFDC-related groups
    While the AFDC Program no longer exists, a number of
Medicaid eligibility groups that are tied to States' former
AFDC rules remain. These rules continue to apply today because
of the 1996 welfare reform law's provision requiring Medicaid
coverage for people who would have qualified for the former
AFDC Program. Other AFDC-related groups include persons who did
not receive cash assistance because the payment would be less
than $10; persons whose payments were reduced to zero because
of recovery of previous overpayments; certain work
supplementation participants; and persons who were ineligible
for AFDC because of a requirement that could not be imposed
under Medicaid. For example, States are permitted to deny
Medicaid benefits to nonpregnant adults and heads of households
who lose TANF benefits because of refusal to work, but must
continue to provide Medicaid coverage to their children.
    States must continue Medicaid for recipients of adoption
assistance and foster care under title IV-E of the Social
Security Act. The Foster Care Independence Act of 1999 (Public
Law 106-169) amends Medicaid law by giving States the option to
extend Medicaid coverage to former foster care recipients ages
18, 19, and 20, and further allows States to limit coverage to
those who were eligible for assistance under title IV-E before
turning 18 years of age.
Ribicoff children
    ``Ribicoff children,'' named for the former Senator that
sponsored legislation authorizing coverage for this group, is a
coverage pathway that is gradually diminishing in importance as
more children are included under the poverty-related coverage
categories. Ribicoff children are children under age 21 who
meet income and resource requirements for the former AFDC
Program but who do not meet other categorical requirements for
AFDC. Included in this category are often children who are in
State-sponsored foster care, are institutionalized, or are
inpatients in psychiatric facilities.
Targeted low-income children authorized under the State Children's
        Health Insurance Program (SCHIP)
    SCHIP was established by the Balanced Budget Act of 1997
under a new title XXI of the Social Security Act. The program,
while completely separate from Medicaid, allows States to
access funds to cover targeted low-income children through
group health or other insurance that meets specific standards
for benefits and cost sharing, or through their Medicaid
Programs, or through a combination of both.\11\ SCHIP is
discussed here because many States have extended Medicaid
coverage to targeted low-income children, although they pay for
that coverage with title XXI funds.
---------------------------------------------------------------------------
    \11\ Under limited circumstances, States have the option to
purchase a health benefits plan that is provided by a community-based
health delivery system, or to purchase family coverage under a group
health plan as long as it is cost effective to do so.
---------------------------------------------------------------------------
    Title XXI defines SCHIP-eligible children as those who are
not eligible for Medicaid or are covered under a group health
plan or other insurance, and are living in families with
incomes that are either: (1) above the State's Medicaid
financial eligibility standard in effect in March 1997 but less
than 200 percent of the FPL; or (2) in States with Medicaid
income levels for children already at or above 200 percent of
the poverty level as of March 1997, within 50 percentage points
over this income standard. Within those broad statutory
requirements, each State can define the group of targeted low-
income children who may enroll in SCHIP. As of January 1, 2000,
the Health Care Financing Administration (HCFA) had approved
SCHIP plans for all 50 States, the District of Columbia, and 5
territories. Twenty-four States use Medicaid expansions, 15
have separate State programs, and 17 combine a Medicaid
expansion and a separate State program. (For a more detailed
description of the SCHIP Program, see below).
Section 1902(r)(2) and demonstration waivers
    Medicaid statute includes other provisions that provide
States with options to extend coverage to individuals who would
not otherwise qualify. One of these provides States with
flexibility in defining methods for counting income and assets
(authorized under section 1902(r)(2) of the Social Security
Act), and another allows States to create demonstration
projects (authorized under section 1115 of the Social Security
Act) to test new approaches for providing health care coverage.
    Section 1902(r)(2) of the Social Security Act allows State
Medicaid Programs to submit a State plan amendment to use more
liberal methods for calculating income and resources for some
categories of Medicaid eligibles. Most States that have chosen
to implement section 1902(r)(2) have done so only for children.
In addition, most States using the flexibility created by
section 1902(r)(2) do so by disregarding certain types or
amounts of income to extend Medicaid to children in families
with earnings that are too high to qualify for one of the other
eligibility groups, or have assets that exceed the allowable
levels.
    Demonstration waivers, authorized in section 1115 of the
Social Security Act, enable States to waive some Medicaid
requirements to create demonstration projects that promote the
objectives of the Medicaid statute. Through a fairly cumbersome
application process, a number of States have used such waivers
to enact broad-based and sometimes statewide health reforms
although demonstrations under this provision need not be
statewide. A number of the demonstrations extend comprehensive
health insurance coverage to low-income children (and families)
who would otherwise not be eligible for Medicaid. Section 1115
waivers are also often used by the States to enroll their
Medicaid beneficiaries in managed care plans.\12\ (See
``Medicaid Managed Care'' section below.)
---------------------------------------------------------------------------
    \12\ Section 1115 waivers have been used to create managed care
delivery systems to provide acute and long-term care services to the
aged and disabled.
---------------------------------------------------------------------------

                       Aged and Disabled Persons

SSI-related groups
    With one important exception, States are required to
provide Medicaid coverage to recipients of SSI, the cash
assistance program for aged, blind and disabled persons. For
2000, persons qualifying for SSI cannot have income in excess
of $572 per month or resources of more than $2,000.
    The major exception to automatic Medicaid coverage for SSI
recipients is in so-called ``209(b)'' States. States may elect
the option, described in section 209(b) of the Social Security
Amendments of 1972 (Public Law 92-603), allowing them to use
income and resource standards that are no more restrictive than
those in effect on January 1, 1972 (before the implementation
of SSI) that established the option. These standards may vary
in the definition of disability used, or in income or resource
standards or definitions. There are 11 section 209(b) States:

Connecticut
Hawaii
Illinois
Indiana
Minnesota
Missouri
New Hampshire
North Dakota
Ohio
Oklahoma
Virginia

    States that use more restrictive eligibility rules under
section 209(b) must also allow applicants to deduct medical
expenses from their income (not including SSI or State
supplemental payments) in determining eligibility. This process
is known as ``spend down.'' For example, if an applicant has a
monthly income of $600 (not including SSI or State supplemental
payments) and the State's maximum allowable income is $300, the
applicant would qualify for Medicaid after incurring $300 in
medical expenses. As discussed below, the spend down process is
also used in establishing eligibility for the medically needy.
    Many States, recognizing that the SSI benefit standard may
provide too little income to meet the individual's living
expenses, supplement SSI with additional cash assistance
payments known as State supplemental payments. States use a
variety of different policies for providing these payments.
Some States provide State supplemental payments to certain
groups of elderly or disabled individuals whose income is too
high to qualify for SSI. In those States, Medicaid coverage may
be extended to persons receiving State supplemental payments on
the same basis as persons receiving SSI. Some examples of
specified groups of elderly or disabled State supplemental
payment recipients include those living independently in the
community but with special needs for in-home personal care
assistance or home-delivered meals; or those residing in
protected living arrangements, such as adult foster care or
domiciliary care provided in large congregate care facilities.
In 1999, all but seven States provided some amount of
supplemental payments.
    When States provide Medicaid coverage to persons receiving
State supplemental payments, the combined Federal SSI and State
supplemental benefit payments become the effective income
eligibility standard. Because specified amounts of income are
disregarded in determining eligibility for SSI and most State
supplemental payment programs, a person with income which
exceeds the maximum benefit may still be eligible for cash
assistance and Medicaid. For 209(b) States, however, the
effective Medicaid income eligibility standards may be below
the SSI/State supplemental payment standard, because some of
those States use more restrictive income standards or
definitions of countable income.
    States must continue Medicaid coverage for several defined
groups of individuals who have lost SSI or State supplemental
payment eligibility. The qualified severely impaired are
disabled persons who have returned to work and have lost
eligibility as a result of employment earnings, but still have
the condition that originally rendered them disabled and meet
all nondisability criteria for SSI except income (the current
law threshold for earnings is $1,109 per month). States must
continue Medicaid coverage to a qualified severely impaired
individual if the person needs Medicaid to continue employment
and the individual's earnings are insufficient to provide the
equivalent of SSI, Medicaid, and attendant care benefits the
individual would qualify for in the absence of earnings.
    Effective in August 1997, as a part of BBA 1997, States can
opt to expand eligibility for employed, disabled individuals
with incomes up to 250 percent of poverty. Those beneficiaries
can buy into Medicaid by paying a sliding scale premium based
on the individual's income as determined by the State. The 1999
ticket to work legislation further allows States to cover
employed, disabled individuals at higher income and resource
levels (i.e., income over 250 percent of the FPL and resources
over $2,000 for an individual or $3,000 for a couple). States
may also cover financially eligible working individuals whose
medical condition has improved such that they no longer meet
the Social Security definition of disability. States can
require these individuals to ``buy in'' to Medicaid coverage by
paying premiums or other cost-sharing charges on a sliding fee
scale based on income, as established by the State.
    States must also continue Medicaid coverage for persons who
were once eligible for both SSI and Social Security payments
and who lose SSI because of a cost-of-living adjustment in
their Social Security benefits. Similarly, Medicaid
continuations have been provided for certain other persons who
lose SSI as a result of eligibility for or an increase in
Social Security or veterans benefits. Finally, States must
continue Medicaid for certain SSI-related groups who received
benefits in 1973, including ``essential persons'' (persons who
care for a disabled individual).
    States have the option of extending coverage to certain
additional elderly or disabled persons. These include
individuals eligible for SSI but not receiving it; and elderly
and disabled persons whose income does not exceed 100 percent
of the FPL and whose resources do not exceed the SSI
standard.\13\
---------------------------------------------------------------------------
    \13\ Certain States providing Medicaid coverage to persons
receiving State supplemental payments may end up covering persons with
incomes at 100 percent of the Federal poverty level or higher, when
State supplemental payments provide income at those levels.
---------------------------------------------------------------------------
Qualified Medicare beneficiaries and related groups
    Certain low-income individuals are entitled to assistance
in paying their Medicare part B premiums and other Medicare
cost-sharing through the Medicaid Program. Such persons fall
into one of the following four coverage groups:
 1. Qualified Medicare beneficiaries (QMBs).--QMBs are aged or
        disabled persons with incomes at or below the Federal
        poverty line ($8,350 for an individual and $11,250 for
        a couple in 2000 \14\) and assets below $4,000 for an
        individual and $6,000 for a couple. QMBs are entitled
        to have their Medicare cost-sharing charges, including
        the part B premium, paid by Medicaid. Medicaid
        protection is limited to payment of Medicare cost-
        sharing and premium charges (i.e., the Medicare
        beneficiary is not entitled to coverage of Medicaid
        plan services) unless the individual is otherwise
        entitled to Medicaid.
---------------------------------------------------------------------------
    \14\ The levels are actually higher since $20 per month of unearned
income is disregarded in the calculation.
---------------------------------------------------------------------------
 2. Specified low-income Medicare beneficiaries.--These are
        persons who meet the QMB criteria, except that their
        income is slightly over the QMB limit. The specified
        low-income Medicare beneficiary limit is 120 percent of
        the FPL. Medicaid protection is limited to payment of
        the Medicare part B premium (i.e., the Medicare
        beneficiary is not entitled to coverage of Medicaid
        plan services) unless the individual is otherwise
        entitled to Medicaid.
 3. Qualifying individuals (QI-1).--These are persons who meet
        the QMB criteria, except that their income is between
        120 and 135 percent of poverty. Further, they are not
        otherwise eligible for Medicaid. Medicaid protection is
        limited to payment of the Medicare part B premium.\15\
---------------------------------------------------------------------------
    \15\ In general, Medicaid payments are shared between the Federal
Government and the States according to a matching formula. However,
expenditures under the QI-1 and QI-2 programs are paid for 100 percent
by the Federal Government (from the Medicare Part B Trust Fund) up to
the State's allocation level. A State is only required to cover the
number of persons which would bring its spending on these population
groups in a year up to its allocation level. Any expenditures beyond
that level are paid by the State. Total allocations are $200 million in
fiscal year 1998, $250 million for fiscal year 1999, $300 million for
fiscal year 2000, $350 million for fiscal year 2001, and $450 million
for fiscal year 2002. Assistance under the QI-1 and QI-2 programs is
available for the period January 1, 1998-December 31, 2002.
---------------------------------------------------------------------------
 4. Qualifying individuals (QI-2).--These are persons who meet
        the QMB criteria, except that their income is between
        135 and 175 percent of poverty. Further, they are not
        otherwise eligible for Medicaid. Medicaid protection is
        limited to payment of that portion of the part B
        premium attributable to the transfer of home health
        visits ($1.07 in 1998; $2.23 in 1999 and $2.87 in
        2000).\16\
---------------------------------------------------------------------------
    \16\ See footnote number 6.
---------------------------------------------------------------------------
Institutionalized persons and related groups (all optional)
    States may provide Medicaid to certain otherwise ineligible
persons because their incomes are too high to qualify for SSI
or State supplemental payments but who are in nursing
facilities (NFs) or other institutions. States have the option
to establish a special income standard, known as ``the 300
percent rule,'' to allow these persons to qualify for Medicaid
coverage. Individuals qualifying for coverage through this
pathway may have income that is not higher than 300 percent of
the maximum SSI benefit applicable to a person living at home
with no other resources. For 2000, this limit is $1,536 per
month.
    States can also apply this higher income standard to
persons qualifying under the waiver authority of section
1915(c) of the Social Security Act. Section 1915(c) waivers
allow States to waive Medicaid statewideness and comparability
rules to provide home- and community-based services to defined
groups of individuals who would otherwise require institutional
care. States are required to make a special application to HCFA
to implement such waivers. With approval, they can provide a
wide variety of nonmedical, social, and supportive services
that have been shown to be critical in allowing chronically ill
and disabled persons to remain in their homes. States are using
waiver programs to provide services to a diverse long-term care
population, including children, the elderly, and others who are
disabled or who have chronic mental illness, mental retardation
and developmental disabilities, and AIDS. In addition, under
this waiver authority States are permitted to disregard income
of other relatives living in the home of the disabled
beneficiary. (This is especially important for disabled persons
who are able to live at home with their spouse or parents and
who need Medicaid assistance to do so.)
    States are also able to provide Medicaid to several other
classes of persons who need the level of care provided by an
institution and who would be eligible if they were in an
institution but can also be cared for at home. These include
children being cared for at home under the ``Katie Beckett''
option,\17\ persons of any age who are ventilator-dependent,
and persons receiving hospice benefits in lieu of institutional
services.
---------------------------------------------------------------------------
    \17\ Named for a ventilator-dependent child who was unable to leave
an institutionalized setting to receive care at home because, if
discharged, she would no longer have been eligible for Medicaid. This
option requires States to serve all such children in the State and is
distinguished from 1915(c) waivers that allow States to extend coverage
to individuals in limited geographic areas.
---------------------------------------------------------------------------
    Finally, in 1997, Congress created a Medicaid requirement
that States continue Medicaid coverage for those disabled
children who were receiving SSI on the date of enactment of the
1996 welfare reform law but who would lose such coverage based
on the new definition of childhood disability created in that
legislation.
 Aliens
    Legal immigrants arriving in the United States after August
22, 1996 are ineligible for Medicaid benefits for 5 years.
Coverage of such persons after the 5 year ban is a State
option. States are required to provide Medicaid coverage to
legal immigrants who resided in the country and were receiving
benefits on August 22,1996, and for those residing in the
country as of that date who become disabled in the future.
States are also required to provide coverage to: refugees for
the first 7 years after entry into the United States; asylees
for the first 7 years after asylum is granted; individuals
whose deportation is being withheld by the Immigration and
Naturalization Service for the first 7 years after grant of
deportation withholding; lawful permanent aliens after they
have been credited with 40 quarters of coverage under Social
Security; and honorably discharged U.S. military veterans,
active duty military personnel, and their spouses and unmarried
dependent children. Qualified aliens and nonqualified aliens
who meet the financial and categorical eligibility requirements
for Medicaid may receive emergency Medicaid services.

                          The Medically Needy

    As of January 2000, 39 States and other jurisdictions
covered at least some groups of the medically needy. These are
persons who meet the nonfinancial standards for inclusion in
one of the groups covered under Medicaid, but who do not meet
the applicable income or resource requirements for
categorically needy eligibility. The State may establish higher
income or resource standards for the medically needy. In
addition, individuals may spend down to the medically needy
standard by incurring medical expenses, in the same way that
SSI recipients in section 209(b) States may spend down to
Medicaid eligibility. For the medically needy, spend down may
involve the reduction of assets and income.
    The State may set its separate medically needy income
standard for a family of a given size at any level up to 133\1/
3\ percent of the maximum payment for a similar family under
the State's AFDC Program (in effect on July 16, 1996, as
modified). States may limit the groups of individuals who may
receive medically needy coverage. If the State provides any
medically needy program, however, it must include all children
under 18 who would qualify under one of the mandatory
categorically needy groups, and all pregnant women who would
qualify under either a mandatory or optional group, if their
income or resources were lower.
    At the close of fiscal year 1998, the following 35 States,
the District of Columbia, and 3 territories covered some groups
of the medically needy:

American Samoa
Arkansas
California
Connecticut
District of Columbia
Florida
Georgia
Hawaii
Illinois
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Montana
Nebraska
New Hampshire
New Jersey
New York
North Carolina
North Dakota
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
Tennessee
Texas
Utah
Vermont
Virginia
Virgin Islands
Washington
West Virginia
Wisconsin

                         Medicaid and the Poor

    In 1998, Medicaid covered 10.2 percent of the total U.S.
population (excluding institutionalized persons) and 40.3
percent of those with incomes below the FPL. Because
categorical eligibility requirements for children are less
restrictive than those for adults, poor children are much more
likely to receive coverage. Table 15-12 shows Medicaid coverage
by age and income status in 1998, as reported in the March 1999
Current Population Survey (CPS) conducted by the U.S. Census
Bureau. Note that persons shown as receiving Medicaid may have
had other health coverage as well. Nearly all the elderly, for
example, have Medicare and/or private coverage.

     TABLE 15-12.--MEDICAID COVERAGE BY AGE AND FAMILY INCOME, 1998
                             [In thousands]
------------------------------------------------------------------------
                                                               Percent
               Age                  Covered by   Persons in      with
                                     Medicaid    age group     Medicaid
------------------------------------------------------------------------
In poverty:
    0-5..........................        3,112        5,087         61.2
    6-10.........................        2,385        4,148         57.5
    11-18........................        2,521        5,253         48.0
    19-44........................        3,632       12,320         29.5
    45-64........................        1,373        4,647         29.5
    65 or older..................        1,004        3,386         29.6
                                  --------------------------------------
      Total......................       16,920       36,650         40.3
                                  ======================================
Family income between 100 and 132
 percent of poverty:
    0-5..........................          762        1,668         45.7
    6-10.........................          509        1,457         34.9
    11-18........................          550        1,801         30.5
    19-44........................          819        5,289         15.5
    45-64........................          358        2,066         17.3
    65 or older..................          458        2,702         16.9
                                  --------------------------------------
      Total......................        3,456       14,980         23.1
                                  ======================================
Family income between 133 and 185
 percent of poverty:
    0-5..........................          771        2,799         27.5
    6-10.........................          537        2,349         22.8
    11-18........................          683        3,334         20.5
    19-44........................          951        9,700          9.8
    45-64........................          450        3,648         12.3
    65 or older..................          438        4,589          9.5
                                  --------------------------------------
      Total......................        3,829       26,420         14.5
                                  ======================================
Family income greater than 185
 percent of poverty:
    0-5..........................          964       14,010          6.9
    6-10.........................          712       12,450          5.7
    11-18........................        1,058       21,350          5.0
    19-44........................        1,719       77,850          2.2
    45-64........................          844       47,780          1.8
    65 or older..................        1,063       21,720          4.9
                                  --------------------------------------
      Total......................        6,359      195,200          3.3
                                  ======================================
All persons:
    0-5..........................        5,609       23,560         23.8
    6-10.........................        4,142       20,410         20.3
    11-18........................        4,812       31,740         15.2
    19-44........................        7,121      105,200          6.8
    45-64........................        3,025       58,140          5.2
    65 or older..................        2,962       32,390          9.1
                                  --------------------------------------
      Total......................       27,670      271,400         10.2
------------------------------------------------------------------------
Source: Congressional Research Service tabulations from the March 1999
  Current Population Survey (CPS). Number of recipients on the CPS is
  lower than the number on administrative records due to underreporting
  by CPS respondents due in part to welfare reform and the transition to
  managed care (see more detailed discussion in the section text).
  Counts exclude approximately 800,000 children in foster care for whom
  income data are not available on the CPS.

    Children under age 6 with family incomes below poverty are
most likely to be covered. Coverage rates drop steadily with
age and income until age 65. Estimates of the number of people
with Medicaid coverage based on the CPS and other national
surveys have always differed from official numbers published by
HCFA based on data reported by States on form HCFA-2082. While
estimates of Medicaid coverage based on the CPS show a
substantial decline over the period from 1994 to 1998,
administrative data reported by the States to HCFA show little
or no decline nationally over the same period. While not all of
the reasons for this divergence are understood, some plausible
explanations for at least part of the growing disparity may be:
(1) double counting and classification errors on the HCFA-2082;
(2) imprecise imputation or underreporting of Medicaid status
based on receipt of cash assistance on the CPS; and (3)
respondents reporting their current insurance coverage rather
than coverage last year when responding to the questions on the
CPS. Moreover, with the widespread transition of Medicaid from
fee-for-service reimbursement to capitated managed care, some
beneficiaries may report the source of their health insurance
coverage incorrectly. They may now carry health insurance cards
that identify them as members of a health maintenance
organization such as Kaiser or Blue Cross/Blue Shield rather
than as Medicaid beneficiaries or they may be classified as
uninsured if the plan in which they are enrolled is not
included among those listed on the CPS questionnaire. Changes
have been made to the March 2000 CPS that should improve the
reporting of Medicaid coverage by respondents.

                                Services

    States are required to offer the following services to
categorically needy recipients under their Medicaid Programs:
inpatient and outpatient hospital services; laboratory and x-
ray services; NF services for those over age 21; home health
services for those entitled to NF care; early and periodic
screening, diagnosis, and treatment for those under age 21;
family planning services and supplies; physicians' services;
and nurse-midwife services. The Omnibus Budget Reconciliation
Act (OBRA) of 1989 required States to provide ambulatory
services offered by federally qualified health centers,
effective April 1, 1990, and services furnished by certified
family or pediatric nurse practitioners, effective July 1,
1990. States may also provide additional medical services such
as drugs, eyeglasses, and inpatient psychiatric care for
individuals under age 21 or over 65 (see table 15-24).
    Federal law establishes the following requirements for
coverage of the medically needy: (1) if a State provides
medically needy coverage to any group, it must provide
ambulatory services to children and prenatal and delivery
services for pregnant women; (2) if a State provides
institutional services for any medically needy group, it must
also provide ambulatory services for this population group; and
(3) if the State provides medically needy coverage for persons
in intermediate care facilities for the mentally retarded or in
institutions for mental disease, it must offer to all groups
covered in its medically needy program either all of the
mandatory services or alternatively the care and services
listed in 7 of the 25 paragraphs in the law defining covered
services.

                                Financing

    The Federal Government helps States pay the cost of
Medicaid services by means of a variable matching formula which
is adjusted annually. The Federal matching rate, which is
inversely related to a State's per capita income, can range
from 50 to 83 percent. In 2000 the highest rate is 76.80
percent, with 15 States and other jurisdictions receiving the
minimum match of 50 percent. Beginning in fiscal year 1998 the
Federal matching rate for the District of Columbia increased
permanently to 70 percent; Alaska's matching percentage
increased to 59.8 percent for fiscal years 1998, 1999, and
2000. Federal matching for the territories is set at 50 percent
with a maximum dollar limit placed on the amount each territory
can receive. The Federal share of administrative costs is 50
percent for all States except for certain items for which the
authorized rate is higher.

                          Reimbursement Policy

    States establish their own service reimbursement policies
within general Federal guidelines. OBRA 1989 codified the
regulatory requirement that payments must be sufficient to
enlist enough providers so that covered services will be
available to Medicaid beneficiaries at least to the extent they
are available to the general population in a geographic area.
Beginning April 1, 1990, States were required to submit to the
Secretary their payment rates for pediatric and obstetrical
services along with additional data that would assist the
Secretary in evaluating the State's compliance with this
requirement. Effective October 1, 1997, States no longer must
assure adequate payment levels to obstetricians and
pediatricians nor provide annual reports on their payment
levels for these services.
    Until 1980, States were required to follow Medicare rules
in paying for institutional services. The Boren amendment,
enacted with respect to nursing homes in 1980 and extended to
hospitals in 1981, authorized States to establish their own
payment systems, as long as rates were reasonable and adequate
to meet the costs of efficiently and economically operated
facilities. Rates for hospitals had to also be sufficient to
assure reasonable access to inpatient services of adequate
quality. The Balanced Budget Act (BBA) of 1997 repealed the
Boren amendment. Effective October 1, 1997, States must instead
provide public notice of the proposed rates for hospitals, NFs,
and intermediate care facilities for the mentally retarded and
the methods used to establish those rates.
    State hospital reimbursement systems must provide for
additional payments to facilities serving a disproportionate
share of low-income patients. Unlike comparable Medicare
payments, Medicaid disproportionate share hospital (DSH)
payments must follow a formula that considers a hospital's
charity patients as well as its Medicaid caseload. Beginning in
fiscal year 1992, DSH payments in the national aggregate, as
well as in each State, are permitted to equal up to 12 percent
of total Medicaid spending applicable to a fiscal year,
excluding administrative costs. The 12 percent limit was phased
in through the use of State-specific DSH allotments (limits on
Federal matching payments) for each Federal fiscal year. BBA
1997 (Public Law 105-33) lowered the DSH allotments by imposing
a freeze and making graduated proportional reductions. It
established additional caps on the State DSH allotments for
fiscal years beginning in 1998 and specifies those caps for
1998-2002. Thereafter, annual DSH allotments for a State equal
the allotment for the preceding fiscal year increased by the
percentage change in the medical care component of the Consumer
Price Index for All Urban Consumers, subject to a ceiling of 12
percent of the total amount of expenditures under the State
plan for medical assistance during the fiscal year. Public Law
105-33 also imposed a new cap on DSH payments to institutions
for mental disease and other mental health facilities. Finally,
the law required States to pay disproportionate share
adjustments on behalf of individuals in managed care entities
directly to the hospitals rather than to the managed care
entities and not to include such payments in the capitation
rate. Public Law 106-113 made further changes to DSH by
increasing the disproportionate share allotments for certain
States and the District of Columbia. This law also removed the
July 1, 1999, end date for increased hospital-specific limits
for disproportionate share payments in California, extending
the transition period indefinitely.
    OBRA 1990 established new rules for Medicaid reimbursement
of prescription drugs. The law denies Federal matching funds
for drugs manufactured by a firm that has not agreed to provide
rebates. Under amendments made by the Veterans Health Care Act
of 1992, a manufacturer is not deemed to have a rebate
agreement unless the manufacturer has entered into a master
agreement with the Secretary of Veterans Affairs. Rebate
amounts vary depending on the nature of the drug. The minimum
rebate is 11 percent of the average price.
    Practitioners and providers are required to accept payments
under the program as payment in full for covered services
except where nominal cost-sharing charges may be required.
States may generally impose such charges with certain
exceptions. They are precluded from imposing cost sharing on
services for children under 18, services related to pregnancy,
family planning or emergency services, and services provided to
NF inpatients who are required to spend all of their income for
medical care except for a personal needs allowance. Effective
August 5, 1997 States are permitted to pay Medicaid rates to
providers for services to ``dual eligibles'' (those Medicare
beneficiaries who are also eligible for full Medicaid benefits)
and QMBs).

                             Administration

    Medicaid is a State-administered program. At the Federal
level, the Health Care Financing Administration (HCFA) of the
U.S. Department of Health and Human Services (DHHS) is
responsible for overseeing State operations.
    Federal law requires that a single State agency be charged
with administration of the Medicaid Program. Generally, that
agency is either the State welfare agency, the State health
agency, or an umbrella human resources agency. The single State
agency may contract with other State entities to conduct some
program functions. Further, States may process claims for
reimbursement themselves or contract with fiscal agents or
health insuring agencies to process these claims.

                        Medicaid and Managed Care

    To contain escalating health care costs and improve access
to the Medicaid Program, States are increasingly adopting
managed care delivery systems. Enrollment in Medicaid managed
care has increased steadily during the 1990s. According to
HCFA, by 1998, 20.2 million Medicaid recipients were enrolled
in some form of managed care, representing 49.7 percent of all
Medicaid recipients that year. Medicaid managed care refers to
a system of health care delivery in which the provision of an
agreed upon set of Medicaid-covered health care services is
coordinated by a health plan or a primary care case manager.
These plans, or case managers, are obligated by contract or
agreement to be responsible for the care provided (or not
provided) to enrollees. The goal of managed care systems is to
provide access to quality health care while containing costs by
ensuring that all necessary services are provided to
individuals.
    The Balanced Budget Act of 1997 included several provisions
that significantly affect the operation of State Medicaid
managed care programs. Effective October 1, 1997, States no
longer need a waiver of Federal law to require the majority of
Medicaid beneficiaries to enroll in managed care. Prior to BBA
1997, States wishing to require Medicaid beneficiaries to
enroll in managed care had to obtain one of two types of
waivers from HCFA. The first type of waiver, known as a
``freedom-of-choice'' waiver, is permitted by section 1915(b)
of the Social Security Act. Section 1915(b) waivers allow
States to waive specific requirements for a specific population
or geographical area, and have been used to require Medicaid
beneficiaries to enroll in managed care plans and to restrict
the providers from whom enrollees receive Medicaid-covered
services. There are currently 270 freedom-of-choice programs
operating in 34 States. The second, a section 1115(a) waiver,
offers States greater flexibility, allowing HCFA to waive a
broad range of Medicaid requirements. As of March 2000,
statewide section 1115(a) waivers were approved in 21 States,
implemented in 19, and pending in 3 States. In addition to
permitting States to require Medicaid beneficiaries to enroll
in managed care and to restrict their choice of providers,
these waivers allow States to expand coverage to those not
traditionally eligible for Medicaid, to impose premiums and
copayments on those new eligibles, and to modify the Medicaid
benefit package. Section 1115(a) waivers are approved on
condition that they are budget neutral to the Federal
Government--that Federal costs over the life of the waiver
(typically 5 years) are no more than if the State had continued
operating its prewaiver Medicaid Program. To enforce budget
neutrality, some waivers employ aggregate caps on Federal
matching and others use per capita expenditure caps. Some
States exempt aged, blind, and disabled Medicaid eligibles, who
often incur high medical expenses, from mandatory managed care
participation. Most Medicaid managed care programs have
operated under waiver authorities allowed by Medicaid statute.
    Medicaid managed care programs generally fall into two
categories: those in which the health plan assumes full
financial risk for services it provides to enrollees, referred
to as ``risk-based'' programs; and those in which an individual
health care provider (a physician or other licensed health
professional) is paid a small monthly amount by the State in
return for managing health care services for a defined
population, referred to as ``primary care case management
(PCCM)'' programs. In the latter case, the provider acts as a
gatekeeper for services needed by an individual, but does not
assume financial risk for health care services provided. There
are other hybrid models of Medicaid managed care in which
entities assume either full or partial risk for selected
services and may also function as PCCMs for enrolled
beneficiaries. For analytic purposes, such hybrid models are
also typically classified as ``risk-based'' programs. According
to a survey conducted by the National Academy for State Health
Policy (1999), 48 States (all except Alaska and Wyoming) and
the District of Columbia reported using some form of Medicaid
managed care in 1998. Forty-five States had risk-based
programs, and 29 States had nonrisk PCCM programs.
    The Medicaid population covered by State managed care
programs is composed primarily of low-income women and
children. As of 1998, all States operating risk-based programs
enrolled the Aid to Families with Dependent Children (AFDC)
related population and poverty-level children; and 43 enrolled
poverty-level pregnant women. Some States enroll populations
with more complex medical needs, such as the
noninstitutionalized elderly, and persons with mental and
physical disabilities. As of 1998, 26 States covered the
noninstitutional elderly in their risk-based programs; 32
covered Supplemental Security Income (SSI) eligible children;
and 30 covered SSI eligible adults living in the community. In
general, States tend to require risk-based managed care plans
to provide a comprehensive range of Medicaid-covered services.
The exceptions to this are long-term care services needed by
the elderly and disabled, which generally are not included
under managed care, and behavioral health services, which are
sometimes provided under a separate contract. This is in
contrast to States that operate PCCM programs; most States
limit the PCCM providers to gatekeeper functions for a smaller
range of services.
    Despite changes to Medicaid law made by BBA 1997, waivers
are still required to mandate the enrollment of children with
special health care needs, Native Americans/Alaska Natives, and
dual-eligible Medicaid-Medicare beneficiaries into managed
care. BBA 1997 also permits States to contract with managed
care organizations serving only Medicaid beneficiaries and to
``lock'' beneficiaries into the same plan for up to 12 months.
Prior to BBA 1997, States required a section 1115 waiver to
implement these requirements. BBA 1997 establishes rules
intended to safeguard the quality of care provided under
managed care arrangements. These include provisions related to
enrollment and disenrollment; information that States must
provide enrollees and potential enrollees; assurances of
adequate capacity and access to care; balance billing
protections; solvency standards; marketing materials; grievance
procedures; and other quality assurance standards the Secretary
of the DHHS is charged with developing. The law adopts the
``prudent layperson'' standard to whether a Medicaid managed
care organization would have to pay for services provided to an
enrollee in an emergency room and includes a ban on so-called
``gag rules,'' prohibiting interference with physician advice
to enrollees.

