Assessing the New Feder alism (ANF) is a large multiyear. Assessing The New Federalism: An Introduction

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1 I N T O D U C T I O N Assessing The New Federalism: An Introduction A major new effort to monitor and understand changes in health care and social programs at the state level. by Anna Kondratas, Alan Weil, and Naomi Goldstein EDITO S NOTE: The Urban Institute s Assessing the New Federalism project is designed to document the extent and nature of the shift in responsibility for health, welfare, and social services programs from the federal to state governments. The project also is measuring the well-being of children, families, and individuals and will analyze relationships between state policy choices and well-being, especially for low-income populations. The primary data sources are results of policy case studies conducted in thirteen states; data gathered through a large household survey, in those states and a national sample; and other data compiled from all fifty states. This paper provides an overview of the project as an introduction to several papers in this volume of Health Affairs. NEW 17 FEDEALISM Assessing the New Feder alism (ANF) is a large multiyear research project of the Urban Institute that examines a broad spectrum of social policies, including health policy. The project is based on two premises. The first is that states are at the forefront of redesigning U.S. safety-net policy today, and, therefore, state variations are important to document and understand. Social policy in the United States has been undergoing a quiet revolution for the past few decades, with state governments increasingly developing both the capacity and the will to contest the federal government s dominance of social policy. The second premise of ANF is that the recent state and federal Anna Kondratas is a senior associate at the Urban Institute and codirector of the Assessing the New Federalism (ANF) project at the Urban Institute; she previously worked at the Hudson Institute, at the National Commission on America s Urban Families at the U.S. Department of Health and Human Services (HHS), and as assistant secretary for community planning and development at the U.S. Department of Housing and Urban Development. Alan Weil is a senior associate at the Urban Institute and is the other codirector of the ANF project; he also serves on President Clinton s Advisory Commission on Consumer Protection and Quality in the Health Care Industry. He was formerly executive director of the Colorado Department of Health Care Policy and Financing. Naomi Goldstein is project manager of the ANF project; she previously served as executive officer in the Office of the Assistant Secretary for Planning and Evaluation at HHS. H E A L T H A F F A I S ~ M a y / J u n e The People-to-People Health Foundation, Inc.

2 N e w F e d e r a l i s m The federal presence in social programs continues to loom large, but the momentum is clearly in the states. 18 INTODUCTION social policy changes are significant and will affect all low-income Americans and not just welfare or Medicaid recipients. Public concerns about long-term dependency and out-of-wedlock childbearing were among the factors that led to the transformation of the Aid to Families with Dependent Children (AFDC) program into the Temporary Assistance to Needy Families (TANF) block grant. Although there is no question that recent policy changes will affect current and future welfare recipients directly, these changes also are likely to affect a much broader population. There can be no precise baseline for studying the new federalism. Devolution has been an evolutionary process, proceeding at varying paces in different states and for different programs. The political debate in 1994 and 1995, with talk of block grants in many social policy areas, sharpened the issues around devolution, and this talk of radical change prompted the interest of the foundations that initiated the ANF project in mounting a large-scale monitoring effort. 1 The Urban Institute chose 1996 as the base year because it was the earliest that such a project could realistically be started and because it predates implementation of the most visible change: the federal welfare reform law. Despite the current focus on devolution, AFDC and Medicaid allowed considerable state variation from the start and in that sense have always been partially devolved. Waivers from federal rules in AFDC, Medicaid, and the food stamps program moved states even further along in that direction. Although the devolution that finally occurred in 1996 was much more limited than the preceding political talk might have led one to predict, encompassing only AFDC and a number of child care programs, the federal government made substantial changes in multiple programs and created new initiatives. The State Children s Health Insurance Program (CHIP) enacted in 1997 continues the trend of increased state discretion. Nontheless, devolution does not go as far as political rhetoric sometimes suggests. The TANF block grant established a new set of program standards at the federal level. Federal initiatives and centralization have increased in child support enforcement and health insurance industry regulation. Also, Food Stamps, Supplemental Security Income (SSI), and the Earned Income Tax Credit remain federal income-support programs, although there is some new flexibility for states in Food Stamps. The federal presence in social pro- H E A L T H A F F A I S ~ V o l u m e 1 7, N u m b e r 3

