Assessing the New Federalism is a multi-year Urban Institute research project to analyze the devolution of responsibility for social programs from the federal government to the states, focusing primarily on health care, income security, job training, and social services. Researchers monitor program changes and fiscal developments. In collaboration with Child Trends, the project is studying the well-being of children and families. Findings should assist state and local policy makers in designing new policies and programs by providing information about significant developments.

The project’s National Survey of America’s Families provides national and state data measuring well-being and program participation (see separate entry). Data from the survey is available on-line at not charge.

The Welfare Rules Database tracks changes in state welfare rules for all 50 states since 1996. The searchable database is available on-line at no charge.

The project has a state database which includes information on the fifty states and the District of Columbia in areas including income security, health, child well-being, demographic, fiscal and political conditions, and social services. This data is available on the New Federalism web site at no charge.

Case study reviews cover 13 states and 24 local sites. Nonrandom sample to assure diversity in fiscal capacity, child well-being, spending traditions, and geographic representation.

To obtain information from respondents about participation in government programs, such as welfare and Medicaid, and about children's education, parent-child interactions, child care arrangements, participation in work and recreational activities, behavioral problems, child support, and contact with noncustodial parents.

Assessing the New Federalism makes available a broad range of data on 13 states — Alabama, California, Colorado, Florida, Massachusetts, Michigan, Minnesota, Mississippi, New Jersey, New York, Texas, Washington, and Wisconsin. These states represent a broad range of fiscal capacity, child well-being, and approach to social policy. At the same time, they are home to more than half of the nation’s population.

Two series of publications focus on each of these 13 states individually: state case study reports and state profiles of health insurance, access, and use.

State experiments undertaken through waivers changed many of the fundamental features of AFDC--features intended to affect important recipient behaviors including marriage, having children, going to work, and the length of time spent on welfare.

Minimal Experimenters: Alabama, Colorado, and New York
These are states that had changes under way in only one of the four policy areas. The group includes states with very different approaches to welfare. Alabama operated its AFDC program under federal rules with low benefit levels. Colorado operated a relatively traditional AFDC program with moderate benefit levels and experimentation in some counties designed to increase work. New York operated a high-benefit, fairly traditional AFDC program with some experimentation focused on helping mothers with child support achieve independence from welfare.

Moderate Experimenters: California, Michigan, Minnesota, and Washington
States in this category were experimenting with two out of the four policies highlighted. These states were, coincidentally, distinguished by their relatively high benefit levels and tended to focus on experimentation designed to expand eligibility for two-parent families and to increase incentives to work. Michigan included more aggressive work requirement policies in its statewide experimentation than others in this category.

Extensive Experimenters: Florida, Massachusetts, Mississippi, New Jersey, Texas, and Wisconsin
States in this group were experimenting with a wider variety of changes to the federal AFDC rules. All expanded eligibility to more two-parent families, were experimenting with a variety of policies to increase recipients' work activities, and were experimenting with time-limited welfare benefits, family caps, or both.

State approaches to administration of cash assistance programs differed in ways that may also affect their responses to the opportunities presented by TANF.

Two characteristics of state caseloads--family structure and the percentage of the caseload in work activities--highlight the substantial differences across state cash assistance programs in 1996.

Balancing increased flexibility with new federal requirements, states made changes to many aspects of their cash assistance programs, including to the definition of who should receive cash assistance, who should work and when, how long cash assistance should be received, and what part benefits should play in the new system.

State policy choices since TANF are increasing diversity in cash assistance policies across the nation. Early TANF decisions were clearly affected by the states' historic approach to benefit generosity. The debate in three states in our sample--Colorado, California, and New York (all operating county-administered models of cash assistance)--was characterized at least in part by an historic desire to give counties a greater role in social welfare policy.

Most states in our sample did not adopt the optional features of family caps and basic benefit reduction; only two states adopted new family caps under TANF and only one state reduced its basic benefit.

