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Testimony on "The Work Incentives Improvement Act" by Sally Richardson
Director, Center for State and Medicaid Operations
Health Care Financing Administration
U.S. Department of Health and Human Services

Chairman Bilirakis, Congressman Brown, distinguished Subcommittee members, thank you for inviting me to discuss the strong support of the Clinton Administration for the Work Incentives Improvement Act of 1999. We would like to thank Chairmen Bilirakis and Bliley, Congressmen Dingell, Brown, Lazio and Waxman, and Senators Roth, Moynihan, Jeffords and Kennedy for their leadership in building bipartisan support for this prudent, fair, and necessary legislation.

The Health Care Financing Administration is working diligently, in concert with the President's goals, to improve the lives of people with disabilities. These individuals deserve to be treated with dignity, to be able to contribute their talents and skills to society, and to have broad options for obtaining the care and services they need. Now, more than ever, given innovations in technology and the historic strength of the economy, people with disabilities can and should be able to work and pay taxes.

One way we are working to meet these goals is by encouraging States to offer more Medicaid home and community-based services. This involves allowing funds for care and services to "follow the person,"instead of dictating that services will be funded only in specific settings like nursing homes. And, based on results of a University of California San Francisco study we commissioned, we are changing Medicaid rules to encourage care in home and community-based settings.

However, some policy changes needed to improve the lives of people with disabilities require legislation. The Work Incentives Improvement Act is one such piece of needed legislation.

We need this legislation so people with disabilities can take fuller advantage of technology advances that have opened doors to the workplace for them. We must ensure that people with disabilities can engage in gainful employment without losing public health care coverage that they often cannot replace in the private sector. We must also give young people with disabilities the opportunity to go from education to employment without ever receiving cash assistance in order to gain health care coverage. This bill will do so.

The President, HCFA and a wide, bipartisan array of Congressional leaders strongly support this bill. It is included in the President's fiscal 2000 budget, and is part of a broader Administration agenda for helping disabled individuals return to the workforce.

Currently three out of four people with disabilities are not working. The unemployment rate among disabled people is exacerbated by existing law, which can make a person with a disability who takes a job ineligible for Medicare and Medicaid because of their income or ability to work. Private sector coverage is often unavailable or unaffordable for disabled people specifically because of their disability.

The Balanced Budget Act enables States to provide Medicaid coverage to the working disabled with incomes up to 250 percent of the federal poverty level if they meet the unearned income eligibility criteria and definition of disability for the Supplemental Security Income program. We have encouraged States to take advantage of this opportunity, and have approved Oregon's plan to do so. Several other States have proposals under consideration, but too few States have taken advantage of this BBA provision.

The Work Incentives Improvement Act will improve upon the Balanced Budget Act in a number of ways. It expands State options for providing Medicaid coverage to the working disabled. It allows States to lift or relax current eligibility limits on assets and income for this population. States would be able to set limits on assets and income, and they would be able to charge premiums on a sliding scale. States could also allow the working disabled to continue to buy Medicaid coverage when they would otherwise lose eligibility due to medical improvement.

The Work Incentives Improvement Act will provide $150 million over five years in grants to participating States to help them develop programs and systems that support working individuals with disabilities, build the capacity to provide home and community-based services, and conduct outreach campaigns to connect individuals with services. This money should help States facilitate coverage for optional eligibility groups and increase the likelihood that they will choose to provide this coverage.

The Act will also provide Medicare Part A coverage (for inpatient hospital and related acute care needs) to any individual who remains disabled but loses Social Security during the 10 years following enactment of this bill due to their ability to earn a living. This will provide important relief for the working disabled in States that do not choose the Medicaid expansions.

And it provides for a $300 million demonstration program over five years that would allow participating States to provide Medicaid to individuals with health conditions that have not yet rendered them disabled, but that can be expected to cause the level of disability required to qualify for disability income. This demonstration would test the cost effectiveness of providing coverage and consequent care needed to prevent disability and related costs. And it will provide important data that private insurers can use in crafting new coverage policies for disabled workers.

The bill also includes a series of non-health provisions that target individuals receiving Social Security disability benefits, including:

• a "Ticket to Work" public-private partnership program that would allow beneficiaries to go to either a public or private participating provider for employment-related services, with payment to providers based on employment outcomes;
• restrictions on employment as the sole basis for continuing disability reviews;
• expedited eligibility determinations for beneficiaries who have left disability rolls to return to work but then must reduce or stop work due to their impairments; and
• outreach and assistance programs to provide information on work incentives.

The President has proposed to broaden the outreach and assistance grant programs in the bill to include "one-stop shopping"assistance for people who need help navigating the bureaucracies involved in returning to work. The proposal would provide grants to ensure that one-stop centers, established by the Workforce Investment Act of 1998, are focused on integrating services that are essential for people with disabilities. We hope that you will consider this broader grant program in this bill or other legislative proposals.

The threat of no health coverage should not be allowed to discourage capable individuals from returning to work. It is both prudent and fair to extend Medicare and Medicaid benefits to disabled individuals under the Work Incentives Improvement Act in order to remove this threat.

ADMINISTRATION SUPPORT FOR THE WORKING DISABLED

As mentioned above, support for the Work Incentives Improvement Act is part of broad Clinton Administration support for efforts to improve the lives of people with disabilities and facilitate their employment. President Clinton established the President's Task Force on Employment of Adults with Disabilities by Executive order on March 13, 1998. This task force is working to coordinate national policy to bring adults with disabilities into the workforce at a rate that is closer to the general population.

The President's fiscal 2000 budget includes a three-part initiative that will invest more than $2 billion over five years to encourage employment among disabled individuals. The first part of that initiative is enactment of the Work Incentives Improvement Act. On January 13, 1999, the President announced his support for this legislation as part of his larger initiative to improve economic opportunities for Americans with disabilities.

The President's fiscal 2000 budget's working disabled initiative also includes a proposed $1,000 annual tax credit for workers with disabilities to help defray the costs of transportation, adaptive equipment or other job assistance. It also includes a $15 million or 50 percent increase for assistive technology activities authorized under the Assistive Technology Act of 1998, and expanded access to information and communication technological advances that help disabled individuals function on the job. Workers with disabilities also will benefit from the President's multi-faceted long-term care initiative that includes a number of provisions targeted toward adults with disabilities.

Also, to further provide States flexibility to offer more home and community-based services, the Vice President recently unveiled a new proposal to allow States to expand home and community-based care to individuals with incomes up to 300 percent of the Social Security Income limit. That is the same income limit for providing care in nursing homes. This would provide another State option to enable families with long term care needs to stay in the community. The initiative would cost $110 million over five years, and is paid for in the Administration's balanced budget.

CONCLUSION