THE WHITE HOUSE

Office of the Press Secretary

         PRESIDENT CLINTON WILL ANNOUNCE WELFARE TO WORK SUCCESSES
                 AND NEW STEPS TO PROVIDE HEALTH COVERAGE
                         FOR MORE WORKING FAMILIES

                              August 4, 1998

Today, President Clinton will take new action to promote work and responsibility as he sends to Congress a report showing that the welfare reform bill he signed into law nearly two years ago has helped millions of families make the successful transition from welfare to work. Today the President will: 1) announce that he is eliminating an old vestige of the welfare system so that all states can provide Medicaid health coverage to working, two parent families; 2) announce $60 million in new Welfare-to-Work grants for six states and Guam to help the most disadvantaged welfare recipients get and keep jobs; 3) announce the latest numbers showing that the federal government is doing its fair share in the welfare to work effort, hiring 5,714 former welfare recipients since April 1997; and 4) send to Congress the first annual report on welfare reform showing that 1.7 million adults who were on welfare in 1996 were working in 1997. The President will also urge Congress to fully fund his Welfare-to-Work housing vouchers proposal so that welfare recipients who need to move in order to work can do so.

Eliminating Anti-Work and Anti-Family Rules that Denied Families Health Coverage

Today, the President will eliminate a vestige of the old welfare system by announcing that the Department of Health and Human Services will revise its regulations to allow all states to provide Medicaid coverage to working, two-parent families who meet State income eligibility. Under the old welfare regulations, adults in two-parent families who worked more than 100 hours per month could not receive Medicaid regardless of income level, while there were no such restrictions on single-parent families. Because these regulations provided disincentives to marriage and full-time work, the Administration allowed a number of states to waive this rule. The new regulation eliminates this rule for all States, providing health coverage for more than 130,000 working families to help them stay employed and off welfare. (See attached sheet for more details)

$60 Million More in Welfare-to-Work Grants

Today, nearly one year after obtaining $3 billion in new Welfare-to-Work funds in the Balanced Budget Act, the President will release funds for Maine, Maryland, New Hampshire, New Mexico, Virginia, West Virginia, and Guam. These funds help long-term recipients who have significant barriers to employment obtain and retain jobs and can be used to help fathers as well as mothers go to work. With the $60 million released today, the Department of Labor has now approved $759 million for 38 states and Guam under the Welfare-to-Work program. (See attached sheet for more details)

The Federal Government is Doing Its Share

The President will announce that the federal government has now hired 5,714 new workers off the welfare rolls, which is over half-way to its goal of 10,000 by 2000. Nearly 80 percent of these new workers live and work outside the Washington Metropolitan area. The Vice President is leading this effort to ensure that the federal government does its fair share to employ welfare recipients. The White House pledged to hire six welfare recipients and has already exceeded this goal. (See attached sheet for more details)

Two Years Later, Millions of Welfare Recipients are Working

The President will release the First Annual Report to Congress on the Temporary Assistance for Needy Families program showing a dramatic increase in the number of welfare recipients who have gone to work since he signed the welfare law in August 1996. Data from the Census Bureau's Current Population Survey show that the rate of employment of individuals on welfare in one year who were working in the following year increased by nearly 30 percent between 1996 and 1997. As a result, 1.7 million adults on welfare in 1996, were working in March 1997. The report also finds that families moving from welfare to work enjoy increases in income.

The report highlights the dramatic decline in welfare caseloads, showing that welfare rolls have declined 27 percent since the welfare reform law was signed and that the percentage of the population on welfare is at its lowest point since 1969. The report also finds that, on average, states are spending more per person on welfare-to-work efforts than they did before the passage of the 1996 law.

Several other reports also confirm that welfare reform is on the right track. The Urban Institute recently found that, on average, a family's income goes up 51 percent when they move from welfare to a part-time entry level job, and increases even more as they move to full-time work. The Earned Income Tax Credit, which this Administration fought hard to expand in the 1993 budget, is a major factor in making work pay, especially if families take the option to get part of this tax credit in their regular paycheck. And the National Governors' Association recently reported that state spending on child care has increased by more than half, while spending on helping welfare recipients succeed at work has increased by one-third. (Copies of report available in lower press)

The President Will Call for Full Funding for Welfare-to-Work Housing Vouchers

The President will call on Congress to fully fund his proposal for 50,000 Welfare-to-Work housing vouchers to help welfare recipients get or keep jobs by moving closer to job opportunities, reducing long commutes, or securing more stable housing. Although both the House and the Senate have appropriated some funds for this purpose, they have funded less than half of the President's request. (See attached sheet for more details)

BACKGROUND ON THE MEDICAID "100-HOUR RULE"

OVERVIEW. The new "100-hour rule" regulation gives states increased flexibility to offer Medicaid to low-income, working parents. Under previous welfare and Medicaid rules, a two-parent family could only be eligible for assistance if the primary wage earner was unemployed, defined in regulation as working less than 100 hours per month. Because this tended to discourage parents from working and was not applied to single-parent families, a number of states received a waiver of this "100-hour rule" prior to welfare reform. However, states that did not receive such a waiver cannot do so now because welfare reform locked in place the states' eligibility rules as of 1996.