                          Legislative History

    (For legislative history prior to 1996, see previous
editions of the Green Book.)
    The following is a summary of major Medicaid changes
enacted in the Contract with America Advancement Act of 1996,
Public Law 104-121:
 1. Alcoholics and drug addicts.--SSI benefits are terminated
        for individuals receiving disability cash assistance
        based on a finding of alcoholism and drug addiction.
        Persons who lose SSI eligibility, which gives them
        automatic Medicaid coverage, may still be eligible for
        Medicaid if they meet other Medicaid eligibility
        criteria. States are required to perform a
        redetermination of Medicaid eligibility in any case in
        which an individual loses SSI and that determination
        affects her Medicaid eligibility.
    The following is a summary of major Medicaid changes
enacted in the Personal Responsibility and Work Opportunity Act
of 1996, Public Law 104-193:
 1. Eligibility.--A new cash welfare block grant to States,
        Temporary Assistance for Needy Families (TANF), is
        established. The automatic link between AFDC and
        Medicaid is severed. Families who meets AFDC
        eligibility criteria as of July 16, 1996 are eligible
        for Medicaid, even if they do not qualify for TANF.
        States must use the same income and resource standards
        and other rules previously used to determine
        eligibility, and the prereform AFDC family composition
        requirement still must be met. A State may lower its
        income standard, but not below the standard it applied
        on May 1, 1988. A State may increase its income and
        resource standards up to the percentage increase in the
        Consumer Price Index (CPI) subsequent to July 16, 1996.
        States may use less restrictive methods for counting
        income and resources than were required by law as in
        effect on July 16, 1996. States are permitted to deny
        Medicaid benefits to adults and heads of households who
        lose TANF benefits because of refusal to work; States
        may not apply this requirement to poverty-related
        pregnant women and children.
 2. Disabled children.--The definition of disability used to
        establish the eligibility of children for SSI is
        narrowed. Children who lose SSI eligibility, which
        gives them automatic Medicaid coverage, may still be
        eligible for Medicaid if they meet other Medicaid
        eligibility criteria. States are required to perform a
        redetermination of Medicaid eligibility in any case in
        which an individual loses SSI and that determination
        affects his or her Medicaid eligibility.
 3. Aliens.--For legal resident aliens and other qualified
        aliens who entered the United States on or after August
        22, 1996 whose coverage is not mandatory (e.g., they
        have been credited with 40 quarters of Social Security
        coverage), Medicaid is barred for 5 years. Except for
        emergency services, Medicaid coverage for such aliens
        entering before August 22, 1996 and coverage after the
        5 year ban are State options.
 4. Administration.--A State may use the same application form
        for Medicaid as they use for TANF. A State may choose
        to administer the Medicaid Program through the same
        agency that administers TANF or through a separate
        Medicaid agency. A special fund of $500 million is
        provided for enhanced Federal matching for States'
        expenditures attributable to the administrative costs
        of Medicaid eligibility determinations due to the law.
    The following is a summary of major Medicaid changes
enacted in the Balanced Budget Act of 1997, Public Law 105-33:
 1. Eligibility.--The Balanced Budget Act restores Medicaid
        eligibility and SSI coverage for legal immigrants who
        entered the country prior to August 22, 1996 and later
        become disabled; guarantees continued Medicaid
        eligibility for children with disabilities who are
        expected to lose their SSI eligibility as the result of
        restrictions enacted in 1996; and extends the exemption
        from the ban on Medicaid and other forms of public
        assistance for refugees and individuals seeking asylum
        from 5 to 7 years. States are permitted to provide
        continuous Medicaid coverage for 12 months to all
        children, regardless of whether they continue to meet
        income eligibility tests. States are permitted to
        create a new Medicaid eligibility category for
        individuals with incomes up to 250 percent of poverty
        and who would, but for income, be eligible for SSI.
        Such individuals can ``buy into'' Medicaid by paying a
        sliding scale premium based on the individuals' income
        as determined by the State.
 2. Payment methodology.--The law repeals the Boren amendment,
        which directed that payment rates to institutional
        providers be ``reasonable and adequate'' to cover the
        cost of ``efficiently and economically operated''
        facilities, and repeals the law requiring States to
        assure adequate payment levels for services provided by
        obstetricians and pediatricians. The requirement to pay
        federally qualified health centers and rural health
        clinics 100 percent of reasonable costs will be phased
        out over 6 fiscal years, with special payment rules in
        place during fiscal years 1998-2002 to ease the
        transition.
 3. Payments for disproportionate share hospitals.--The law
        reduces State DSH allotments by imposing freezes and
        making graduated proportionate reductions. Limitations
        are placed on payments to institutions for mental
        disease. The act establishes additional caps on the
        State DSH allotments for fiscal years beginning in 1998
        and specifies those caps for 1998-2002. States are
        required to report annually on the method used to
        target DSH funds and to describe the payments made to
        each hospital.
 4. Managed care.--The law eliminates the need for 1915(b)
        waivers for most Medicaid populations. Under the new
        law, States can require the majority of Medicaid
        recipients to enroll in managed care simply by amending
        their State plan. Waivers are still required to mandate
        that children with special health care needs and
        certain dual eligible Medicaid-Medicare beneficiaries
        enroll with managed care entities. The law establishes
        a statutory definition of PCCM, adds it as a covered
        service, and sets contractual requirements for both
        PCCM and Medicaid managed care organizations. The act
        also includes managed care provisions that establish
        standards for quality and solvency, and provide
        protections for beneficiaries. The law repeals the
        provision that requires managed care organizations to
        have no more than 75 percent of their enrollment be
        Medicaid and Medicare beneficiaries and the prohibition
        on cost sharing for services furnished by health
        maintenance organizations.
    The following is a summary of the major Medicaid changes
included in the Medicare, Medicaid, and State Children's Health
Insurance Program (SCHIP) Balanced Budget Refinement Act of
1999, incorporated by reference in the Consolidated
Appropriations Act for fiscal year 2000, Public Law 106-113:
 1. Increase in DSH allotments for selected States.--The law
        increases the Federal share of DSH payments to
        Minnesota, New Mexico, Wyoming, and the District of
        Columbia for each of fiscal years 2000-2002.
 2. Administration.--The law extends beyond fiscal year 2000
        the availability of a $500 million fund created to
        assist with the transitional costs of new Medicaid
        eligibility activities resulting from welfare reform,
        and allows these funds to be used for costs incurred
        beyond the first 3 years following welfare reform.
 3. Federally qualified health centers services and rural
        health clinics.--The law slows the phase-out of the
        cost-based system of reimbursement for services
        provided by federally qualified health centers and
        rural health clinics and authorizes a study of the
        impact of reducing or modifying payments to such
        providers.
 4. Payments for monitoring services and external review
        requirements.--The law provides that States will
        receive enhanced matching payments for medical and
        utilization reviews for Medicaid fee-for-service, and
        quality reviews for Medicaid managed care, when
        conducted by certain entities similar to peer review
        organizations. It also eliminates duplicative
        requirements for external review and requires the DHHS
        Secretary to certify to Congress that the external
        review requirements for Medicaid managed care are fully
        implemented.
 5. Federal matching for disproportionate share hospital
        payments.--The law clarifies that Medicaid
        disproportionate share hospital payments are matched at
        the Medicaid Federal medical assistance percentage and
        not at the enhanced Federal medical assistance
        percentage authorized under title XXI.
 6. Outpatient drugs.--The law allows rebate agreements entered
        into after the date of enactment of this act to become
        effective on the date on which the agreement is entered
        into, or at State option, any date before or after the
        date on which the agreement is entered into.
 7. Disproportionate share hospital transition rule.--The law
        extends a provision included in the Balanced Budget Act
        of 1997 related to allocation of DSH funds among
        California's hospitals.
    The following is a summary of the major Medicaid changes
enacted in the Foster Care Independence Act of 1999, Public Law
106-169:
 1. Foster care children.--States are given the option to
        extend Medicaid coverage to former foster care
        recipients ages 18, 19, and 20, and States may limit
        coverage to those who were eligible for assistance
        under title IV-E before turning 18 years of age. The
        law also includes a ``sense of Congress'' statement
        indicating that States should provide health insurance
        coverage to all former foster care recipients ages 18,
        19, and 20.
    The following is a summary of the major Medicaid changes
enacted in the Ticket to Work and Work Incentives Improvement
Act of 1999, Public Law 106-170:
 1. Employed, disabled individuals.--States can opt to cover
        working persons with disabilities at higher income and
        resource levels than otherwise permitted (i.e., income
        over 250 percent of the Federal poverty level (FPL) and
        resources over $2,000 for an individual or $3,000 for a
        couple). States may also cover financially eligible
        working individuals whose medical condition has
        improved such that they no longer meet the Social
        Security definition of disability. States can require
        these individuals to ``buy in'' to Medicaid coverage.
        These individuals pay premiums or other cost-sharing
        charges on a sliding fee scale based on income, as
        established by the State.

                              Program Data

    Under current law, Federal Medicaid outlays are projected
to reach $116.1 billion in fiscal year 2000, a 7.5 percent
increase over the $108 billion projected for fiscal year 1999.
This and other Medicaid Program data are presented in tables
15-13 to 15-26.

                           TABLE 15-13.--HISTORY OF MEDICAID PROGRAM COSTS, 1966-2001
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                        Total                Federal                State
                                               -----------------------------------------------------------------
                  Fiscal year                    Program  Percentage   Program  Percentage   Program  Percentage
                                                  costs     change      costs     change      costs     change
----------------------------------------------------------------------------------------------------------------
1966 \1\......................................    $1,658  ..........      $789  ..........      $869  ..........
1967 \1\......................................     2,368        42.8     1,209        53.2     1,159        33.4
1968 \1\......................................     3,686        55.7     1,837        51.9     1,849        59.5
1969 \1\......................................     4,166        13.0     2,276        23.9     1,890         2.2

1970 \1\......................................     4,852        16.5     2,617        15.0     2,235        18.3
1971..........................................     6,176        27.3     3,374        28.9     2,802        25.4
1972 \2\......................................     8,434        36.6     4,361        29.3     4,074        45.4
1973..........................................     9,111         8.0     4,998        14.6     4,113         1.0

1974..........................................    10,229        12.3     5,833        16.7     4,396         6.9
1975..........................................    12,637        23.5     7,060        21.0     5,578        26.9
1976..........................................    14,644        15.9     8,312        17.7     6,332        13.5
    TQ \3\....................................     4,106          NA     2,354          NA     1,752          NA

1977..........................................    17,103    \4\ 16.8     9,713    \4\ 16.9     7,389    \4\ 16.7
1978..........................................    18,949        10.8    10,680        10.0     8,269        11.9
1979..........................................    21,755        14.8    12,267        14.9     9,489        14.8
1980..........................................    25,781        18.5    14,550        18.6    11,231        18.4

1981..........................................    30,377        17.8    17,074        17.3    13,303        18.4
1982..........................................    32,446         6.8    17,514         2.6    14,931        12.2
1983..........................................    34,956         7.7    18,985         8.4    15,971         7.0
1984..........................................    37,569         7.5    20,061         5.7    17,508         9.6

1985 \5\......................................    40,917         8.9  \6\ 22,6        12.9  \6\ 18,2         4.3
                                                                            55                    62
1986..........................................    44,851         9.6    24,995        10.3    19,856         8.7
1987..........................................    49,344        10.0    27,435         9.8    21,909        10.3
1988..........................................    54,116         9.7    30,462        11.0    23,654         8.0

1989..........................................    61,246        13.2    34,604        13.6    26,642        12.6
1990..........................................    72,492        18.4    41,103        18.8    31,389        17.8
1991..........................................    91,519        26.2    52,532        27.8    38,987        24.2
1992..........................................   118,166        29.1    67,827        29.1    50,339        29.1

1993..........................................   131,775        11.5    75,774        11.7    56,001        11.2
1994..........................................   143,204         8.7    82,034         8.3    61,170         9.2
1995..........................................   156,395         9.2    89,070         8.6    67,325        10.1
1996..........................................   161,963         3.6    91,990         3.3    69,973         3.9

1997..........................................   167,635         3.5    95,552         3.8    72,083         3.1
1998..........................................   177,364         5.8   100,177         4.8    77,187         7.1
1999 \7\......................................   189,547         6.9   108,042         7.9    81,505         5.6
2000 \7\......................................   203,714         7.5   116,117         7.5    87,597         7.5

2001 \7\......................................   219,014         7.5   124,838         7.5    94,176         7.6
----------------------------------------------------------------------------------------------------------------
\1\ Includes related programs which are not separately identified, though for each successive year a larger
  portion of the total represents Medicaid expenditures. As of January 1, 1970, Federal matching was only
  available under Medicaid.
\2\ Intermediate care facilities transferred from the cash assistance programs to Medicaid effective January 1,
  1972. Data for prior periods do not include these costs.
\3\ Transitional quarter (beginning of Federal fiscal year moved from July 1 to October 1).
\4\ Represents increase over fiscal year 1976, i.e., 5 calendar quarters.
\5\ Includes transfer of function of State fraud control units to Medicaid from Office of Inspector General.
\6\ Temporary reductions in Federal payments authorized for fiscal years 1982-84 were discontinued in fiscal
  year 1985.
\7\ Current law estimate.

NA--Not available.

Note.--Totals may not add due to rounding. Except for fiscal years 1999-2001, program costs are taken from the
  HCFA 64 report. These payments are primarily for direct payment for medical benefits but include all other
  Medicaid expenditures claimed by the State. Total State expenditures include lump sum adjustments,
  disproportionate share hospital payments, and administrative costs. These data do not match payments reported
  on the HCFA-2082 reports, which typically exclude lump-sum payments not attributable to individual claims,
  such as institutional cost settlements, disproportionate share hospital payments, and administrative costs.

Source: Budget of the U.S. Government, fiscal years 1969-2001 and Health Care Financing Administration.

     TABLE 15-14.--UNDUPLICATED NUMBER OF MEDICAID RECIPIENTS BY ELIGIBILITY CATEGORY, FISCAL YEARS 1972-98
                                                 [In thousands]
----------------------------------------------------------------------------------------------------------------
                                                                   Age 65
                     Fiscal year                          Total      or     Blind/   Children  Adults  Other \1\
                                                       recipients   older  disabled
----------------------------------------------------------------------------------------------------------------
1972.................................................     17,606    3,318     1,733     7,841   3,137     1,576
1973.................................................     19,622    3,496     1,905     8,659   4,066     1,495
1974.................................................     21,462    3,732     2,357     9,478   4,392     1,502
1975.................................................     22,007    3,615     2,464     9,598   4,529     1,800
1976.................................................     22,815    3,612     2,669     9,924   4,774     1,836
1977 \2\.............................................     22,832    3,636     2,802     9,651   4,785     1,959
1978.................................................     21,965    3,376     2,718     9,376   4,643     1,852
1979.................................................     21,520    3,364     2,753     9,106   4,570     1,727
1980 \3\.............................................     21,605    3,440     2,911     9,333   4,877     1,499
1981 \3\.............................................     21,980    3,367     3,079     9,581   5,187     1,364
1982 \3\.............................................     21,603    3,240     2,890     9,563   5,356     1,434
1983 \3\.............................................     21,554    3,371     2,921     9,535   5,592     1,129
1984 \3\.............................................     21,607    3,238     2,913     9,684   5,600     1,187
1985 \3\.............................................     21,814    3,061     3,017     9,757   5,518     1,214
1986 \3\.............................................     22,515    3,140     3,182    10,029   5,647     1,362
1987 \3\.............................................     23,109    3,224     3,381    10,168   5,599     1,418
1988 \3\.............................................     22,907    3,159     3,487    10,037   5,503     1,343
1989 \3\.............................................     23,511    3,132     3,591    10,318   5,717     1,175
1990.................................................     25,255    3,202     3,718    11,220   6,010     1,105
1991.................................................     28,280    3,359     4,068    13,415   6,778       658
1992.................................................     30,926    3,742     4,462    15,104   6,954       664
1993.................................................     33,432    3,863     5,016    16,285   7,505       763
1994.................................................     35,053    4,035     5,459    17,194   7,586       779
1995.................................................     36,282    4,119     5,859    17,164   7,604     1,537
1996.................................................     36,118    4,285     6,221    16,739   7,127       652
1997.................................................     34,872    3,955  \4\ 6,12    15,266   6,803       524
                                                                                  9
1998.................................................     40,649    3,964  \4\ 6,63    18,309   7,908       655
                                                                                  8
----------------------------------------------------------------------------------------------------------------
\1\ This category includes other title XIX, such as Ribicoff children and foster care children.
\2\ Fiscal year 1977 began in October 1976 and was the first year of the new Federal fiscal cycle. Before 1977,
  the fiscal year began in July.
\3\ Beginning in fiscal year 1980, recipients' categories do not add to the unduplicated total due to the small
  number of recipients that are in more than one category during the year.
\4\ In fiscal year 1997 HCFA combined the blind and disabled categories.

Note.--For 1972-97, a recipient is an individual for whom a fee-for-service claim was paid during the year. For
  fiscal year 1998 only, a recipient is an individual for whom a fee-for-service claim was paid during the year,
  or for whom a capitation payment was made during the year. Capitated service delivery systems became more
  prominent under Medicaid starting in 1995, and primarily include nondisabled children and adults. See tables
  15-25 and 15-26 for detailed data on capitated beneficiaries and expenditures.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form HCFA-2082.

 TABLE 15-15.--MEDICAID RECIPIENTS BY SERVICE CATEGORY, FISCAL YEAR 1998
                        [In thousands of people]
------------------------------------------------------------------------
                                                              Number of
                      Service category                        recipients
------------------------------------------------------------------------
Inpatient hospital.........................................        4,273
Mental health facility.....................................          135
Nursing facility...........................................        1,646
Intermediate care facility for the mentally retarded.......          126
Physician..................................................       18,555
Dental.....................................................        4,965
Other practitioner.........................................        4,342
Outpatient hospital........................................       12,158
Clinic.....................................................        5,285
Laboratory and x ray.......................................        9,381
Home health................................................        1,225
Prescribed drugs...........................................       19,338
Family planning............................................        2,011
Early and periodic screening...............................        6,175
Personal care support......................................        3,108
Home- and community-based..................................          467
Primary care case management...............................        4,066
Prepaid health care........................................       20,203
Other care.................................................        6,975
                                                            ------------
      Unduplicated total...................................      40,649
------------------------------------------------------------------------
Note.--A recipient is an individual for whom a fee-for-service claim was
  paid during the year or for whom a capitation payment was made during
  the year. See tables 15-25 and 15-26 for detailed data on capitated
  beneficiaries and expenditures.

Source: Health Care Financing Administration, U.S. Department of Health
  and Human Services. Form HCFA-2082 Report.

            TABLE 15-16.--MEDICAID RECIPIENTS AND PAYMENTS BY BASIS OF ELIGIBILITY, FISCAL YEAR 1998
----------------------------------------------------------------------------------------------------------------
                                                         Payments
                                                           (in                  Recipients                 Per
                 Basis of eligibility                  millions of  Percentage      (in     Percentage   capita
                                                         dollars)               thousands)              payments
----------------------------------------------------------------------------------------------------------------
Age 65 and older.....................................      $40,602      28.5        3,964        9.8     $10,243
Blind/disabled.......................................       60,375      42.4        6,637       16.3       9,097
Children.............................................       20,459      14.4       18,309       45.0       1,117
Adults...............................................       14,833      10.4        7,908       19.5       1,876
Foster care children.................................        2,347       1.6          655        1.6       3,583
Unknown..............................................        3,702       2.6        3,176        7.8       1,166
                                                      ----------------------------------------------------------
      Total..........................................      142,318       100       40,649        100      3,501
----------------------------------------------------------------------------------------------------------------
Note.--A recipient is an individual for whom a fee-for-service claim was paid during the year, or for whom a
  capitation payment was made during the year. The data in this table includes payments for capitated delivery
  systems and fee-for-service delivery systems. See tables 15-25 and 15-26 for detailed data on capitated
  beneficiaries and expenditures. Medicaid payments reported on the HCFA-2082 for fiscal year 1998 include
  payments made for Medicaid claims processed during the year.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form HCFA-2082
  Report.

                               TABLE 15-17.--MEDICAID RECIPIENTS BY BASIS OF ELIGIBILITY BY JURISDICTION, FISCAL YEAR 1998
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Total      Age 65 and     Blind/                              Foster care/
                            State                               recipients     older       disabled     Children      Adults      children     Unknown
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama......................................................      527,078       64,651      145,892      262,547       48,049        4,038        1,901
Alaska.......................................................       74,508        50306        8,912       37,429       19,990        1,055        1,816
Arizona......................................................      507,668       27,473       78,121      282,256      114,360        5,458           NA
Arkansas.....................................................      424,727       50,746       96,507      179,405       85,023        4,994        8,052
California...................................................    7,082,175      587,326      926,252    3,345,491    1,646,576      138,609      437,921
Colorado.....................................................      344,916       43,264       62,492      154,206       66,485       14,354        4,115
Connecticut..................................................      381,208       51,741       51,586      189,083       81,613        7,185           NA
Delaware.....................................................      101,436        6,652       13,726       49,425       28,831          461        2,341
District of Columbia.........................................      166,146        7,979       22,551       58,488       25,682        1,664       49,782
Florida......................................................    1,904,591      186,566      383,978      944,280      354,337       20,311       15,119
Georgia......................................................    1,221,978       89,197      226,263      666,385      202,223        6,508       31,402
Hawaii.......................................................      184,614       17,022       16,913       75,329       64,575        3,022        7,753
Idaho........................................................      123,176       12,210       17,395       57,056       17,147        1,351       18,017
Illinois.....................................................    1,363,856      108,132      262,773      620,251      293,879       78,821           NA
Indiana......................................................      607,293       72,880       91,514      313,972      101,228        5,802       21,897
Iowa.........................................................      314,936       39,847       51,219      138,633       78,021        4,836        2,380
Kansas.......................................................      241,933       27,388       43,388      120,383       40,811        4,029        5,934
Kentucky.....................................................      644,482       65,739      178,672      273,114      111,161        6,369        9,427
Louisiana....................................................      720,615       93,838      160,544      345,723      120,369          141           NA
Maine........................................................      170,456       22,669       37,064       74,213       30,487        2,160        3,863
Maryland.....................................................      561,085       44,502      104,461      264,965      106,312       15,219       25,626
Massachusetts................................................      908,238      113,876      197,426      409,962      186,362          612           NA
Michigan.....................................................    1,362,890       91,663      259,243      616,825      287,617       28,346       79,196
Minnesota....................................................      538,413       58,701       73,913      293,632       96,443        6,476        9,248
Mississippi..................................................      485,767       60,567      131,439      218,491       61,217        2,894       11,159
Missouri.....................................................      734,015       88,776      113,652      384,773      115,773       14,859       16,182
Montana......................................................      100,760        9,130       16,378       45,686       20,665        3,186        5,715
Nebraska.....................................................      211,188       25,162       27,724      106,023       42,199       10,080           NA
Nevada.......................................................      128,144       12,320       19,320       65,349       21,460        3,155        6,540
New Hampshire................................................       93,970       12,291       12,124       51,166       14,838        2,434        1,117
New Jersey...................................................      813,251       94,244      151,050      372,807      172,122       15,605        7,423
New Mexico...................................................      329,418       19,601       44,824      209,014       52,197        1,558        2,224
New York.....................................................    3,073,241      393,567      592,598    1,315,777      689,543       81,756           NA
North Carolina...............................................    1,167,988      158,676      198,254      609,190      189,692       12,176           NA
North Dakota.................................................       62,280       10,376        8,953       27,779       11,398        1,481        2,293
Ohio.........................................................    1,290,776      168,246      232,986      586,546      276,603       24,395           NA
Oklahoma.....................................................      342,475           NA           NA           NA           NA           NA      342,475
Oregon.......................................................      511,171       39,401       97,889      129,409      210,350       13,701       20,421
Pennsylvania.................................................    1,523,120      222,458      272,083      745,977      257,602       23,026        1,974
Puerto Rico..................................................      964,015           NA           NA           NA           NA           NA      964,015
Rhode Island.................................................      153,130       17,540       28,524       64,882       30,866        3,583        7,735
South Carolina...............................................      594,962       72,074      102,904      269,751      121,013        6,412       22,808
South Dakota.................................................       89,537        9,496       15,767       48,794       14,154        1,326           NA
Tennessee....................................................    1,843,661       88,948      302,470      554,235      479,727       12,130      406,151
Texas........................................................    2,324,810      301,368      288,293    1,327,276      391,786       16,087           NA
Utah.........................................................      215,801        9,716       20,093      106,259       44,966        3,783       30,984
Vermont......................................................      123,992       14,101       15,258       53,842       36,814        1,952        2,025
Virginia.....................................................      653,236       86,550      121,112      333,370      107,944        4,260           NA
Virgin Islands...............................................       19,764        1,516        1,208       11,424        5,616           NA           NA
Washington...................................................    1,413,208       61,996      112,306      489,005      181,319       14,342      554,240
West Virginia................................................      342,668       29,157       73,037      153,021       56,682        5,065       25,706
Wisconsin....................................................      518,595       63,432      120,136      231,607       82,360       13,094        7,966
Wyoming......................................................       46,121        4,146        6,793       24,639        9,448          523          572
                                                              ------------------------------------------------------------------------------------------
    All jurisdictions........................................   40,649,482    3,964,223    6,637,980   18,309,145    7,907,935      654,684    3,175,515
--------------------------------------------------------------------------------------------------------------------------------------------------------
NA--Not available.

Note.--A recipient is an individual for whom a fee-for-service claim was paid during the year or for whom a capitation payment was made during the year.
  Capitated service delivery systems became more prominent under Medicaid starting in 1995, and primarily include nondisabled children and adults. See
  tables 15-25 and 15-26 for detailed data on capitated beneficiaries and expenditures.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. HCFA-2082 Report.

         TABLE 15-18.--MEDICAID PAYMENTS BY BASIS OF ELIGIBILITY OF RECIPIENT BY STATE, FISCAL YEAR 1998
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                   Age 65                                Foster
                       State                            Total       and     Blind/   Children   Adults    care
                                                    expenditures   older   disabled                     children
----------------------------------------------------------------------------------------------------------------
Alabama...........................................      $1,902       $550      $598      $187      $34      $18
Alaska............................................         330         57       115        86       61       10
Arizona...........................................       1,644        324       610       405      297        8
Arkansas..........................................       1,376        430       791       262       99       29
California........................................      14,237      2,878     6,143     2,665    2,149      250
Colorado..........................................       1,439        438       582       150      125      101
Connecticut.......................................       2,421      1,048       890       289      176       17
Delaware..........................................         420         95       197        68       55        2
District of Columbia..............................         731        151       346        78       53       16
Florida...........................................       5,687      1,555     2,659       846      549       51
Georgia...........................................       3,012        493     1,403       583      458       24
Hawaii............................................         507        157       128       117       89        5
Idaho.............................................         425        124       168        52       38        2
Illinois..........................................       6,173      1,105     3,262       786      686      333
Indiana...........................................       2,564        864     1,084       400      175       23
Iowa..............................................       1,289        464       489       179      134       19
Kansas............................................         916        253       450       132       60        7
Kentucky..........................................       2,425        583     1,162       387      240       43
Louisiana.........................................       2,384        672     1,101       372      238        0
Maine.............................................         747        239       329        96       44       26
Maryland..........................................       2,489        604     1,184       387      239       40
Massachusetts.....................................       4,609      1,475     2,174       561      398        1
Michigan..........................................       4,345        940     1,945       516      515       52
Minnesota.........................................       2,924        993     1,223       455      197       37
Mississippi.......................................       1,442        415       665       226      120       12
Missouri..........................................       2,570        927     1,016       410      157       47
Montana...........................................         361        115       139        57       38        6
Nebraska..........................................         753        264       278       108       67       36
Nevada............................................         462         92       174        79       52       41
New Hampshire.....................................         606        227       221        99       34       24
New Jersey........................................       4,219      1,325     1,978       434      370       97
New Mexico........................................         862        146       310       270      105       26
New York..........................................      24,299      7,871    11,645     2,324    2,091      367
North Carolina....................................       4,014      1,193     1,663       716      397       44
North Dakota......................................         341        131       140        34       23       10
Ohio..............................................       6,121      2,245     2,545       705      554       71
Oklahoma..........................................       1,178          0         0         0        0        0
Oregon............................................       1,378        113       268       367      576       37
Pennsylvania......................................       6,080      2,510     1,988     1,025      457       98
Puerto Rico.......................................         250          0         0         0        0        0
Rhode Island......................................         919        298       455        81       59       13
South Carolina....................................       2,019        478       762       305      162       51
South Dakota......................................         356        107       161        57       27        4
Tennessee.........................................       3,167        675       991       411      633       58
Texas.............................................       7,140      2,342     2,485     1,397      872       44
Utah..............................................         619         90       227       120       79       30
Vermont...........................................         351         97       136        55       47       15
Virginia..........................................       2,118        639       933       336      201        9
Virgin Islands....................................          10          2         2         3        3        0
Washington........................................       2,044        573       623       341      354       22
West Virginia.....................................       1,243        359       474       154      102       32
Wisconsin.........................................       2,206        817       978       256      123       35
Wyoming...........................................         192         54        84        30       22        1
                                                   -------------------------------------------------------------
      All jurisdictions...........................     142,318     40,602    60,375    20,459   14,833   2,347
----------------------------------------------------------------------------------------------------------------
Note.--The data in this table include payments for capitated service delivery systems and fee-for-service
  delivery systems. Capitated service delivery systems became more prominent under Medicaid starting in 1995,
  and primarily include nondisabled children and adults. See tables 15-25 and 15-26 for detailed data on
  capitated beneficiaries and expenditures. Medicaid payments reported on the HCFA-2082 for fiscal year 1998
  include payments made for Medicaid claims processed during the year. These payments typically exclude lump sum
  payments not attributable to individual claims, such as disproportionate share hospital payments, and other
  institutional cost settlements, or administrative costs.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form HCFA-2082
  Report.