3 I N T O D U C T I O N grams continues to loom large. But the momentum is clearly in the states, and the ANF project is in a position to document both the changes and their limits. esearch Context The policy environment described above does not lend itself to traditional program evaluation, which is best suited to changes that are incremental and narrowly focused, with a clear starting point and a stable context. In contrast, the federal government has made major changes in multiple programs and, through waivers and legislation, freed the states to experiment broadly at their own pace. Moreover, neither the states nor the federal government is in a position to assess these changes comprehensively. Although the federal government will be doing a major tracking study of how welfare recipients fare over time, that study will provide answers only about recipients. Meanwhile, federal surveys on income, program participation, and health were not designed to provide state-specific information about low-income populations. Moreover, the federal government has reduced reporting requirements in some areas, although it has also imposed new ones. So there will be less information on some state activities, while new information may not, at first, be reliably or consistently reported. Although some states will be doing evaluations of their own programs (and others will not), these evaluations will not necessarily produce information that can easily be compared across states. Thus, as policies change, both the importance and the difficulty of obtaining information on state activities increase. To address this potential information gap, a group of private foundations has jointly funded the ANF project to monitor state-level developments in health care, income security, job training, and social services. The project examines the design, administration, funding, and implementation of programs in these areas. In collaboration with Child Trends, Inc., the project also is measuring the well-being of children, families, and individuals and will analyze relationships between state policy choices and well-being, especially for low-income populations. Project Design The ANF project has a dual mission. Monitoring and documenting is the first aspect of that mission; analysis of what has occurred is the second. The project design reflects the breadth and complexity of the change that is occurring around the country. Data collection has been organized around three separate but related efforts. The first is a database that provides key demographic, economic, programmatic, and other information on all fifty states and the District NEW 19 FEDEALISM H E A L T H A F F A I S ~ M a y / J u n e

4 N e w F e d e r a l i s m 20 INTODUCTION of Columbia. The second is two sets of policy case studies based on field research in thirteen states, one on health policy and the other on income support and social services programs. The third is a household survey conducted in each of the same thirteen states, with the addition of a national sample. esearch papers will be based not only on analysis of these rich new data sets but also on existing national databases such as the Current Population Survey and the National Health Interview Survey; states administrative data; and new information from outside sources as it becomes available. n State selection. Although we are collecting much data and will do some analysis of developments in all fifty states, we could not study all states intensively. For more in-depth study, we selected thirteen states (Alabama, California, Colorado, Florida, Massachusetts, Michigan, Minnesota, Mississippi, New Jersey, New York, Texas, Washington, and Wisconsin), based on the following considerations. We sought states that would include a large proportion of the nation s population while also representing a broad range with respect to geography, fiscal capacity, citizens needs, and traditions of providing government services. We hoped to maximize the likelihood that the selected states would choose to adopt a diverse set of policies over the next few years. We categorized all states into groups by high or low ranking on three factors: (1) child well-being (a composite of the Annie E. Casey Foundation s Kids Count indicators); (2) fiscal capacity (total taxable resources divided by population and adjusted for cost of living); and (3) spending on AFDC and Medicaid (adjusted for regional prices and divided by population under 150 percent of poverty). We selected states from across the range of groups defined in these ways, considering also geographic diversity and favoring large states. States rankings on these factors tend to cluster, with more states in the groups ranked low or high on all three factors than in groups with mixed rankings. The thirteen states we selected also follow this pattern. Finally, we made sure to include states considered to be leaders in health (Minnesota and Washington) and welfare (Michigan and Wisconsin) reform. The thirteen states include four southern states, three western states, three northeastern states, and three midwestern states, and the four states with the largest populations (California, Florida, New York, and Texas). Populations range from more than thirty-one million in California to less than three million in Mississippi. ankings on child well-being range from eighth to forty-ninth; rankings on AFDC and Medicaid spending range from second to forty-fifth; and rankings on fiscal capacity range from seventh to forty-eighth. Exhibit 1 describes the thirteen states rankings on the three factors H E A L T H A F F A I S ~ V o l u m e 1 7, N u m b e r 3

