MEMORANDUM 
Date: December 9, 1994
To: Senator Dole
From: Alec Vachon
Re: "WELFARE REFORM"/CONTRACT WITH AMERICA: WHAT DO THEY MEAN FOR ADULTS AND CHILDREN WITH DISABILITIES? 

* For reasons described below, welfare reform or other restructuring of social welfare programs will likely fail even if passed by Congress if the often unrecognized or hidden "disability factor" is not explicitly considered in fashioning reform proposals. Disability is no longer simply a matter of charity, or even civil rights, but a factor driving health 	care and social welfare policy--whether policymakers realize it or not. 

DISABILITY INTEREST IN WELFARE REFORM
* The phrase "welfare reform" is increasingly used to describe a broad restructuring in the "safety net" beyond AFDC. Targets include both entitlements--e.g., SSI, Food Stamps, and Medicaid--and discretionary "social welfare" programs-­e .g., housing, nutrition, etc. 

* Although not always appreciated, many of these programs-­including AFDC--are heavily used by people with disabilities --in fact, several are essentially disability programs. Three examples illustrate this point:

--SSI: 76% of recipients are disabled or blind (4.6 million persons), who receive 84% of benefits ($22 billion). The number of disabled SSI recipients has grown 44% since 1988. 

--MEDICAID: Although only 14% of adults (under 65) and children enrolled in Medicaid are disabled (5.5 million), 37% of Medicaid dollars are spent on these individuals ($46 billion). 

--FOOD STAMPS: 9.5% of recipients qualify because of severe disability (2.6 million)--they receive 7% of benefits ($1.6 billion). However, this is a conservative estimate of disabled persons in this program--19% of recipients are disabled enough to be exempt from work requirements. 

Only SSI and Medicaid identify recipients by disability status; other program numbers are the best available estimates. 

* Even "traditional welfare"--AFDC--serves a sizable number of disabled. 19% of AFDC mothers report being disabled. Among all AFDC mothers, 13% have a disabled child, 23% another family member with disability. 

Significance: Under both current work rules for AFDC recipients and most reform proposals (Republican and Democrat), disabled women and those with a disabled family member are exempt from work requirements. In total, this group might comprise 35% of AFDC recipients--sharply limiting the impact of reforms. 

IMPACT ON PEOPLE WITH DISABILITIES
* First, as you know, people with disabilities are among the poorest Americans, depend heavily on government assistance, and would almost certainly be affected by cuts. As you noted in your 25th anniversary floor statement on April 14th, "According to a 1992 GAO study, 45% of families headed by a person with a disability, and 65% of single parents or single persons with a disability, live in poverty."
 
But at the same time, reforms may offer something to people with disabilities--and to flatly exempt them from reforms might exclude them from important new services. For example, some proposals create new job placement/training opportunities. As you also stated in your 25th anniversary statement: 

--"There is no career ladder for Social Security recipients. The lesson here is simple: for people with disabilities, as for most Americans, working is essential to a decent income. We need to help people get off the disability check and onto a paycheck." 

--"Both Republican and Democratic welfare proposals generally exempt [the disabled] from reforms. We mean well, I know, but I fear we are doing these individuals no favor." 

IMPACT ON THE STATES
* There are many unknowns--but may create big new costs for the States. 

* For example, CONTRACT WITH AMERICA'S Personal Responsibility Act places tight caps on SSI growth and makes SSI spending discretionary rather than an entitlement. 50% of SSI disabled are either mentally ill or mentally retarded. If passage of this Act resulted in real SSI cuts (rather than cuts in growth), States might have to make up the costs for this highly vulnerable group--or face the debacle that occurred in the early 1980's when ham-fisted reviews led to hundreds of thousands of persons dropped from the Social Security disability rolls--and then returned under court orders. Even caps on program growth could have unexpected effects -- e.g., delay State plans to move people with disabilities from large institutions to smaller, community-based residences.

N.B. Self-report by AFDC mothers (not physical exam). However, if disabilities were severe, it might be expected these individuals would apply for SSI--since SSI payments are higher than AFDC, and States like SSI because no match is required. 

NEXT STEPS
* I am preparing a more detailed analysis of various proposals--including Kassebaum's swap; the 10 bills of the Contract with America; and recommendations of the Kerry/Danforth Commission on Entitlements and Tax Reform. 

* We also need to develop original proposals. For example, is SSI more properly a State than a Federal responsibility? If so, might this make a better swap than other programs? Consider that between 1985 and 1993 the number of individuals with mental disorders coming onto the SSI roles grew by 150 percent, or by more than 1 million persons. The large number of persons with mental disabilities on SSI reflects a Federalization of what had been a longstanding state responsibility. 

* If there is any specific issue that needs attention, please let me know. 

cc: Sheila Burke
Nelson Rockefeller
David Taylor
Mike Torrey