                        TABLE 15-19.--AMOUNTS OF MEDICAID PAYMENTS BY BASIS OF ELIGIBILITY AND TYPE OF SERVICE, FISCAL YEAR 1998
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Foster care/
                    Service category                           Aged       Blind/disabled     Children         Adults         children          Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              In millions of dollars
                                                         -----------------------------------------------------------------------------------------------
Inpatient hospital......................................        $1,871.1        $9,643.4        $4,825.5        $4,211.0          $307.5       $21,498.7
Mental health facility..................................           854.7         1,142.4           361.6           125.7           288.8         2,800.5
Nursing facility........................................        25,529.8         5,952.3            90.8           104.8            11.2        31,892.1
Intermediate care facility for the mentally retarded....           691.7         8,763.3            41.8            37.4            16.4         9,481.7
Physician...............................................           695.0         2,102.0         1,524.6         1,533.2           119.4         6,070.0
Outpatient hospital.....................................           585.2         2,682.7         1,149.6         1,182.6            90.6         5,759.0
Early and periodic screening, diagnosis, and treatment..            13.9           364.1           822.3            28.7            97.0         1,334.8
Prescribed drugs........................................         3,805.9         7,618.5         1,011.8           916.1           119.7        13,521.7
Dental..................................................            58.6           200.8           460.2           156.4            21.4           901.4
Other practitioner......................................            92.8           218.2           166.4            72.5            34.5           587.1
Clinic..................................................           223.0         2,240.7           750.0           514.8           138.8         3,921.2
Laboratory and x ray....................................            55.0           367.6           166.4           311.5            16.2           938.7
Family planning.........................................             2.6            51.4            65.0           316.5             3.7           449.1
Home health.............................................           797.5         1,691.8           101.5            61.2            43.7         2,701.5
Personal care support...................................         2,367.1         4,376.5           856.2           205.2           346.5         8,222.0
Home- and community-based waiver........................           950.1         5,478.7            72.0            70.2           117.4         6,708.7
Other care..............................................           719.0         2,382.0           621.3           252.1           361.7         4,386.2
Prepaid health care.....................................         1,281.7         5,061.1         7,258.2         4,716.6           210.2        19,296.2
Primary care case management............................             4.8            26.0            66.5            18.4             1.7           134.4
Unknown/error...........................................             2.5            11.4            47.4            -1.6             0.2         1,712.8
                                                         -----------------------------------------------------------------------------------------------
      Total.............................................        40,602.1        60,375.1        20,459.1        14,833.1         2,346.8       142,317.9
                                                         ===============================================================================================
                                                                                                    Percentage
                                                         -----------------------------------------------------------------------------------------------
Inpatient hospital......................................             4.6            16.0            23.6            28.4            13.1            15.1
Mental health facility..................................             2.1             1.9             1.8             0.8            12.3             2.0
Nursing facility........................................            62.9             9.9             0.4             0.7             0.5            22.4
Intermediate care facility for the mentally retarded....             1.7            14.5             0.2             0.3             0.7             6.7
Physician...............................................             1.7             3.5             7.5            10.3             5.1             4.3
Outpatient hospital.....................................             1.4             4.4             5.6             8.0             3.9             4.0
Early and periodic screening, diagnosis, and treatment..             0.0             0.6             4.0             0.2             4.1             0.9
Prescribed drugs........................................             9.4            12.6             4.9             6.2             5.1             9.5
Dental..................................................             0.1             0.3             2.2             1.1             0.9             0.6
Other practitioner......................................             0.2             0.4             0.8             0.5             1.5             0.4
Clinic..................................................             0.5             3.7             3.7             3.5             5.9             2.8
Laboratory and x ray....................................             0.1             0.6             0.8             2.1             0.7             0.7
Family planning.........................................             0.0             0.1             0.3             2.1             0.2             0.3
Home health.............................................             2.0             2.8             0.5             0.4             1.9             1.9
Personal care support...................................             5.8             7.2             4.2             1.4            14.8             5.8
Home- and community-based waiver........................             2.3             9.1             0.4             0.5             5.0             4.7
Other care..............................................             1.8             3.9             3.0             1.7            15.4             3.1
Prepaid health care.....................................             3.2             8.4            35.5            31.8             9.0            13.6
Primary care case management............................             0.0             0.0             0.3             0.1             0.1             0.1
Unknown/error...........................................             0.0             0.0             0.2            -0.0             0.0             1.2
                                                         -----------------------------------------------------------------------------------------------
      Total.............................................             100             100             100             100             100            100
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Parentheses are used to indicate negative values. Negative values typically result from large negative claims payment adjustments. The data in
  this table include payments for capitated service delivery systems and fee-for-service delivery systems. See tables 15-25 and 15-26 for detailed data
  on capitated beneficiaries and expenditures. Medicaid payments reported on the form HCFA-2082 for fiscal year 1998 include payments made for Medicaid
  claims processed during the year.

Source: Health Care Financing Administration, Data and Data Systems Group, Division of Information Analysis and Technical Assistance.

 TABLE 15-20.--MEDICAID PAYMENTS AND PER CAPITA PAYMENTS BY BASIS OF ELIGIBILITY, SELECTED FISCAL YEARS 1975-98
----------------------------------------------------------------------------------------------------------------
                                                                Fiscal year                             Percent
        Basis of eligibility        ------------------------------------------------------------------   change
                                        1975       1980       1985       1990       1995       1998     1975-98
----------------------------------------------------------------------------------------------------------------
                                                      Nominal payments, in millions of dollars
                                    ----------------------------------------------------------------------------
Payments:
    Age 65 and older...............     $4,358     $8,739    $14,096    $21,508    $36,527    $40,602      831.7
    Blind/disabled.................      3,145      7,621     13,452     24,403     49,418     60,375     1819.7
    Children.......................      2,186      3,123      4,414      9,100     17,976     20,459      835.9
    Adults.........................      2,062      3,231      4,746      8,590     13,511     14,833      619.4
    Other..........................        492        596        798      1,051      1,499      6,048     1129.3
                                    ----------------------------------------------------------------------------
      Total........................     12,242     23,311     37,508     64,859    120,140    142,318     1062.5
                                    ============================================================================
Per capita payment:
    Age 65 and older...............      1,205      2,540      4,605      6,717      8,868     10,242      750.0
    Blind/disabled.................      2,146      2,619      7,600     11,807     17,678      9,095      323.8
    Children.......................        228        335        452        811      1,047      1,117      389.9
    Adults.........................        455        663        860      1,429      1,777      1,876      312.3
    Other..........................        273         NR        658      1,062      2,380      1,579      478.4
                                    ----------------------------------------------------------------------------
      Total........................        556      1,079      1,719      2,568      3,311      3,501      529.7
                                    ============================================================================

                                                          Constant 1998 dollars in millions
                                    ----------------------------------------------------------------------------
Payments:
    Age 65 and older...............     13,684     17,740     21,426     27,100     39,084     40,602      196.7
    Blind/disabled.................      9,875     15,471     20,447     30,748     52,877     60,375      511.4
    Children.......................      6,864      6,340      6,709     11,466     19,234     20,459      198.1
    Adults.........................      6,475      6,559      7,214     10,823     14,457     14,833      129.1
    Other..........................      1,545      1,210      1,213      1,324      1,604      6,048      291.5
                                    ----------------------------------------------------------------------------
      Total........................     38,440     47,321     57,012     81,722    128,550    142,318      270.2
                                    ============================================================================
Per capita payment:
    Age 65 and older...............      3,784      5,156      7,000      8,463      9,489     10,242      170.7
    Blind/disabled.................      6,738      5,317     31,080     14,877     18,915      9,095       35.0
    Children.......................        716        680        687      1,022      1,120      1,117       56.0
    Adults.........................      1,429      1,346      1,307      1,801      1,901      1,876       31.3
    Other..........................        857         NR      1,000      1,338      2,547      1,579       84.2
                                    ----------------------------------------------------------------------------
      Total........................      1,746      2,190      2,613      3,236      3,543      3,501     100.5
----------------------------------------------------------------------------------------------------------------
Note.--Totals may not add due to rounding and include other coverage groups and individuals for whom basis of
  eligibility is unknown. Fiscal year 1975 ended in June; all other fiscal years end in September. Nominal
  dollars were converted to constant dollars by inflating each year's spending for the cumulative growth in the
  Consumer Price Index for All Urban Consumers (CPI-U) (inflation) between that fiscal year and fiscal year
  1998. The 1998 data reflect changes in HCFA-2082 reporting forms that affected coverage categories. For fiscal
  years 1975-97, a recipient is an individual for whom a fee-for-service claim was paid during the year. For
  fiscal year 1998 only, a recipient is an individual for whom a fee-for-service claim was paid during the year,
  or for whom a capitation payment was paid during the year. The fiscal year 1998 dollar figures include
  payments for capitated delivery systems and fee-for-service delivery systems. See tables 15-25 and 15-26 for
  detailed data on capitated beneficiaries and expenditures. Medicaid payments reported on the HCFA-2082 for
  fiscal year 1998 include payments made for Medicaid claims processed during the year.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form HCFA-2082
  Report.

  TABLE 15-21.--MEDICAID PAYMENTS BY SERVICE CATEGORY, FISCAL YEAR 1998
------------------------------------------------------------------------
                                                  Payments
                                                    (in
               Service category                 millions of   Percentage
                                                  dollars)
------------------------------------------------------------------------
Inpatient hospital............................      $21,499         15.1
Mental health facility........................        2,801          2.0
Nursing facility..............................       31,892         22.4
Intermediate care facility for the mentally           9,482          6.7
 retarded.....................................
Physician.....................................        6,070          4.3
Dental........................................          901          0.6
Other practitioner............................          587          0.4
Outpatient hospital...........................        5,759          4.0
Clinic........................................        3,921          2.8
Laboratory and x ray..........................          939          0.7
Home health...................................        2,702          1.9
Prescribed drugs..............................       13,522          9.5
Family planning...............................          449          0.3
Early and periodic screening..................        1,335          0.9
Personal care support.........................        8,222          5.8
Home- and community-based.....................        6,709          4.7
Primary care case management..................          134          0.1
Prepaid health care...........................       19,296         13.6
Other care....................................        4,386          3.1
                                               -------------------------
      Total...................................      142,318         100
------------------------------------------------------------------------
Note.--The data in this table include payments for capitated service
  delivery systems and fee-for-service delivery systems. See tables 15-
  25 and 15-26 for detailed data on capitated beneficiaries and
  expenditures. Medicaid payments reported on the HCFA-2082 for fiscal
  year 1998 include payments made for Medicaid claims processed during
  the year.

Source: Health Care Financing Administration, U.S. Department of Health
  and Human Services. Form HCFA-2082 Report.

            TABLE 15-22.--AVERAGE PAYMENTS BY BASIS OF ELIGIBILITY BY JURISDICTION, FISCAL YEAR 1998
----------------------------------------------------------------------------------------------------------------
                                                                   Age 65                                Foster
                         State                            Total      and     Blind/   Children  Adults    care/
                                                        payments    older   disabled                    children
----------------------------------------------------------------------------------------------------------------
Alabama...............................................    $3,609    $8,513    $4,098     $711     $701    $4,414
Alaska................................................     4,434    10,765    12,919    2,297    3,072     9,150
Arizona...............................................     3,238    11,801     7,804    1,436    2,595     1,438
Arkansas..............................................     3,239     8,474     8,198    1,462    1,168     5,779
California............................................     2,010     4,900     6,632      797    1,305     1,800
Colorado..............................................     4,173    10,117     9,312      970    1,879     7,051
Connecticut...........................................     6,350    20,258    17,259    1,529    2,156     2,396
Delaware..............................................     4,138    14,325    14,317    1,372    1,906     3,500
District of Columbia..................................     4,402    18,901    15,354    1,340    2,076     9,498
Florida...............................................     2,986     8,336     6,926      896    1,550     2,533
Georgia...............................................     2,465     5,531     6,200      874    2,265     3,681
Hawaii................................................     2,749     9,238     7,588    1,554    1,376     1,785
Idaho.................................................     3,446    10,195     9,640      906    2,205     1,845
Illinois..............................................     4,526    10,217    12,415    1,268    2,335     4,224
Indiana...............................................     4,222    11,853    11,845    1,273    1,732     3,918
Iowa..................................................     4,092    11,641     9,555    1,293    1,718     3,842
Kansas................................................     3,788     9,239    10,377    1,096    1,460     1,836
Kentucky..............................................     3,763     8,870     6,506    1,417    2,158     6,788
Louisiana.............................................     3,308     7,165     6,860    1,075    1,980     1,095
Maine.................................................     4,383    10,556     8,879    1,300    1,435    12,222
Maryland..............................................     4,437    13,571    11,331    1,459    2,246     2,628
Massachusetts.........................................     5,075    12,954    11,013    1,369    2,133     1,604
Michigan..............................................     3,188    10,258     7,501      836    1,789     1,821
Minnesota.............................................     5,432    16,923    16,552    1,550    2,041     5,667
Mississippi...........................................     2,969     6,857     5,062    1,034    1,958     4,284
Missouri..............................................     3,501    10,445     8,940    1,067    1,353     3,137
Montana...............................................     3,585    12,593     8,478    1,239    1,862     1,888
Nebraska..............................................     3,566    10,511    10,031    1,015    1,581     3,594
Nevada................................................     3,606     7,439     9,013    1,209    2,442    13,016
New Hampshire.........................................     6,449    18,451    18,246    1,928    2,282     9,912
New Jersey............................................     5,188    14,063    13,094    1,164    2,152     6,245
New Mexico............................................     2,617     7,440     6,918    1,290    2,006    16,800
New York..............................................     7,907    20,000    19,651    1,766    3,032     4,492
North Carolina........................................     3,437     7,520     8,389    1,176    2,093     3,653
North Dakota..........................................     5,476    12,660    15,656    1,212    2,009     6,829
Ohio..................................................     4,742    13,345    10,923    1,202    1,990     2,927
Oklahoma..............................................     3,439         0         0        0        0         0
Oregon................................................     2,695     2,867     2,736    2,832    2,740     2,673
Pennsylvania..........................................     3,992    11,283     7,307    1,374    1,775     4,249
Puerto Rico...........................................       259         0         0        0        0         0
Rhode Island..........................................     6,004    16,996    15,936    1,254    1,916     3,731
South Carolina........................................     3,393     6,631     7,408    1,132    1,340     7,990
South Dakota..........................................     3,974    11,315    10,193    1,169    1,895     2,855
Tennessee.............................................     1,718     7,588     3,276      741    1,319     4,767
Texas.................................................     3,071     7,771     8,620    1,053    2,224     2,746
Utah..................................................     2,867     9,276    11,290    1,134    1,768     7,887
Vermont...............................................     2,834     6,893     8,897    1,020    1,271     7,921
Virginia..............................................     3,243     7,377     7,706    1,009    1,859     2,204
Virgin Islands........................................       511     1,643     1,463      274      484         0
Washington............................................     1,447     9,236     5,546      697    1,952     1,527
West Virginia.........................................     3,628    12,322     6,483    1,004    1,794     6,374
Wisconsin.............................................     4,255    12,880     8,144    1,106    1,497     2,651
Wyoming...............................................     4,163    13,037    12,308    1,236    2,310     2,802
                                                       ---------------------------------------------------------
      All jurisdictions...............................     3,501    10,243     9,097    1,117    1,876    3,583
----------------------------------------------------------------------------------------------------------------
Note.--A recipient is an individual for whom a fee-for-service claim was paid during the year, or for whom a
  capitation payment was made during the year. The data in this table include payments for capitated service
  delivery systems and fee-for-service delivery systems. See tables 15-25 and 15-26 for detailed data on
  capitated beneficiaries and expenditures.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form HCFA-2082
  Report.

 TABLE 15-23.--TOTAL AND PER CAPITA MEDICAID PAYMENTS FOR RECIPIENTS BY
MAINTENANCE ASSISTANCE STATUS AND BASIS OF ELIGIBILITY, FISCAL YEAR 1998
------------------------------------------------------------------------
                                      Total
                                     payments
Maintenance assistance status and      (in       Percentage    Payments
       basis of eligibility        millions of    of total    per capita
                                     dollars)
------------------------------------------------------------------------
Receiving cash payments..........      $63,035         44.3       $3,590
    Aged.........................        9,176          6.4        5,516
    Blind/disabled...............       39,128         27.5        7,924
    Children.....................        8,427          5.9        1,121
    Adults.......................        6,304          4.4        1,834
Poverty related..................       19,758         13.9        2,147
    Aged.........................        4,566          3.2        7,608
    Blind/disabled...............        4,432          3.1        7,760
    Children.....................        6,296          4.4        1,029
    Adults.......................        4,464          3.1        2,332
Other coverage groups............       30,686         21.6        4,834
    Aged.........................       14,499         10.2       15,954
    Blind/disabled...............        8,174          5.7       14,211
    Children.....................        3,405          2.4        1,264
    Adults.......................        2,261          1.6        1,493
    Foster care children.........        2,347          1.6        3,585
Medically needy..................       25,139         17.7        5,754
    Aged.........................       12,361          8.7       15,610
    Blind/disabled...............        8,641          6.1       15,611
    Children.....................        2,331          1.6        1,177
    Adults.......................        1,805          1.3        1,731
Unknown..........................        3,700          2.6        1,166
                                  --------------------------------------
      Total......................      142,318        100.0       3,501
------------------------------------------------------------------------
Note.--A recipient is an individual for whom a fee-for-service claim was
  paid during the year, or for whom a capitation payment was made during
  the year. Totals may not add due to rounding. Totals include other
  coverage groups and unknowns. The data in this table includes payments
  for capitated delivery systems and fee-for-service delivery systems.
  See tables 15-25 and 15-26 for detailed data on capitated
  beneficiaries and expenditures. Medicaid payments reported on the HCFA-
  2082 for fiscal year 1998 include payments made for Medicaid claims
  processed during the year.

Source: Health Care Financing Administration, U.S. Department of Health
  and Human Services. Form HCFA-2082 Report.

    TABLE 15-24.--OPTIONAL MEDICAID SERVICES AND NUMBER OF STATES \1\
                   OFFERING EACH SERVICE, OCTOBER 1996
------------------------------------------------------------------------
                                                   States
                                    States        offering     Access to
                                   offering     services to     include
            Service              services to        both       Medicaid
                                categorically  categorically   services
                                  needy only   and medically    to the
                                                   needy       uninsured
------------------------------------------------------------------------
Podiatrist....................             9             27           10
Optometrist...................            11             28           10
Chiropractor..................             4             20            4
Psychologist..................             6             20            6
Medical social worker.........             1              6            3
Nurse anesthetist.............             8             16            5
Private duty nursing..........             4             16            6
Clinic........................            13             33            9
Dental........................            11             26            9
Physical therapy..............            10             29            6
Occupational therapy..........             6             24            6
Speech, hearing and language              11             26            5
 disorder.....................
Prescribed drugs..............            14             32           10
Dentures......................             7             25            6
Prosthetic devices............            14             31           10
Eyeglasses....................            12             27            9
Diagnostic....................             5             22            7
Screening.....................             5             20            7
Preventive....................             6             20            6
Rehabilitative................            13             31            9
Services for age 65 and older
 in mental institutions:
    Inpatient hospital........            12             21            9
    Skilled nursing facility..             9             17            6
    Intermediate care facility            18             22           10
     for the mentally retarded
Inpatient psychiatric.........            12             21            9
Christian science nurses......             1              2            1
Christian science sanitoria...             3              7            4
Skilled nursing facility for              16             26           10
 under age 21.................
Emergency hospital............            11             25            8
Personal care.................             7             18            6
Transportation................            13             32           10
Case management...............            11             27            8
Hospice.......................             8             22            8
Respiratory care..............             2              9            3
Tuberculosis related..........             1              5            3
------------------------------------------------------------------------
\1\ Includes the territories.

Source: Health Care Financing Administration, U.S. Department of Health
  and Human Services.

         TABLE 15-25.--PREPAID HEALTH CARE MEDICAID RECIPIENTS BY BASIS OF ELIGIBILITY, FISCAL YEAR 1998
                                                 [In thousands]
----------------------------------------------------------------------------------------------------------------
                                                                      Age
                         State                             Total    65 and    Blind/    Child     Adult
                                                        recipients   older  disabled                     Unknown
----------------------------------------------------------------------------------------------------------------
Alabama...............................................      344.9      0.0       0.0       0.0      0.0    344.9
Alaska................................................        0.0      0.0       0.0       0.0      0.0      0.0
Arizona...............................................      368.3      0.0       0.0       0.0      0.0    368.3
Arkansas..............................................      244.8     22.6      70.7     110.7     35.8      5.0
California............................................    6,022.5    548.1     894.7   3,053.2  1,390.1    136.4
Colorado..............................................      316.1     37.3      58.6     148.3     56.5     15.3
Connecticut...........................................      271.4      0.0       0.9     185.6     77.9      7.0
Delaware..............................................       85.2      0.3       8.1      47.2     27.6      2.0
District of Columbia..................................      100.9      0.0       1.9      43.3     15.3     40.4
Florida...............................................      791.8     17.3     110.2     507.5    149.4      7.4
Georgia...............................................       78.5      0.7       8.3      53.6     15.7      0.2
Hawaii................................................      144.7      0.0       0.0      75.3     64.6      4.8
Idaho.................................................        0.0      0.0       0.0       0.0      0.0      0.0
Illinois..............................................      142.4      0.1       1.3     101.1     38.7      1.2
Indiana...............................................      271.0     59.3      42.2     127.8     38.8      2.9
Iowa..................................................      246.6      0.8      41.6     130.6     68.5      5.0
Kansas................................................       44.0      0.0       0.1      34.1      9.6      0.2
Kentucky..............................................      194.2      9.3      50.9      97.8     35.1      1.0
Louisiana.............................................        0.0      0.0       0.0       0.0      0.0      0.0
Maine.................................................        9.3      0.0       0.0       6.7      2.5      0.1
Maryland..............................................      449.8      6.3      75.2     258.3     91.2     18.9
Massachusetts.........................................      768.8      1.7     111.7     451.1    203.7      0.6
Michigan..............................................      758.2      8.7     130.5     422.7    181.0     15.3
Minnesota.............................................      318.9     27.6       2.6     222.3     64.3      2.1
Mississippi...........................................       17.6      0.8       4.7       9.7      2.4      0.0
Missouri..............................................      336.1      0.0       0.5     248.2     69.8     17.6
Montana...............................................       96.7      8.6      15.8      44.5     19.8      8.0
Nebraska..............................................      159.6      1.2      14.6      98.0     37.5      8.3
Nevada................................................       55.9      0.6       0.1      40.7     12.6      1.9
New Hampshire.........................................       11.2      0.0       0.0       9.1      1.9      0.1
New Jersey............................................      545.4     35.5      16.5     353.3    138.8      1.4
New Mexico............................................      263.3      1.0      26.7     192.2     41.7      1.6
New York..............................................      884.4      6.2      51.0     565.6    258.0      3.6
North Carolina........................................      220.7      0.0      12.3     194.3      9.8      4.3
North Dakota..........................................        1.5      0.0       0.0       1.1      0.4      0.0
Ohio..................................................      453.3      0.1       1.9     315.0    135.8      0.5
Oklahoma..............................................        0.0      0.0       0.0       0.0      0.0      0.0
Oregon................................................      481.5     37.7      93.8     123.8    201.5     24.8
Pennsylvania..........................................      902.9     63.0     144.5     505.6    178.6     11.2
Rhode Island..........................................       96.2      0.0       0.6      63.5     29.7      2.4
South Carolina........................................       17.2      0.4       1.6      13.6      1.5      0.1
South Dakota..........................................       84.0      8.1      14.7      47.0     12.9      1.3
Tennessee.............................................    1,764.3     84.2     293.6     552.7    472.5    361.4
Texas.................................................        0.0      0.0       0.0       0.0      0.0      0.0
Utah..................................................      170.3      6.6      11.3      92.5     29.4     30.6
Vermont...............................................       69.7      0.0       1.1      36.7     31.5      0.4
Virginia..............................................      159.4      1.2      20.5     105.7     32.0      0.0
Washington............................................    1,146.2      1.6      10.7     455.4    141.9    536.7
West Virginia.........................................        0.1      0.0       0.0       0.0      0.0      0.1
Wisconsin.............................................      293.2      0.3       6.1     211.4     67.6      7.9
Wyoming...............................................        0.0      0.0       0.0       0.0      0.0      0.0
                                                       ---------------------------------------------------------
      All jurisdictions...............................   20,202.9    997.3   2,352.0  10,356.9  4,493.6  2,003.2

----------------------------------------------------------------------------------------------------------------
Note.--Recipients are those for whom a capitation payment was made during the year. Prepaid health care includes
  all managed care plans except primary care case management (PCCM) programs. Totals may not match those
  reported on other sources and should be used with caution due to errors in State reporting.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form HCFA-2082
  Report.

        TABLE 15-26.--MEDICAID PAYMENTS FOR PREPAID HEALTH CARE BY BASIS OF ELIGIBILITY, FISCAL YEAR 1998
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                                     Maintenance
                                                        Total    Age 65    Blind/                     assistance
                        State                         payments    and    disabled    Child    Adult     status
                                                                 older                                 unknown
----------------------------------------------------------------------------------------------------------------
 Alabama............................................    $289.0      0.0       0.0      0.0      0.0      $289.0
 Alaska.............................................       0.0      0.0       0.0      0.0      0.0         0.0
 Arizona............................................   1,431.4   $305.9    $538.3   $348.6   $231.0         7.6
 Arkansas...........................................       4.4      0.4       1.8      1.7      0.4         0.1
 California.........................................   2,867.7    243.4     502.1  1,461.2    627.0        34.0
 Colorado...........................................     238.6     18.3      92.0     62.9     26.2        39.2
 Connecticut........................................     377.2      0.0       0.9    230.0    138.9         7.4
 Delaware...........................................     122.0      1.7      50.0     31.8     36.9         1.6
 District of Columbia...............................      98.2      0.0      10.6     25.5      9.1        53.1
 Florida............................................     701.3     71.5     279.2    223.8    121.8         5.1
 Georgia............................................      57.9      0.8      18.2     22.4     16.4         0.1
 Hawaii.............................................     213.6      0.0       0.0    117.1     88.9         7.6
 Idaho..............................................       0.0      0.0       0.0      0.0      0.0         0.0
 Illinois...........................................     241.3      1.4       1.3    135.3    102.5         0.7
 Indiana............................................     168.0     33.3      22.1     75.1     36.4         1.1
 Iowa...............................................     107.2      0.2      26.6     41.5     37.9         0.9
 Kansas.............................................      17.2      0.0       0.0     11.3      5.8         0.1
 Kentucky...........................................     311.5      9.9     140.9    122.1     37.5         1.0
 Louisiana..........................................       0.0      0.0       0.0      0.0      0.0         0.0
 Maine..............................................       4.2      0.0       0.0      2.9      1.3         0.0
 Maryland...........................................     852.0     29.4     429.6    217.3    157.7        17.9
 Massachusetts......................................     477.9     17.8     168.9    191.7     99.5         0.1
 Michigan...........................................     823.7      7.7     370.0    206.7    223.3        16.1
 Minnesota..........................................     483.2     99.2       3.7    273.5    105.5         1.3
 Mississippi........................................      22.2      1.1       8.7     10.1      2.2         0.1
 Missouri...........................................     277.7      0.0       0.2    207.0     60.1        10.3
 Montana............................................      53.6      4.1      21.7     18.2      5.9         3.7
 Nebraska...........................................      73.0      1.8      17.9     20.9     12.9        19.5
 Nevada.............................................      32.3      0.5       0.0     15.1     15.5         1.1
 New Hampshire......................................      12.1      0.0       0.0     10.0      2.0         0.1
 New Jersey.........................................     617.6      8.0      37.3    338.9    232.5         0.8
 New Mexico.........................................     372.6      1.8     134.6    163.8     66.3         6.1
 New York...........................................   1,638.4    107.9     645.8    490.8    391.2         2.7
 North Carolina.....................................      85.7      0.0       8.9     65.5      9.3         2.0
 North Dakota.......................................       1.3      0.0       0.0      0.8      0.5         0.0
 Ohio...............................................     494.8      0.7       3.4    282.7    207.8         0.4
 Oklahoma...........................................       0.0      0.0       0.0      0.0      0.0         0.0
 Oregon.............................................     665.9     53.0     131.2    174.5    281.4        25.7
 Pennsylvania.......................................   1,801.1    177.8     663.2    652.0    290.8        17.2
 Rhode Island.......................................     114.9      0.0       0.3     58.1     51.1         5.4
 South Carolina.....................................      17.2     10.3       2.6      3.2      1.1         0.0
 South Dakota.......................................       3.8      0.3       0.7      2.3      0.4         0.1
 Tennessee..........................................   1,859.1     61.2     571.1    396.5    630.3       199.9
 Texas..............................................       0.0      0.0       0.0      0.0      0.0         0.0
 Utah...............................................     147.7      4.5      35.9     45.5     19.2        42.7
 Vermont............................................      53.9      0.0       2.3     21.4     29.9         0.2
 Virginia...........................................     186.3      2.0      68.8     73.8     41.7         0.0
 Washington.........................................     529.0      0.9       7.0    211.1    188.2       121.9
 West Virginia......................................      26.6      0.0       0.0      0.0      0.0        26.6
 Wisconsin..........................................     321.9      4.8      43.3    193.3     72.3         8.1
 Wyoming............................................       0.0      0.0       0.0      0.0      0.0         0.0
                                                     -----------------------------------------------------------
       All jurisdictions............................  19,296.2  1,281.7   5,061.1  7,258.2  4,716.6      978.7
----------------------------------------------------------------------------------------------------------------
Note.--Totals may not match those reported on other sources and should be used with caution due to errors in
  State reporting. Payments include only capitation payments made on behalf of individuals enrolled in prepaid
  health care. Prepaid health care includes all managed care plans except PCCM programs.

Source: Health Care Financing Administration, U.S. Department of Health and Human Services. Form HCFA-2082
  Report.

               STATE CHILDREN'S HEALTH INSURANCE PROGRAM

    The Balanced Budget Act of 1997 (BBA 1997, Public Law 105-
33) established the State Children's Health Insurance Program
(SCHIP) under a new title XXI of the Social Security Act. In
general, the program offers Federal matching funds to States
and territories to provide health insurance to certain low-
income children.