The revision of the regulation allows all states, including those without waivers, to change the 100-hour rule, thus allowing them to cover two-parent, working families. As such, it eliminates a vestige of the old welfare system that provided disincentives against marriage and full time work. Combined with flexibility in setting income eligibility, this provision also enables all states to cover many low-income, two-parent families under Medicaid.

PROBLEM. Historically, Medicaid was an add-on to welfare, so that, in general, only people receiving welfare were eligible for Medicaid. Welfare (prior to reform in 1996) was limited to certain types of families -- in particular, single-parent families or two-parent families where the primary wager earner is unemployed. These "deprivation rules" date back to the creation of the Aid to Families with Dependent Children (AFDC) program, which was targeted toward "broken" rather than poor families.

Since President Clinton took office, the inequities of limiting cash assistance and Medicaid to only a narrow group of two-parent families led to changes designed to encourage work and marriage. Rather than using the regulatory definition of "unemployed" under the old welfare law -- working less than 100 hours per month -- many states received waivers to encourage work by considering parents working more than 100 hours a week as "unemployed." As of 1996, 32 states had received such waivers.

Welfare reform in 1996 limited other states from changing the 100-hour rule to allow them to cover two-parent, working families under Medicaid. It replaced it with a rule that states must, at a minimum, offer Medicaid to people who would have been eligible for welfare prior to the law. States could cover additional groups of people, but only if their income or resources were higher -- not if they worked more hours. While states that received waivers of the 100-hour rule prior to 1996 could continue those waivers, the remaining 18 states plus the District of Columbia were locked into their pre-1996 rules.

REVISED REGULATION. To allow all states the flexibility previously offered under welfare waivers, the Secretary of Health and Human Services is revising the regulations at 45 CFR 233.101(a)(1) to permit states to extend Medicaid eligibility to families whose parents would not have met the 100-hour rule contained in the existing definition. This is a final regulation with a 60-day comment period.

EFFECTS OF THE CHANGE

The following 18 states (plus District of Columbia) did not, at the time of welfare reform, have statewide waivers of the 100-hour rule:

Alabama
Alaska
Arkansas
Colorado
Florida
Kentucky
Louisiana
Maine
Nevada
New Hampshire
New Jersey
New York
North Dakota
Oklahoma
Pennsylvania
South Dakota
Virginia
Wyoming

States with waivers for only subsets of families (e.g., certain counties; only parents under the age of 21) also can broaden eligibility through this revised regulation.

There are two main benefits of this change. First, it eliminates an anti-work and anti-family vestige of the old welfare system. Instead of rewarding work, the 100-hour rule took away health care from two-parent families who increased their hours at work. And instead of rewarding marriage, it punished single mothers who married and gave preference to single over two-parent families.

Second, the revision allows all states the important option of covering low-income parents. While Medicaid coverage of children has expanded, most states have not been able to extend coverage to their parents because of this rule. This change gives all states the flexibility to give the whole family, and not a fraction of it, health coverage. With this flexibility, approximately 135,000 people could gain Medicaid coverage.

WELFARE TO WORK HOUSING VOUCHERS

The President's FY99 budget takes further steps to promote work and welfare reform through a plan to provide 50,000 new housing vouchers to welfare recipients who need housing assistance in order to get or keep a job. Families could use these housing vouchers to move closer to a new job, to reduce a long commute, or to secure more stable housing to eliminate emergencies that keep them from getting to work every day on time. These targeted vouchers will give people on welfare a new tool to make the transition to a job and succeed in the work place.

The $283 million proposal will help address the problem, in many regions, that jobs are being created far from where many welfare recipients live. Currently, about two-thirds of new jobs are being created in the suburbs, but three of four welfare recipients live in rural areas or central cities. The funding for the Administration's Access to Jobs initiative in the Transportation Equity Act for the 21st Century (TEA-21) will assist states and localities to develop flexible transportation alternatives for welfare recipients and other low income workers. But in some cases it makes more sense for someone to move closer to work -- and this new proposal will make that move from welfare to work possible.

How It Will Work

These vouchers will provide States and communities with a new flexible tool to help families who need housing assistance in order to achieve self-sufficiency.

      The additional vouchers will be available on a competitive 
      basis to local housing agencies, including Indian housing 
      authorities.  Applications must be developed in consultation 
      with the state, local, or tribal welfare agency and the 
      local Welfare-to-Work formula funds grantee (typically the 
      Private Industry Council), to ensure that services are 
      coordinated.

      The vouchers will be used where they are essential to a 
      successful transition from welfare to work -- that is, where 
      housing assistance is critical for a family to get or keep 
      a job.

      Families who receive the vouchers must be eligible for or 
      currently receiving Temporary Assistance for Needy Families 
      (TANF) or have received TANF within the past year.

The initiative recognizes the direct link between affordable housing and self-sufficiency. Along with the Administration's proposal to increase the Low-Income Housing Tax Credit, this initiative will make decent, affordable housing available to more Americans.

Current Status

Congress has recognized the need for housing vouchers to promote welfare reform, but so far has provided insufficient funding for them. The HUD/VA Appropriations bill passed by the House provides $100 million for 17,700 Welfare to Work Housing Vouchers. The bill passed by the Senate provides only $40 million for 7,000 housing vouchers. The HUD/VA Appropriations conference committee is expected to occur after the August recess.

08/04/98