5 I N T O D U C T I O N EXHIBIT 1 Characteristics Of States Selected For Intensive Study, Assessing The New Federalism (ANF) Project Sociodemographic Population (thousands) ( ) a 4,314 Percent age % Percent Hispanic 0.8 Percent non-hispanic black 28.9 Percent non-hispanic white 69.6 Percent noncitizen immigrant 1.4 Economic Per capita annual income (1995) b Percent below poverty (1994) c Percent of children below poverty (1994) c $19, % 23.8% Health Percent uninsured (nonelderly) ( ) a 16.9% Percent Medicaid (nonelderly) ( ) a 10.4% Deaths per 1,000 live births (1995) d 10.2 Political Governor s affiliation (1997) e Party control of Senate (1997) e Party control of House (1997) e Selection factors Kids Count outcomes rank (1995) g AFDC and Medicaid spending rank (1994) h Fiscal capacity rank (1991) i egion 23D-12 71D South 31, % $24, % 25.6% 19.7% 18.1% 6.1 3, % $23, % 12.4% 14.0% 5.9% 7.1 D 23D-16-1I 15D-20 43D-37 24D West West 14, % $23, % 25.9% 19.2% 13.2% 7.5 D 17D-23 59D South 6, % $28, % 17.2% 12.6% 8.9% 5.5 9, % $23, % 22.0% 10.4% 11.5% D-7 16D D-29-1I 57D Northeast Midwest 4, % $23, % 14.8% 9.2% 7.2% D-24-1I 70D Midwest Sociodemographic Population (thousands) ( ) a 2,600 Percent age % Percent Hispanic 0.7 Percent non-hispanic black 38.7 Percent non-hispanic white 60.0 Percent noncitizen immigrant 1.0 Economic Per capita annual income (1995) b Percent below poverty (1994) c Percent of children below poverty (1994) c $16, % 34.4% Health Percent uninsured (nonelderly) ( ) a 20.1% Percent Medicaid (nonelderly) ( ) a 15.9% Deaths per 1,000 live births (1995) d 10.6 Political Governor s affiliation (1997) e Party control of Senate (1997) e Party control of House (1997) e 7, % $29, % 14.1% 14.6% 8.3% D-18 16D-24 83D-36-2I 29D-50 18, % $27, % 24.6% 16.8% 14.7% D-35 96D-54 18, % $21, % 25.8% 23.9% 12.6% D-17 82D-68 5, % $23, % 17.3% 12.9% 12.3% 4.7 D 23D-26 42D-56 5, % $22, % 14.4% 8.6% 7.9% D-16 47D , % $23, % 21.7% 15.5% 12.2% 7.6 H E A L T H A F F A I S ~ M a y / J u n e

6 N e w F e d e r a l i s m EXHIBIT 1 Characteristics Of States Selected For Intensive Study (cont.) Selection factors Kids Count outcomes rank (1995) g AFDC and Medicaid spending rank (1994) h Fiscal capacity rank (1991) i egion South Northeast Northeast South West Midwest SOUCES: See below. NOTE: AFDC is Aid to Families with Dependent Children. a Two-year concatenated March Current Population Survey (CPS) files, 1995 and These files were edited by the Urban Institute s Transfer Income Model (TIM-2) microsimulation model. Excludes those in families with active military members. b State Personal Income, , CD-OM (Washington: egional Economic Measurement Division [BE-55], Bureau of Economic Analysis, Economics and Statistics Administration, U.S. Department of Commerce, October 1996). c CPS three-year average (March 1994 March 1996 where 1994 is the center year) edited using the Urban Institute s TIM-2 microsimulation model. d National Center for Health Statistics, Births, Marriages, Divorces, and Deaths for 1995, Monthly Vital Statistics eport 44, no. 12 (Hyattsville, Md.: U.S. Public Health Service, 1996). e National Conference of State Legislatures, 1997 Partisan Composition, May 7 Update. D indicates Democrat, indicates epublican, and I indicates Independent. f Not applicable. g Annie E. Casey Foundation, Kids Count Data Book (Baltimore, Md.: Annie E. Casey Foundation, 1996), Appendix 4. anking is based on a composite of ten indicators: low-birthweight rate, infant mortality rate, child death rate, teen violent death rate, teen birth rate, juvenile violent crime arrest rate, percent of teens who are high school dropouts, percent of teens not in school and not working, percent of children in poverty, and percent of families with children headed by a single parent. h anking based on Urban Institute calculation: sum of AFDC and Medicaid spending in 1994, adjusted for relevant regional price differences and divided by population under 150 percent of poverty. i anking based on total taxable resources divided by population under 150 percent of poverty, adjusted for state cost of living. L. Blumberg et al., Options for Federal Funding for State Costs under Health Care eform (Washington: Urban Institute, 1995), Table II.8. we used in selecting them, as well as a number of additional characteristics of each state. At the time we began our study, the thirteen states together contained half of the country s population and more than half of its poverty population. They included 57 percent of AFDC recipients and accounted for 65 percent of AFDC spending, as well as 53 percent of Medicaid enrollees and 54 percent of Medicaid spending. n Case studies. Two policy case studies were conducted in each of the thirteen selected states during late 1996 and early 1997, one focusing on health programs and the other on income support and social services, including employment and training programs. The case studies will be repeated in two years to help assess how states change over that time. The case studies included the review of states plans and development of interview protocols for field research. Interviews were conducted with state and local officials, providers, legislators, interest groups, and state-based researchers. The case-study teams spent a week or more in each state and visited at least one county or municipal site in each state. The health case studies examined the entire context of health care provision for the low-income populations in these states. Thus, they examined Medicaid and state-funded insurance programs and their H E A L T H A F F A I S ~ V o l u m e 1 7, N u m b e r 3