                              Eligibility

    Under SCHIP, States may cover children in families with
incomes above the State's Medicaid eligibility standard but
less than 200 percent of the Federal poverty level (FPL).\18\
However, States in which the maximum Medicaid income level for
children was at or above 200 percent FPL prior to the enactment
of SCHIP may increase this income level by an additional 50
percentage points above the level used under the State's
Medicaid Program.
---------------------------------------------------------------------------
    \18\ In 2000 the poverty guideline in the 48 contiguous States and
the District of Columbia is $17,050 for a family of four (Federal
Register, 2000).
---------------------------------------------------------------------------
    Not all targeted low-income children will necessarily
receive medical assistance under SCHIP for two reasons. First,
unlike Medicaid, Federal law does not establish an individual
entitlement \19\ to benefits under SCHIP. Instead, it entitles
States with approved SCHIP plans to predetermined Federal
allotments based on a distribution formula set in the law.
Second, each State can define the group of targeted low-income
children who may enroll in SCHIP. Title XXI allows States to
use the following factors in determining eligibility:
geography, age, income and resources, residency, disability
status (so long as any standard relating to that status does
not restrict eligibility), access to other health insurance,
and duration of eligibility for coverage. Title XXI funds
cannot be used for children who would have been eligible for
the State's Medicaid plan under the eligibility standards that
were in effect prior to the enactment of the law establishing
SCHIP or for children covered by a group health plan or other
insurance.
---------------------------------------------------------------------------
    \19\ The one exception to this rule is when a State chooses to
implement a Medicaid expansion under SCHIP. Children who qualify for
SCHIP through a Medicaid expansion are entitled to Medicaid benefits as
long as they continue to meet these specific eligibility criteria (even
if SCHIP itself terminates) or until the State is granted approval to
eliminate the eligibility category created by the Medicaid expansion
through SCHIP.
---------------------------------------------------------------------------
    To date, the upper income eligibility limit under SCHIP has
reached 350 percent of the FPL in one State (table 15-27).\20\
Eleven States have asset tests for some groups of SCHIP
beneficiaries, typically those in Medicaid rather than separate
State programs (see Benefits subsection).\21\ While increases
in coverage have been achieved for all age groups under SCHIP,
the most significant increases in eligibility to date have
benefited older adolescents. States are taking advantage of the
opportunity to use enhanced matching funds under SCHIP to bring
in older teens in families with incomes up to 100 percent FPL
sooner than required under current Medicaid law, and in many
cases, cover such children at income levels well above poverty.
---------------------------------------------------------------------------
    \20\ For determining income eligibility for SCHIP and Medicaid,
some States apply ``income disregards.'' These are specified dollar
amounts subtracted from gross income to compute net income, which is
then compared to the applicable income criterion. Such disregards
increase the effective income level above the stated standard. State
SCHIP plans do not consistently report the use of income disregards,
nor whether the stated income standards include or exclude such
disregards.
    \21\ States may apply resource or asset tests in determining
financial eligibility. Individuals must have resources for which the
dollar value is less than a specified standard amount in order to
qualify for coverage. States determine what items constitute countable
resources and the dollar value assigned to those countable resources.
Assets may include, for example, cars, savings accounts, real estate,
trust funds, tax credits, etc. See the Kaiser Commission on Medicaid
and the Uninsured: Medicaid for Children and CHIP-Funded Separate State
Programs (Fact Sheet), revised December 1, 1999.
---------------------------------------------------------------------------

                                Benefits

    States may choose from three options when designing their
SCHIP Programs. They may expand their current Medicaid Program,
create a new ``separate State'' insurance program, or devise a
combination of both approaches. Under limited circumstances,
States have the option to purchase a health benefits plan that
is provided by a community-based health delivery system or to
purchase family coverage under a group health plan as long as
it is cost effective to do so.\22\
---------------------------------------------------------------------------
    \22\ In the case of community-based health delivery systems, the
cost of coverage cannot exceed, on an average per child basis, the cost
of coverage that would otherwise be provided. In the case of family
coverage, the alternative must be cost effective relative to the amount
paid to obtain comparable coverage only of the targeted low-income
children, and it must not substitute for health insurance coverage that
would otherwise be provided to the children.
---------------------------------------------------------------------------
    States that choose to expand Medicaid to new eligibles
under SCHIP must provide the full range of mandatory Medicaid
benefits, as well as all optional services specified in their
State Medicaid plans. Alternately, States may choose any of
three other benefit options: (1) a benchmark benefit package,
(2) benchmark equivalent coverage, or (3) any other health
benefits plan that the Secretary determines will provide
appropriate coverage to the targeted population of uninsured
children.\23\
---------------------------------------------------------------------------
    \23\ When the law establishing SCHIP was enacted, existing State
programs in Florida, New York, and Pennsylvania were designated as
meeting the minimum benefit requirements under this program.
---------------------------------------------------------------------------
    A benchmark benefit package is one of the following three
plans: (1) the standard Blue Cross/Blue Shield preferred
provider option plan offered under the Federal Employees Health
Benefit Plan, (2) the health coverage offered and generally
available to State employees in the State involved, and (3) the
health coverage offered by a health maintenance organization
with the largest commercial (non-Medicaid) enrollment in the
State involved.

  TABLE 15-27.--STATE CHILDREN'S HEALTH INSURANCE PROGRAM AGGREGATE ENROLLMENT STATISTICS FOR FISCAL YEAR 1999
----------------------------------------------------------------------------------------------------------------
                                                                            State reported fiscal
                                                                               year 1999 SCHIP
                                                                            enrollment \3\ (total    Fiscal year
                               Type of         Date            Upper       children ever served in   1999 total
            State               SCHIP    implemented \1\  eligibility \2\     fiscal year 1999)         SCHIP
                               Program                      (in percent)  -------------------------  enrollment
                                                                             Separate     Medicaid
                                                                              program    expansion
----------------------------------------------------------------------------------------------------------------
Alabama \4\.................  COMBO....  02/01/98.......  200............  25,738......  13,242...  38,980
Alaska......................  ME.......  03/01/99.......  200............  NA..........  8,033....  8,033
American Samoa \5\ .........  ME.......  04/01/99.......  NA.............  NA..........  NA.......  0
Arizona.....................  SSP......  11/01/98.......  200............  26,807......  NA.......  26,807
Arkansas....................  ME.......  10/01/98.......  100............  NA..........  913......  913
California..................  COMBO....  03/01/98.......  250............  187,854.....  34,497...  222,351
Colorado....................  SSP......  04/22/98.......  185............  24,116......  NA.......  24,116
Connecticut.................  COMBO....  07/01/98.......  300............  5,277.......  4,635....  9,912
Delaware....................  SSP......  02/01/99.......  200............  2,433.......  NA.......  2,433
District of Columbia........  ME.......  10/01/98.......  200............  NA..........  3,029....  3,029
Florida \6\.................  COMBO....  04/01/98.......  200............  116,123.....  38,471...  154,594
Georgia.....................  SSP......  11/01/98.......  200............  47,581......  NA.......  47,581
Guam \5\ \7\................  ME.......  10/01/97.......  NA.............  NA..........  NA.......  0
Hawaii \8\..................  ME.......  07/01/00.......  185............  NA..........  NI.......  NI
Idaho.......................  ME.......  10/01/97.......  150............  NA..........  8,482....  8,482
Illinois \9\................  ME.......  01/05/98.......  133............  7,567.......  35,132...  42,699
Indiana \8\.................  COMBO....  10/01/97.......  200............  NI..........  31,246...  31,246
Iowa........................  COMBO....  07/01/98.......  185............  2,694.......  7,101....  9,795
Kansas......................  SSP......  01/01/99.......  200............  14,443......  NA.......  14,443
Kentucky \8\ \10\...........  COMBO....  07/01/98.......  200............  NI..........  18,579...  18,579
Louisiana...................  ME.......  11/01/98.......  150............  NA..........  21,580...  21,580
Maine.......................  COMBO....  07/01/98.......  185............  3,786.......  9,871....  13,657
Maryland....................  ME.......  07/01/98.......  200............  NA..........  18,072...  18,072
Massachusetts...............  COMBO....  10/01/97.......  200............  24,408......  43,444...  67,852
Michigan....................  COMBO....  05/01/98.......  200............  14,825......  11,827...  26,652
Minnesota \10\..............  ME.......  10/01/98.......  280............  NA..........  21.......  21
Mississippi \8\.............  COMBO....  07/01/98.......  200............  NI..........  13,218...  13,218
Missouri....................  ME.......  09/01/98.......  300............  NA..........  49,529...  49,529
Montana.....................  SSP......  01/01/99.......  150............  1,019.......  NA.......  1,019
Nebraska....................  ME.......  05/01/98.......  185............  NA..........  9,713....  9,713
Nevada......................  SSP......  10/01/98.......  200............  7,802.......  NA.......  7,802
New Hampshire...............  COMBO....  05/01/98.......  300............  3,700.......  854......  4,554
New Jersey..................  COMBO....  03/01/98.......  350............  43,824......  31,828...  75,652
New Mexico \10\.............  ME.......  03/31/99.......  235............  NA..........  4,500....  4,500
New York \6\ \11\...........  COMBO....  04/15/98.......  192............  519,401.....  1,900....  521,301
North Carolina \10\.........  SSP......  10/01/98.......  200............  57,300......  NA.......  57,300
North Dakota \8\............  COMBO....  10/01/98.......  140............  NI..........  266......  266
Northern Mariana Islands \5\  ME.......  10/01/97.......  NA.............  NA..........  NA.......  0
 \7\.
Ohio........................  ME.......  01/01/98.......  150............  NA..........  83,688...  83,688
Oklahoma \10\...............  ME.......  12/01/97.......  185............  NA..........  40,196...  40,196
Oregon......................  SSP......  07/01/98.......  170............  27,285......  NA.......  27,285
Pennsylvania \6\............  SSP......  05/28/98.......  200............  81,758......  NA.......  81,758
Puerto Rico \12\............  ME.......  01/01/98.......  200............  NA..........  20,000...  20,000
Rhode Island \13\...........  ME.......  10/01/97.......  300............  NA..........  7,288....  7,288
South Carolina \14\.........  ME.......  10/01/97.......  150............  NA..........  45,737...  45,737
South Dakota................  ME.......  07/01/98.......  140............  NA..........  3,191....  3,191
Tennessee \10\..............  ME.......  10/01/97.......  100............  NA..........  9,732....  9,732
Texas \8\...................  COMBO....  07/01/98.......  200............  NI..........  50,878...  50,878
Utah \15\...................  SSP......  08/03/98.......  200............  13,040......  NA.......  13,040
Vermont \10\................  SSP......  10/01/98.......  300............  2,055.......  2,055....  NA
Virginia....................  SSP......  10/22/98.......  185............  16,895......  NA.......  16,895
Virgin Islands \5\ \16\.....  ME.......  04/01/98.......  NA.............  NA..........  120......  120
Washington \8\..............  SSP......  02/01/00.......  250............  NI..........  NA.......  NI
West Virginia...............  COMBO....  07/01/98.......  150............  6,656.......  1,301....  7,957
Wisconsin...................  ME.......  04/01/99.......  185............  NA..........  12,949...  12,949
Wyoming \8\.................  SSP......  12/01/99.......  133............  NI..........  NA.......  NI
                             -----------------------------------------------------------------------------------
    Total, 56 plans.........  .........  ...............  ...............  1,284,387...  695,063..  1,979,450
----------------------------------------------------------------------------------------------------------------
\1\ Implementation date of the initial SCHIP plan as reported by States. In some States the initial SCHIP plan
  involved a modest expansion of coverage and was followed by a plan amendment to further expand coverage. As of
  January 1, 2000, there are 37 States with approved amendments, and another 13 States have pending State plan
  amendments.
\2\ Reflects upper eligibility level of SCHIP plans and amendments approved as of January 1, 2000. Upper
  eligibility is defined as a percent of the Federal poverty level (FPL). In 1999, the FPL was $16,700 for a
  family of four. In general, States with Medicaid expansion SCHIP Programs must establish their upper
  eligibility levels net of income disregards. States with separate SCHIP Programs can establish their upper
  eligibility levels on a gross income basis or net of income disregards. Puerto Rico defines the upper
  eligibility limit as 200 percent of Puerto Rico's poverty level.
\3\ State reported enrollment in fiscal year 1999 reflects formal State quarterly electronic statistical data
  submissions and estimates by States in cases where electronic State quarterly data submissions were not
  available.
\4\ Alabama's enrollment for Medicaid expansion SCHIP is estimated.
\5\ Due to the unique nature of their SCHIP plans, these U.S. territories and jurisdictions may cover existing
  Medicaid populations with SCHIP funds, but only after their Medicaid funding caps are reached.
\6\ Florida, New York and Pennsylvania had State-funded programs prior to SCHIP. Title XXI permitted children
  previously in the State-funded program to be covered under SCHIP and requires these States to maintain at
  least the previous levels of spending.
\7\ Guam and the Commonwealth of the Northern Mariana Islands did not exceed their Medicaid funding caps, and
  therefore could not claim any SCHIP funding in fiscal year 1999.
\8\ These States have plans or amendments approved, but these programs were not implemented as of September 30,
  1999. Therefore, the enrollment counts do not correspond fully to the upper eligibility levels reported in
  this table since these eligibility levels reflect plans and plan amendments approved as of January 1, 2000.
\9\ Illinois is covering children under its proposed separate SCHIP Program; although the amendment is pending.
\10\ State reported SCHIP enrollment is estimated.
\11\ New York's enrollment for Medicaid expansion SCHIP is estimated.
\12\ Puerto Rico's SCHIP allotment funded 20,000 children; another 44,324 children were funded with territorial
  funds.
\13\ Rhode Island has implemented their program to 250 percent FPL. In addition, Rhode Island has an approved
  amendment (February 5, 1999) to further expand the program to 300 percent FPL.
\14\ South Carolina's enrollment for SCHIP reflects estimated enrollment from October 1998-July 1999.
\15\ Utah SCHIP enrollment for fiscal year 1999 reflects the total number of children ever enrolled in the
  fourth quarter.
\16\ Virgin Island's SCHIP enrollment reflects the number of children for which health care claims were paid
  during the period from July 1998 through April 1999.

COMBO--Combination approach.    ME--Medicaid expansion.    NA--Not applicable.    NI--``Not implemented''
  denotes States with approved SCHIP plans or amendments with implementation dates after fiscal year 1999.
  SSP--Separate State programs.

Note.--Fiscal year 1999 enrollment statistics reflect unedited, unduplicated data as submitted by States to
  HCFA.

Source: Health Care Financing Administration (undated).

    Benchmark equivalent coverage is defined as a package of
benefits that has the same actuarial value as one of the
benchmark benefit packages. A State choosing to provide
benchmark equivalent coverage must cover each of the benefits
in the ``basic benefits category.'' The benefits in the basic
benefits category are inpatient and outpatient hospital
services, physicians' surgical and medical services, laboratory
and x-ray services, and well-baby and well-child care,
including age-appropriate immunizations. Benchmark equivalent
coverage must also include at least 75 percent of the actuarial
value of coverage under the benchmark plan for each of the
benefits in the ``additional service category.'' These
additional services include prescription drugs, mental health
services, vision services, and hearing services. States are
encouraged to cover other categories of service not listed
above. Abortions may not be covered, except in the case of a
pregnancy resulting from rape or incest, or when an abortion is
necessary to save the mother's life.

                              Cost Sharing

    Federal law permits States to impose cost sharing for some
beneficiaries and some services under SCHIP. States that choose
to implement SCHIP as a Medicaid expansion must follow the
cost-sharing rules of the Medicaid Program. If the State
implements SCHIP through a separate State program, premiums or
enrollment fees for program participation may be imposed, but
the maximum allowable amount is dependent on family income. For
families with incomes under 150 percent FPL, premiums may not
exceed the amounts set forth in Federal Medicaid regulations.
Additionally, these families may be charged service-related
cost sharing, but such cost sharing is limited to nominal
amounts defined in Federal Medicaid regulations.
    For a family with income above 150 percent FPL, service-
related cost sharing may be imposed in any amount, provided
cost sharing for higher income children is not less than cost
sharing for lower income children. However, the total annual
aggregate cost sharing (including premiums, deductibles,
copayments and any other charges) for all targeted low-income
children in a family may not exceed 5 percent of total family
income for the year. In addition, States must inform families
of these limits and provide a mechanism for families to stop
paying once the cost-sharing limits have been reached.
    Preventive services are exempt from cost sharing for all
families regardless of income. In the proposed SCHIP
regulations published in November 1999, the Health Care
Financing Administration (HCFA) defines preventive services to
include the following: all healthy newborn inpatient physician
visits, including routine screening (inpatient and outpatient);
routine physical examinations; laboratory tests; immunizations
and related office visits as recommended by the American
Academy of Pediatrics; and routine preventive and diagnostic
dental services (for example, oral examinations, prophylaxis
and topical fluoride applications, sealants, and x rays).

                               Financing

    The Balanced Budget Act of 1997 appropriated a total of
$39.7 billion for SCHIP for fiscal year 1998 through fiscal
year 2007.\24\ A total of $4.295 billion was appropriated for
fiscal year 1998, $4.307 billion for fiscal year 1999, and
$4.309 billion for fiscal year 2000. Allotment of funds among
the States is determined by a formula set in law. This formula
is based on a combination of the number of low-income children
and low-income uninsured children in the State, and includes a
cost factor that represents average wages in the State compared
to the national average. A State with an approved plan has 3
fiscal years in which to draw down a given year's funding.
---------------------------------------------------------------------------
    \24\ The law sets aside 0.25 percent of SCHIP funds for the five
territories and commonwealths (Puerto Rico, Guam, Virgin Islands,
American Samoa, and the Northern Mariana Islands). It also sets aside
$60 million annually for special diabetes grants for fiscal year 1998
through fiscal year 2002 only.
---------------------------------------------------------------------------
    Like Medicaid, SCHIP is a Federal-State matching program.
For each dollar of State spending, the Federal Government makes
a matching payment. A State's share of program spending is
equal to 100 percent minus the enhanced Federal medical
assistance percentage (FMAP). The enhanced SCHIP FMAP is equal
to a State's Medicaid FMAP increased by the number of
percentage points that is equal to 30 percent multiplied by the
number of percentage points by which the FMAP is less than 100
percent. For example, among States with a Medicaid FMAP of 60
percent, under Medicaid such States must spend 40 cents for
every 60 cents that the Federal Government contributes. The
enhanced FMAP for such States equals the Medicaid FMAP
increased by 12 percentage points (60 percent + [30 percent
<greek-e> 40 percent] = 72 percent.) In this example, the State
share equals 100 percent - 72 percent = 28 percent.
    Compared with the Medicaid FMAP, which ranges from 50 to
76.8 percent in fiscal year 2000, the enhanced FMAP for SCHIP
ranges from 65 to 83.76 percent. All SCHIP assistance for
targeted low-income children, including child health coverage
provided through a Medicaid expansion, is eligible for the
enhanced FMAP. The Medicaid FMAP and the enhanced SCHIP FMAP
are subject to a ceiling of 83 and 85 percent, respectively.
    There is a limit on Federal spending for SCHIP
administrative expenses, which include activities such as data
collection and reporting, as well as outreach and education.
For Federal matching purposes, a 10 percent cap applies to
State administrative expenses. This cap is tied to the dollar
amount that a State draws down from its annual allotment to
cover benefits under SCHIP, as opposed to 10 percent of a
State's total annual allotment.

                          Legislative History

    Under the Balanced Budget Act of 1997, SCHIP was
established, effective August 5, 1997. The legislation
specified eligibility criteria; coverage requirements for
health insurance; Federal allotments and the State allocation
formula; payments to States and the enhanced FMAP formula; the
process for submission, approval and amendment of State SCHIP
plans; strategic objectives and performance goals, and plan
administration; annual reports and evaluations; options for
expanding coverage of children under Medicaid; and diabetes
grant programs.
    During late 1997 through 1999, changes to SCHIP have been
included in four laws passed subsequent to BBA 1997. Major
provisions affecting SCHIP in these laws are summarized below.
    The District of Columbia Appropriations Act of 1998 (Public
Law 105-100) and the 1998 Supplemental Appropriations and
Rescissions Act (Public Law 105-174) made technical corrections
to SCHIP. In addition, Public Law 105-100 increased the fiscal
year 1998 SCHIP appropriation from $4.275 billion to $4.295
billion.
    Two changes to SCHIP were made in the Omnibus Consolidated
and Emergency Supplemental Appropriations Act, fiscal year 1999
(Public Law 105-277). For fiscal year 1999, an additional
appropriation of $32 million for the territories was provided,
bringing the fiscal year 1999 total appropriation to $4.295
billion. In addition, for fiscal year 1998 and fiscal year
1999, this law changed the annual State allotment formula by
stipulating that children with access to health care funded by
the Indian Health Service and no other health insurance would
be counted as uninsured (rather than as insured as required
under the previously existing law).
    Finally, the recently enacted Medicare, Medicaid and SCHIP
Balanced Budget Refinement Act of 1999 (incorporated by
reference in Public Law 106-113) made a number of mostly
technical corrections to the program, of which the major
changes are enumerated below:
1. Stabilizing the SCHIP allotment formula
    Annual Federal allotments to each State are determined in
part by States' success in covering previously uninsured low-
income children under SCHIP. Under prior law, the more
successful a State is in enrolling children in SCHIP,
especially early in the program, the greater the potential
reduction in subsequent annual allotments. To limit the amount
a State's allocation can fluctuate from one year to the next,
the Balanced Budget Refinement Act of 1999 modifies the
allotment distribution formula and establishes new floors and
ceilings.
2. Targeted, increased allotments
    Additional allotments for the commonwealths and territories
are provided for fiscal years 2000-2007.
3. Improved data collection and evaluation
    First, the law provides new funding for the collection of
data to produce reliable, annual State-level estimates of the
number of uninsured children. These data changes will improve
research and evaluation efforts. They will also affect State-
specific counts of the number of low-income children and the
number of such children who are uninsured that feed into the
formula that determines annual State-specific allotments from
Federal SCHIP appropriations. Second, new funding is also
provided for a Federal evaluation to identify effective
outreach and enrollment practices for both SCHIP and Medicaid,
barriers to enrollment, and factors influencing beneficiary
dropout. Finally, the law also requires: (a) an Inspector
General audit and GAO report on enrollment of Medicaid-eligible
children in SCHIP, (b) States to report annually the number of
deliveries to pregnant women and the number of infants who
receive services under the Maternal and Child Health Services
Block Grant or who are entitled to SCHIP benefits, and (c) the
Secretary of Health and Human Services to establish a
clearinghouse for the consolidation and coordination of all
Federal databases and reports regarding children's health.

                              Program Data

    As of December 1, 1999, the Health Care Financing
Administration had approved SCHIP plans for all 50 States, the
District of Columbia and all 5 territories. Twenty-five are
Medicaid expansions (ME), 16 are separate State programs (SSP),
and 15 provide health insurance coverage through a combination
approach (COMBO).
    As of December 1, 1999, 44 amendments to original State
plans were submitted; 32 amendments had been approved and 12
were still in review. Several States have multiple amendments.
The content of the plan amendments varies among States. Some
States use the amendments to extend coverage beyond income
levels defined in their original State plan (e.g., Michigan,
New Mexico, and Nebraska). Others define new copayment
standards for program participants (e.g., Missouri and
Pennsylvania). Still others modify benefit packages (e.g.,
Alabama, Indiana, New Hampshire, and North Carolina).
    Officials at HCFA anticipate that amendments will be
submitted throughout the life of the program and that the
nature of the amendments will change as the program evolves.
The proposed program regulations issued in November 1999
indicate that HCFA will consider section 1115 research and
demonstration waivers of title XXI provisions only after a
State has had at least 1 year of SCHIP experience and has
conducted an evaluation of that experience.
    Early HCFA enrollment estimates indicate that nearly 1
million children (982,000) were enrolled in SCHIP under 43
operational State programs as of December 1998. More recently,
HCFA reported that nearly 2 million children (1,979,450) were
enrolled in SCHIP during fiscal year 1999 under 53 operational
State programs. Over 1.2 million of these children were served
by separate programs and almost 700,000 were enrolled in
Medicaid expansions (see table 15-27). Subsequent to enactment
of the Balanced Budget Act (BBA) of 1997, the Congressional
Budget Office (CBO) estimated that SCHIP would cover an average
of 2.3 million children per year after 1999 (CBO, 1998). The
administration's goal is to enroll 5 million children in SCHIP
by fiscal year 2002.
    Because annual SCHIP allotments remain available for a
period of 3 years, nearly all States continue to draw down on
their fiscal year 1998 allotments, and have until the end of
fiscal year 2000 to spend these funds.\25\ Table 15-28 provides
information on SCHIP allotments and reported expenditures by
State for fiscal year 1998. These expenditures are based on
unaudited State claims submitted to HCFA and do not represent
actual outlays. As of January 4, 2000, States have claimed
$986.8 million, or 23.3 percent of the

---------------------------------------------------------------------------
    \25\ Unspent funds will be redistributed to States that have fully
expended their allotments.

               TABLE 15-28.--ESTIMATED SCHIP FEDERAL ALLOTMENTS AND EXPENDITURES--FISCAL YEAR 1998
----------------------------------------------------------------------------------------------------------------
                                                                   Expenditures \1\
                                        Fiscal year  --------------------------------------------
                State                 1998 allotment                  Percent of                    S-SCHIP \2\
                                                       Total dollars   allotment      M-SCHIP
----------------------------------------------------------------------------------------------------------------
Alabama.............................      85,975,213      25,421,675        29.6      10,840,371      14,581,304
Alaska..............................       6,889,296       3,806,310        55.2       3,425,679         380,631
American Samoa \3\..................         128,850           (\4\)         0.0           (\4\)           (\4\)
Arizona.............................     116,797,799       8,836,776         7.6           (\4\)       8,836,776

Arkansas............................      47,907,958         680,106         1.4         612,096          68,010
California..........................     854,644,807      68,780,451         8.0       7,012,804      61,767,647
Colorado............................      41,790,546      10,024,469        24.0           (\4\)      10,024,469
Connecticut.........................      34,959,075      12,301,470        35.2       9,567,126       2,734,344

Delaware............................       8,053,463         883,874        11.0           (\4\)         883,874
District of Columbia................      12,076,002         498,585         4.1         498,585           (\4\)
Florida.............................     270,214,724      57,362,492        21.2      27,317,491      30,045,001
Georgia.............................     124,660,136       7,428,825         6.0           (\4\)       7,428,825

Guam \5\............................         375,812           (\4\)         0.0           (\4\)           (\4\)
Hawaii \6\..........................       8,945,304           (\4\)         0.0           (\4\)           (\4\)
Idaho...............................      15,879,707       5,280,101        33.3       4,752,091         528,010
Illinois............................     122,528,573      20,812,534        17.0      20,812,534           (\4\)

Indiana.............................      70,512,432      61,716,155        87.5      59,547,425       2,168,730
Iowa................................      32,460,463      10,839,004        33.4       8,901,735       1,937,269
Kansas..............................      30,656,520       8,790,887        28.7           (\4\)       8,790,887
Kentucky............................      49,932,527      17,825,116        35.7      17,352,499         472,617

Louisiana...........................     101,736,840      10,361,817        10.2       9,325,635       1,036,182
Maine...............................      12,486,977       5,617,064        45.0       4,060,701       1,556,363
Maryland............................      61,627,358      14,251,164        23.1      13,527,138         724,026
Massachusetts.......................      42,836,231      35,385,895        82.6      29,961,560       5,424,335

Michigan............................      91,585,508      15,576,561        17.0       9,076,713       6,499,848
Minnesota...........................      28,395,980           7,189         0.0           7,189           (\4\)
Mississippi.........................      56,017,103       8,092,064        14.4       8,092,064           (\4\)
Missouri............................      51,673,123      19,708,219        38.1      19,166,928         541,291

Montana.............................      11,740,395         599,352         5.1           (\4\)         599,352
Nebraska............................      14,862,926       3,773,847        25.4       3,773,847           (\4\)
Nevada..............................      30,407,067       4,110,173        13.5           (\4\)       4,110,173
New Hampshire.......................      11,458,404         965,340         8.4         395,135         570,205

New Jersey..........................      88,417,899      23,156,897        26.2      16,266,802       6,890,095
New Mexico..........................      62,972,705         767,955         1.2         767,955           (\4\)
New York............................     255,626,409     255,626,409       100.0         477,118     255,149,291
North Carolina......................      79,508,462      34,921,019        43.9           (\4\)      34,921,019

North Dakota........................       5,040,741          75,874         1.5          74,324           1,550
Northern Mariana Islands \7\........         118,113           (\4\)         0.0           (\4\)           (\4\)
Ohio................................     115,734,364      44,510,120        38.5      44,510,120           (\4\)
Oklahoma \8\........................      85,699,060           (\4\)         0.0           (\4\)           (\4\)

Oregon..............................      39,121,663       7,638,628        19.5           (\4\)       7,638,628
Pennsylvania........................     117,456,520      48,751,058        41.5           (\4\)      48,751,058
Puerto Rico.........................       9,835,550       9,835,550       100.0       9,835,550           (\4\)
Rhode Island........................      10,684,422       2,321,095        21.7       2,321,095           (\4\)

South Carolina......................      63,557,819      63,557,819       100.0      61,250,170       2,307,649
South Dakota........................       8,541,224       1,546,059        18.1       1,391,453         154,606
Tennesseee \8\......................      66,153,082           (\4\)         0.0           (\4\)           (\4\)
Texas...............................     561,331,521      39,799,551         7.1      35,917,987       3,881,564

Utah................................      24,241,159       7,994,253        33.0           (\4\)       7,994,253
Vermont.............................       3,535,445         524,624        14.8           (\4\)         524,624
Virginia............................      68,314,914       4,992,151         7.3           (\4\)       4,992,151
Virgin Islands \3\..................         279,175           (\4\)         0.0           (\4\)           (\4\)

Washington \6\......................      46,661,213           (\4\)         0.0           (\4\)           (\4\)
West Virginia.......................      23,606,744       1,078,823         4.6         247,648         831,175
Wisconsin \3\.......................      40,633,039           (\4\)         0.0           (\4\)           (\4\)
Wyoming \9\.........................       7,711,638           (\4\)         0.0           (\4\)           (\4\)
                                     ---------------------------------------------------------------------------
      Total.........................   4,235,000,000     986,835,400        23.3     441,087,568    545,747,832
----------------------------------------------------------------------------------------------------------------
\1\ Federal expenditures as reported by the States (Form HCFA-21C through September 30, 1999 as tabulated on
  January 4, 2000).
\2\ Amounts may include Medicaid SCHIP administrative expenditures at enhanced Medicaid matching rates at State
  option.
\3\ As of January 4, 2000, American Samoa, the Virgin Islands and Wisconsin had not submitted any expenditure
  reports.
\4\ Not applicable or missing data. See footnotes for individual States for further explanation.
\5\ Guam will be revising its expenditure reports through the fourth quarter of fiscal year 1999 to show that
  all the fiscal year 1998 allotment was spent.
\6\ Hawaii and Washington show no expenditures because the implementation date for their programs is July 1, and
  February 1, 2000, respectively.
\7\ Under its current SCHIP plan, the Northern Mariana Islands must exhaust their regular Medicaid funds (which
  has not been done for fiscal year 1998) before SCHIP funds become available.
\8\ As of early January 2000, Oklahoma and Tennessee could not get their Medicaid computer systems altered to
  adequately identify SCHIP expenditures, so costs have been claimed under regular Medicaid. Beginning with the
  first quarter of fiscal year 2000, these States plan to report SCHIP expenditures and begin the process of
  adjusting regular Medicaid claims for prior periods.
\9\ Wyoming shows no expenditures because it did not begin enrolling children into SCHIP until October 1, 1999
  (beyond fiscal year 1998).

M-SCHIP--Medicaid expansion CHIP.
S-SCHIP--Separate State CHIP.

