GOOD MORNING:
Mr. Chairman, Senator Moynihan, members of the Committee, it
is my distinct pleasure to appear before you today to discuss the
Medicaid and welfare reform proposals introduced by Chairman Roth
and others on May 22nd.
As the Congress continues to consider ways to reform Medicaid
and welfare and pursue a balanced Federal budget, we appreciate
the opportunity to state clearly the President's vision for
reform in these areas.
The Clinton Administration believes that we must balance the
budget by the year 2002 and give more responsibility to the
states and local communities. But we must do it in a way that is
consistent with the values of our nation. As the President has
said time and time again: We can balance the budget and find
common ground -- without turning our hacks on our values, our
families, and our future :
In Medicaid, we believe we can give the states the
flexibility they need, while maintaining a strong federal-state
partnership built on a foundation of shared resources,
accountability to the taxpayers, and national protections for the
most vulnerable Americans. That is why the President has
proposed a common sense plan, and that is why he has refused to
sign legislation which breaks our promises.
As part of his balanced budget plan, the President has
submitted to the Congress a welfare reform bill entitled the
"Work First and Personal Responsibility Act of 1996". The
President's bill would replace the current welfare system with
one that demands responsibility, strengthens families, protects
children, and provides states with broad flexibility and the
resources they need to get the job done. It is a comprehensive
proposal that reflects the common principles held by those in and
out of Congress who have worked tirelessly to reform our nation's
welfare system. We strongly hope for legislation that builds
upon these principles and the recent bipartisan initiatives from
the nation's governors and moderate Republicans and Democrats in
both houses of Congress.
The President is committed to balancing the budget and
enacting real welfare and Medicaid reforms. However, the
President has also made it clear that the current strategy of the
majority in Congress to link welfare reform to unacceptable
changes in Medicaid will leave him no choice but to veto the
entire package. We call on Congressional leaders to abandon the
"Poison pill" strategy that is designed to provoke a veto. We
strongly support the bipartisan efforts of the governors and the
Breaux-Chafee and Castle-Tanner groups to reform welfare without
gutting Medicaid.
Before I continue, let me note in particular the fine work of
Senators Chafee and Breaux and the members of their bipartisan
group on both Medicaid and welfare reform. While we have yet to
review any details and still have some concerns, I think the
willingness of Senators of good will to join together across the
aisle to agree on meaningful reforms is an example to us all.
The President believes their proposals could very well be the
foundation for a broad bipartisan effort in this regard.
Let me begin by discussing Medicaid.
Medicaid
Medicaid provides vitally important health and long-term care
coverage for approximately 37 million Americans and their
families:
- It provides primary and preventive care for 18 million low-
income children;
- It covers 6 million individuals with disabilities -
providing the health, rehabilitation, and long-term care services
that would otherwise be unaffordable for these individuals and
their families;
- It covers 4 million senior citizens -- including long-term
care benefits that provide financial protection for
beneficiaries, spouses, and the adult children of those requiring
nursing home care.
- Finally, it pays the Medicare premium and cost sharing for
low income seniors, thus putting the benefits of Medicare within
reach.
The Clinton Administration is dedicated to strengthening and
improving Medicaid so that it can continue to fulfill the promise
of our nation to millions of children, elderly, and disabled
Americans and their families. To achieve this goal, this
Administration has worked vigorously in partnership with the
states to test innovative new approaches to delivering and
financing care for Medicaid patients. During our first 3 years
in office, this Administration approved 91 major Freedom of
Choice waivers and waiver renewals, which allow states to enroll
beneficiaries in managed care plans. We have also approved 163
new and renewed Home and Community-Based Services waivers, which
enable states to use home care as an alternative to costly
nursing home care, and allow people with disabilities to live in
their communities. In addition, since January 1993 we have
approved 12 statewide Medicaid demonstrations, compared to a
total of one such demonstration approved under all previous
administrations combined. Some statewide demonstrations expand
access to the uninsured, others test new methods for delivering
mental health services, and still others implement simplified
eligibility requirements.
The flexibility provided by these waivers has allowed states
to improve the efficiency with which they provide care. Some
states have used the resulting savings to cover additional
populations with unmet health care needs. When all of the
currently approved demonstrations are implemented, nearly 2.2
million individuals who did not receive Medicaid coverage will be
eligible for services.