7 I N T O D U C T I O N benefits, state policies on insurance and managed care markets, provider payment rates, long-term care, disproportionate-share hospital (DSH) payments, and the role of public hospitals, other safety-net providers, and public health programs. Some of the questions that these case studies sought to answer are examined in the papers that follow, which are based largely on case-study findings. The income support and social services case studies examined three broad areas. One is basic income support for low-income families, which includes cash and near-cash programs such as AFDC (now TANF) and Food Stamps. The second includes programs designed to lessen the dependence of families on government-funded income support, such as education and training programs, child care, and child-support enforcement. Finally, we looked at what might be termed the last-resort safety net, which includes child welfare, homelessness programs, and other emergency services. Again, the purpose of examining such a wide range of programs was not only to understand what is occurring with welfare reform and welfare recipients, but also to understand how these programs fit into, affect, and are affected by the broader safety net for the entire low-income population. n Household survey. The National Survey of America s Families (NSAF) interviewed almost 50,000 households about family income and employment, use of government programs and other social services, family health, use of health care, health insurance, child care, family structure, various behaviors and attitudes, children s school performance and attendance, and other aspects of child and family well-being. The population under 200 percent of poverty constitutes about one-half of the sample. The survey was designed to provide reliable estimates not only at the national level but also for each of the thirteen states selected for intensive study. It includes both households with children and nonelderly adults without children. The first wave of the survey has been completed; results will be available in the fall of A second round of the survey, planned for 1999, will allow us to examine changes over time. n State database. The ANF project is collecting and making available state-level information on all fifty states and the District of Columbia. The project s state database includes information on state demographic and economic characteristics, income security, health care and health insurance, and social services. The information includes secondary data (for example, data from census surveys), data gathered from states by other organizations, and information the Urban Institute has gathered from states specifically for the ANF project. The data are updated regularly. The state database is intended to show the evolution of states policy choices regarding NEW 23 FEDEALISM H E A L T H A F F A I S ~ M a y / J u n e

8 N e w F e d e r a l i s m 24 INTODUCTION program eligibility, rules, benefit levels, and the like and broad trends affecting children, families, and individuals. These data provide a context for understanding the more in-depth efforts that focus on selected states. A Look Ahead The current phase of Assessing the New Federalism runs through 1998, but we anticipate a second phase that will extend the project by three years. Throughout 1998 we will continue to produce cross-state analyses of specific topics, such as those included in this volume. All of the data used for this research will be made available to the public. The reports on the state case studies have already been published. We are preparing public-use data files from the survey. Also, the state database is already available through the Internet. The richness of our data sets is such that even a project the size of this one will not be able to analyze all of the information collected. We look forward to creating a body of information that can be used by a variety of analysts over the years. The ANF project fits into a landscape of efforts to understand the implications of devolution. By design, we are trying to provide a common factual base and a common analytic framework that encompasses the entire low-income population and that will enable crossstate comparisons in a national context. Other examinations are focusing on particular states or communities, particular policies, particular subpopulations of low-income Americans (such as welfare recipients), or other federalism topics beyond the scope of this project. These other studies complement our efforts. Multiple studies are useful both to validate results and to attain a richer picture. The goal of our project is to continue to provide research that will prove useful to policymakers and administrators in shaping policies and programs for the ultimate betterment of the well-being of the population, particularly low-income households and families with children. General information on the Assessing the New Federalism project as well as all of its publications and the state database are available on the World Wide Web at NOTE 1. The project was initiated in 1995 by the Annie E. Casey Foundation and has received support from the Henry J. Kaiser Family, W.K. Kellogg, John D. and Catherine T. MacArthur, McKnight, obert Wood Johnson, Charles Stewart Mott, and Weingart Foundations and the Commonwealth Fund and the Fund for New Jersey. Additional support is provided by the Joyce Foundation and the Lynde and Harry Bradley Foundation through grants to the University of Wisconsin-Madison. H E A L T H A F F A I S ~ V o l u m e 1 7, N u m b e r 3