Source: Health Care Financing Administration.

total fiscal year 1998 appropriation of $4.235 billion
available to States and territories. Just over half of these
claims (55.3 percent) cover administrative and benefit costs
for separate State programs; the remainder are for costs
incurred under Medicaid expansions. Actual Federal spending in
fiscal year 1998 totaled less than $500 million. CBO estimates
that Federal State Children's Health Insurance Program (SCHIP)
spending will total approximately $1 billion for fiscal year
1999 and $2 billion for fiscal year 2000 (CBO, 2000). The
discrepancies between dollar figures reported by HCFA versus
CBO are due primarily to differences in reporting periods and
the time lag between claim submission and subsequent
adjudication, and actual disbursement of Federal funds.
    The proportion of State SCHIP allotments claimed by early
January 2000, varies considerably across States. Ten States and
territories reported no expenditures (see table 15-28 footnotes
for explanations). An additional 27 States submitted
expenditure reports claiming 25 percent or less of their
allotments. Another 13 States claimed between 26 and 50 percent
of available funds. Finally, six jurisdictions submitted
expenditure reports totaling over 50 percent of allotments.
Three of these six jurisdictions--New York, Puerto Rico and
South Carolina--had claimed their full fiscal year 1998
allotments as of early January 2000, and have also submitted
expenditure reports to access their fiscal year 1999 SCHIP
funding.

                    FEDERAL HOUSING ASSISTANCE \26\
---------------------------------------------------------------------------

    \26\ This discussion draws directly from the Congressional Budget
Office (1988). For this report, CBO has updated all figures with 12
additional years of data. For a more recent study on these topics, see
Congressional Budget Office (1994). Assistance provided through various
aspects of the Tax Code is excluded from the discussion.
---------------------------------------------------------------------------
     A number of Federal programs administered by the U.S.
Department of Housing and Urban Development (HUD) and the Rural
Housing Service (RHS) address the housing needs of low-income
households. Housing assistance has never been provided as an
entitlement to all households that qualify for aid. Instead,
Congress has traditionally appropriated funds for a number of
new commitments each year. Until the 1990s, those commitments
generally ran up to 40 years, with the result that the
appropriations were actually spent gradually over many years.
More recently, funding has been provided 1 year at a time.
Those additional commitments have expanded the pool of
available aid, thus increasing the total number of households
that can be served. They have also contributed to growth in
Federal outlays in the past and have committed the government
to continuing expenditures for many more years to come. The
traditional housing programs have been augmented over the years
with additional programs funded through block grants to State
and local governments. This section describes recent trends in
the number and mix of new commitments, as well as trends in
expenditures for both the traditional assistance programs and
the more recent block grant programs. The section focuses
primarily on programs administered by HUD.

                          Types of Assistance

     The Federal Government has traditionally provided housing
aid directly to low-income households in the form of rental
subsidies and mortgage interest subsidies. For the most part,
both the number of households receiving aid and total Federal
expenditures have steadily increased, but the growth of
households assisted through the traditional programs has slowed
since the 1980s and, in recent years, the number of such
assisted households may have declined.\27\ Starting in the mid-
1980s, a number of statutes were enacted--including the Stewart
B. McKinney Homeless Assistance Act of 1987 (hereafter referred
to as the McKinney Act) and the 1990 Cranston-Gonzalez National
Affordable Housing Act (hereafter referred to as the 1990
Housing Act) that authorized new, indirect approaches in the
form of housing block grants to State and local governments.
Those governments may use the grants for various housing
assistance activities specified in the laws. Data on the number
of households assisted through those types of programs are not
readily available, however.
---------------------------------------------------------------------------
    \27\ Because of changes in the way in which HUD reports the number
of households assisted through the traditional programs, it is not
entirely clear whether the number has just leveled off or has actually
declined during the past 3 years.
---------------------------------------------------------------------------
     A number of different housing assistance programs evolved
over time in response to changing housing policy objectives.
The primary purpose of housing assistance has always been to
reduce housing costs and improve housing quality for low-income
households. Other goals have included promoting residential
construction, expanding housing opportunities for disadvantaged
groups and groups with special housing needs such as the
elderly, the disabled, and the homeless, promoting neighborhood
preservation and revitalization, increasing home ownership, and
empowering the poor to become self-sufficient.
     New housing programs have been developed because of
shifting priorities among these objectives as housing-related
problems changed and because of the relatively high Federal
costs associated with some approaches. Other programs have
become inactive as Congress stopped appropriating funds for new
assistance commitments through them. Because housing programs
traditionally have involved multiyear contractual obligations,
however, these so-called inactive programs continue to play an
important role by serving a large number of households through
commitments for which funds were appropriated some time ago.
Direct rental assistance
     Most Federal housing aid is now targeted to very-low-
income renters through the rental assistance programs
administered by HUD and the RHS (Schussheim, 2000). Rental
assistance is provided through two basic approaches: (1)
project-based aid, which is typically tied to projects
specifically produced for low-income households through new
construction or substantial rehabilitation; and (2) household-
based subsidies, which permit renters to choose standard
housing units in the existing private housing stock. Some
funding is also provided each year to modernize units built
with Federal aid. Rental assistance programs generally reduce
tenants' rent payments to a fixed percentage--currently 30
percent--of their income after certain deductions, with the
government paying the remaining portion of the rent.
     Almost all project-based aid is provided through
production-oriented programs, which include the Public and
Indian Housing Program, the section 8 New Construction and
Substantial Rehabilitation Program, and the section 236
Mortgage Interest Subsidy Program--all administered by HUD--and
the section 515 Mortgage Interest Subsidy Program administered
by the RHS.\28\ Today new commitments are being funded through
only two of these four programs--a modified version of the
section 8 New Construction Program for elderly and disabled
families only and the section 515 program. In addition, some
new housing for Native Americans continues to be developed
through the Indian Housing Block Grant Program.
---------------------------------------------------------------------------
    \28\ A small number of renters continue to receive project-based
subsidies through the now inactive section 221(d)(3) Below-Market
Interest Rate and Rent Supplement Programs.
---------------------------------------------------------------------------
     Some project-based aid is also provided through several
components of HUD's section 8 Existing Housing Program, which
tie subsidies to specific units in the existing housing stock,
many of which have received other forms of aid or mortgage
insurance through HUD. Traditionally, those components have
included the section 8 loan management set-aside (LMSA) and
property disposition (PD) components, which are designed to
improve cash flows in selected financially troubled projects
that are or were insured by the Federal Housing Administration
or to provide deeper subsidies to the occupants; the section 8
conversion assistance component, which subsidizes units that
were previously aided through other programs; and the section 8
Moderate Rehabilitation Program, which provides subsidies to
units that have been brought up to standard by the owner.\29\
In recent years, few, if any, new commitments have been funded
through these programs. Today, new funding is predominantly
used for tenant protection to enable tenants to remain in or
move out of projects where rents are being raised after the
owners opt out of the Federal assistance programs. Tenant
protection assistance is also used to replace aid to households
that are being displaced from assisted projects because the
projects are being demolished.
---------------------------------------------------------------------------
    \29\ The 1990 Housing Act repealed the section 8 Moderate
Rehabilitation Program at the end of fiscal year 1991, except for
single-room occupancy units for the homeless.
---------------------------------------------------------------------------
     Household-based subsidies have traditionally been provided
through two other components of the section 8 Existing Housing
Program--section 8 rental certificates and vouchers. These
programs tie aid to households that choose units meeting
certain housing standards in the private housing stock.
Certificate holders generally must occupy units with rents that
are within guidelines--the so-called fair market rents--
established by HUD. Voucher recipients, however, are allowed to
occupy units with rents above the HUD guidelines provided they
pay the difference. Starting in 2000, the certificate and
voucher program are being combined into one program that pays
the difference between 30 percent of a tenant's income and the
lesser of the tenant's actual housing cost or a payment
standard determined by local rent levels. Commitments to aid
additional households are being made under this program. In
addition, because of the tenant protection programs discussed
above, aid is gradually being shifted from project-based to
household-based assistance.
Direct home ownership assistance
     Each year, the Federal Government also assists some low-
and moderate-income households in becoming homeowners by making
long-term commitments to reduce their mortgage interest. Most
of this aid has been provided through the section 502 program
administered by the RHS. This program supplies direct mortgage
loans at low interest rates roughly equal to the long-term
government borrowing rates or provides guarantees for private
loans with interest rates that may not exceed those set by the
Department of Veterans Affairs (VA). Many home buyers, however,
receive much deeper subsidies through the interest-credit
component of this program, which reduces their effective
interest rate to as low as 1 percent.
     A number of home buyers have received aid through the
section 235 program administered by HUD. That program provides
interest subsidies for mortgages financed by private lenders.
New commitments are now being made only through the section 502
program but a small number of homeowners continue to receive
aid from prior commitments made under the section 235
program.\30\ Both programs generally reduce mortgage payments,
property taxes, and insurance costs to a fixed percentage of
income, ranging from 20 percent for the RHS program to 28
percent for the latest commitments made under the HUD program.
---------------------------------------------------------------------------
    \30\ The Housing and Community Development Act of 1997 terminated
the section 235 program at the end of fiscal year 1989.
---------------------------------------------------------------------------
Homeless programs
     Since the mid-1980s, a number of programs specifically
designed to address the issue of homelessness have been
authorized. The still active programs, most of which were
authorized by the McKinney Act, include the Emergency Shelter
Grants Program, the Supportive Housing Program, the Shelter
Plus Care Program, and the Moderate Rehabilitation for Single
Room Occupancy Dwellings Program. Another program, which is
designed to prevent rather than deal with homelessness, is the
Housing Opportunities for Persons with AIDS (HOPWA) Program,
authorized by the 1990 Housing Act.
     Under these programs, HUD funds housing assistance
indirectly in the form of block grants to State and local
governments. They in turn are required to contribute matching
funds under all programs except under the Single Room Occupancy
Dwellings and HOPWA Programs. Funds are distributed by formula
or by competition, depending on the type of program. Funds may
be used for a variety of housing activities that may be
supported on a short-term, emergency basis or on a more
permanent basis. Those activities include acquisition,
rehabilitation, and new construction of facilities, tenant
rental assistance (including section 8), supportive services,
and administration costs.
Other housing block grant programs
     Several programs funded through block grants that are not
specifically designed to deal with homelessness have been
authorized since the early 1980s. Most of these programs have
been terminated or are no longer being funded today.
     Some assistance for the construction or rehabilitation of
rental housing was funded under two small HUD programs
authorized in 1983, the Rental Housing Development Grants
(HoDAG) and the Rental Rehabilitation Block Grant Programs.\31\
These programs distributed funds through a national competition
and by formula, respectively, to units of local government that
met certain eligibility criteria.
---------------------------------------------------------------------------
    \31\ The Housing and Community Development Act of 1987 terminated
the HoDAG Program at the end of fiscal year 1989; the 1990 Housing Act
repealed the Rental Rehabilitation Block Grant Program at the end of
fiscal year 1991.
---------------------------------------------------------------------------
     The 1990 Housing Act authorized several new housing
assistance approaches, including the Home Ownership and
Opportunity for People Everywhere (HOPE) Program and the HOME
Investment Partnerships Block Grant Program. Since 1996, funds
have been appropriated only for the HOME Program. The HOME
Program provides Federal grants to State and local governments
on a formula basis. Currently, participating jurisdictions
generally must provide matching contributions of at least 25
percent of HOME funds spent in each fiscal year. Some or all of
the matching requirement may be waived for jurisdictions that
can show they are financially distressed. Funds may be used for
tenant-based rental assistance or assistance to new home
buyers.\32\ They may also be used for acquisition,
rehabilitation, or in limited circumstances, construction of
both rental and owner-occupied housing.
---------------------------------------------------------------------------
    \32\ Prior to the enactment of the HOME Program, some of the
activities for home buyers were supported under the Nehemiah Housing
Opportunity Grant Program, which was authorized by the Housing and
Community Development Act of 1987.
---------------------------------------------------------------------------

          Trends in Levels and Budgetary Impact of Housing Aid

     This section examines trends in the levels and the
budgetary impact of housing aid. Figures are presented only for
programs administered by HUD. Because of data limitations,
figures for the number of assisted households are presented
only for those subsidized through the traditional programs that
provide direct rental and home ownership assistance. Figures
for the budgetary impact are shown for all housing programs
discussed above.
Trends in net new commitments
     Although HUD has been subsidizing the shelter costs of
low-income households since 1937, more than half of all
currently outstanding commitments under the traditional
assistance programs were funded over the past 24 years. Between
1977 and 2000, funds were appropriated for about 2.6 million
net new commitments to aid low-income renters (table 15-29).
Another 108,000 new commitments were funded in the form of
mortgage assistance to low- and moderate-income home buyers.
Between 1977 and 1983, the number of net new rental commitments
funded each year declined steadily, however, from 354,000 to
54,000. Trends have been somewhat erratic since that time.
During the late 1990s relatively few

 TABLE 15-29.--NET NEW COMMITMENTS FOR RENTERS AND HOME BUYERS RECEIVING DIRECT HOUSING ASSISTANCE ADMINISTERED
                              BY HUD, BY TYPE OF SUBSIDY, SELECTED YEARS 1977-2000
----------------------------------------------------------------------------------------------------------------
                                                             Net new commitments for renters          Net new
                                                       ------------------------------------------   commitments
                      Fiscal year                         Existing          New                      for home
                                                        housing \1\  construction \2\    Total      buyers \3\
----------------------------------------------------------------------------------------------------------------
1977..................................................     12,7581         226,832       354,413           4,719
1980..................................................      58,402         129,490       187,892          58,907
1981..................................................      83,520          75,365       158,885           5,102
1982..................................................      37,818          18,018        55,836           4,754
1983..................................................      54,071            -339        53,732           2,630
1984..................................................      78,648           9,619        88,267             930
1985..................................................      85,741          16,980       102,721           4,586
1986..................................................      85,476          13,109        98,585               5
1987..................................................      72,788          20,192        92,980              60
1988..................................................      64,270          19,991        84,261               0
1989..................................................      67,653          14,053        81,706               0
1990..................................................      61,309           7,428        68,737               0
1991 \4\..............................................      55,900          13,082        68,982               0
1992 \4\..............................................      62,008          23,537        85,545               0
1993 \4\..............................................      50,162          18,715        68,877               0
1994 \4\..............................................      47,807          17,652        65,459               0
1995 \4\..............................................      16,904          16,587        33,491               0
1996 \4\..............................................       7,055           1,438         8,493               0
1997 \4\..............................................       9,229          12,449        21,678               0
1998 \4\..............................................      18,376          17,675        36,051               0
1999 \4\..............................................      16,225          11,060        27,285               0
2000 est. \4\.........................................     126,000           9,556       135,556              0
----------------------------------------------------------------------------------------------------------------
\1\ Includes units assisted through section 8 certificates and vouchers, loan management set-aside (LMSA), PD,
  and Moderate Rehabilitation Programs.
\2\ Includes units assisted through the section 8 New Construction and Substantial Rehabilitation Program,
  section 202/811 Housing for the Elderly and the Disabled, section 236, and Public and Indian Housing Programs.
  Excludes units constructed under the Indian Housing Block Grant Program.
\3\ Includes units assisted through the various section 235 programs.
\4\ Figures are no longer adjusted for units for which funds were deobligated because data were unavailable.

Note.--Because reliable data are not readily available, this table excludes substantial numbers of commitments
  made through the various programs for the homeless (including HOPWA) and other block grant programs such as
  the HOME Investment Partnerships Program.
Net new commitments for renters represent net additions to the available pool of rental aid and are defined as
  the total number of commitments for which new funds are appropriated in any year.
To avoid double counting, numbers are adjusted for commitments for which such funds are deobligated or canceled
  that year (except where noted otherwise); the commitments for units converted from one type of assistance to
  another; starting in 1985, the commitments replacing those lost because private owners of assisted housing opt
  out of the programs or because public housing units are demolished; and, starting in 1989, the commitments for
  units whose section 8 contracts expire.
New commitments for home buyers are defined as the total number of new loans that HUD subsidizes each year. This
  measure of program activity is meant to indicate how many new home buyers can be helped each year. It is not
  adjusted to account for homeowners who leave the program in any year because of mortgage repayments,
  prepayment, or foreclosures. Thus, it does not represent net additions to the total number of assisted
  homeowners and therefore cannot be added to net new commitments for renters.

Source: Congressional Budget Office based on data from the U.S. Department of Housing and Urban Development.

 new commitments were funded, ranging from less than 8,500 in
1996 to 36,000 in 1998. For fiscal year 2000, however, funds
were appropriated for more than 135,000 new commitments.
     The production-oriented approach in rental programs was
sharply curtailed in 1982 in favor of the less costly section 8
Existing Housing Programs. Between 1977 and 1981, commitments
through programs for new construction and substantial
rehabilitation ranged annually from 47 to 69 percent of the
total. After 1981, the proportion never exceeded 32 percent
until 1995, when it rose to roughly one-half of the total.
Because in recent years the number of commitments funded for
existing housing has been so low, the new construction
commitments (primarily for the elderly and disabled) have been
a relatively high proportion of the total.
Trends in number of assisted households
     The total number of households receiving housing
assistance from HUD has increased substantially, almost 113
percent, from 2.4 million at the beginning of fiscal year 1977
to 5.1 million at the beginning of fiscal year 2000 (table 15-
30). That increase results largely from net new commitments,
but also from commitments made before 1977 that have been
processed during this period. The number of households
receiving rental subsidies increased from 2.1 million to 5.1
million. The number of assisted homeowners dropped steadily
from 331,000 to 43,000, however, reflecting commitments for
newly assisted home buyers, if any, being more than offset by
loan repayments, prepayments, and foreclosures.
     Among rental assistance programs, the shift away from
production-oriented programs toward existing housing is
reflected in the increasing proportion of renters receiving aid
through the latter approach, from 13 percent at the beginning
of fiscal year 1977 to about 42 percent at the beginning of
fiscal year 2000. During that period, the proportion of renters
receiving household-based subsidies increased from 8 percent to
32 percent.
Trends in budget authority
     Under the direct housing assistance programs, funding for
additional commitments used to be provided each year through
appropriations of long-term (up to 40 years) budget authority
for subsidies to households and through appropriations of
budget authority for grants to public housing agencies and
developers of rental housing. Today, most rental subsidies,
both for new commitments and for the renewal of expiring
contracts, are funded for 1 year at a time. Only new
commitments that subsidize the operating costs of projects
being built for the elderly and disabled are funded for 5-year
periods. For the homeless and other housing block grant
programs, funds are appropriated on an annual basis but spend
out over periods as long as 10 years.
     Annual appropriations of new budget authority for all
housing assistance programs combined were cut dramatically
during the 1980s. They dropped (in 2000 dollars) from a high of
$82.5 billion in 1978 to a low of $12.5 billion in 1989 (table
15-31). Those cuts reflect four underlying factors affecting
budget authority for the direct housing assistance programs:
the previously mentioned reduction in the number of newly
assisted households; the shift toward

                  TABLE 15-30.--TOTAL HOUSEHOLDS RECEIVING DIRECT HOUSING ASSISTANCE ADMINISTERED BY HUD, BY TYPE OF SUBSIDY, 1977-2000
                                                              [In thousands of households]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Assisted renters
                                                        -----------------------------------------------------------------
                                                                 Existing housing                                                         Total assisted
                  Start of fiscal year                  ----------------------------------                      Total     Total assisted    renters and
                                                                                 Subtotal  New construction    assisted   homeowners \5\  homeowners \4\
                                                         Household-   Project-   existing         \3\        renters \4\
                                                          based \1\  based \2\   housing
--------------------------------------------------------------------------------------------------------------------------------------------------------
1977...................................................         162        105        268          1,799          2,067            331           2,398
1978...................................................         297        126        423          1,928          2,350            293           2,643
1979...................................................         427        175        602          1,978          2,580            262           2,842
1980...................................................         521        185        707          2,090          2,797            235           3,032
1981...................................................         599        221        820          2,228          3,212            219           3,431
1982...................................................         651        194        844          2,373          3,379            241           3,619
1983...................................................         691        265        955          2,485          3,615            242           3,857
1984...................................................         728        357      1,086          2,589          3,851            230           4,081
1985...................................................         749        431      1,180          2,657          4,015            210           4,225
1986...................................................         797        456      1,253          2,686          4,135            200           4,336
1987...................................................         893        473      1,366          2,721          4,279            182           4,461
1988...................................................         956        490      1,446          2,736          4,371            159           4,530
1989...................................................       1,025        509      1,534          2,748          4,485            148           4,632
1990...................................................       1,090        527      1,616          2,755          4,569            141           4,710
1991...................................................       1,137        540      1,678          2,778          4,656            130           4,786
1992...................................................       1,166        554      1,721          2,786          4,705            125           4,830
1993...................................................       1,326        574      1,900          2,762          4,861             98           4,959
1994...................................................       1,392        593      1,985          2,764          4,939             95           5,035
1995...................................................       1,474        607      2,081          2,778          5,049             80           5,130
1996...................................................       1,413        608      2,021          2,817          5,028             76           5,104
1997...................................................       1,465        586      2,051          2,822          5,063             68           5,132
1998...................................................       1,481        564      2,045          2,786          5,021             60           5,082
1999...................................................       1,613        542      2,154          2,757          5,101             53           5,154
2000...................................................       1,621        522      2,143          2,728          5,061             43          5,104
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes units assisted through section 8 certificates and vouchers.
\2\ Includes units assisted through the section 8 loan management set-aside (LMSA), PD, conversion (from rent supplement and section 236 Rental
  Assistance Program), and Moderate Rehabilitation Programs.
\3\ Includes units assisted through the section 8 New Construction and Substantial Rehabilitation Program, section 236, Rent Supplement, and Public
  Housing Programs, including Indian units originally constructed under the Public Housing Program but currently assisted through the section 8 loan
  management set-aside (LMSA), PD, conversion (from rent supplement and section 236 Rental Assistance Program), and Moderate Rehabilitation Programs.
\4\ Figures for total assisted renters have been adjusted since 1980 to avoid double-counting households receiving more than one subsidy. Therefore, the
  total is less than the sum of the components.
\5\ Includes units assisted through the various section 235 programs.

Note.--Because reliable data are not readily available, this table excludes substantial numbers of households receiving aid through the various programs
  for the homeless (including the Housing Opportunities for Persons with AIDS Program) and other block grant programs such as the HOME Investment
  Partnerships Program).

Source: Congressional Budget Office based on data from the U.S. Department of Housing and Urban Development.

  TABLE 15-31.--NET BUDGET AUTHORITY APPROPRIATED FOR HOUSING ASSISTANCE ADMINISTERED BY HUD, BY BROAD PROGRAM
                                              CATEGORIES, 1977-2000
                                    [In millions of current and 2000 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                              Other         Total net budget
                                             Direct housing    Homeless      housing            authority
                                             assistance \1\  programs \2\     block    -------------------------
                Fiscal year                    in current     in current    grants \3\
                                                 dollars        dollars     in current    Current        2000
                                                                             dollars      dollars      dollars
----------------------------------------------------------------------------------------------------------------
1977.......................................        $28,579              0            0      $28,579      $77,944
1978.......................................         32,193              0            0       32,193       82,470
1979.......................................         25,123              0            0       25,123       59,100
1980.......................................         27,435              0            0       27,435       58,075
1981.......................................         26,021              0            0       26,021       50,057
1982.......................................         14,766              0            0       14,766       26,544
1983.......................................         10,001              0            0       10,001       17,214
1984.......................................         10,810              0         $615       11,425       18,867
1985.......................................         11,071              0            0       11,071       17,633
1986.......................................          9,888              0          144       10,032       15,591
1987.......................................          8,645           $195          300        9,140       13,806
1988.......................................          8,353            107          204        8,664       12,570
1989.......................................          8,664            172          170        9,006       12,476
1990.......................................         10,331            284          152       10,767       14,206
1991.......................................         19,029            339          105       19,473       24,457
1992.......................................         16,730            498        1,861       19,089       23,277
1993.......................................         18,280            672        1,485       20,437       24,181
1994.......................................         18,107            979        1,173       20,259       23,358
1995.......................................         11,676          1,291        1,462       14,429       16,182
1996.......................................         13,218            994        1,400       15,612       17,036
1997.......................................          8,672          1,019        1,370       11,061       11,753
1998.......................................         14,175          1,027        1,500       16,702       17,463
1999.......................................         16,544          1,200        1,600       19,344       19,846
2000.......................................         17,459          1,252        1,600       20,311      20,311
----------------------------------------------------------------------------------------------------------------
\1\ Includes the following programs: section 8 Low-Income Housing Assistance, section 202/811 Housing for the
  Elderly and the Disabled, section 236 Rental Housing Assistance, Rent Supplement, section 235 Homeownership
  Assistance, Public Housing Capital, Public Housing Operating Subsidies, Public Housing Drug Elimination
  Grants, Revitalization of Severely Distressed Public Housing, Low-Rent Public Housing Loan Fund, Indian
  Housing Block Grants.
\2\ Includes the following programs: Housing Opportunities for Persons with AIDS (HOPWA), Homeless Assistance
  Grants, Supplemental Assistance for Facilities to Assist the Homeless, Emergency Shelter Grants, Supportive
  Housing, Shelter Plus Care Program, section 8 Moderate Rehabilitation for Single Room Occupancy Dwellings,
  Innovative Homeless Initiatives Demonstration Program.
\3\ Includes the following programs: HOME Investment Partnerships Program, Nehemiah Housing Opportunity Grant
  Program, Rental Housing Development Grants (HoDAG), Rental Rehabilitation Block Grant Program.

Note.--All figures are net of funding rescissions, exclude reappropriations of funds, and include supplemental
  appropriations. Figures exclude budget authority for HUD's section 202 loan fund.

Source: Congressional Budget Office based on data from the U.S. Department of Housing and Urban Development.

cheaper existing housing assistance; a systematic reduction in
the average term of new commitments from more than 24 years in
1977 to less than 5 years today; and changes in the method for
financing the construction and modernization of public housing
and the construction of housing for the elderly and the
disabled.\33\
---------------------------------------------------------------------------
    \33\ Before 1987, new commitments for the construction and
modernization of public housing were financed over periods ranging from
20 to 40 years, with the appropriations for budget authority reflecting
both the principal and interest payments for this debt. Starting in
1987, these activities have been financed with up front grants, which
reduced their budget authority requirements by between 51 and 67
percent. Similarly, prior to 1991, housing for the elderly and the
disabled was financed by direct Federal loans for construction, coupled
with 20 years of section 8 rental assistance, which helped repay the
direct loan. Starting in 1991, the loans have been replaced by grants,
which reduced the amount of budget authority required for annual rental
assistance. Moreover, starting in 1995, the term of the rental
assistance was decreased from 20 years to 5 years, thereby reducing the
budget authority even more.
---------------------------------------------------------------------------
     Between 1991 and 1994, budget authority levels (in 2000
dollars) rose sharply to between $23 and $25 billion. Those
trends reflect primarily the cost of renewing section 8
contracts that expired, with contracts being extended for 5-
year terms. In addition, appropriations for homeless programs
and other housing block grant programs rose significantly
during that period.
     After 1994, budget authority levels dropped again to as
low as $11.8 billion in 1997. That decrease is explained by
decreases in net budget authority appropriated for direct
housing assistance, which were only partially offset by
increases in appropriations for homeless and other housing
block grant programs. The decreases in net budget authority for
direct assistance reflect several factors: a gradual reduction
in the terms of renewed contracts from 5 years to 1 year;
further reductions in funding for new activity; and substantial
rescissions of budget authority that had been appropriated in
earlier years.
Trends in outlays
     Total outlays for all housing programs administered by the
U.S. Department of Housing and Urban Development (HUD)
increased (in 2000 dollars) steadily from 1977 through 1996,
from $16 billion to $57 billion (table 15-32). The lion's share
of that increase is explained by increases in outlays for
direct housing assistance, reflecting both the continuing
increase in the number of assisted households and increases in
the average subsidy in real terms.
     Several factors have contributed to the growth of average
subsidies over the 1977-96 period. First, rents in assisted
housing have probably risen faster than the income of assisted
households, causing subsidies to rise faster than the inflation
index used here--the Consumer Price Index for All Urban
Consumers (CPI-U-X1).\34\ Second, the number of households that
occupy units completed under the section 8 New Construction
Program rose during the 1980s. Those units require larger
subsidies compared with the older units that were built prior
to the 1980s under the Mortgage Interest Subsidy and Public
Housing Programs. Third, the share of households receiving less
costly home ownership assistance has de-

---------------------------------------------------------------------------
    \34\ For example, between 1980 and 1990, the CPI-U-X1 increased 59
percent. Over the same period, the Consumer Price Index (CPI) for
residential rents and median household income of renters increased by
71 and 70 percent, respectively, while the maximum rents allowed for
section 8 existing housing rental certificates--the so-called fair
market rents--rose even faster, by 85 percent.

                        TABLE 15-32.--OUTLAYS FOR HOUSING ASSISTANCE ADMINISTERED BY HUD, BY BROAD PROGRAM CATEGORIES, 1977-2000
                                                        [In millions of current and 2000 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Direct housing assistance   (in                     Other        Total outlays
                                                                               current dollars)                           housing  ---------------------
                                                                    -------------------------------------   Homeless       block
                            Fiscal year                               Section 8                           programs \3\  grants \4\
                                                                      and other      Public     Subtotal   (in current      (in      Current      2000
                                                                       assisted   housing \2\   assisted    dollars)      current    dollars    dollars
                                                                     housing \1\                housing                  dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1977...............................................................      $1,331       $1,564      $2,895            0            0     $5,790    $15,791
1978...............................................................       1,824        1,779       3,603            0            0      7,206     18,460
1979...............................................................       2,374        1,815       4,189            0            0      8,378     19,709
1980...............................................................       3,146        2,218       5,364            0            0     10,728     22,709
1981...............................................................       4,254        2,478       6,732            0            0     13,464     25,901
1982...............................................................       5,293        2,553       7,846            0            0     15,692     28,208
1983...............................................................       6,102        3,318       9,420            0            0     18,840     32,428
1984...............................................................       7,068        3,932      11,000            0            0     22,000     36,331
1985...............................................................       7,771       17,261      25,032            0          $15     50,079     79,760
1986...............................................................       8,320        3,859      12,179            0          142     24,500     38,075
1987...............................................................       8,993        3,517      12,510           $2          165     25,187     38,046
1988...............................................................       9,985        3,699      13,684           37          180     27,585     40,020
1989...............................................................      10,689        3,774      14,463           72          275     29,273     40,553
1990...............................................................      11,357        4,331      15,688           85          276     31,737     41,875
1991...............................................................      12,107        4,786      16,893          125          168     34,079     42,802
1992...............................................................      13,052        5,182      18,234          150           35     36,653     44,694
1993...............................................................      14,032        6,447      20,479          180          276     41,414     49,002
1994...............................................................      15,289        6,857      22,146          225          862     45,379     52,321
1995 \5\...........................................................      16,448        7,505      23,953          359        1,259     49,524     55,542
1996 \5\...........................................................      17,496        7,668      25,164          616        1,273     52,217     56,979
1997...............................................................      17,131        7,809      24,940          718        1,263     51,861     55,104
1998 \5\...........................................................      16,975        8,028      25,003          916        1,316     52,238     54,617
1999 \5\...........................................................      17,171        7,805      24,976        1,032        1,367     52,351     53,710
2000 est. \5\......................................................      17,443        8,094      25,537        1,174        1,456     53,704    53,704
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes the following programs: section 8 Low-Income Housing Assistance, section 202/811 Housing for the Elderly and the Disabled, section 236
  Rental Housing Assistance, Rent Supplement, section 235 Homeownership Assistance.
\2\ Includes the following programs: Public Housing Capital, Public Housing Operating Subsidies, Public Housing Drug Elimination Grants, Revitalization
  of Severely Distressed Public Housing, Low-Rent Public Housing Loan Fund, Indian Housing Block Grants.
\3\ Includes the following programs: Housing Opportunities for Persons with AIDS (HOPWA), Homeless Assistance Grants, Supplemental Assistance for
  Facilities to Assist the Homeless, Emergency Shelter Grants, Supportive Housing, Shelter Plus Care Program, section 8 Moderate Rehabilitation for
  Single Room Occupancy Dwellings Program, Innovative Homeless Initiatives Demonstration Program.
\4\ Includes the following programs: HOME Investment Partnerships Program, Nehemiah Housing Opportunity Grant Program, Rental Housing Development Grants
  (HoDAG), Rental Rehabilitation Block Grant Program.
\5\ In order to reflect trends more accurately, figures have been adjusted to account for advance spending in certain years. In 1995, $1.2 billion of
  spending occurred that should have occurred in 1996. In 1998, $680 million of spending occurred that should have occurred in 1999. The Congressional
  Budget Office also expects that $680 million of spending will occur in 2000 that should occur in 2001.

