New York City and State Agree to Reimburse Health Costs for Families Improperly Dropped from Medicaid After Welfare Reform

New York City and state officials have agreed to reimburse health care expenses and restore coverage for "thousands of poor city families" who were improperly dropped from Medicaid after leaving the welfare rolls, the New York Times reports. The settlement results from a 1998 class-action lawsuit filed by the Legal Aid Society of New York and the Welfare Law Center on behalf of several families. After the 1996 welfare overhaul, which delinked welfare and Medicaid, many people "removed from welfare or discouraged from applying for cash aid were also ... swept from the Medicaid rolls," even if they qualified for Medicaid benefits, the Times reports. The Clinton administration last year ordered all states to locate people who had been improperly cut from Medicaid and restore their benefits. Under the settlement approved by Federal District Judge Jed Rakoff, New York families that "managed to pay for care and kept receipts" can receive compensation from New York. Officials will send notices to about 20,000 city families to inform them of the settlement. However, lawyers who work with poor families "acknowledge" that many families might not be able to collect settlement money, the Times reports.

Do Problems Still Exist?
In New York, a "combination of faulty practices and computer coding errors" led to many families being "wrongly cut from Medicaid." According to Lorna Bade Goodman, New York City Law Department spokesperson, the city fixed its share of the computer problems in March 1999. State Department of Health spokesperson John Signor added that the state "recently" corrected computer-coding mistakes. But a recent HHS review of Medicaid programs "faulted" New York state for "failing to properly monitor the local Medicaid programs." Federal investigators cited several "problems," including that the state failed to provide transitional Medicaid benefits for individuals moving from welfare to work, "discourag[ed]" Medicaid applicants and improperly "den[ied]" benefits because "people failed to meet requirements that vary from one county to the next." Signor pointed out that the report also "praised" New York state's efforts to expand health coverage for the uninsured (Bernstein, New York Times, 7/12).