As part of his balanced budget plan, the President has
proposed a carefully designed and balanced approach to Medicaid
reform which builds on this experience. His plan preserves the
essential elements of Medicaid (title XIX of the Social Security
Act) while making important changes that will give states
unprecedented flexibility to meet the needs of the people they
serve. The President's plan is built upon three core principles:
(1) the need for a real, enforceable Federal guarantee of
coverage to a congressionally-defined benefit package; (2)
appropriately shared Federal and state financing; and (3) quality
standards, beneficiary Protections, and accountability.
The President's plan fulfills these principles while
contributing Federal savings to the balanced budget plan through
reductions in disproportionate share hospital payments and the
use of a per capita cap on Federal matching payments that adjusts
automatically to changes in state Medicaid enrollment and changes
in the economy. The President's plan also provides states far
greater flexibility to better manage their programs, pay
providers of care, and operate managed care and other
arrangements with reasonable Federal requirements to maintain
programmatic and fiscal accountability.
As you know, the President strongly opposed the Medicaid
proposals passed by Congress last year because they failed to
meet his core principles. The Congress repealed the Medicaid
program and replaced it with a new "Medigrant" program that did
not provide meaningful Federal guarantees of eligibility or
benefits. The Congress also put forward a "block-grant" funding
mechanism that breached the 30 year Federal commitment with the
states to share in changes in state Medicaid spending that left
states with the full financial responsibility for providing
health care to individuals who would qualify for services in the
future due to unanticipated enrollment increases or economic
downturns.
Last February, the National Governors' Association approved
the outlines of a bipartisan Medicaid reform plan. As I
testified before this Committee in March, we believed the
governors' plan -- produced through a bipartisan process-- held
some promise and we were hopeful that, once more details were
known, there would be a real basis for Medicaid reform. The
governors clearly worked very hard to move the debate forward.
At the same time, however, I discussed the Administration's
concerns with some key elements of the governors' plan.
Last month, the Republican majority in both Houses of
Congress introduced a revised version of their Medicaid bill,
which I will discuss today. Unfortunately, this bill moves us
further away from the bipartisan reform envisioned by the
governors, and much closer to the Republican legislation that the
President vetoed last year. our view is shared by the Democratic
governors who were instrumental in crafting the NGA agreement.
In a May 29 letter to Senator Roth, four Democratic governors
stated that: " The Republicans' Medicaid proposal is far from the
NGA agreement and appears to be more like the proposal vetoed by
the President last year and rejected by the Governors at our
winter meeting .... A ccording to our early calculations, 96
percent of the funding under this new formula is distributed
precisely in the same manner as your earlier bills proposed. You
have created a block grant for this program with essentially the
same language and parameters of the vetoed bill -- a block grant
that denies a safety net for our most vulnerable citizens."
Let me be clear: the new Republican bill, like its
predecessor, fails to meet the President's basic principles for
Medicaid reform. If this bill is sent to the President, I would
recommend that he veto it.
I will now discuss why the new Republican Medicaid plan fails
to meet each of the President's three core principles.
The Federal Guarantee of Coverage and Benefits
The Federal "guarantee" of coverage and benefits is at the
core of the Medicaid program. Unfortunately, the term
"guarantee" has been assigned very different meanings in the
context of the current Medicaid debate. When we use the term
guarantee in the context of a Federal statute like Medicaid, we
mean a real guarantee, composed of three interrelated components:
definitions of 1) eligibility; 2) benefits, and 3) enforcement.
Eligibility: Let's begin with eligibility. The new
Republican bill would deny millions of Americans the Federal
guarantee of Medicaid eligibility that they now have under
current law. The bill repeals the phase-in of the Federal
guarantee of Medicaid coverage for children ages 13 to 18 in
families with income below the Federal poverty level -- a
bipartisan coverage expansion signed into law by President Bush.
In addition, the new Republican bill repeals the Federal
standard for defining disability and replaces it with language
that could mean 50 separate state definitions. This has the
effect of making Medicaid coverage and benefits for those with
disabilities uncertain and variable across the nation. For
example, some states could use restricted definitions of
disability that result in very limited coverage for those whose
needs are pronounced and among the most costly. In fact, States
might be forced to narrow their definitions of disability in
order to cope with lower Federal funding levels. In such
situations, narrow state definitions of disability could preclude
individuals with HIV, certain physical disabilities, or mental
illness from receiving critically needed services under Medicaid.