Note.--The bulge in outlays for public housing in 1985 is caused by a change in the method of financing public housing, which generated close to $14
  billion in one-time expenditures. That amount paid off--all at once--the capital cost of public housing construction and modernization activities
  undertaken between 1974 and 1985, which otherwise would have been paid off over periods of up to 40 years. Because of that expenditure, however,
  outlays for public housing since that time have been lower than they would have been otherwise.

Source: Congressional Budget Office based on data from the U.S. Department of Housing and Urban Development.

TABLE 15-33.--PER UNIT OUTLAYS FOR HOUSING AID ADMINISTERED BY HUD, 1977-
                                   97
                      [In current and 1997 dollars]
------------------------------------------------------------------------
                                                    Per unit outlays
                                               -------------------------
                  Fiscal year                     Current        1997
                                                  dollars      dollars
------------------------------------------------------------------------
1977..........................................       $1,160       $2,980
1978..........................................        1,310        3,160
1979..........................................        1,430        3,160
1980..........................................        1,750        3,480
1981..........................................        2,100        3,810
1982..........................................        2,310        3,900
1983..........................................        2,600        4,220
1984..........................................        2,900        4,500
1985..........................................        6,420        9,620
1986..........................................        3,040        4,440
1987..........................................        3,040        4,320
1988..........................................        3,270        4,460
1989..........................................        3,390        4,420
1990..........................................        3,610        4,480
1991..........................................        3,830        4,530
1992..........................................        4,060        4,670
1993..........................................        4,450        4,960
1994..........................................        4,720        5,120
1995..........................................        5,080        5,360
1996..........................................        5,350        5,490
1997 (estimate)...............................        5,490        5,490
------------------------------------------------------------------------
Note.--The peak in outlays per unit in 1985 of $6,420 is attributable to
  the bulge in 1985 expenditures associated with the change in the
  method for financing public housing. Without this change, outlays per
  unit would have amounted to around $2,860.

Source: Congressional Budget Office based on data provided by the U.S.
  Department of Housing and Urban Development.

creased. Fourth, housing assistance has been targeted
increasingly toward poorer segments of the population,
requiring larger subsidies per assisted household (table 15-
33).
     Since 1996, outlays for all housing assistance programs
have decreased from $57 billion to around $54 billion in 1999
and 2000 (in 2000 dollars). That drop is explained by a
decrease in constant outlays for direct housing assistance from
$54.9 billion in 1996 to an estimated $51.1 billion in 2000,
offset only partially by an increase in real outlays for
homeless and other housing block grant programs from $2.1
billion to an estimated $2.6 billion.
     The decrease in constant dollar outlays for direct housing
assistance, which is also evident in the leveling off of
outlays in current dollars, is not easily explained because of
a lack of reliable data on the underlying factors that may have
contributed.
     Given that the number of assisted households has more or
less leveled off at around 5 million, the factor likely to be
responsible for the decrease in real outlays is a decrease in
real average subsidies.\35\ Indeed, several cost containment
measures have been enacted in recent legislation that have
slowed down the growth in average subsidies in current dollars,
thereby helping to reduce average subsidies in 2000 dollars.
First, rents in assisted housing are increasing at a slower
rate or are even declining in many cases. Because the Federal
Government pays part of those rents, subsidies have been lower
than they would have been otherwise. In particular, the maximum
allowable rent in the section 8 voucher and certificate program
has been lowered from the 45th percentile to the 40th
percentile of the local rent distribution. That decrease is
being phased in gradually, as households move from their
current units or turn over their certificate or voucher to a
new recipient. Also, rents in certain assisted housing projects
are no longer increased annually, while rent adjustments in
other cases are being reduced. Second, many assisted households
who had been contributing little or nothing to their rent are
now charged a minimum rent of up to $50 per month. Third,
preference rules for admitting new tenants have been relaxed,
thereby allowing a gradual shift to a population with somewhat
higher incomes. Fourth, in several of the years during the
period, the reissuing of section 8 certificates and vouchers
upon turnover has been delayed for 3 months.
---------------------------------------------------------------------------
    \35\ The apparent fluctuations in total number of assisted
households between 5.021 and 5.101 million is most likely due to
inaccuracies in the data.
---------------------------------------------------------------------------
     In addition to the legislative changes, some
nonlegislative factors may have contributed to the drop in real
subsidies. First, the booming economy of the late 1990s likely
has increased the incomes of many assisted households, thereby
resulting in larger shares of the rent being paid by them and
lower shares by HUD. Second, anecdotal evidence suggests that
new recipients of section 8 certificates and vouchers in some
parts of the country have trouble finding units in which to use
their housing assistance because of very tight housing markets
or a lack of landlords willing to participate in the programs.
As a result, the utilization rate of certificates and vouchers
has been decreasing.
     Future trends in outlays for housing assistance will be
affected by further changes made by recent legislation. On the
one hand, the so-called mark-to-market initiative, enacted by
the Multifamily Assisted Housing Reform and Affordability Act
of 1997, will reduce rents in certain section 8 projects with
federally insured mortgages, thereby reducing outlays for the
section 8 program. Under this initiative, project rents will be
reduced to market levels as the section 8 contracts expire. To
avoid defaults on the federally insured mortgages, HUD will
write down, if needed, those mortgages to levels that are
supportable by the new lower rents. On the other hand, a second
initiative, enacted in 1999 by the Preserving Affordable
Housing for Senior Citizens and Families into the 21st Century
Act, will allow rents to increase in certain section 8
projects, thereby increasing outlays for section 8. To prevent
owners from opting out of the Federal assistance programs,
rents will be raised to market levels. In cases where owners
opt out anyway, tenants will be enabled to stay in the project
through the use of vouchers that will be issued at market rent
levels even if the latter exceed the section 8 fair market rent
in the area.

                SCHOOL LUNCH AND BREAKFAST PROGRAMS \36\
---------------------------------------------------------------------------

    \36\ Other major Federal child nutrition programs include: the
Child and Adult Care Food Program (discussed in section 9) and the
Summer Food Service Program (which provides subsidies for meals served
during the summer months to some 2 million children participating in
recreational and other programs in low-income areas).
---------------------------------------------------------------------------
    The School Lunch and School Breakfast Programs provide
Federal cash and commodity support for meals. The meals are
served by public and private nonprofit elementary and secondary
schools and residential child care institutions (RCCIs) that
opt to enroll and guarantee to offer free or reduced-price
meals meeting Federal nutrition standards to eligible low-
income children. The programs are ``entitlement'' programs, and
both subsidize participating schools and RCCIs for all meals
served that meet Federal nutrition standards at specific,
inflation-indexed rates for each meal. Each program has a
three-tiered system for per-meal Federal reimbursements to
schools and RCCIs that: (1) allows children to receive free
meals if they have family income below 130 percent of the
Federal poverty guidelines (about $21,700 for a four-person
family in the 1999-2000 school year); (2) permits children to
receive reduced-price meals (no more than 40 cents for a lunch
or 30 cents for a breakfast) if their family income is between
130 and 185 percent of the poverty guidelines (between about
$21,700 and $30,900 for a four-person family in the 1999-2000
school year); and (3) provides a small per-meal subsidy for
``full-price'' meals (the price is set by the school or RCCI)
served to children whose families do not apply, or whose family
income does not qualify them for free or reduced-price meals.
Children in Temporary Assistance for Needy Families (TANF) and
food stamp households may automatically qualify for free school
meals without an income application, and the majority actually
receive them.
    The School Lunch Program subsidizes lunches (4.5 billion in
fiscal year 1999) to children in 6,000 RCCIs and almost all
schools (91,000). During fiscal year 1999, average daily
participation was 27 million students (57 percent of the
children enrolled in participating schools and RCCIs); of
these, 48 percent received free lunches, and 9 percent ate
reduced-price lunches (table 15-34). More than 90 percent of
Federal funding is used to subsidize free and reduced-price
lunches served to low-income children. For the 1999-2000 school
year, per-lunch Federal subsidies (cash and commodity support)
range from about 34 cents for full-price lunches to $2.13 and
$1.73 for free and reduced-price lunches.\37\ Fiscal year 1999
Federal school lunch costs (including commodity assistance)
totaled over $6 billion (table 15-34).
---------------------------------------------------------------------------
    \37\ Schools and RCCIs with very high proportions of low-income
children receive an extra 2 cents a meal. Federally donated commodity
assistance make up about 15 cents of each cited subsidy rate.
---------------------------------------------------------------------------
    The School Breakfast Program serves far fewer students than
does the School Lunch Program; about 1.3 billion breakfasts in
66,000 schools (and 6,000 RCCIs) were subsidized in fiscal year
1999. Average daily participation was 7.4 million children (21
percent of the 36 million students enrolled in participating
schools and RCCIs). Unlike the School Lunch Program, the great
majority received free or reduced-price meals: 77 percent
received free meals, and 8 percent purchased reduced-price
meals (table 15-35). In the 1999-2000 school year, per-
breakfast Federal subsidies (cash only) range from about 21
cents for full-price meals to $1.09 and 79 cents for free and
reduced-price breakfasts, respectively.\38\ Fiscal year 1999
Federal school breakfast funding totaled about $1.4 billion
(table 15-35).
---------------------------------------------------------------------------
    \38\ Subsidies are substantially higher (about 20 cents more) for
schools in which breakfast service is required by State law or at least
40 percent of lunches are served free or at reduced price.

        TABLE 15-34.--NATIONAL SCHOOL LUNCH PROGRAM PARTICIPATION AND FEDERAL COSTS, FISCAL YEARS 1977-99
                                                  [In millions]
----------------------------------------------------------------------------------------------------------------
                                                  Participation 9 month average \1\           Federal costs
                                             -------------------------------------------------------------------
                 Fiscal year                            Reduced-    Full-                              Constant
                                                Free      price     price    Total \3\    Current        1999
                                                meals     meals   meals \2\             dollars \4\    dollars
----------------------------------------------------------------------------------------------------------------
1977........................................      10.5       1.3       14.5       26.3     $2,111.1     $5,857.3
1978........................................      10.3       1.5       14.9       26.7      2,293.6      5,945.0
1979........................................      10.0       1.7       15.3       27.0      2,659.0      6,247.2
1980........................................      10.0       1.9       14.7       26.6      3,044.9      6,298.5
1981........................................      10.6       1.9       13.3       25.8      2,959.5      5,510.6
1982........................................       9.8       1.6       11.5       22.9      2,611.5      4,528.5
1983........................................      10.3       1.5       11.2       23.0      2,828.6      4,738.6
1984........................................      10.3       1.5       11.5       23.3      2,948.2      4,744.1
1985........................................       9.9       1.6       12.1       23.6      3,034.4      4,709.2
1986........................................      10.0       1.6       12.2       23.8      3,160.2      4,786.9
1987........................................      10.0       1.6       12.4       24.0      3,245.6      4,779.6
1988........................................       9.8       1.6       12.8       24.2      3,383.7      4,785.7
1989........................................       9.7       1.6       12.7       24.2      3,479.4      4,697.5
1990........................................       9.9       1.6       12.8       24.1      3,676.4      4,727.6
1991........................................      10.3       1.8       12.1       24.2      4,072.9      4,986.0
1992........................................      11.1       1.7       11.7       24.5      4,474.5      5,317.4
1993........................................      11.8       1.7       11.3       24.8      4,663.8      5,379.1
1994........................................      12.2       1.8       11.3       25.3      4,994.5      5,613.2
1995........................................      12.4       1.9       11.3       25.6      5,254.0      5,743.6
1996........................................      12.6       2.0       11.3       25.9      5,441.0      5,786.3
1997........................................      13.0       2.0       11.3       26.3      5,729.8      5,935.1
1998........................................      13.0       2.2       11.3       26.5      5,872.1      5,984.8
1999........................................      13.0       2.4       11.6       27.0      6,249.8      6,249.8
----------------------------------------------------------------------------------------------------------------
\1\ In order to reflect participation for the actual school year (September through May), these estimates are
  based on 9 month averages of October through May, plus September, rather than averages of the 12 months of the
  fiscal year (October through September).
\2\ The Federal Government provides a small subsidy for these meals.
\3\ Details may not sum to total because of rounding.
\4\ Includes cash payments and the value of ``entitlement'' commodities; does not include the value of ``bonus''
  commodities. Overstates actual support for school lunches because a portion (less than $75 million a year) of
  commodity support included in the figures is used for other child nutrition programs.

Note.--Constant dollars were calculated using the fiscal year CPI-U.

Source: U.S. Department of Agriculture, Food and Consumer Service (FCS): (1) budget justification materials
  prepared by the FCS for appropriations requests for fiscal years 1980-2001; and (2) monthly ``Program
  Information Report'' summaries prepared by the FCS.

      TABLE 15-35.--SCHOOL BREAKFAST PROGRAM PARTICIPATION AND FEDERAL COSTS, SELECTED FISCAL YEARS 1977-99
                                                  [In millions]
----------------------------------------------------------------------------------------------------------------
                                                Participation 9 month average \1\             Federal costs
                                          ----------------------------------------------------------------------
               Fiscal year                                          Full-                              Constant
                                             Free      Reduced-     price    Total \3\    Current        1999
                                             meals   price meals  meals \2\             dollars \4\    dollars
----------------------------------------------------------------------------------------------------------------
1977.....................................       2.0          0.1        0.4        2.5       $148.6       $412.3
1980.....................................       2.8          0.2        0.6        3.6        287.8        595.3
1981.....................................       3.0          0.2        0.5        3.8        331.7        617.6
1982.....................................       2.8          0.2        0.4        3.3        317.3        550.2
1983.....................................       2.9          0.1        0.3        3.4        343.8        576.0
1984.....................................       2.9          0.1        0.4        3.4        364.0        585.7
1985.....................................       2.9          0.2        0.4        3.4        379.3        588.7
1986.....................................       2.9          0.2        0.4        3.5        406.3        615.5
1987.....................................       3.0          0.2        0.4        3.7        446.8        658.0
1988.....................................       3.0          0.2        0.5        3.7        482.0        681.7
1989.....................................       3.1          0.2        0.5        3.8        507.0        684.5
1990.....................................       3.3          0.2        0.5        4.0        589.1        757.6
1991.....................................       3.6          0.2        0.6        4.4        677.2        829.0
1992.....................................       4.0          0.3        0.6        4.9        782.6        930.0
1993.....................................       4.4          0.3        0.7        5.4        868.4      1,001.6
1994.....................................       4.8          0.3        0.7        5.8        958.7      1,077.5
1995.....................................       5.1          0.4        0.8        6.3      1,181.8      1,291.9
1996.....................................       5.3          0.4        0.9        6.6      1,124.2      1,195.5
1997.....................................       5.5          0.9        6.9        6.6      1,212.7      1,256.2
1998.....................................       5.6          1.0        7.1        6.6      1,299.6      1,324.5
1999.....................................       5.7          1.1        7.4        6.6      1,354.8      1,354.8
----------------------------------------------------------------------------------------------------------------
\1\ In order to reflect participation for the actual school year (September through May), these estimates are
  based on 9 month averages of October through May, plus September, rather than averages of the 12 months of the
  fiscal year (October through September).
\2\ The Federal Government provides a small subsidy for these meals.
\3\ Details may not sum to totals due to rounding.
\4\ Does not include the value of any federally donated commodities. Fiscal year 1995 figure for Federal costs
  is not reduced for a ``write-down'' of approximately $50-$80 million for unclaimed obligations.

Note.--Constant dollars were calculated using the fiscal year CPI-U.

Source: U.S. Department of Agriculture, Food and Consumer Service (FCS): (1) budget justification materials
  prepared by the FCS for appropriations requests for fiscal years 1980-2001; and (2) monthly ``Program
  Information Report'' summaries prepared by the FCS.

SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN
                                 (WIC)

    The Special Supplemental Nutrition Program for Women,
Infants, and Children (the WIC Program) provides food
assistance, nutrition risk screening, and related services
(e.g., nutrition education and breastfeeding support) to low-
income pregnant and postpartum women and their infants, as well
as to low-income children up to age 5. Participants in the
program must have family income at or below 185 percent of
poverty, and must be judged to be nutritionally at risk.
Nutrition risk is defined as detectable abnormal nutritional
conditions; documented nutritionally-related medical
conditions; health-impairing dietary deficiencies; or
conditions that predispose people to inadequate nutrition or
nutritionally related medical problems.
    Beneficiaries of the WIC Program receive supplemental foods
each month in the form of actual food items or, more commonly,
vouchers for purchases of specific items in retail stores. The
law requires that the WIC Program provide foods containing
protein, iron, calcium, vitamin A, and vitamin C, and allows
Federal limits on the foods that may be provided by the WIC
Program. Among the items that may be included in a food package
are milk, cheese, eggs, infant formula, cereals, and fruit or
vegetable juices. U.S. Department of Agriculture regulations
require tailored food packages that provide specified types and
amounts of food appropriate for six categories of participants:
(1) infants from birth to 3 months; (2) infants from 4 to 12
months; (3) women and children with special dietary needs; (4)
children from 1 to 5 years of age; (5) pregnant and nursing
mothers; and (6) postpartum nonnursing mothers. In addition to
food benefits, recipients also must receive nutrition education
and breast feeding support (where called for).
    The Federal cost of providing WIC benefits varies widely
depending on the recipient and the foods included in the food
package, as well as differences in retail prices (where
vouchers are used), food costs (where the WIC agency buys and
distributes food), and administrative costs (including the
significant costs of nutrition risk screening, breastfeeding
support, and nutrition education). Moreover, the program's food
costs are significantly influenced by the degree to which
States gain rebates from infant formula manufacturers under a
requirement to pursue ``cost containment'' strategies; these
rebates total over $1 billion a year nationwide. In fiscal year
1999, the national average Federal cost of a WIC food package
(after rebates) was $32.50 a month, and, for each participant,
the average monthly ``administrative'' cost (including
nutrition risk assessments and nutrition education) was about
$12.
    The WIC Program has categorical, income, and nutrition risk
requirements for eligibility. Only pregnant and postpartum
women, infants, and children under age 5 may participate. As
noted above, WIC applicants must show evidence of health or
nutrition risk, medically verified by a health professional, in
order to qualify. They must also have family income below 185
percent of the most recent Federal poverty guidelines (about
$25,700 a year for a three-person family in 1999). State WIC
agencies may (but seldom do) set lower income eligibility
cutoff points. Receipt of TANF, food stamps, or Medicaid
assistance also can satisfy the WIC Program's income test, and
States may consider pregnant women meeting the income test
``presumptively'' eligible until a nutritional risk evaluation
is made. Drawing on a 1996 study, over 60 percent of WIC
enrollees had family income below the Federal poverty
guidelines, 25 percent of WIC enrollees were cash welfare
recipients, 36 percent received food stamps, and 55 percent
were covered by Medicaid.
    WIC participants receive benefits for a specified period of
time, and in some cases must be recertified during this period
to show continuing need. Pregnant women may continue to receive
benefits throughout their pregnancy and for up to 6 months
after childbirth, without recertification. Nursing mothers are
certified at 6-month intervals, ending with their infant's
first birthday.
    The WIC Program, which is federally funded but administered
by State and local health agencies, does not serve all who are
eligible. It is not an ``entitlement'' program, and
participation is limited by the amount of Federal funding
appropriated, whatever State supplementary funding is provided,
and the extent of manufacturers' infant formula rebates. In
fiscal year 1999, Federal spending was $3.956 billion, and the
program served a monthly average of 7.3 million women, infants,
and children: 23 percent women, 26 percent infants, and 51
percent children. The administration's most recent estimate of
the total number of persons eligible and likely to apply for
WIC benefits is 7.5 million persons, although other sources
suggest the number exceeds 8 million people. Table 15-36
summarizes WIC participation and Federal costs.

  TABLE 15-36.--SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN (WIC) PARTICIPATION AND
                                 FEDERAL SPENDING, SELECTED FISCAL YEARS 1977-99
                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                     Participation (in thousands)           Federal spending
                                              ------------------------------------------------------------------
                 Fiscal year                                                                           Constant
                                                 Women    Infants  Children  Total \1\    Current        1999
                                                                                        dollars \2\    dollars
----------------------------------------------------------------------------------------------------------------
1977.........................................     165.0     213.0     471.0      848.0      $255.9        $710.0
1980.........................................     411.0     507.0     995.0    1,913.0       724.7       1,499.1
1981.........................................     446.0     585.0   1,088.0    2,119.0       874.4       1,628.1
1982.........................................     478.0     623.0   1,088.0    2,189.0       948.2       1,644.2
1983.........................................     542.0     730.0   1,265.0    2,537.0     1,123.1       1,881.5
1984.........................................     657.0     825.0   1,563.0    3,045.0     1,386.3       2,230.8
1985.........................................     665.0     874.0   1,600.0    3,138.0     1,488.9       2,310.7
1986.........................................     712.0     945.0   1,655.0    3,312.0     1,580.5       2,394.1
1987.........................................     751.0   1,019.0   1,660.0    3,429.0     1,663.6       2,449.9
1988.........................................     815.0   1,095.0   1,683.0    3,593.0     1,802.4       2,549.2
1989.........................................     951.8   1,259.6   1,907.0    4,118.4     1,929.4       2,604.9
1990.........................................   1,035.0   1,412.5   2,069.4    4,516.9     2,125.9       2,733.8
1991.........................................   1,120.1   1,558.8   2,213.8    4,892.6     2,301.1       2,817.0
1992.........................................   1,221.5   1,684.1   2,505.2    5,410.8     2,566.5       3,050.0
1993.........................................   1,364.9   1,741.9   2,813.4    5,920.3     2,819.5       3,252.0
1994.........................................   1,499.2   1,786.3   3,191.7    6,477.2     3,159.8       3,551.2
1995.........................................   1,576.8   1,817.3   3,500.1    6,894.2     3,451.0       3,772.6
1996.........................................   1,648.2   1,827.3   3,712.3    7,187.8     3,688.2       3,922.2
1997.........................................   1,710.5   1,863.0   3,835.4    7,408.9     3,845.7       3,983.5
1998.........................................   1,733.3   1,882.8   3,749.2    7,365.3     3,895.8       3,970.6
1999.........................................   1,742.5   1,897.6   3,671.4    7,311.5     3,955.6       3,955.6
----------------------------------------------------------------------------------------------------------------
\1\ Details may not sum to totals due to rounding.
\2\ Includes funding for studies, surveys, pilots, and farmers' market programs. Spending figures include
  adjustments for significant interyear carryovers and reflect spending by State WIC agencies derived both from
  current-year appropriations and prior-year amounts, adjusted for amounts carried forward into the next year.

Note.--Constant dollars were calculated using the fiscal year CPI-U.

Source: U.S. Department of Agriculture, Food and Consumer Service (FCS): (1) budget justification materials
  prepared by the FCS for appropriations requests for fiscal years 1980-2001; and (2) monthly ``Program
  Information Report'' summaries prepared by the FCS.

                   CHILD AND ADULT CARE FOOD PROGRAM

     The Child and Adult Care Food Program (CACFP) is a
permanently authorized entitlement under section 17 of the
Richard B. Russell National School Lunch Act. It provides
Federal subsidies for breakfasts, lunches, suppers, and snacks
served in participating nonresidential child care centers
(including homeless shelters, Head Start centers, and
afterschool care centers) and family or group day care homes,
as well as for snacks offered in outside-of-school
programs.\39\ Sponsors giving administrative support for
providers also are paid limited amounts for their costs.
Subsidized meals and snacks must meet Federal nutrition
standards, and providers must fulfill any State or local
licensing/approval requirements or minimum alternative Federal
requirements (or otherwise demonstrate that they comply with
government-established standards for other child-care
programs). Federal assistance is made up overwhelmingly of cash
subsidies based on the number of meals/snacks served or paid
for administration; about 3 percent is in the form of federally
donated food commodities. CACFP subsidies to participating
centers, homes, and outside-of-school programs are available
for meals and snacks served to children age 12 or under
(through age 18 in outside-of-school settings), migrant
children age 15 or under, and handicapped children of any age,
but preschool children form the majority.
---------------------------------------------------------------------------
    \39\ CACFP subsidies also are available for meal services to
chronically impaired adults and the elderly in adult day care centers
under the same general terms and conditions as child care centers.
However, few adult care centers participate (about 1,900 sites serving
some 63,000 persons daily in fiscal year 1999), and Federal spending
for them is a minor fraction of the total cost of the CACFP ($36
million in fiscal year 1999, or about 2 percent of overall CACFP
spending). In limited cases, residential child care facilities may
receive CACFP subsidies for snacks served in afterschool programs.
---------------------------------------------------------------------------
     At the Federal level, the program is administered by the
Agriculture Department's Food and Nutrition Service (FNS). At
the State level, a variety of agencies have been designated as
responsible by the individual States, and, in one State
(Virginia), the FNS is the designated State agency. Federal
CACFP payments flow to individual providers either directly
from the State agency (this is the case with many child care
centers able to handle their own administrative
responsibilities) or through ``sponsors'' who oversee and
provide support for a number of local providers (this is the
case with some child care centers and all day care homes). The
CACFP dates back to 1968, when Federal assistance for programs
serving children outside of school (``special food service''
programs) was first authorized. In 1975, the summer food
service and child care components of this assistance were first
formally separated as individual programs.
     In fiscal year 1999, the cost of CACFP cash and commodity
subsidies for meals/snacks, sponsors' administrative costs, and
a separate payment to State agencies for audit and oversight
was $1.599 billion, approximately the same as it was in fiscal
years 1996-98. Total average daily attendance in participating
centers, homes, and outside-of-school programs was 2.6 million
children, up from 2.4 million in fiscal year 1996.

                 Centers and Outside-of-School Programs

     Child care centers in the CACFP serve an average of 40-60
children and are of 5 types: (1) public or private nonprofit
centers (including afterschool care centers), (2) Head Start
centers, (3) for-profit proprietary centers (see restrictions
noted below), (4) outside-of-school programs (often operated by
schools), and (5) shelters for homeless families. In fiscal
year 1999, some 37,000 centers/sites (15,000 sponsors) with an
average daily attendance of 1.66 million children participated
in the CACFP. Over 60 percent of children in the CACFP are
reached through centers or outside-of-school programs. Of
these, about half are in public or private nonprofit centers/
programs, and some 30 percent are in Head Start centers; just
under 20 percent are in for-profit centers.\40\ On the other
hand, CACFP funding for centers/programs represents half of
total CACFP spending, primarily because their subsidies are,
for the most part, differentiated by individual children's
family income and larger administrative cost payments generally
are provided for sponsors of day care homes (see below).
Proprietary centers are eligible for CACFP subsidies only if
they receive title XX funding for at least 25 percent of their
enrollment or licensed capacity, regardless of the income
status of the children they serve.\41\
---------------------------------------------------------------------------
    \40\ Children in participating homeless shelters represent a very
minor fraction of those served under the CACFP; only about 100 shelter
sites participate.
    \41\ FNS guidelines, however, allow proprietary centers to
participate where Child Care and Development Block Grant and title XX
funds are ``pooled'' in such a way as to meet the 25-percent
requirement, thus requiring relatively minimal contributions under
title XX itself if this arrangement is used. In two States (Iowa and
Kentucky), a demonstration project allows proprietary centers to
participate in the CACFP if children representing at least 25 percent
of their enrollment or licensed capacity have family income below 185
percent of the Federal poverty income guidelines (i.e., would be
eligible for free or reduced-price meals and snacks).
---------------------------------------------------------------------------
     Day care centers may receive daily subsidies for up to two
meals and one snack or one meal and two snacks for each child.
All meals and snacks served in centers are federally subsidized
to at least some degree; different subsidies are provided for
breakfasts, lunches/suppers, and snacks, and subsidy rates are
set in law and indexed for inflation annually. However, cash
subsidies vary according to the family income of each child,
and applications for free or reduced-price meals and snacks
normally must be taken. The largest subsidies are paid for
meals and snacks served to children with family income below
130 percent of the Federal poverty income guidelines: for July
1999-June 2000, these subsidies are 54 cents for each snack,
$1.09 for each breakfast, and $1.98 for each lunch/supper.
Smaller subsidies are available for meals and snacks served at
a reduced price (no more than 15 cents for snacks, 30 cents for
breakfasts, and 40 cents for lunches/suppers) to children with
family income between 130 and 185 percent of the poverty
guidelines: for July 1999-June 2000, these are 27 cents for
snacks, 79 cents for breakfasts, and $1.58 for lunches/suppers.
The smallest subsidies are paid for meals and snacks served to
children who do not qualify or apply for free or reduced-price
meals and snacks: for July 1999-June 2000, these are 5 cents
for snacks, 21 cents for breakfasts, and 19 cents for lunches
and suppers. ``Independent'' centers (those without sponsors
handling administrative responsibilities) must pay for
administrative costs associated with the CACFP out of non-
Federal funds or a portion of their meal subsidy payments. In
other cases, center sponsors may retain a proportion of the
meal subsidy payments they receive on behalf of their centers
to cover their costs. Finally, Federal commodity assistance is
available to centers, generally valued at about 15 cents a
meal.
     In addition to the regular CACFP for centers described
above, the 1998 child nutrition reauthorization law allows
public and private nonprofit organizations (including schools
and child care centers) operating outside-of-school programs to
get Federal CACFP subsidies for snacks served free in their
programs to children (through age 18) in low-income areas--at
the free snack rate noted above.

                    Family and Group Day Care Homes

     CACFP-subsidized day care homes serve an average of 4-6
children; just under 40 percent of children in the CACFP are in
day care homes, and about half the money spent under the CACFP
supports meals and snacks served in homes. In fiscal year 1999,
175,000 home sites (with almost 1,200 sponsors) received
subsidies for an average daily attendance of some 970,000
children. As with centers, payments are provided for no more
than two meals and one snack (or one meal and two snacks) a day
for each child. Unlike centers, day care homes must participate
under the auspices of a public or (most often) private
nonprofit sponsor that typically has 100 or more homes under
its supervision; CACFP day care home sponsors receive monthly
administrative payments (separate from meal subsidies) based on
the number of homes for which they are responsible. Also unlike
centers, day care homes receive cash subsidies (but not
commodities) that generally do not differ by individual
children's family income. Instead, there are two distinct
subsidy rates. ``Tier I'' homes (those located in low-income
areas or operated by low-income providers) receive higher
subsidies for each meal/snack they serve: for July 1999-June
2000, all lunches and suppers are subsidized at $1.69 each, all
breakfasts at 92 cents, and all snacks at 50 cents. ``Tier II''
homes (those not located in low-income areas or without low-
income providers) receive smaller subsidies: for July 1999-June
2000, these are $1.02 for lunches/suppers, 34 cents for
breakfasts, and 13 cents for snacks. However, tier II providers
may seek the higher tier I subsidy rates for individual low-
income children for whom financial information is collected and
verified.

