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April 2010, Volume 16, Number 2

Food Stamps, Welfare, Health Reform

Rural areas generally fared better than metro areas during the 2008-09 recession, losing a smaller share of jobs except in the manufacturing-intensive Southeast and Midwestern Great Lake states. Home prices in 2008 in metro areas fell more than home prices in rural areas.

Food Stamps. The Food Stamp program, known as the Supplemental Nutrition Assistance Program or SNAP since 2008, was launched in 1964 to benefit the poor and farmers with surplus commodities. Reduced cash welfare payments, easier qualification rules, and more outreach efforts increased the number of applicants for SNAP benefits, especially among low-income adults with children.

The federal government pays for SNAP benefits and half of the administrative costs.

Over 39 million Americans received SNAP benefits in January 2010, a record, while the number of Americans receiving cash welfare payments was less than five million. Almost half of those receiving SNAP benefits worked full time during the preceding year, and only 10 percent of adults with children who received SNAP benefits also received cash welfare payments. In a quarter of the almost 3,200 US counties, a third of children were in households receiving SNAP benefits.

About 86 percent of all eligible US residents receive SNAP benefits, but only 48 percent of Californians eligible for SNAP benefits receive them; California is one of four states that require food stamp recipients to be fingerprinted. In 2009, Californians received $4.8 billion in SNAP benefits, an average of $137 per recipient per month.

Hidalgo county, Texas and the Bronx in New York City are the two counties with over 500,000 residents that have the highest share of residents receiving SNAP benefits, 30 percent. In Fresno county, California, 18 percent of residents receive SNAP benefits.

Welfare. Between December 2007 and December 2009, the unemployment rate doubled but the number of people receiving cash payments under the main federal-state welfare program, Temporary Assistance for Needy Families, or TANF, increased less than 10 percent. By contrast, the number of Food Stamp recipients rose over 40 percent in two years of recession.

Under the 1996 welfare reform law, adults can receive cash payments for a maximum 24 months in any 60-month period, with a lifetime maximum of 60 months of benefits. During the late 1990s, the employment of single mothers increased and child poverty declined. However, in recent years, child poverty has increased.

California provides a poor mother with two children $694 a month, the third highest welfare payment after Alaska and New York. California's welfare payments peaked at over $1,100 a month in 2010 dollars in the late 1980s. The number of cases, typically a woman with two children, fell to a low of 455,000 in September 2007; the caseload climbed to 540,000 in September 2009.

California has a tenth of US residents and a third of US welfare recipients, primarily because California continues to provide the child portion of cash assistance even after parents lose eligibility. There are many child-only welfare cases in California, and children are about 40 percent of those receiving cash assistance. The cost of CalWORKS is projected to be $5.3 billion in FY10-11; the federal government pays half and the state and countries cover the other half.

Health. About 17 percent of US residents live in nonmetro areas, and 5.5 million are in farm operator households. About 15.3 percent of residents of both metro and nonmetro areas were without health insurance sometime in 2008. However, because almost all persons 65+ are covered by Medicaid, and nonmetro areas include a higher share of persons 65+, health insurance coverage for those under 65 is lower in nonmetro areas.

A major reason for lower rates of health insurance coverage in nonmetro areas is that rural employers tend to be smaller and to hire workers with less education; health insurance coverage increases with size of employer and education of employees (only 31 percent of all US residents without a high-school diploma had employer-based insurance in 2008). In 2006, about 75 percent of metro residents 25 to 64 had private insurance, compared with 71 percent of nonmetro residents.

The Senate approved the Patient Protection and Affordable Care Act in December 2009 without Republican support. The House in March 2010 approved the Senate bill and a separate bill, the Health Care and Education Reconciliation Act of 2010, making changes to the Patient Protection Act. President Obama signed both bills into law. The combined bills are expected to increase the share of non-elderly and legal US residents who have health insurance from 83 percent to 94 percent at an additional cost of $940 billion in federal expenditures between 2010 and 2019.

The health care reform law requires almost everyone to obtain health insurance by 2014 or pay a fine that, from 2016, would be $695 or 2.5 percent of income, whichever is greater. Subsidies to purchase health insurance would be provided for those with incomes up to four times the federal poverty level, or up to $88,200 for a family of four in 2009. Medicaid would be expanded to include those with incomes up to 133 percent of the poverty level, or $28,327 for a family of four in 2009. The federal government will pay most of the cost of Medicaid expansion instead of sharing the cost 50-50 with states, as under the current Medicaid program.

State-based American Health Benefit Exchanges are to be created by 2014 to allow insurance companies to offer health-care plans to those who do not qualify for Medicaid or Medicare or receive employment-based benefits. Federal subsidies would be available for individuals purchasing health insurance via these exchanges, which would be regulated so that insurers offer a minimum package of benefits and do not deny coverage to those with pre-existing conditions. Unauthorized foreigners could not buy insurance in the exchanges, even if they could pay the full price without federal subsidies.

Employers with more than 50 employees must offer "qualified" health benefits to their employees, that is, a package of government-approved benefits. Employers with at least 50 full-time employees (full time means employed at least 30 hours a week) would be charged $2,000 per full-time worker ($167 a month) if at least one of their employees qualifies for a subsidy to obtain health insurance via an exchange; the first 30 employees would be subtracted before the penalty is assessed. Seasonal workers, defined as those employed 120 days or less during a year, do not count in the calculation of employees for health-care purposes.

If an employer offers health insurance, employees who cannot afford it can purchase subsidized insurance in the exchanges, and employers would pay $3,000 a year for such employees to the federal government. Employers with less than 25 workers and average wages of less than $50,000 a year would receive tax credits to provide health insurance to their employees.

Farm employers expressed concern about the definition and treatment of seasonal workers. The California Farm Bureau Federation complained of ambiguity about how seasonal workers brought to farms by farm labor contractors will be handled for health insurance purposes.

Tom Karst, "Health care overhaul to saddle industry with new costs," The Packer, March 22, 2010. Michael Doyle, "Health Care bill's winners, losers," Miami Herald March 23, 2010.