We should not turn back the clock on those with disabilities by
permitting 50 different state definitions for purposes of
Medicaid coverage.
The new Republican bill also eliminates the current law
requirement that Medicaid be provided for one year to persons who
leave welfare in order to join the workforce. By eliminating
this guarantee, the Republican proposal could discourage
individuals from leaving welfare and set back our efforts to
reform the welfare system.
Finally, the new Republican bill gives states the authority
to impose additional eligibility limits based on age, residence,
employment or immigration status, or more restrictive definitions
of assets and income. This provision will enable states, if
financially necessary, to restrict eligibility even among those
people who supposedly are "guaranteed" coverage.
Benefits: Eligibility is only one component of the guarantee.
The next question is "eligibility for what?", which brings us to
benefits. The new Republican bill "guarantees" some benefits for
those populations who are "guaranteed" eligibility. But this
guarantee is hollow. Many loopholes make it essentially
meaningless.
One loophole in the "guarantee of benefits" relates to the
adequacy of the benefits. Current Medicaid law and regulations
already give states substantial flexibility in defining the
amount, duration, and scope of benefits, and states have used
this flexibility to tailor Medicaid packages to their unique
circumstances. This latitude is tempered by a very reasonable
constraint -- benefits must be "sufficient to reasonably achieve
their purpose." The Republican bill removes this sensible
provision, giving states complete flexibility on amount,
duration, and scope. Thus, states could "guarantee" coverage for
hospital and physician services, but -- if forced to do so -could
limit this coverage to unreasonably low levels such as 3 days of
hospital care and one physician visit per year. This type of
guarantee is meaningless for persons who truly need medical care.
Another loophole in this "guarantee" is the new elimination
of current law standards of comparability and "statewideness" of
services. Without these standards, some states could offer
different coverage and benefit packages in different parts of the
state, or to different groups based on their age or diagnosis.
Eliminating requirements for comparability and statewideness
leaves states free to discriminate against persons who live in
certain areas, who have specific diseases (such as AIDS), or who
lack political clout (such as children).
The new Republican bill also severely curtails the treatment
services which must be provided under the Early and Periodic,
Screening, Diagnosis, and Treatment (EPSDT) program. Under the
Republican bill, children must be screened for a range of health
problems, but treatment is only required for dental, hearing, and
vision problems. If a child is diagnosed with any other medical
problem, they are not guaranteed treatment. Therefore, an
asthmatic child would not be guaranteed coverage for treatment,
such as asthma- controlling drugs or inhalers. Diagnosis without
treatment is bad medical care and a wasteful use of taxpayers,
dollars.
Enforcement: The third essential component of the Federal
guarantee is enforcement. Implicit in the concept of defined
populations and defined benefits is the notion of a meaningful
enforcement mechanism. A Federal cause of action for
beneficiaries assures that those seeking a remedy for the
deprivation of medical care receive the same due process rights
everywhere in the United States. The new Republican bill
requires states to provide a state right of action, but
eliminates the Federal right of action for individuals and
providers who assert that a state is violating Federal Medicaid
laws. The only access to Federal court for such claims would be
if the Secretary brings the action to Federal court on behalf of
the individual or if the individual petitioned the U.S. Supreme
Court for review of a decision of a state's highest court. By
denying beneficiaries access to the Federal courts, the
Republican bill eliminates individuals' guarantee to enforceable
Federal benefits. Thus, Medicaid would confer a Federal right to
benefits but lack a Federal enforcement mechanism - a virtually
unprecedented situation.
Provider suits against states have caused great problems for
the states. Under the Administration's plan, the Boren Amendment
and related provider payment provisions would be repealed,
thereby eliminating these causes of action by providers. Thus,
the Administration's plan resolves states' concern about their
exposure to providers, suits in Federal court, and does not
undermine beneficiaries, ability to enforce their Federal
guarantee to coverage and benefits.
On balance, when we assess the three components required to
make any guarantee real -- the definitions of eligibility,
benefits, and enforcement -- we find that the so-called
"guarantee" of Medicaid coverage and benefits contained in the
new Republican bill is neither real nor enforceable for
beneficiaries. This is not about whether the governors can be
trusted. They can be trusted, which is why our proposal offers
states unprecedented flexibility in program management and why we
have worked with so many states on their innovative
demonstrations. The issue is whether an individual, regardless
of where he or she lives, is guaranteed meaningful coverage.