                        WORKFORCE INVESTMENT ACT

    Title II of the Job Training Partnership Act of 1982 (JTPA)
provided block grants to States to fund training and related
services for economically disadvantaged youths and adults.
Title II consisted of three programs: the II-A Adult Training
Program, the II-B Summer Youth Employment and Training Program,
and the II-C (year-round) Youth Training Program. Prior to the
1992 amendments to JTPA, which became effective July 1, 1993,
title II-A provided services to both adults and youth.
     In 1998, Congress passed the Workforce Investment Act
(WIA, Public Law 105-220), which repealed and replaced JTPA on
July 1, 2000. Program information in this edition of the Green
Book is taken from data available under JTPA. The 2002 edition
will contain program data for WIA. A brief description of the
major differences between WIA and JTPA concludes this section
of the Green Book. Table 15-37 cross references the
authorization for the JTPA Programs discussed in this section
with their authorization under WIA.

  TABLE 15-37.--CROSS REFERENCE OF PROGRAMS AUTHORIZED UNDER JTPA WITH
                      THEIR AUTHORIZATION UNDER WIA
------------------------------------------------------------------------
                                              Workforce Investment Act
    Job Training Partnership Act (JTPA)                 (WIA)
------------------------------------------------------------------------
Adult Training Program--Title II-A........  Adult Activities--Title I,
                                             Subtitle B, Chapter 5
Youth Training Program--Title II-C........  Youth Activities--Title I,
                                             Subtitle B, Chapter 4
Summer Youth Employment and Training        no separate summer youth
 Programs--Title II-B.                       program; summer youth
                                             activities are included in
                                             Youth Activities above
Job Corps--Title IV-B.....................  Job Corps--Title I, Subtitle
                                             C
------------------------------------------------------------------------

    As shown in table 15-38a, of title II-A participants who
terminated during program year 1997, 45 percent were white, 34
percent were black, and 17 percent were Hispanic. Of
participants who terminated benefits, 71 percent entered
employment. The average hourly wage for adult terminees who
entered employment was $7.94.
    Among the 36 percent of title II-A terminees who were cash
welfare recipients at the time of enrollment in program year
1997, 86 percent received Temporary Assistance for Needy
Families (TANF) payments. Women comprised 86 percent of
terminees receiving cash welfare payments, as compared with 58
percent of terminees who were not recipients. Among title II-A
participants receiving cash welfare payments, 25 percent did
not complete high school, compared with 19 percent of those
participants who were not recipients. Sixty-eight percent of
cash welfare recipients entered employment in program year
1997, compared with 73 percent for those II-A terminees who did
not receive cash welfare payments. The average hourly starting
wage for cash welfare recipients entering employment was $7.88,
compared with $8.46 for nonrecipients.
    As shown in table 15-38b, of the youth participants in
year-round services who terminated during program year 1997, 38
percent were white, 33 percent were black, and 24 percent were
Hispanic. Of the title II-C participants who terminated, 48
percent entered employment, and the average hourly wage for
terminees who entered employment was $6.52.
    Among the 26 percent of title II-C (youth) participants
receiving cash welfare payments in program year 1997, 48
percent entered employment, compared with 48 percent of II-C
participants who did not receive cash welfare payments. The
average hourly starting wage for cash welfare recipients was
$6.55, compared with $6.51 for nonrecipients. Among the 53
percent of II-C terminees who had

        TABLE 15-38a.--CHARACTERISTICS OF JTPA TITLE II-A ADULT TERMINEES, PROGRAM YEARS 1992-97 \1\ \2\
                                                  [In percent]
----------------------------------------------------------------------------------------------------------------
              Selected characteristics                  1992      1993      1994      1995      1996      1997
----------------------------------------------------------------------------------------------------------------
Sex:
  Male..............................................        41        36        33        33        31        32
  Female............................................        59        64        67        67        69        68
Ethnic status:
  White (excluding Hispanic)........................        52        53        52        48        46        45
  Black (excluding Hispanic)........................        30        31        31        32        33        34
  Hispanic..........................................        15        13        14        17        17        17
  Other D4..........................................         3         3         4         5         5
Age at enrollment:
  22-29.............................................        42        42        42        42        42        41
  30-54.............................................        56        56        56        56        56        57
  55 and older......................................         3         2         2         2         2         2
Economically disadvantaged..........................        NA        97        98        98        98        98
Receiving TANF/AFDC.................................        28        32        35        35        33        31
Receiving cash welfare (including TANF/AFDC)........        33        40        42        41        39        36
Unemployment compensation claimant..................        13        14        10         8         9         8
Education status:
  Less than high school graduate....................        25        24        23        22        22        21
  High school graduate..............................        51        55        56        56        56        57
  Post high school..................................        25        21        21        21        22        21
Average weeks participated..........................        26        31        37        39        39        37
Entered employment..................................        62        62        63        63        66        71
Average hourly wage at placement....................     $6.40     $6.86     $7.09     $7.25     $7.58     $7.94
                                                     -----------------------------------------------------------
    Total terminees.................................   257,561   180,178   175,647   162,120   151,155   147,717
----------------------------------------------------------------------------------------------------------------
\1\ Prior to 1993, title II-A served both adults and youth. Data in this table is for adults only.
\2\ Numbers (except total terminees, average weeks participated, and average hourly wage at placement) represent
  percentages.

Source: U.S. Department of Labor.

    TABLE 15-38b.--CHARACTERISTICS OF JTPA YEAR-ROUND YOUTH PROGRAM TERMINEES, PROGRAM YEARS 1992-97 \1\ \2\
                                                  [In percent]
----------------------------------------------------------------------------------------------------------------
               Selected characteristics                   1992      1993      1994      1995      1996     1997
----------------------------------------------------------------------------------------------------------------
Sex:
  Male................................................        47        45        44        42       41       41
  Female..............................................        53        55        56        58       59       59
Ethnic status:
  White (excluding Hispanic)..........................        40        41        41        38       38       38
  Black (excluding Hispanic)..........................        36        35        35        34       33       33
  Hispanic............................................        21        20        20        24       25       24
  Other...............................................         4         4         5         4        4        5
Age at enrollment:
  14-15...............................................        18        16        14        12        9        9
  16-17...............................................        33        34        36        35       33       34
  18-21...............................................        48        49        50        53       58       57
Economically disadvantaged............................        NA        95        95        95       96       96
Receiving TANF/AFDC...................................        25        27        27        26       25       22
Receiving cash welfare (including TANF/AFDC)..........        27        35        31        30       29       26
Unemployment compensation claimant....................         1         1         1         1        1        1
Education status:
  Less than high school graduate......................        78        79        77        75       71       71
  High school graduate................................        18        19        20        22       26       26
  Post high school....................................         4         3         3         3        3        3
Average weeks participated............................        29        35        36        40       39       37
Entered employment....................................        34        34        37        38       45       48
Average hourly wage at placement......................     $5.19     $5.45     $5.61     $5.81    $6.17    $6.52
                                                       ---------------------------------------------------------
    Total terminees...................................   255,268   167,444   158,083   113,563   76,700   74,816
----------------------------------------------------------------------------------------------------------------
\1\ Prior to 1993, youth were served under title II-A. Since that time, year-round services for youth are
  provided under title II-C.
\2\ Numbers (except total terminees, average weeks participated, and average hourly wage at placement) represent
  percentages.

Source: U.S. Department of Labor.

either dropped out of school or were behind in grade level, the
average entered employment rate in program year 1997 was 40
percent as compared with 57 percent for those not in this
legislatively defined hard-to-serve category. The average
hourly starting wage for youths who had dropped out of school
or were behind in their grade level was $6.13 compared with
$6.83 for those not in this category.
    In fiscal year 1999, an estimated $1.1 billion is expected
to be spent for JTPA II-A and II-C grants, providing training
and other services to over 513,000 participants. Data on
participation and budget authority for recent years are
provided in table 15-39 below.
    For the Summer Youth Employment and Training Program (title
II-B), $871 million was appropriated for the summer of 1998,
with 495,100 participants served. For the summer of 1999, $871
million was appropriated to serve an estimated 495,000
individuals. Table 15-40 presents a funding and participation
history of the summer program.
    Job Corps, authorized by title IV-B of JTPA, serves
economically disadvantaged youth, ages 16-24, who demonstrate
both the need for, and the ability to benefit from, an
intensive and wide range of services provided in a residential
setting. The program is administered directly by the Federal
Government through contractors and currently operates at 114
centers around the country. Services include basic education,
vocational skill training, work experience, counseling, health
care, and other supportive services.
    In program year 1997 (July 1, 1997-June 30, 1998), nearly
66,000 new students enrolled in Job Corps Centers, 60 percent
of whom were male. In that same year, 50 percent of new
students were African-American, 28 percent were white, 16
percent were Hispanic, 4 percent were Native Americans, and 2
percent were Asian or Pacific Islanders. Seventy-eight percent
of new students had dropped out of high school and 63 percent
had never worked full time. Thirty-three percent of new
students in program year 1997 came from families on public
assistance.
    The average length of stay in Job Corps in program year
1997 was 7.3 months. The Labor Department estimates that 70
percent of terminees entered employment after leaving the
program, while another 10 percent either continued their
education or entered another training program, for a total
positive termination rate in 1997 of 80 percent.
    Table 15-41 provides a funding and participation history of
the Job Corps since 1982. The program was first authorized in
the mid-60s by the Economic Opportunity Act and has been
authorized under JTPA since 1982.

         Description of Major Differences Between WIA and JTPA

     One of the major differences between WIA and JTPA is that
WIA creates a coordinated service delivery system called the
one-stop system as the basic delivery system for providing
services to adults. (One criticism of JTPA was that programs
authorized by it were not coordinated with each other or with
other training programs.) Under WIA, each local area in a State
must have a one-stop delivery system to provide ``core
services,'' such as job search assistance, ``intensive
services,'' such as comprehensive assessments, and job
training. The one-stop system is created by the local workforce
investment board with the agreement of the chief elected
official, e.g., the mayor. The workforce investment board is
certified by the Governor and is responsible for setting local
workforce investment pol-

    TABLE 15-39.--JOB TRAINING PROGRAMS \1\ FOR THE DISADVANTAGED: NEW ENROLLEES, FEDERAL APPROPRIATIONS AND
                                          OUTLAYS, FISCAL YEARS 1975-98
----------------------------------------------------------------------------------------------------------------
                                                                                           Budget
                                          New enrollees/                                 authority    Outlays in
              Fiscal year                      total       Appropriations    Outlays    in constant    constant
                                         participants \2\    (millions)     (millions)      1990         1990
                                                                                          dollars      dollars
----------------------------------------------------------------------------------------------------------------
1975...................................       1,126,000           $1,580        $1,304       $3,755       $3,099
1976...................................       1,250,000            1,580         1,697        3,515        3,775
1977...................................       1,119,000            2,880         1,756        5,964        3,636
1978...................................         965,000            1,880         2,378        3,658        4,627
1979...................................       1,253,000            2,703         2,547        4,829        4,550
1980...................................       1,208,000            3,205         3,236        5,154        5,203
1981...................................       1,011,000            3,077         3,395        4,493        4,958
1982...................................              NA            1,594         2,277        2,175        3,107
1983...................................              NA            2,181         2,291        2,846        2,990
1984...................................         716,200            1,886         1,333        2,361        1,669
1985...................................         803,900            1,886         1,710        2,279        2,066
1986...................................       1,003,900            1,783         1,911        2,101        2,252
1987...................................         960,700            1,840         1,880        2,108        2,154
1988...................................         873,600            1,810         1,902        1,991        2,092
1989...................................         823,200            1,788         1,868        1,877        1,961
1990...................................         630,000            1,745         1,803        1,745        1,803
1991...................................         603,900            1,779         1,746        1,694        1,676
1992...................................         602,300            1,774         1,767        1,637        1,632
1993...................................         641,700            1,692         1,747        1,530        1,580
    Adult..............................         371,700            1,015         1,048          918          948
    Youth..............................         270,000              677           699          612          632
1994...................................         635,300            1,597         1,693        1,415        1,500
    Adult..............................         370,400              988         1,016          875          900
    Youth..............................         264,900              609           677          540          600
1995...................................         536,200            1,124         1,534          971        1,325
    Adult..............................         353,500              997           934          861          807
    Youth..............................     \3\ 182,700              127           600          110          518
1996...................................         480,600              977         1,023          825          865
    Adult..............................         338,600              850           866          718          732
    Youth..............................         142,000              127           157          107          133
1997...................................         483,100            1,022           949          845          784
    Adult..............................         367,300              895           799          740          660
    Youth..............................         115,800              127           150          105          124
1998...................................         452,400            1,085         1,162          886          949
    Adult..............................         333,600              955           900          780          735
    Youth..............................         118,800              130           262          106          214
----------------------------------------------------------------------------------------------------------------
\1\ Figures shown in years 1975-83 are for training activities under the Comprehensive Employment and Training
  Act (CETA); public service employment under CETA is not included. Figures shown in years 1984-92 are for
  activities under title II-A of the Job Training Partnership Act (JTPA). For 1993-96 figures are for titles II-
  A (adult) and II-C (youth) of the JTPA, as amended in 1992.
\2\ Figures for 1975-94 are new enrollees. Total participants are shown from 1995 forward.
\3\ Reduced budget authority in fiscal year 1995 was insufficient to serve those already enrolled and to enroll
  a comparable number of new participants. In fiscal year 1996, transfers from II-B (summer youth) enabled more
  participants to be enrolled. This transfer authority continues to be used by States to serve more year-round
  youth.

NA--Not available.

Source: U.S. Department of Labor.

 TABLE 15-40.--SUMMER YOUTH EMPLOYMENT AND TRAINING PROGRAM: FEDERAL APPROPRIATIONS, OUTLAYS, AND PARTICIPANTS,
                                            FISCAL YEARS 1984-98 \1\
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                               Outlays
                                                                     --------------------------
                                                  Appropriations \2\                 Constant   Participants \3\
                                                                        Current        1990
                                                                        dollars      dollars
----------------------------------------------------------------------------------------------------------------
1984............................................             $824            $584         $731         672,000
1985............................................              724             776          938         767,600
1986............................................              636             746          879         785,000
1987............................................              750             723          828         634,400
1988............................................              718             707          778         722,900
1989............................................              709             697          732         607,900
1990............................................              700             699          699         585,100
1991............................................              683             698          663         555,200
1992............................................          \3\ 995             958          912         782,100
1993............................................        \4\ 1,025             915          827         647,400
1994............................................          \5\ 888             834          739         574,400
1995............................................          \6\ 185             883          763         495,300
1996............................................          \7\ 625           1,030          870         410,700
1997............................................          \8\ 871             913          754         492,900
1998............................................          \9\ 871             787          643         495,100
----------------------------------------------------------------------------------------------------------------
\1\ Appropriations and outlays are for fiscal years; participants are for calendar years.
\2\ Because JTPA is an advance-funded program, appropriations for the Summer Youth Employment and Training
  Program in a particular fiscal year are generally spent the following summer. For example, fiscal year 1991
  appropriations were spent during the summer of calendar year 1992. The pattern has varied somewhat in recent
  years. These variations are noted.
\3\ Fiscal year 1992 funding includes a $500 million supplemental appropriation for summer 1992 and $495 million
  for summer 1993.
\4\ Fiscal year 1993 funding includes $354 million for summer 1993 and $671 million for summer 1994.
\5\ Fiscal year 1994 funding includes $206 million for summer 1994 and $682 million for summer 1995.
\6\ Public Law 104-19 rescinded $682 million in fiscal year 1995 funds which were to be available for the summer
  of 1996. The remaining $185 million was for the summer of 1995.
\7\ Fiscal year 1996 funds are for the summer of 1996.
\8\ Fiscal year 1997 funds are for the summer of 1997.
\9\ Fiscal year 1998 funds are for the summer of 1998.

Source: Employment and Training Administration, U.S. Department of Labor.

icy. The board is similar to the private industry council under
JTPA. Each local one-stop system must include at least one
physical center, which may be supplemented by affiliated sites.
The law mandates 19 ``partners,'' which must provide
``applicable'' services through the one-stop system. Mandated
partners include the Employment Service, welfare-to-work, Trade
Adjustment Assistance, and NAFTA Transitional Adjustment
Assistance. Partners must enter into written agreements with
the local boards regarding services to be provided, the funding
of the services and operating costs of the system, and methods
of referring individuals among partners. A one-stop operator,
which could be a single entity or a consortium of entities
(e.g., a postsecondary education institution, an employment
service agency, a private nonprofit organization, and a
government agency) must be designated by the board through a
competitive process or through an agreement between the board
and a consortium of at least three partners.

      TABLE 15-41.--JOB CORPS: FEDERAL APPROPRIATIONS, OUTLAYS, AND NEW ENROLLEES, FISCAL YEARS 1982-98 \1\
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                    Outlays
                                                                          --------------------------
                                                           Appropriations                 Constant       New
                                                                             Current        1990      enrollees
                                                                             dollars      dollars
----------------------------------------------------------------------------------------------------------------
1982.....................................................           $590          $595         $812       53,581
1983.....................................................            618           563          735       60,465
1984.....................................................            599           581          727       57,386
1985.....................................................            617           593          716       63,020
1986.....................................................            612           594          701       64,964
1987.....................................................            656           631          723       65,150
1988.....................................................            716           688          757       68,068
1989.....................................................            742           689          724       62,550
1990.....................................................            803           740          740       61,453
1991.....................................................            867           769          769       62,205
1992.....................................................            919           834          789       61,762
1993.....................................................            966           936          846       62,749
1994.....................................................          1,040           981          869       58,460
1995.....................................................          1,089         1,011          873       68,540
1996.....................................................          1,094           994          840       67,774
1997.....................................................          1,154         1,165          963       65,705
1998.....................................................          1,246         1,197          977       67,425
----------------------------------------------------------------------------------------------------------------
\1\ Appropriations and outlays are for fiscal years; enrollees are for program years.

Source: Employment and Training Administration, U.S. Department of Labor.

     A second difference between WIA and JTPA is that there is
no income eligibility requirement for adults in order to
receive services. Any adult (defined under WIA as age 18 and
older rather than as age 22 and older under JTPA) is eligible
to receive job search assistance and other core services. To be
eligible to receive comprehensive assessments and other
intensive services, an individual has to be unemployed, and
unable to obtain employment through core services or employed
but in need of intensive services to obtain or retain
employment that allows for self-sufficiency. To be eligible to
receive job training, an individual has to have met the
eligibility for intensive service and been unable to obtain
employment through those services. A local area is required to
give priority for receiving intensive services and training to
recipients of public assistance and other low-income
individuals if WIA funds allocated to the local area under the
adult funding stream are limited.
     A third difference is that under WIA, training for adults
is to be provided primarily through ``individual training
accounts.'' The purpose of individual training accounts is to
provide individuals the opportunity to choose training courses
and providers. Typically, under JTPA, services were procured
for groups of individuals. Under WIA, the one-stop operator is
responsible for arranging payment to the training provider, who
must be identified by the Governor as an eligible provider in
accordance with statutory provisions. Local boards retain a
list of eligible providers along with performance and cost
information. Individuals who have individual training accounts
may choose providers from this list in consultation with a case
manager.
     A fourth difference is that under WIA, the Summer Youth
Employment and Training Program is eliminated as a separately
funded program. Local areas are required, however, to provide
summer employment opportunities under youth activities, which
continue to be for low-income youth.
     Regarding Job Corps, WIA includes new provisions to help
assure that youth are placed in centers closest to their homes;
to strengthen linkages between centers and local communities;
and to establish performance measures and expected performance
levels.

                               HEAD START

    Head Start began operating in 1965 under the general
authority of the Economic Opportunity Act of 1964. Head Start
provides a wide range of services to primarily low-income
children, ages 0 to 5, and their families. Its goals are to
improve the social competence, learning skills, and health and
nutrition status of low-income children so that they can begin
school on an equal basis with their more advantaged peers. The
services provided include cognitive and language development;
medical, dental, and mental health services (including
screening and immunizations); and nutritional and social
services. Parental involvement is extensive, through both
volunteer participation and employment of parents as Head Start
staff. Formal training and certification as child care workers
is provided to some parents through the Child Development
Associate Program.
    Head Start's eligibility guidelines require that at least
90 percent of the children served come from families with
incomes at or below the poverty line. At least 10 percent of
the enrollment slots in each local program must be available
for children with disabilities. In fiscal year 1999, 835,635
children were served in Head Start Programs, at a total Federal
cost of $4.658 billion. In June 1999, 30 percent of Head Start
children came from families receiving TANF benefits. Table 15-
42 provides historical data on participation in and funding of
the Head Start Program, while table 15-43 provides
characteristics of children enrolled in the program.

           LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM (LIHEAP)

                               Background

    The Federal Government has been involved in providing
energy assistance for the poor since 1973. But in 1980, in
response to the 1973-74 Organization of Petroleum Exporting
Countries (OPEC) oil embargo and the accompanying shortages and
increased petroleum prices, Congress passed the Crude Oil
Windfall Profit Tax Act (Public Law 96-223), title III of which
was officially named the Home Energy Assistance Act of 1980.
The 1980 program generally is considered the predecessor to the
present Low-Income Home Energy Assistance Program.

  TABLE 15-42.--HEAD START ENROLLMENT AND FEDERAL FUNDING, FISCAL YEARS
                                 1965-99
------------------------------------------------------------------------
                                                          Appropriations
               Fiscal year                  Enrollment     (in millions
                                                            of dollars)
------------------------------------------------------------------------
1965 (summer only)......................         561,000           $96.4
1966....................................         733,000           198.9
1967....................................         681,400           349.2
1968....................................         693,900           316.2
1969....................................         663,600           333.9
1970....................................         477,400           325.7
1971....................................         397,500           360.0
1972....................................         379,000           376.3
1973....................................         379,000           400.7
1974....................................         352,800           403.9
1975....................................         349,000           403.9
1976....................................         349,000           441.0
1977....................................         333,000           475.0
1978....................................         391,400           625.0
1979....................................         387,500           680.0
1980....................................         376,300           735.0
1981....................................         387,300           818.7
1982....................................         395,800           911.7
1983....................................         414,950           912.0
1984....................................         442,140           995.8
1985....................................         452,080         1,075.0
1986....................................         451,732         1,040.0
1987....................................         446,523         1,130.5
1988....................................         448,464         1,206.3
1989....................................         450,970         1,235.0
1990....................................         548,470     \1\ 1,552.0
1991....................................         583,471         1,951.8
1992....................................         621,078         2,201.8
1993....................................         713,903         2,776.3
1994....................................         740,493         3,325.7
1995....................................         750,696         3,534.1
1996....................................         752,077         3,569.3
1997....................................         793,809         3,980.5
1998....................................         822,316         4,347.4
1999....................................         835,365         4,658.2
------------------------------------------------------------------------
\1\ After sequestration.

Source: Head Start Bureau, U.S. Department of Health and Human Services.

         TABLE 15-43.--CHARACTERISTICS OF CHILDREN ENROLLED IN HEAD START, SELECTED FISCAL YEARS 1980-99
                                                  [In percent]
----------------------------------------------------------------------------------------------------------------
                                              Age of children enrolled              Enrollment by race
                                            --------------------------------------------------------------------
           Fiscal year             Disabled  5 and                Under   Native
                                             older    4      3      3    American  Hispanic  Black  White  Asian
----------------------------------------------------------------------------------------------------------------
1980.............................       12      21     55     24      0        4        19      42     34      1
1982.............................       12      17     55     26      2        4        20      42     33      1
1984.............................       12      16     56     26      2        4        20      42     33      1
1986.............................       12      15     58     25      2        4        21      40     32      3
1988.............................       13      11     63     23      3        4        22      39     32      3
1990.............................       14       8     64     25      3        4        22      38     33      3
1991.............................       13       7     63     27      3        4        22      38     33      3
1992.............................       13       7     63     27      3        4        23      37     33      3
1993.............................       13       6     64     27      3        4        24      36     33      3
1994.............................       13       7     62     28      3        4        24      36     33      3
1995.............................       13       7     62     27      4        4        25      35     33      3
1996.............................       13       6     62     29      4        4        25      36     32      3
1997.............................       13       5     60     30      4        4        26      36     31      3
1998.............................       13       6     59     31      4        3        26      36     32      3
1999.............................       13       5     58     33      4        3        27      35     31      3
----------------------------------------------------------------------------------------------------------------
Source: Head Start Bureau, U.S. Department of Health and Human Services.

    In 1981, title XXVI of the Omnibus Budget Reconciliation
Act (OBRA, Public Law 97-35), the Low-Income Home Energy
Assistance Act of 1981, authorized the Secretary of Health and
Human Services to make LIHEAP allotments to States for fiscal
years 1982-84. The act permitted States to provide three types
of energy assistance. States can: (1) help eligible households
pay their home heating or cooling bills; (2) use up to 15
percent of their LIHEAP allotment for low-cost weatherization;
and (3) provide assistance to households during energy-related
emergencies.
    LIHEAP is a block grant program under which the Federal
Government gives States, the District of Columbia, U.S.
territories and Commonwealths (American Samoa, Commonwealth of
Puerto Rico, Commonwealth of the Northern Mariana Islands,
Guam, Palau, and the U.S. Virgin Islands), and Indian tribal
organizations annual grants to operate multicomponent home
energy assistance programs for needy households. Public Law
103-252, the Human Services Reauthorization Act of 1994,
reauthorized LIHEAP through fiscal year 1999. In 1998, Public
Law 105-285 reauthorized LIHEAP at ``such sums as may be
necessary'' for fiscal years 2000 and 2001, and $2 billion
annually for fiscal years 2002-4. In fiscal year 1981, more
than $1.8 billion was appropriated for the program. Over the
years, LIHEAP funding has reached a high of $2.1 billion in
1985 and a low of about $1.06 billion in 1996 (see bottom of
table 15-44). As noted in the table's footnotes, the funding
allotments include LIHEAP contingency funds released in a given
fiscal year. In fiscal year 2000, $1.1 billion was appropriated
for LIHEAP, with an additional $300 million for emergencies.
Due

                         TABLE 15-44.--LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM STATE ALLOTMENTS, SELECTED FISCAL YEARS 1985-99
                                                                [In thousands of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
              State                  1985        1991        1992        1993        1994      1995 \1\    1996 \2\    1997 \3\    1998 \4\    1999 \5\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama.........................     $18,234     $15,856     $12,664     $11,344     $12,127     $11,063      $9,077      $9,937     $16,612      $9,225
Alaska..........................       7,247       9,594       8,034       7,241       7,741       7,062       5,794       6,343      15,344       5,888
Arizona.........................       8,150       6,200       6,125       5,486       5,865       5,350       4,390       4,806       4,049       4,461
Arkansas........................      13,973      11,069       9,663       8,656       9,253       8,442       6,926       7,582      12,334       7,039
California......................      97,894      68,764      67,940      60,855      65,056      59,352      48,693      53,308      44,917      49,489
Colorado........................      33,299      23,419      23,688      21,218      22,683      20,694      16,978      18,587      15,661      17,255
Connecticut.....................      43,440      35,541      30,902      27,680      34,986      28,011      22,148      24,247      20,430      25,633
Delaware........................       5,931       5,471       4,102       3,674       4,214       3,583       2,940       3,218       2,712       3,682
District of Columbia............       6,940       5,269       4,799       4,299       4,595       4,193       3,440       3,766       3,173       4,581
Florida.........................      28,970      21,731      20,039      17,950      19,188      17,506      14,362      15,722      39,195      14,596
Georgia.........................      22,910      17,439      15,844      14,191      15,171      13,841      11,355      12,431      23,142      11,541
Hawaii..........................       2,243       1,531       1,596       1,429       1,528       1,394       1,144       1,252       1,055       1,162
Idaho...........................      12,877       9,493       9,240       8,277       8,848       8,072       6,622       7,250       6,109       6,731
Illinois........................     123,679      85,711      85,533      76,614      93,921      90,445      61,302      76,588      56,548      78,262
Indiana.........................      55,371      41,069      38,727      34,689      39,408      39,568      27,756      30,386      25,603      35,353
Iowa............................      38,581      28,719      27,466      24,584      34,335      28,584      19,671      24,576      18,145      23,491
Kansas..........................      18,211      12,901      12,605      11,290      12,069      11,011       9,034       9,890       8,333      12,488
Kentucky........................      29,141      22,537      20,153      18,052      24,639      22,996      14,444      15,813      13,324      22,430
Louisiana.......................      18,867      13,203      12,947      11,597      12,398      11,311       9,279      10,159      18,193       9,431
Maine...........................      27,914      23,550      20,020      17,932      27,275      17,489      14,349      15,708      13,236      15,365
Maryland........................      34,214      29,361      23,662      21,194      29,288      20,671      16,959      18,566      15,643      20,812
Massachusetts...................      86,878      69,364      61,815      55,369      73,071      56,312      44,304      48,502      40,868      52,790
Michigan........................     113,951      86,099      81,206      72,738     126,605      81,746      58,201      63,717      53,687      63,103
Minnesota.......................      82,239      62,063      58,504      52,404      93,421      56,152      41,931      52,386      38,679      45,696
Mississippi.....................      15,683      12,391      10,858       9,725      10,397       9,485       7,782       8,519      11,547       7,909
Missouri........................      48,026      35,779      34,165      30,603      32,715      37,030      24,487      30,592      22,587      32,524
Montana.........................      12,298      10,938      10,838       9,708      10,378       9,468       7,768       9,705       7,165       7,895
Nebraska........................      19,032      13,851      13,573      12,158      12,997      14,572       9,728      12,154       8,974      12,022
Nevada..........................       4,151       3,214       2,877       2,577       2,754       2,513       2,062       2,257       1,902       2,095
New Hampshire...................      16,447      13,648      11,700      10,480      14,352      10,535       8,386       9,180       7,735       9,297
New Jersey......................      82,849      66,929      57,386      51,402      61,894      50,132      41,129      45,027      37,939      50,855
New Mexico......................       9,973       8,123       7,668       6,868       7,342       6,698       5,495       6,016       5,069       5,585
New York........................     263,291     214,983     187,373     167,835     240,880     175,232     134,293     147,019     123,877     164,971
North Carolina..................      40,378      35,612      27,924      25,013      26,739      24,394      20,014      21,910      28,253      47,176
North Dakota....................      14,612      12,503      11,773      10,546      19,376      10,868       8,438      13,302       7,784       8,576
Ohio............................     109,413      78,365      75,666      67,776      96,381      76,346      54,231      59,370      50,025      63,606
Oklahoma........................      16,004      12,250      11,641      10,427      11,147      10,169       8,343       9,134      14,606       8,480
Oregon..........................      25,808      19,298      18,360      16,445      17,580      16,039      13,159      14,405      12,138      13,373
Pennsylvania....................     141,479     107,475     100,647      90,152     116,857      95,330      72,135      78,971      66,540      86,271
Rhode Island....................      14,220      11,572      10,175       9,114      11,471       9,341       7,293       7,984       6,727       9,133
South Carolina..................      14,544      12,451      10,058       9,009       9,631       8,787       7,209       7,892      13,753       7,326
South Dakota....................      11,434      10,691       9,562       8,565      11,150       9,319       6,853      10,802       6,322       6,965
Tennessee.......................      29,520      21,652      20,415      18,286      19,548      17,834      14,632      16,018      21,842      14,871
Texas...........................      48,206      36,455      33,337      29,861      31,922      29,123      23,893      26,158      73,089      24,284
Utah............................      14,827      11,062      11,008       9,860      10,541       9,617       7,890       8,637       7,278       8,018
Vermont.........................      12,328       9,813       8,770       7,855      13,197       7,908       6,285       6,881       5,798       6,863
Virginia........................      41,677      36,051      28,822      25,817      28,277      25,179      20,657      22,615      19,055      28,635
Washington......................      40,896      31,495      30,199      27,050      28,917      26,382      21,644      23,695      19,965      21,997
West Virginia...................      19,285      13,676      13,337      11,946      16,503      11,651       9,559      10,465       8,817      12,607
Wisconsin.......................      74,027      56,987      52,662      47,171      65,147      53,718      37,744      41,320      34,816      42,851
Wyoming.........................       6,195       4,605       4,407       3,948       4,220       3,850       3,159       3,458       2,914       3,210
                                 -----------------------------------------------------------------------------------------------------------------------
  U.S. total....................   2,077,577   1,607,819   1,472,503   1,318,961   1,709,998   1,386,368   1,055,364   1,188,225   1,133,512   1,247,899
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes $100 million in LIHEAP emergency contingency funds.    \2\ Includes $180 million in LIHEAP emergency contingency funds.    \3\ Includes
  $215 million in LIHEAP emergency contingency funds.    \4\ Includes reallotment of $81,913 in fiscal year 1997 block grant funds and $160 million in
  emergency contingency funds.    \5\ Includes reallotment of $2,204,442 in fiscal year 1998 block grant funds and $175,298,765 in emergency contingency
  funds.

