Welfare Reform Impacts Parents’ Health Insurance

August 14, 2002

Welfare Reform Impacts Parents’ Health Insurance

EVANSTON, ILL— Loss of health insurance, especially for parents, appears to be an unintended consequence of welfare reform, according to new findings from the Illinois Families Study (IFS) at the Northwestern University Institute for Policy Research.

“We found that parents who ‘played by the rules’ of welfare reform by working, being married, and getting off welfare were less likely to have health insurance. We also saw a troubling trend towards more parents without coverage,” says Jane L. Holl, MD, assistant professor of pediatrics and faculty fellow at Northwestern’s Institute for Health Services Research and Policy Studies. Dr. Holl is principal investigator of the Child Well-Being component of the IFS and a faculty associate at the Institute for Policy Research.

There was some good news, however. Dr. Holl reports that “this negative trend was reversed for children, so it looks like recent efforts to maintain and expand coverage for children have been fairly successful and should be continued.”

The first of the two policy briefs summarizing the findings draws upon interviews conducted in 1999 and 2000 with 1,363 current and former Illinois welfare recipients. The second draws upon a subsequent round of interviews conducted in 2001 with 1,183 of the same families to look at trends in coverage for parents and children over a two-year period.

In 1999-2000, 28 percent of parents who were off welfare and working did not have health insurance. Fewer than half of working parents (45 percent) said their employer offered health insurance either immediately or even after a waiting period. In contrast, nearly all parents who remained on welfare received coverage through the Medicaid program.

Marriage did not appear to improve coverage. Among married parents, 27 percent were uninsured in 1999-2000, compared to 18 percent of the unmarried. A higher percentage of married adults also reported gaps in coverage and longer gaps, compared to the unmarried sample.

Rates of insurance coverage improved for children and worsened for parents between 1999-2000 and 2001. The proportion of adults with no health coverage rose six percentage points, resulting in 25 percent of parents overall uninsured in 2001, compared to 9 percent of children.

Medicaid remained the most important source of coverage for these families, although a sharp decline in Medicaid for these parents between 1999-2000 and 2001 appears to be the primary cause of decreased coverage for parents, the study reported.

“It looks like outreach campaigns to expand coverage for low-income children through KidCare and Medicaid have been somewhat successful in Illinois, said Dr. Holl. “It’s now time to turn our attention to the insurance needs of parents. Hopefully some of the lessons learned from insuring low-income children can now be applied to their parents.”

Among those lessons, the researchers recommend the following strategies:

• Raise income eligibility cutoffs for Medicaid, especially for adults

• Expand Transitional Medicaid Assistance (TMA) beyond 6-12 months after exit from TANF (the state-based cash assistance program)

• Extend KidCare (SCHIP) coverage to parents through the FamilyCare Program

• Encourage private employers to expand health insurance coverage for low-income workers

Principal investigator for the Illinois Families Study is IPR faculty fellow Dan A. Lewis, professor of education and social policy. The study’s goal is to inform policymakers about how Illinois families have been faring since welfare reform was implemented. Researchers from Northwestern, Roosevelt, and Northern Illinois universities, the University of Illinois at Chicago, and the University of Chicago are conducting the six-year panel study.