Financing
The President's second principle for Medicaid reform is an
appropriate financing structure -- namely, one that maintains the
Federal-state partnership that has been at the heart of the
Medicaid program for 30 years. Under this partnership, Federal
dollars follow the people, meaning that the Federal government
shares responsibility with the states for increased costs
associated with increases in enrollment. As with the Federal
guarantee of coverage and benefits, the new Republican bill falls
far short of meeting this principle.
This newest financing structure is simply the MediGrant II
block grant formula, dressed up with a tiny embellishment to pay
lip service to the governors' principles that funding must
automatically adjust for enrollment.
To demonstrate this point, I will walk through each component
of the financing structure of the new Republican bill.
Base Allotment: The first component of the Republican funding
system is called the base allotment. These allotments, which
account for an average of 96 percent of total Federal spending
over the 6 year period are distributed to states based on a
formula that includes factors such as "needs-based amounts" and
"program need". Given this structure, at first it might appear
that each state's base allotment is determined based on its
actual need, including enrollment growth and caseload changes.
However, the base allotment is not what it seems. Only 5
percent of this 96 percent of funding is actually distributed
based on need. The remaining 91 percent is distributed to states
based on annual caps. Under this system, states' allotments are
determined through the use of "floors" and "ceilings", rather
than by the results of the needs-based formula. Each year,
between 44 and 49 states' allotments are determined through a
floor or ceiling. For these states, the new Republican bill is a
block grant with a new name.
Furthermore, even the 5 percent "needs-based" funding does
not truly reflect the financial need of states in their Medicaid
programs. This is because it is determined by the number of poor
people in a state rather than Medicaid enrollment growth. As a
result, if the number of Medicaid enrollees in a state increases
but the number of poor people does not, the state's base
allotment would not increase.
Umbrella Fund: The second component of the financing
structure is called the "umbrella fund", and it consists of
supplemental Federal money that is to be distributed to states
with high enrollment growth. But if the Republican umbrella is
the states' only protection against the costs of high enrollment
growth, the states are going to get drenched. The entire
umbrella fund accounts for only 3 percent of all CBO estimated
Federal Medicaid spending; thus, it could provide only a fraction
of what states would need in times of recession. In addition, it
covers enrollment increases only for the year of the increase
-not for any later years during which the new enrollees continue
to receive Medicaid. Thus, if a state suffered a three-year
recession that caused its Medicaid enrollment to rise, it could
get umbrella funds for new enrollees for their first year, but
could be forced to bear the entire cost of these enrollees for
any later years during which they remained on Medicaid.
Assume that the recession begins in year 2. This recession
causes a dramatic increase in the state's enrollment, which
triggers an umbrella payment to assist the state in covering the
costs of these new enrollees. In year three, however, the
state's enrollment remains at the same level as in year two, but
this time there is no umbrella payment, because these payments
are based only on changes in enrollment from the previous year,
not total enrollment. Thus, the state is forced to bear the cost
of the much higher enrollment with the same amount of Federal
assistance as it received in year one.
Pools for Undocumented Aliens and Indians: The final
component of the financing structure is $4.3 billion to assist
states in providing care for undocumented aliens and Native
Americans. The first pool is allocated across the 15 states with
the highest numbers of undocumented aliens. The second pool is
allocated among all states that have Indian-funded health
facilities or programs.
Changes in FMAP and Taxes and Donations Laws
In addition to replacing the current financing partnership
with a block grant to states, the new Republican bill also
includes two changes in the way states finance their share of
Medicaid costs. It increases the rate of Federal contribution to
Medicaid (known as the FMAP) for many states, thereby reducing
the amount of funds necessary to collect Federal matching funds.
It also repeals the restrictions on states' use of provider tax
and donation financing mechanisms.
While these proposals are appealing to many states, they
raise significant concerns. Specifically, the proposed changes
to the FMAP will raise the Federal share of national Medicaid
spending from 57 percent to 63 percent. In addition, the FMAP
changes could encourage states to reduce their contributions to
the program, resulting in even deeper reductions in total
Medicaid spending than this bill suggests. The new Republican
bill will reduce total Federal spending on Medicaid by $72
billion over 6 years. But total reductions in Medicaid spending
could be far greater. The Center for Budget and Policy
Priorities estimates that states could reduce their own spending
on Medicaid by about $185 billion over 6 years without decreasing
the amount of Federal funds for which they are eligible. Thus,
the new Republican bill could lead to a total reduction of
approximately $257 billion in Medicaid spending over the next 6
years.