Note.--Columns may not add due to rounding. The table includes payments to Indian tribal organizations and excludes payments to the insular areas.

Source: U.S. Department of Health and Human Services.

to cold weather emergencies and an increase in the price of
home heating oil, all $300 million in the LIHEAP contingency
fund had been released by President Clinton by midway through
the fiscal year.

                           Program Components

    Federal LIHEAP funds may be used by grantees for the
following activities:
  --Home heating and cooling assistance;
  --Energy crisis intervention (with a reasonable amount
        reserved, based on prior years' data, until March 15 of
        each program year);
  --Low-cost weatherization or other energy-related home
        repairs (not to exceed 15 percent of the funds allotted
        to or available to a grantee, although a grantee may
        request a waiver that increases the amount of LIHEAP
        funds for weatherization from 15 to 25 percent);
  --Administrative and planning costs (not to exceed 10 percent
        of funds net of set-asides for Indian tribal grants);
  --Carryover of funds to the next fiscal year (not to exceed
        10 percent of funds net of set-asides for Indian tribal
        grants); and
  --Development or implementation of a leveraging incentive
        program that may be used by States to attract funds
        from non-Federal sources.

                          Allotments to States

    Several sources of Federal and non-Federal funds generally
are available to LIHEAP grantees:
  --Federal LIHEAP block grant allotments;
  --LIHEAP emergency contingency allotment for weather
        emergencies (these funds can only be released at the
        President's directive);
  --LIHEAP leveraging incentive awards;
  --LIHEAP carryover (grantees can request that up to 10
        percent of their Federal LIHEAP funds be held available
        for the next fiscal year);
  --Oil overcharge funds (disbursed by the Department of Energy
        from settlements of cases of oil price overcharges
        pursuant to the Emergency Petroleum Act of 1973. States
        determine how to allocate these funds among several
        eligible activities, including LIHEAP); and
  --State and other funds (States use their own funds to
        supplement LIHEAP benefits or administrative costs.
        Other funds include reimbursements to LIHEAP agencies
        for taking application for low-income weatherization
        programs or winter heating protection programs.).
    Table 15-44 shows State allotments for selected fiscal
years.

                  Eligibility and Types of Assistance

    States have considerable discretion to determine
eligibility criteria for LIHEAP and the types of energy
assistance to be provided. At State option, LIHEAP payments can
be made to households, based on categorical eligibility, where
one or more persons are receiving Supplemental Security Income
(SSI), Temporary Assistance for Needy Families (TANF), food
stamps, or needs-tested veterans benefits. States can also
elect to make payments to households with incomes of up to 150
percent of the Federal poverty income guidelines or 60 percent
of the State's median income, whichever is greater.
    Individuals who are denied benefits are entitled to an
administrative hearing. The term ``household'' is defined as
any individual or group of individuals who are living together
as one economic unit and for whom residential energy is
customarily purchased in common, or who make undesignated
payments for energy in the form of rent. States cannot
establish an income eligibility ceiling that is below 110
percent of the poverty level, but may give priority to those
households with the highest energy costs in relation to
household income, taking into consideration the presence of
very young children, frail elderly, or persons with
disabilities. States also are prohibited from treating
categorically eligible and income eligible households
differently with respect to LIHEAP. However, Public Law 103-185
permits States to reduce benefits to tenants of federally
assisted housing if it is determined that such a reduction is
reasonably related to any utility allowance they may receive.
LIHEAP benefits cannot be used to calculate income or
resources, or affect other benefits, under Federal or State
law, including public assistance programs.
    Section 607(a) of Public Law 98-558 directs the U.S.
Department of Health and Human Services to collect annual data,
including information on the number of LIHEAP households in
which at least one household member is 60 years old or
handicapped. In addition, Public Law 103-252 authorized the
establishment of the Residential Energy Assistance Challenge
Program, an incentive grant program designed to increase
efficient energy use, minimize health and safety risks, and
prevent hopelessness among low-income families with high energy
burdens. Up to 25 percent of leveraging incentive moneys may be
used to fund Residential Energy Assistance Challenge Programs.
    States have considerable discretion in the methods they may
use to provide assistance to eligible households, including
cash payments, vendor payments, two-party checks, vouchers/
coupons, and payments directly to landlords. When paying home
energy suppliers directly, States are required to give
assurances that suppliers will charge the eligible households
the difference between the amount of the assistance and the
actual cost of home energy. Also, States may use Federal funds
to provide tax credits to energy suppliers that supply home
energy to low-income households at reduced rates. Table 15-45
presents estimates by State for 1996 of total dollars spent on
heating assistance, the number of households receiving benefits
from the single largest program component (heating assistance),
and average heating benefits.

    TABLE 15-45.--LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM ESTIMATED HEATING ASSISTANCE BENEFITS, NUMBER OF
                          HOUSEHOLDS, AND ESTIMATED AVERAGE BENEFITS, FISCAL YEAR 1996
----------------------------------------------------------------------------------------------------------------
                                                             Estimated heating      Number of        Estimated
                           State                                 assistance        households         average
                                                                  benefits          assisted         benefits
----------------------------------------------------------------------------------------------------------------
Alabama....................................................         $5,621,197            39,706            $142
Alaska.....................................................          3,651,347            11,501             313
Arizona....................................................          3,074,995            21,083             146
Arkansas...................................................          3,035,652            36,353              82
California.................................................         35,666,584           156,168              61
Colorado...................................................         14,409,351            44,361             325
Connecticut................................................         22,051,236            66,111             334
Delaware...................................................          2,270,577            11,594             185
District of Columbia.......................................          2,356,837            11,551             178
Florida....................................................          7,285,632            66,117              83
Georgia....................................................          8,670,527            70,577             123
Hawaii.....................................................            853,616             5,087             165
Idaho......................................................          3,389,067            15,302             252
Illinois...................................................         46,182,974           178,895             250
Indiana....................................................         17,196,420            94,582             182
Iowa.......................................................         14,425,722            70,248             205
Kansas.....................................................          6,076,885            23,732             208
Kentucky...................................................          5,909,767            88,811              87
Louisiana..................................................          2,957,469               251             156
Maine......................................................          9,996,455            38,670             220
Maryland...................................................         16,278,609            79,615             187
Massachusetts..............................................         41,083,489           125,205             325
Michigan...................................................         30,226,450           276,731             109
Minnesota..................................................         30,569,495            87,080             345
Mississippi................................................          4,209,335            30,019             121
Missouri...................................................         19,221,339           105,010             183
Montana....................................................          4,327,949            18,558             235
Nebraska...................................................          4,286,609            25,990             167
Nevada.....................................................          1,414,462             8,752             162
New Hampshire..............................................          6,109,284            18,664             341
New Jersey.................................................         30,975,527           141,931             229
New Mexico.................................................          3,717,176            68,467              54
New York...................................................         80,268,491           600,834             135
North Carolina.............................................         10,457,970           187,016              43
North Dakota...............................................          4,728,402            13,573             343
Ohio.......................................................         22,685,929           237,614              96
Oklahoma...................................................          5,660,502            72,396              78
Oregon.....................................................          9,004,376            43,659             187
Pennsylvania...............................................         44,064,583           239,378             166
Rhode Island...............................................          4,969,966            17,834             278
South Carolina.............................................          4,685,600            51,735              89
South Dakota...............................................          4,221,823            13,608             310
Tennessee..................................................          9,394,892            64,444             145
Texas......................................................          5,084,520            30,809             165
Utah.......................................................          5,013,975            25,313             198
Vermont....................................................          4,173,735            21,393             196
Virginia...................................................         17,529,360           106,960             164
Washington.................................................         15,900,645            48,823             325
West Virginia..............................................          5,278,394            45,508             116
Wisconsin..................................................         33,895,611           109,876             273
Wyoming....................................................          2,280,336             6,657             321
                                                            ----------------------------------------------------
      Total................................................   \1\ $696,801,144         3,974,152        \2\ $175
----------------------------------------------------------------------------------------------------------------
\1\ Includes leveraging incentive funds.
\2\ Computed based on dividing the total estimates of obligated heating assistance funds by total number of
  households receiving heating assistance.

Source: Administration for Children and Families, U.S. Department of Health and Human Services.

                      Planning and Administration

    LIHEAP is administered within the U.S. Department of Health
and Human Services (DHHS) by the Administration for Children
and Families. Grantees are required to submit an application
for funds to the Secretary of DHHS. As part of the annual
application, the chief executive officer of the State (Indian
tribe, or territory), or her designee, is required to make
several assurances related to eligibility requirements,
anticipated use of funds, as well as to satisfy planning and
administrative requirements. States are prohibited from using
more than 10 percent of their total LIHEAP allotment for
planning and administrative costs.
    States must provide for public participation and public
hearings in the development of the State plan, including making
it, and any substantial revisions, available for public
inspection and allowing public comment on the plan. Public Law
98-558 requires States to engage an independent person or
organization to prepare an audit at least once every 2 years.
However, the Single Audit Act of 1984 (Public Law 98-502)
supersedes this requirement in most instances, and requires
grantees to conduct an annual audit of all Federal financial
assistance received.

                     VETERANS BENEFITS AND SERVICES

    The Department of Veterans Affairs (VA) offers a wide range
of benefits and services to eligible veterans, members of their
families, and survivors of deceased veterans. VA programs
include veterans compensation and pensions, readjustment
benefits, medical care, and housing and loan guaranty programs.
The VA also provides life insurance, burial benefits, and
special counseling and outreach programs. In fiscal year 1999,
Federal appropriations for veterans benefits and services were
over $44 billion (table 15-46).

 TABLE 15-46.--BUDGET AUTHORITY FOR VETERANS BENEFITS AND SERVICES, DEPARTMENT OF VETERANS AFFAIRS, FISCAL YEARS
                                                     1980-99
                                            [In thousands of dollars]
----------------------------------------------------------------------------------------------------------------
                                               Service-
                                               connected                                                 Total:
                                             compensation   Education,                          Other   veterans
                Fiscal year                  and survivor    training,    Medical   Housing   benefits  benefits
                                               payments;   readjustment    care    loans \1\     and       and
                                             means-tested                                     services  services
                                               pensions
----------------------------------------------------------------------------------------------------------------
1980.......................................     $11,770        $2,374      $6,409         NA      $641   $21,194
1981.......................................      13,210         2,351       6,919         NA       671    23,150
1982.......................................      14,510         1,964       7,802         NA       687    24,963
1983.......................................      14,216         1,667       8,816       -$78       721    25,341
1984.......................................      14,884         1,582       9,078        201       751    26,496
1985.......................................      15,089         1,066      10,005        306       789    27,256
1986.......................................      15,363           605       9,964        200       757    26,888
1987.......................................      15,392           393      10,481        100       824    27,190
1988.......................................      15,848           395      10,836      1,484       817    29,380
1989.......................................      16,384           335      11,523        778       871    29,891
1990.......................................      16,660           251      12,168        548       897    30,524
1991.......................................      17,790           824      13,194        730     1,013    33,251
1992.......................................      17,412           600      14,256        815     1,020    34,103
1993.......................................      18,123           675      15,235      1,181       993    36,208
1994.......................................      18,597         1,031      16,187        188     1,006    37,009
1995.......................................      18,824         1,090      16,555        612     1,078    38,159
1996.......................................      19,703         1,013      16,812        612     1,023    38,763
1997.......................................      20,660         1,178      17,375       -291     1,014    39,936
1998.......................................      21,517         1,168      17,959      1,145     1,003    42,792
1999.......................................      22,934           989      18,032      1,087     1,115    44,157
----------------------------------------------------------------------------------------------------------------
\1\ Housing loans are net income and expenditures from VA housing program revolving funds. Figures for the VA
  housing funds are unavailable in this format before fiscal year 1983.

NA--Not available.

Source: Office of the President (2000).

    Service-connected compensation is paid to veterans who have
disabilities from injuries and illnesses traceable to a period
of active-duty military service. The amounts of monthly
payments are determined by disability ratings that are based on
presumed average reductions in earning capacities caused by the
disabilities. Disability ratings generally range from 10
percent to 100 percent in 10-percent intervals; however, some
disabilities are determined to be service-connected, but are
given a zero-percent rating. Death compensation, or dependency
and indemnity compensation, is paid to surviving dependents of
veterans who died as a result of service-connected causes. In
fiscal year 1999, about 2.3 million disabled veterans and
324,000 survivors received about $18 billion in compensation
payments.
    Veterans pensions are means-tested cash benefits paid to
war veterans who have become permanently and totally disabled
from non-service-connected causes, and to survivors of such
disabled and impoverished war veterans. Under the current or
``improved law'' program, benefits are based on family size,
and the pensions provide a floor of income. For 2000, the basic
benefit before subtracting other income sources is $11,773 for
a veteran with one dependent, $8,989 for a veteran living
alone). Somewhat less generous benefits are available to
survivors; a surviving spouse with no children could receive
two-thirds ($6,026) of the basic benefit amount given a single
veteran. About 604,000 persons received about $3.1 billion in
veterans pension payments in fiscal year 1999.
    Several VA programs support readjustment, education, and
job training for veterans and military personnel who meet
certain eligibility criteria. The largest of these programs was
the Montgomery GI bill (MGIB). The MGIB provides educational
assistance to persons, who as members of the Armed Forces or
the Selected Reserve, elect to participate in the program after
June 30, 1985. The purposes of the MGIB are to assist service
members leaving the Armed Forces in their readjustment into
civilian life, to provide an incentive for the recruitment and
retention of qualified personnel in the Armed Forces, and to
develop a more educated and productive work force. To
participate in the MGIB, active duty military personnel
contribute $100 per month, for the first 12 months of
enlistment. Benefit levels are contingent upon length of
service. To receive the maximum benefit of $536 per month for
36 months, service members must generally serve continuously
for 3 years.
    The VA also provides vocational rehabilitation to disabled
veterans. In fiscal year 1999, spending for VA readjustment
programs was nearly $1 billion (table 15-46). In addition, the
Department of Labor also provides employment counseling and job
training for veterans.
    The VA provides a comprehensive array of inpatient and
outpatient medical services through 172 medical centers, 134
nursing homes, 40 domiciliaries, 527 ambulatory clinics, and
206 readjustment counseling centers (Vet centers). Public Law
104-262 reformed eligibility rules for VA medical services.
These reforms not only simplified the rules, but give the VA
greater flexibility in how it provides medical care to
veterans. Past eligibility rules were seen as emphasizing
inpatient over outpatient care and, thus, impeded the efficient
use of VA medical resources. Under the new eligibility rules,
the VA provides free medical care, both inpatient and
outpatient, to veterans for service-connected conditions and to
low-income veterans for nonservice-connected conditions. For
2000, veterans with an income of $27,468 or less, and married
or with one dependent; plus $1,532 for each additional
dependent; or $22,887 or less if single; would meet the low-
income criterion for free medical care. As facilities and other
resources permit, the VA provides care to veterans for
nonservice-connected conditions with incomes that exceed these
limits; however, copayments are required. Again, as facilities
and other resources permit, the VA provides nursing home care
to veterans, with priority going to those with service-
connected disabilities. The VA also contracts with private
facilities and/or medical providers when it is determined to be
in the interests of the veteran and cost effective for the VA.
VA-operated nursing home care is augmented by VA-supported care
through contracts with private community nursing homes and with
per diem payments for veterans in State-run homes for veterans.
    In fiscal year 1999, VA medical treatment programs cost $18
billion (table 15-46). VA medical services were provided to
about 3.6 million separate applicants, resulting in about
752,000 inpatient episodes and 38 million outpatient visits
(table 15-47).

       TABLE 15-47.--NUMBER OF RECIPIENTS OF VETERANS BENEFITS AND SERVICES, SELECTED FISCAL YEARS 1975-99
                                                 [In thousands]
----------------------------------------------------------------------------------------------------------------
                                                       Readjustment,           Medical care
              Fiscal year                Compensation    education,  -------------------------------   Housing
                                         and pensions   job training  Inpatient \1\  Outpatient \2\     loans
----------------------------------------------------------------------------------------------------------------
1975...................................         4,855         2,692          1,220          14,630           290
1980...................................         4,646         1,233          1,359          17,930           297
1981...................................         4,535         1,081          1,360          17,809           188
1982...................................         4,407           906          1,358          18,510           103
1983...................................         4,286           755          1,401          18,616           245
1984...................................         4,123           629          1,412          19,601           252
1985...................................         4,005           492          1,435          20,188           179
1986...................................         3,900           419          1,462          21,635           314
1987...................................         3,850           365          1,466          21,635           479
1988...................................         3,762           352          1,224          23,233           235
1989...................................         3,686           349          1,153          22,629           190
1990...................................         3,614           360          1,113          22,600           196
1991...................................         3,546           322          1,072          23,007           181
1992...................................         3,462           388            988          23,902           266
1993...................................         3,397           438            974          24,236           383
1994...................................         3,351           472            963          25,443           602
1995...................................         3,332           476            930          27,565           263
1996...................................         3,315           475            850          30,055           292
1997...................................         3,290           480            700          32,648           239
1998...................................         3,270           479            632          35,777           369
1999...................................         3,254           458            752          37,799           396
----------------------------------------------------------------------------------------------------------------
\1\ Patients treated: the sum of discharges and deaths during the period plus patients remaining as bed
  occupants or absent bed occupants at the end of the report period.
\2\ Visits for outpatient care.

Source: Department of Veterans Affairs.

                         WORKERS' COMPENSATION

                       Overview Through  1996 \42\
---------------------------------------------------------------------------

    \42\ Largely drawn from Mont et al. (1999).
---------------------------------------------------------------------------
    Workers' compensation laws provide for cash and medical
benefits to persons with job-related disabilities and
survivors' benefits to dependents of those whose death resulted
from a work-related accident or illness. In 1996, workers'
compensation laws protected approximately 115 million workers
in 51 jurisdictions, including the District of Columbia.
Although the laws vary from State to State, and among the
Federal programs, the underlying principle is that employers
should assume the costs of occupational disabilities without
regard to fault. Prior to the enactment of workers'
compensation laws (the first of which was enacted in 1908), a
worker was only protected in cases in which employer negligence
could be proven as the cause of injury or death. By 1949, all
States and the Federal Government had enacted laws to cover
workers and their dependents in any case of occupational
disability or death.
    Most workers' compensation benefits are paid by insurance
companies through policies purchased by private employers that
are keyed to the benefits required by the State or Federal
workers' compensation law covering the employer. In addition,
benefits may be paid by special State or Federal insurance
funds, by employers themselves acting as self-insurers, and by
the Federal Government (for Federal employees and some black
lung beneficiaries). State laws generally are administered by
entities such as industrial commissions or special units within
State labor departments. Federal laws are administered by the
U.S. Department of Labor, although the Social Security
Administration has responsibility for paying some black lung
claims.
    Federal involvement in the workers' compensation system is
minimal. Federal laws cover work-related disability and death
benefits for Federal employees, certain maritime and railroad
employees, and benefits for black-lung-related disability or
death.\43\ In general, Federal funding extends only to benefits
for Federal employees and some black lung beneficiaries and
administrative costs at the Labor Department and Social
Security Administration.\44\ There are no Federal standards for
or controls over the State laws that cover most of the work
force, although they are structured similarly, and a 1972
Federal commission issued a still-current set of recommended
goals for State laws. Workers' compensation benefits are not
taxed at any level of government; if taxed as income by the
Federal Government, the Joint Committee on Taxation estimates
revenues would be about $4 billion (for tax year 1995).
---------------------------------------------------------------------------
    \43\ The Federal Employees' Compensation Account covers Federal
employees and certain others (e.g., some law enforcement officers and
volunteers, postal service employees). The Longshore and Harbor
Workers' Compensation Act (LHWCA) and the Jones Act cover certain
workers in maritime endeavors (including, for example, workers on the
outer continental shelf). The Federal Employers' Liability Act covers
interstate railroad employees. The Black Lung Benefits Act provides for
benefits to coal mine employees and survivors for disability or death
related to black lung disease.
    \44\ Under the Federal Employees' Compensation Account, the Federal
Government pays all administrative and benefit costs from annual
appropriations to the employing agencies and the Labor Department.
Under the LHWCA, private employers are responsible for virtually all
benefits; the Federal Government pays for a very small and declining
payment to pre-72 claimants and, standing in the place of a State, the
administrative costs of the system. Under the Jones Act and the Federal
Employers' Liability Act, there are few Federal costs, limited to some
Federal court costs and potential effects on the Federal appropriation
for Amtrak. Under the Black Lung Benefits Act, Federal appropriations
pay for benefits and administrative costs for claims filed before 1974
(through the Social Security Administration) and Department of Labor
administrative expenses (for claims filed later). Black lung benefits
for claims filed after 1973 are paid directly by responsible coal mine
operators or the Black Lung Disability Trust Fund (which is financed
through an excise tax on coal and borrowing from the Federal Treasury).
---------------------------------------------------------------------------
    Cash compensation for lost earnings made up 61 percent of
total workers' compensation benefits in 1996. Some 70 percent
of cash payments are for permanent partial disabilities of
either major or minor severity. These payments cover loss (or
loss of use) of body parts and partial, but permanent, loss of
earning capacity due to work-related injuries. About 5-8
percent of cash benefits are awarded to survivors because of
work-related deaths. The remainder is paid for temporary
disabilities in which an employee is unable to work, or must
work at a reduced level, but is expected to recover fully.
    Permanently disabled workers receiving workers'
compensation also may be eligible for benefits under the Social
Security Disability Insurance (DI) Program if they meet
generally more stringent DI tests. However, the Social Security
Act stipulates that total benefits under workers' compensation
and DI cannot exceed 80 percent of a worker's former earnings
(or, if higher, 80 percent of the total family Social Security
benefit). If there is an excess, the Social Security benefit is
reduced by the amount of the excess, or, in 13 States, the
workers' compensation benefit is reduced.
    Workers' compensation laws require that all injury-related
medical and hospital care be paid for. As a result, medical
expenses made up 39 percent of total workers' compensation
benefits in 1996. Medical benefits are typically paid on an
``as-charged'' basis; the majority of States and the Federal
Government allow relatively unfettered employee choice of
physician/care provider. However, the medical benefit component
of workers' compensation has grown substantially in recent
years, and a growing number of States (now over half) have
instituted at least some form of ``managed care'' or ``fee
schedules'' to control these costs.
    Workers' compensation laws make coverage compulsory for
most private employers, except in Texas and Wyoming.\45\ If
employers reject coverage in these States, they lose the use of
common-law negligence defenses if sued. However, many State
laws exempt from coverage employees of nonprofit, charitable,
or religious institutions, as well as very small employers,
domestic and agricultural employment, and casual labor.
Coverage of State and local government employees differs widely
from State to State.
---------------------------------------------------------------------------
    \45\ Coverage in Wyoming is mandatory for extra-hazardous
occupations.
---------------------------------------------------------------------------
    In 1996, 114.6 million employees were covered by State or
Federal workers' compensation laws, which represented 90
percent of employed persons, and was up from 88 percent in 1991
(National Academy, 1999).
    The total of workers' compensation benefit costs (including
those for black lung recipients) is driven by the level of
benefits provided under workers' compensation laws, the cost of
medical benefits, and injury rates, as well as
``administrative'' factors such as the degree of litigation
involved. Of the 1996 total of $42.4 billion of benefits, some
$25.8 billion, or 61 percent, was in the form of cash
compensation for lost wages, and the rest was in the form of
medical treatment and rehabilitation (table 15-48).
    Cash compensation levels are established by formulas set in
State and Federal workers' compensation laws and are typically
a percentage of weekly earnings at the time of injury or death.
Most laws provide benefits equal to two-thirds of gross
(pretax) lost earnings (or earning capacity); but several
States calculate benefits as a percentage of lost ``spendable''
(aftertax) earnings, usually replacing 75 or 80 percent.
Workers' compensation laws also set maximum weekly benefit
amounts. While maximum benefits are most often set at between
two-thirds and 100 percent of the State's average weekly wage,
they vary widely. For example, as of January 1996, maximum
weekly compensation for permanent total disability ranged from
$1,402 for Federal employees ($872 for those covered by the
Federal LHWCA) to $947 for Iowa (the highest State figure) and
$293 for Mississippi (the lowest State figure).
    The Bureau of Labor Statistics reported a 1999 workplace
injury and illness incidence rate of 7.1 cases per 100 full-
time equivalent private industry workers. The incidence rate
for lost workday cases was 2.1. These were down almost 20 to 40
percent, respectively, since 1990. According to the Survey of
Occupational Injuries and Illnesses, the total number of
private sector workplace injuries/illnesses in 1997 was 6.1
million, of which 1.8 million resulted in days away from work.
In addition, the Bureau of Labor Statistics Census of Fatal
Occupational Injuries reported 6,026 fatalities resulting from
on-the-job injuries in 1998, down 3 percent from 1997 (Bureau
of Labor, 1999).
    Generally, employers insure against their workers'
compensation liability through commercial insurance companies.
However, they also may self-insure by providing proof of
financial ability to carry their own risk (normally, large
employers), purchase their insurance through a State ``fund''
(essentially, a State-run insurance company), or buy insurance
commercially through a State-established ``high-risk''
insurance pool. In two States (North Dakota and Wyoming),
employers must purchase insurance from their State fund, and,
in four other States (Nevada, Ohio, Washington, West Virginia),
they must either self-insure or buy insurance from the State
fund. And nearly half of the remaining States have fully
``competitive'' State funds that allow employers to buy private
insurance, self insure, or buy from a State fund.
    In 1996, 48 percent ($20.5 billion) of the total of $42.4
billion in workers' compensation benefits (including all cash
and medical costs under Federal and State laws) was paid by
private insurers; 26 percent ($10.9 billion) was provided
through self-insurance; 19 percent ($7.9 billion) came from
State funds; and 7 percent ($3.1 billion) was paid under
Federal programs.\46\
---------------------------------------------------------------------------
    \46\ Federal program disbursements were for black lung benefits and
payments for Federal employees. Some of the payments financed through
private insurers, self-insurance, and State funds were mandated by
Federal laws covering private-sector employers (e.g., the LHWCA).
---------------------------------------------------------------------------
    Total workers' compensation costs to employers in a given
year are greater than annual benefits paid out because of the
built-in cost of long-term benefits. In 1996, employer costs
totaled $55.2 billion. These costs included benefits paid,
administration of insurance operations, insurer profits and
taxes, and reserves for future benefit payments. Benefits to
workers represent about 77 cents of each dollar of employers'
costs. Where insurance is purchased, the premium paid by
employers varies with the risk involved in the covered
employment and the industrial classification of the employer's
particular industry, although it may be modified by
``experience rating'' for some moderate to large employers and
other factors judged relevant by the insurer.
    By type of insurer, the total 1996 cost to employers was:
55 percent paid to private insurers, 18 percent paid to State
funds, 22 percent financed by self-insured employers, and 5
percent from the Federal Government for Federal employees and
black lung beneficiaries.
    In 1996, average employer costs per covered employee were
$483; as a proportion of employers' payrolls, this represented
$1.67 per $100 of payroll. Although substantial increases in
employers' workers' compensation costs were recorded in the
1980s, these costs actually decreased in real terms in the
early 1990s, dropping from a high of $2.16 per $100 of payroll
in 1991.
    Table 15-48 illustrates benefit payments under workers'
compensation laws by type of benefit for the period 1987-96. In
1996, total benefits paid equaled $42.4 billion, of which $41.2
billion was paid out under regular State and Federal workers'
compensation laws and nearly $1.2 billion was provided through
the Federal Black Lung Benefit Programs.

TABLE 15-48.--ESTIMATED WORKERS' COMPENSATION BENEFIT PAYMENT AMOUNTS BY TYPE OF BENEFIT, SELECTED YEARS 1987-96
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                         Type of benefit                             1987        1990        1993        1996
----------------------------------------------------------------------------------------------------------------
Regular program:
    Medical and hospitalization.................................      $9,794     $15,067     $17,409     $16,514
    Compensation................................................      15,979      21,737      24,160      24,694
        Disability..............................................      15,046      20,635      22,930          NA
        Survivor................................................         933       1,102       1,229          NA
                                                                 -----------------------------------------------
            Total...............................................      25,773      36,804      41,569      41,208
                                                                 ===============================================
Black Lung Program:
    Medical and hospitalization.................................         118         120         112          95
    Compensation................................................       1,426       1,314       1,243       1,059
        Disability..............................................         698         577         520          NA
        Survivor................................................         729         737         723          NA
                                                                 -----------------------------------------------
            Total...............................................       1,545       1,434       1,355       1,154
                                                                 ===============================================
Regular and Black Lung:
    Medical and hospitalization.................................       9,912      15,187      17,521      16,609
    Compensation................................................      17,406      23,051      25,403      25,753
        Disability..............................................      15,775      21,212      23,450          NA
        Survivor................................................       1,631       1,839       1,952          NA
                                                                 -----------------------------------------------
            Total...............................................      27,318      38,238      42,925      42,362
----------------------------------------------------------------------------------------------------------------
NA--Not available.

Source: Mont (1999); Nelson (1991, 1993); Schmulowitz (1995).

             Recent Developments in Statistical Compilation

    The historical data series providing national information
on the costs, benefits, and coverage of the workers'
compensation system (used in the above overview through 1993)
was discontinued by the Social Security Administration (SSA)
after publication of data for 1993. However, while not directly
comparable to the historical SSA series, estimates from other
sources, including the now-retired author of the SSA series
(Jack Schmulowitz) and John F. Burton (editor of John Burton's
Workers' Compensation Monitor) are available to portray recent
cost trends.\47\
---------------------------------------------------------------------------
    \47\ Further updated information is also available from the
National Academy of Social Insurance and in Burton et al. (1997) and
National Foundation (1997).
---------------------------------------------------------------------------

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