Clinton Encourages New Paths on Welfare

AS it considers wide-ranging reform of the welfare system, the Clinton administration is making it easier than ever for states to experiment with the current setup.

The Department of Health and Human Services (HHS) announced procedures last week to speed up consideration of states' applications to conduct demonstration projects within Aid to Families with Dependent Children (AFDC), Medicaid, and Medicare, which are joint federal-state programs. The move comes in response to a request from the nation's governors.

The pace of such waiver requests picked up last year. At times, the approval process has been inefficient and time-consuming. But even without the new procedures, some states have noticed under President Clinton a greater degree of high-level HHS interest and technical assistance in getting demonstration projects approved and running.

Oregon is one happy customer. A year ago, the Bush administration turned down the state's request to ration Medicaid care, because it discriminated against the disabled, the administration said. The program would have limited expensive, long-shot medical procedures, thus freeing up funds that could bring more people into the program.

Oregon waited a year, then was turned down. After Mr. Clinton took office, top-level HHS officials, such as Secretary Donna Shalala's chief of staff, went to Oregon to work with state officials to rework the proposal, which involved changing the way medical procedures would be ranked. On March 19, HHS approved Oregon's waiver.

"The difference is I don't believe Secretary [Louis] Sullivan ever contacted Gov. [Barbara] Roberts," says Jean Thorne, director of Medicaid in Oregon, referring to the head of HHS under Bush. "Governor Roberts had frequent contact with Donna Shalala."

Gov. Bruce Sundlun (D) of Rhode Island has also had high praise for Shalala. His state is seeking to set up a managed-care arrangement for Medicaid recipients, and needs a number of waivers to do so. Under the old regime, the state could expect an answer in one to two years, says Robert Fallon, director of the state's health services. Now he expects an answer in 60 to 90 days.

The policies announced last Wednesday by HHS include: concurrent rather than sequential review of waivers by HHS divisions, assessment of the "cost neutrality" of a demonstration project over its entire period rather than year by year, consideration of joint waivers in multiple programs, and allowing demonstrations to last long enough to give them a fair test.

It may seem superfluous for the administration to focus on waivers from the old system as it overhauls it. But, say HHS officials, it's going to take a few years before a new system is in place, and in the meantime, states - and the federal government - can glean valuable data through experimentation.

Bruce Reed, a co-chair of the White House's Working Group on Welfare Reform, noted at a forum on welfare reform last week that the increase in waivers proves that the system is eroding and needs to be revamped.

The latest waiver was granted Aug. 13 to Iowa, which will allow AFDC recipients to accumulate assets in such a way that they are encouraged to take and keep jobs. For example, recipients can build up a bank account that doesn't count as ordinary income, and can be used only for education, home ownership, business startup, or emergencies.

At root, states are searching for ways to return the system to its intended purpose: to help people while they are in need but to encourage self-sufficiency as soon as possible. Disincentives, such as the high cost of child care and a lack of medical benefits in many low-paying jobs, have kept some aid recipients out of the work force.

Mark Greenberg, senior attorney with the Center for Law and Social Policy, an advocacy group for the poor, sees a "bandwagon" effect with governors pushing to experiment. "Waiver packages are the trendy way for a governor to assert that he or she is trying to do something about the problem," he says.

In the area of AFDC, Mr. Greenberg says, the rush to get waivers began last year under President Bush. Projects that were "cost neutral" - especially those that cut benefits - were routinely approved.

Unlike Bush, though, the Clinton administration has said it reserves the right to turn down a waiver bid for policy reasons. A key test will come when HHS rules on a request by Wisconsin, which wants a pilot program in two counties that would require able-bodied welfare recipients to work for benefits. Benefits would end after two years. "This is a test of whether the president is serious about time limits on cash benefits," says Gerald Whitburn, secretary of the Wisconsin Department of Health and Social

Services.

Clinton has stated that he wants his reform to include a two-year time limit on welfare benefits. But, says Paul Offner, a Senate Finance Committee expert on welfare, "in Wisconsin, you'll be on your own after two years. With Clinton, a job will be guaranteed by the state" after two years on welfare.

If the administration turns down the Wisconsin waiver, that could serve as a partisan flashpoint on welfare, since the governor of Wisconsin, Tommy Thompson, is a Republican. Governor Thompson has put his state in the vanguard of welfare experiments. Since 1988, the state has received 20 waivers.