Defining and revising the appropriate Federal and state
contributions and spending levels through matching formula or
other means always will be one of the most difficult issues to
settle in any Medicaid reform plan. There is no question that
these matters merit careful attention in the long-term. The
President's plan proposes to gain advice from an
intergovernmental advisory commission on the appropriate
relationship between Federal and state funding before the
Congress proceeds to change the current distribution.
The new Republican bill also would permit unconstrained use
of provider tax and donation financing approaches for the "state"
share of Medicaid. These are the same financing approaches that
were widely used by some states in the early 1990s to increase
their Federal Medicaid payments without actually increasing state
Medicaid spending.
During the late 1980s and early 1990s, many states took
advantage of these types of financing mechanisms, costing the
Federal government billions of dollars and helping to drive
annual Medicaid spending growth rates to well over 20 percent.
Congress responded in a bipartisan fashion by limiting the
provider tax schemes and completely outlawing the donations
schemes. Now, the Republican bill seeks to remove these
restrictions that were passed with overwhelming bipartisan
support just a few years ago. Without these restrictions, states
would be free to finance significant portions of the state share
without contributing any real state dollars, leading to
substantially lower support overall for the Medicaid program.
In summary, the new Republican bill fails to meet the
President's second principle for Medicaid reform -- a financing
structure that maintains the Federal-state partnership that has
been at the heart of the Medicaid program for 30 years. Neither
does it meet the financing principles agreed to on a bipartisan
basis by the governors. The governors' proposal reflected a
willingness to assume a greater responsibility for the management
of the Medicaid program, but only if they had a strong financial
partner to help meet the costs. The NGA proposal was designed to
provide this Federal-state partnership, and was based on a
funding mechanism that protected states from the full costs
associated with actual changes in enrollment. The money was
supposed to follow the people, in order to protect states from
unexpected, uncontrollable enrollment increases. When the latest
Republican proposal was released, it did not take the Democratic
Governors long to realize that the centerpiece of their deal was
no longer part of the mix.
Protecting beneficiaries, families, and taxpayers
This brings me to the President's third principle for
Medicaid reform: protections for beneficiaries, families, and
taxpayers. Once again, the new Republican bill fails to meet the
President's principle.
The new Republican bill would repeal title XIX and create a
new title for the Medicaid program. This has the effect of
seriously compromising the framework for quality standards,
beneficiary and family financial protections that limit families,
out-of-pocket costs, and program accountability.
Out-of-Pocket Costs: This bill reduces or eliminates many
long- standing family and beneficiary protections. For example,
it would permit states to require adult children of Medicaid
beneficiaries to contribute to the cost of their care, except for
long-term care. In addition, the bill grants states broad
discretion to impose cost- sharing requirements on Medicaid
beneficiaries. It imposes minimal cost-sharing limits only for
certain services to children and pregnant women below poverty,
leaving other women, children, and most disabled and elderly
fully exposed to potentially serious financial consequences.
This lack of limits on cost-sharing is another factor which
effectively undermines these persons' "guarantee" of eligibility
and benefits.
In addition, while the bill retains current law provisions
designed to protect spouses and other relatives of nursing home
patients from excessive liability for the cost of care, repeal of
the more general cost sharing protections significantly minimize
these protections. For example, nursing home residents who have
spent down their income to become eligible for Medicaid could be
charged any level of cost-sharing to help pay for long term care
services. In addition, services included in the nursing home
benefit could be reduced, leaving the spouses or children of
nursing home residents to bear the full cost of these services.
Furthermore, states could charge elderly or disabled persons any
level of premium, which could be set so high as to effectively
exclude them from the program.
Quality Assurance Requirements for Managed Care: In addition,
the new Republican bill makes no mention of quality assurance
requirements or monitoring responsibilities for Medicaid managed
care. This is a serious concern since Medicaid managed care
enrollment is increasing so dramatically. About one-third of
beneficiaries now are in managed care, a 140 percent increase in
enrollment over the past three years. The President's plan
recognizes the need for updating managed care quality standards.
