Audit Finds Families Denied Medicaid

WASHINGTON — States are illegally denying Medicaid benefits to poor families being dropped from the welfare rolls, federal auditors have found. Medicaid’s top administrator said Tuesday the errors are widespread and promised a crackdown.

“I was very disappointed when I saw this,” said Nancy-Ann DeParle, head of the Health Care Financing Administration, which runs Medicaid. “I can’t say whether these are significant willful failures or mistakes.”

DeParle’s comments come nine months after her agency warned states that strict welfare rules should not prevent families eligible for Medicaid from getting the government-sponsored health care benefits.

But many such Medicaid-eligible families have been dropped from the program as its rolls have continued to decrease along with the welfare rolls, officials said.

DeParle promised to investigate and force states to fix the problems once the audit is complete. Auditors thus far have investigated 40 states and found widespread problems, she said, declining to say exactly how many states had problems.

She did not name any of the states with problems, saying they will be made public when audits are completed next year.

The problems include:

--States not telling people they are eligible for Medicaid when they are discouraged from applying for welfare.

--State computers that automatically wipe people off Medicaid when they leave welfare.

--Caseworkers improperly hassling families who apply for Medicaid.

“It’s surprising to us that states would think that’s OK,” DeParle said. “Some of them have not been complying with the law, so we’re going to be working with the states on some corrective action plans.”

States realize they are not signing up everyone who is eligible for Medicaid, though they are not acting deliberately to keep people from the program, said Bill Waldman, executive director of the American Public Human Services Association, which represents state welfare and Medicaid agencies.

Still, he said, the states must work harder to correct it.

“I think that there’s a real problem here,” Waldman said. “There’s no question about it.”

The trouble has been that Medicaid and welfare once went hand in hand, but since a massive 1996 welfare overhaul, they have been guided by different philosophies.

Cash welfare is being actively discouraged, as states push people to find jobs and get off the rolls. Governors and President Clinton regularly trumpet falling welfare caseloads as evidence that the overhaul is helping families become self-sufficient.

But Medicaid, while also government aid for the poor, is viewed as a positive support for families, particularly for people who leave welfare for low-wage jobs that do not provide health insurance benefits. There is also growing concern about the number of Americans who don’t have health insurance--some 44 million at last count; families that lose Medicaid generally makes that problem worse.

There’s a similar dynamic with food stamps, which are also seen as an important support for working poor families.

The problem is cultural and hard to fix, said Ron Pollack, president of Families USA, a liberal consumer group.

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