Of the many important themes, eight findings dominate the study’s portrait of state health policy. First, while states historically have had primary responsibility for insurance regulation, most states have had to make major changes to strengthen their regulation of the small-group and individual health insurance markets in order to comply with the Health Insurance Portability and Accountability Act of 1996. The passage of new federal insurance standards is an exception to the devolution of authority to the states that has characterized recent federal policy in health care.
Second, public coverage through Medicaid and other programs significantly lowers the uninsurance rate for those under 200 percent of the FPL, especially children, but the level of employer-sponsored coverage is the main determinant of the uninsurance rate for the overall population.
Third, despite state efforts to maintain Medicaid enrollment for those beneficiaries leaving the cash welfare rolls without obtaining employer-sponsored health insurance, Medicaid enrollment is falling.
Fourth, the Medicaid managed care revolution has been more of a skirmish than a revolution. The goals of Medicaid managed care were to expand access to mainstream providers and to save money, but success on both fronts has been limited.
Fifth, state administrators have been extremely adept in maximizing federal funds under Medicaid, which is reflected in the explosion of disproportionate share hospital payments between 1988 and 1992, and in the Medicaid coverage of various health and social services that previously were financed solely with state and local funds. However, recent policy changes at the federal and state level are at odds with this strategy.
Sixth, local safety net providers—public hospitals, community health centers, and some voluntary hospitals—are experiencing financial stress, but there have been no widespread failures as some feared. The development of several problems at the same time, such as increased hospital competition, Medicaid managed care, growth in the number of uninsured, and reductions in DSH payments, could create serious problems in many cities.
Seventh, while long-term care is often downplayed at the national level, it is much too large a part of Medicaid spending (34 percent) to be ignored. Given the aging of the population, the potential for spending growth is enormous.
Finally, development of state health policy for the low-income population takes place within the confines of a financial and regulatory relationship between the states and federal government, principally through the Medicaid program. States have long sought additional flexibility to run the Medicaid program as they choose, especially in the areas of managed care and nursing home and hospital reimbursement. States would also like additional freedom to "try things out" without having to obtain federal permission to do so and without having to construct a "research" rationale.

• Child Care providers are key to achieving the larger goals of both the subsidy system and the welfare system.
• How much providers are paid is critical but a broad range of policies and practices interact to affect the provider's bottom line.
• There are a number of subtle policies and practices that are likely to affect how easy or difficult it is for providers to participate in the subsidy system. These range from how easy it is for them to get a payment agreement with the state, how easy it is to deal with paperwork requirements to get paid, etc.
• The fact that subsidy policies and practices can affect the amount that providers receive as well as their financial stability, suggest that they may also affect the quality of care that providers are able to give.
• Providers are likely to be affected by the entire range of subsidy policies and programs-- both those that affect their bottom line and those that affect their experiences with the system.
• Subsidy policies are likely to play out differently for kith and kin care providers.

• At least 29 percent of all employed families with children under age 13 receive some type of non tax child care help.
• Among families with some type of help, two sources of help predominate: 1. Free child care from a relative and 2. Free or subsidized child care from a govt agency or private organization
• Low income families are more likely to get some sort of child care help.
• Among low income families, those most likely to receive help are families with income below the poverty level and single parent families
• Between 1997 and 1999, there was an increase in the percentage of low income families with no child care expenses because of help from relatives
• Approximately 20% of all employed families with children under age 13 pay no child care expenses because of help they receive from relatives, the govt or private orgs.
• Among families with govt/org child care help, approximately half still have some child care expenses.
• Overall, 48% of employed families with children under age 13 pay for child care, spending an avg. of $303 per month, which amounts to 9 percent of parental earnings on average.
• At the current levels of child care help, low-income families that pay for child care pay an average of 14% of earnings for that care.

• At least 29% of all employed families with children under age 13 get help with child care expenses. The assistance enables them to avoid all child care expenses, lower their child care expenses, or purchase more or different care than would otherwise be possible.
• One of the two major components of child care help is the free child care provided by relatives.
• The other major source of child care help is aid from the govt and other organizations.
• The various forms of child care help provide enormous financial benefits to the families that receive help. When compared with unassisted families that used and paid fully for child care, low-income families that received govt/org help seemed to pay less on average while purchasing more hours of care and more center-based care.
• Despite the substantial amount of help provided by relatives, the govt. and other organizations, child care remains a major expense for many families.
• Among the low-income employed families that do not receive child care help. some are undoubtedly happy with their child care arrangements and did not try to find help for that reason.