It replaces some outdated approaches with a quality improvement
program that must include appropriate standards for
Medicaid-contracting health plans and data analysis that tracks
utilization and outcomes.
Fiscal Accountability: Finally, we recognize that the Federal
government finances well over half of Medicaid spending
nationwide, at a cost to Federal taxpayers which is growing to
more than $100 billion a year. The Federal government has a
responsibility to those taxpayers to ensure that these funds are
spent efficiently and appropriately.
Fulfilling this responsibility requires imposing a minimal
amount of reporting and monitoring requirements on states. There
are ways, similar to the approach taken in the President's plan,
that would provide states with expanded flexibility in management
and operation of their Medicaid programs, while ensuring
accountability for funds at the same time. Unfortunately, the
new Republican bill, includes no quality assurance requirements
or monitoring responsibilities for Medicaid managed care, and it
contains no mechanism to ensure that changes in benefits and
cost-sharing do not jeopardize the sufficiency of coverage.
Thus, under the Republican bill, the Federal government will
finance a greater percentage of the Medicaid program, but
taxpayers will have fewer assurances that their money is being
well spent.
In summary, like its predecessor last fall, the new
Republican bill fails to meet the President's third principle
-protecting beneficiaries, families, and taxpayers.
Let me conclude on Medicaid by focusing on one fundamental
structural issue -- whether we approach the task of Medicaid
reform by making changes in the current title XIX of the Social
Security Act, or by repealing that program and replacing it with
a new title. We support reform, not repeal, of title XIX. The
potential unintended consequences of repealing and replacing this
program are staggering -- for states, beneficiaries, providers,
and the Federal government, especially when you consider that it
would reopen thirty years of settled litigation. The Congress
can address many of the most pressing concerns about any Medicaid
reform plan by amending the current law.
We in the Administration believe that Medicaid must be
financed through a Federal-state partnership that ensures Federal
funding and provides a real, enforceable guarantee of coverage
for a defined package of health and long-term care benefits. The
President's plan proposes unprecedented flexibility for the
states to operate their programs, pay providers, and use managed
care and other delivery arrangements, while retaining and
revising key standards related to quality and beneficiary
financial protections. The President's proposal would achieve
those objectives in a way that would also help to balance the
budget by 2002.
Welfare Reform
Mr. Chairman, I would now like to turn to welfare reform. As
we have worked to enhance state flexibility under Medicaid in the
absence of national reform legislation, the Administration has
also worked with states to transform their welfare systems to
require work, promote parental responsibility, and protect
children.
Over the last three years, within the framework of the Family
Support Act, we have worked with governors and other state and
local elected officials to give 39 states flexibility to design
welfare reform strategies that meet their specific needs. These
efforts are directly affecting approximately 10 million
recipients throughout the country, or 75 percent of all welfare
recipients nationwide. States, led by governors of both parties,
.are now demanding and supporting work; time-limiting assistance;
requiring teens to stay in school and live at home; strengthening
child support enforcement; and strengthening families.
The President also has worked with the Congress to expand the
Earned Income Tax Credit to help make work pay more than welfare.
This program, which President Ronald Reagan said was the most
pro- family, pro-work initiative undertaken by the United States
in the last generation, means that, in 1994, millions of families
with children with incomes under $28,000 paid less in income tax
than they would have if the laws hadn't been changed in 1993.
The efforts we have taken at both the Federal and state
levels have begun to pay off. Welfare caseloads have declined by
1.3 million since January of 1993 -- a decline of about 9
percent. A larger percentage of those still on the rolls are
engaged in work and related activities. Food Stamp rolls have
gone down. Teen birth rates have gone down. At the same time,
child support collections have gone up, as the Administration has
worked to improve state collection efforts, the IRS's offset of
income tax refunds, and the ability of the Federal government to
make Federal employees accountable for the support they owe their
children.
We continue to move ahead. On May 10, the President directed
the Department of Health and Human Services to implement an
initiative to strengthen parental responsibility among teen
parents. This initiative builds on the belief -- which I'm
confident is shared by this committee, Congress, and the states
-- that encouraging parental responsibility must remain a
bipartisan imperative.
The President's initiative includes four actions: requiring
all states to submit plans for requiring teen mothers to stay in
school and prepare for employment; cutting through red tape to
allow states to reward teen mothers who finish high school, in
addition to sanctioning those who don't; requiring all states to
have teen mothers who have dropped out of school return to school
and sign personal responsibility plans; and challenging all
states to require minor mothers to live with a responsible adult.
