Not on the public dole, but why?

Amid the rah-rah atmosphere of plummeting welfare rolls, declines in other forms of public aid to the poor - food stamps and health care - are sounding alarm bells.

Food-stamp enrollment has shown a dramatic 28 percent decline in the past four years, with almost 8 million people leaving the rolls.

Participation in Medicaid, the health-insurance program for the poor, has shown a smaller net decline, unusual for a program that traditionally has only expanded.

What's behind the drop? Certainly, the strong economy can account for some people, who are now earning too much to qualify for benefits. Changes in the food-stamp laws, including the exclusion of some legal immigrants, account for another part of the drop in that program.

But advocacy groups, members of Congress, and federal government officials are worried that states are "diverting" people - intentionally or unintentionally - from food and medical programs that they're entitled to, as agencies focus on getting people off public assistance and into jobs.

"We're quite concerned about what's safe to say is a disturbing trend," says a government official, speaking on background.

Another problem, say advocates, is the bureaucratic mistakes that persist in a system that's still working to de-link cash assistance from other forms of aid to the poor.

Princess Norwood, a single mother of four in Baltimore, knows what it's like to have the financial floor fall from beneath her. In late January, she received a letter from the state announcing she was losing cash benefits and medical assistance for the whole family.

According to the welfare office, she had too many absences from her work training program and was being "sanctioned." Regardless, she should not have lost her medical assistance.

When she was concerned her son was ill, she treated him herself, instead of taking him to a doctor. She also contacted a Baltimore legal aid clinic that helped her fight her case. On Tuesday, she learned all her benefits are being restored.

"When I said I had a lawyer, they paid attention," says Ms. Norwood, an upbeat young woman who, with her sister Marquetta, and Marquetta's eight kids, dreams of escaping their cramped, lead-paint-drenched row house, and moving into subsidized housing outside the city.

Peter Sabonis, the lawyer who helped Norwood, says he doesn't believe the state was intentionally trying to deny her benefits she qualified for. He attributes her loss of Medicaid to state workers who don't know how to use new computer programs that have "de-linked" the two programs.

A spokeswoman for Maryland's Department of Human Resources says cases like Norwood's are rare.

In New York City, it's a different story. In January, a federal judge found that the city was illegally blocking people from applying for Medicaid and food stamps and ordered compliance with federal regulations. After that ruling, the federal agency that administers food stamps sent a letter to all state welfare commissioners, reminding them they must continue to encourage people to apply for food stamps even if they've been diverted from applying for cash assistance.

Why the decline?

Much remains unknown about why Medicaid and food stamps rolls are declining. Studies are under way, and Rep. Nancy Johnson (R) of Connecticut, chairwoman of the House Ways and Means human resources subcommittee, is planning to hold hearings.

Preliminary research on food stamps by advocacy groups shows about 10 percent of the caseload decline is a result of the 1996 welfare reform that changed eligibility for food stamps - namely, the removal of benefits to about 700,000 legal immigrants (some of whom have since regained benefits).

Another portion, between 28 to 45 percent of the caseload drop, could be associated with improvements in the economy, according to the research group Mathematica. The rest of the decline, the group suggested, is a result of the de-linking of cash assistance and other benefits.

The newly reinforced stigma around public assistance may also be discouraging people from applying for food stamps and Medicaid, advocates say. Another problem is many people simply may not understand that while they no longer qualify for cash aid, they may qualify for other help.

"I think people still generally believe if they aren't eligible for welfare, they're not going to be eligible for Medicaid," says Ron Pollack, executive director of Families USA, a health-care advocacy group.

Another category of uninsured are people who left welfare for work and received up to a year of transitional Medicaid, but when that period ended, still were in low-wage jobs that didn't provide health coverage. This category of working poor is also increasingly showing up at soup kitchens. Their incomes are just above the level that qualifies them for food stamps, but when bills are due, food money is often the first to go.

The annual US Conference of Mayors report on hunger and homelessness, released in December, found that demand for emergency food assistance in the surveyed cities was up 14 percent over the previous year. The decline in poverty rates is well below the 28 percent decline in food stamps from 1994 to 1998.

Between 1994 and 1997, the enrollment in Medicaid has declined from 40.5 million to 40.3 million people. In fact, enrollment should have increased, advocates say, because of expanded eligibility for children.

'Public charge' issue

One factor that may discourage legal immigrants from applying for benefits is the brewing issue of "public charge." When a legal immigrant seeks to change his immigration classification, the Immigration and Naturalization Service can look at a family's history and determine if they're a drain on public resources, or a public charge.

Since welfare reform, there has been no clarification of which types of assistance are considered public charge programs. Historically, food stamps weren't included. Now, people aren't sure.

"This creates a chilling effect," says Ed Bolen, senior food policy analyst at California Food Policy Advocates in San Francisco.