Researchers at the American Enterprise Institute for Public Policy Research studied the relationship between welfare and Medicaid coverage. Working under a subcontract, staff at Mathematica Policy Research conducted a literature review.
As passed in August 1996, federal welfare reform legislation—The Personal Responsibility and Work Opportunity Reconciliation Act of 1996—severed the automatic link between welfare and Medicaid eligibility, creating much broader Medicaid eligibility for people who left welfare.
In addition, the 1997 passage of the federal State Children's Health Insurance Program (CHIP) expanded Medicaid eligibility for children. In response, the researchers broadened the focus of the project to include ways to structure health care coverage for people who have left welfare.
The researchers simulated the possible impacts of all options, and recommended one for expanding health insurance coverage to low-income families, both those who are on welfare and those who have left welfare:
- Build upon the existing Medicaid program and its existing infrastructure.
- Target low-income working families.
- Impose income-related premiums on all families.
- Scale back the scope of benefits.
- Provide health insurance vouchers.
- Limit eligibility for public assistance and tax benefits (such as the child tax credit) to those who show proof of health insurance.