With these actions, we're focusing on one of the key components
of welfare reform: parental responsibility. And we're putting
young mothers on the right path, toward employment and
self-sufficiency.
The Need for Legislative Action
While we've made great progress on welfare reform through
welfare reform waivers, executive actions, and other initiatives,
we still need national welfare reform legislation. As part of
his balanced budget plan, the President has proposed a
comprehensive welfare reform proposal that would require work,
promote parental responsibility, and protect children. The
President has made it clear that if Congress sends him a clean
welfare reform bill that follows these fundamental principles, he
will sign it. However, the President has also made it clear that
real welfare reform should not be impeded by attaching harmful
proposals to it, such as the elimination of guaranteed health
coverage for poor children, pregnant women, and people with
disabilities.
Fortunately, we have begun to approach bipartisan consensus
on a framework for welfare reform legislation based on these
fundamental principles. We believe that the governors have moved
the debate forward and increased the likelihood that Republicans
and Democrats will produce bipartisan solutions to reforming our
welfare system. Senators Chafee and Breaux and their colleagues
have also moved us much closer to that goal, and, as I said
earlier, we greatly appreciate the great amount of time and
outstanding leadership they have committed to this process. We
are pleased that the Chairman's bill, S. 1795, reflects some of
the significant progress that has been made on welfare reform
since the President was forced to veto HR 4.
It is now up to this Administration and this Congress to
build on the spirit of these efforts to reach our mutual goals:
flexibility for the states; incentives for AFDC recipients to
move from welfare to work; increased parental responsibility; and
protections for our most precious resource, our children.
The New Republican Bill (S. 1795)
As I mentioned, the Chairman's new bill, S. 1795, makes
important improvements to the H.R. 4 conference bill. It
incorporates a number of key changes recommended by the
Administration and contained in the NGA and the Breaux-Chafee
proposals. These are steps in the right direction, and we would
urge the Committee to build on this bipartisan ground. However,
the bill does not address several issues that are of concern to
the Administration, particularly in providing the resources and
incentives to protect children, ensure accountability, and move
people from welfare to work. And, instead of stand-alone welfare
legislation the Administration has repeatedly requested, the new
bill continues to link welfare reform with unacceptable Medicaid
changes.
We appreciate the steps the Chairman has taken to provide
additional protections for children and families in the new
Republican bill. The important modifications you have made to
H.R. 4 move the legislation much closer to the President's vision
of true welfare reform. We are particularly pleased that S.
1795:
- reflects an understanding of the child care resources
states will need in implementing welfare reform by adding $4
billion for child care above the level in the conference report
for H.R. 4. These proposals improve upon H.R. 4, which did not
provide child care resources needed for those required to move
from welfare to work and low-income working families at-risk of
welfare dependency.
- adopts several provisions from last year's Senate-passed
bill -- including exemptions from the time limit; a true state
option on implementing a family cap; and requirements that teen
mothers live at home and stay in school.
- remains the annual spending cap on Food Stamps, which will
preserve the program's ability to expand during periods of
economic recession and help families when are most in need.
- no longer includes the provisions for a child nutrition
block grant demonstration proposed in H.R. 4, which would have
undermined the program's ability to respond automatically to
economic changes and maintain national nutrition standards.
- recognizes the importance of child support enforcement to
welfare reform and includes all of the major proposals for child
support enforcement reform in the President's bill.
- retains the safety net for abused and neglected children,
adopted children and children in foster care by continuing
critical federal entitlement programs for them.
- removes the two-tiered benefit system for low income
disabled children, and ensures full benefits for all eligible
children under the SSI program.
The new Republican bill makes other improvements to H.R. 4
that will strengthen states, abilities to move people from
welfare work. For example, S. 1795 makes improvements to the
performance bonus provisions contained in H.R. 4 by establishing
a separate funding stream to pay for bonuses. It increases the
cash block grant contingency fund modestly and adds a more
responsive trigger based on the Food Stamps caseload. Consistent
with the NGA proposal, S. 1795 gives states some more flexibility
to run work programs by allowing job search for up to 12 weeks
and allowing teen parents in school to count toward the work
requirements.
While we applaud the inclusion of many of the provisions
endorsed by numerous Democratic and Republican senators and
governors, the new Republican bill still fails to include other
provisions that have earned bipartisan endorsement.
For example, S. 1795 incorporates almost all of the cuts that
were in the bill the President vetoed -- a total of $51 billion
(excluding Medicaid) over 6 years under CBO's new baseline.
These cuts are far greater than those proposed by the NGA or the
Administration. The cuts in Food Stamps and benefits to legal
immigrants are particularly deep. In addition, unlike the
Administration's bill, the Republican bill would also allow
states to substantially reduce their own spending on programs
serving low income families, compounding the impact on poor
children and families.
We are particularly concerned that S. 1795 actually decreases
state flexibility by prohibiting states from providing a safety
net for children -- by not allowing them to use block grant funds
to provide non-cash assistance or vouchers for children in
families who are subject to the 5 year time limit. No such
prohibition was contained in H.R. 4 and it is difficult to
understand why the leadership has moved in this direction.
Further, the new Republican bill does not maintain the
guarantee for medical assistance for all those currently eligible
or those who reach the five year time limit. And, as I mentioned
previously, S. 1795 fails to continue transitional Medicaid
coverage for families leaving welfare for work.
In addition, S. 1795 also fails to provide adequate
protection for states in the event of economic downturns. The
contingency fund is set at too low a level and does not allow for
further expansions (above the $2 billion cap) during poor
economic conditions and periods of increased need.
The new Republican bill also makes deep cuts in the Food
Stamp program, which take the form of a reduction in benefits to
families with high shelter costs and a four month time limit to
childless adults who are not give a work slot. It would also
permit states to replace the Food Stamp Program with a block
grant, jeopardizing the nutrition and health of millions of
children, working families, and the elderly.
S. 1795 includes no changes to the unduly harsh and
uncompromising immigration provisions that were contained in the
H.R. 4 Conference bill. While the Administration supports
strengthening requirements on the sponsors of immigrants for SSI,
Food Stamps, and AFDC, S. 1795 requires a permanent SSI and Food
Stamps ban for virtually all legal immigrants and a 5-year ban on
all other Federal programs, including Medicaid, for new
immigrants. There are no exemptions for immigrants who become
disabled after entering the country, families with children, or
for individuals who have been working for a few years and lose
their job. The proposal also unfairly shifts costs to states
with high numbers of immigrants.
Another concern is the transfer authority to the Social
Services Block Grant (SSBG) in the proposed cash assistance block
grant. Transfers to SSBG could result in the substitution of
Federal dollars for state dollars in a range of state social
services activities, potentially reducing or even eliminating the
effective state maintenance of effort levels required for the
cash block grant.
The Breaux-Chafee proposal addresses many of the
Administration concerns and would strengthen state accountability
efforts, welfare to work measures and protections for children.
It provides one of many foundations upon which this Committee
should build to reach our mutual goals: flexibility for the
states; incentives for AFDC recipients to move from welfare to
work; increased parental responsibility; and protections for
children.
The American people want Congress to pass a bill that the
President can sign -- that honors our values and ensures fiscal
integrity. They want a bill that promotes work and
responsibility, but also protects children. They want a bill
that supports families who play by the rules and rewards those
who work hard to support themselves. They want a bill that
ensures accountability for use of taxpayer funds. In short, they
want real welfare reform.
Mr. Chairman, let me restate the Administration's commitment
to enact bipartisan welfare reform legislation. I know the
President shares my hope that, with the leadership of this
committee, the bipartisan cooperation that existed in 1988 will
surface again to address the critical issue of welfare reform
this year.
CONCLUSION
The last time I testified before this committee, I was
encouraged that the governors, bipartisan efforts appeared to be
moving us toward a solution that could meet the President's
principles. Since that time, the Breaux-Chafee group in
particular has worked hard to build on the balanced approach
envisioned in the NGA Medicaid and welfare agreements. I can
assure you that this Administration stands ready to work with the
members of this committee and the entire Congress to enact both a
balanced budget and Medicaid and welfare reform legislation. we
are confident that we can reform the welfare system to promote
work and responsibility and protect children, and design a
reformed Medicaid program that will meet the needs of
beneficiaries, states, and taxpayers. We look forward to working
in a bipartisan way to enact both Medicaid and welfare reform
legislation of which we can all be proud.
Mr. Chairman, I want to thank this Committee for giving me
the opportunity to testify today, and I look forward to answering
your questions.