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Income and Adjunctive Eligibility of Infants and Children Individuals who meet WIC's categorical eligibility criteria must also meet the program's income eligibility rules. WIC requires that the applicant's income does not exceed 185 percent of the federal government's poverty guidelines for the number of the individuals who are in the applicant's family. However, individuals may also gain eligibility if they are enrolled in any of the following means-tested transfer programs (adjunctive eligibility): Temporary Assistance for Needy Families (TANF), food stamps, or Medicaid. This chapter and the next examine alternative estimates of the number of individuals who are categorically eligible for the program and are eligible either on the basis of their income or through their enrollment in a means-tested program. Currently, USDA estimates the number of infants and children who are income and adjunctively eligible by computing the number who live in families whose annual income is less than or equal to 185 percent of the family's poverty guideline amount. The panel, in its Phase I report (Na- tional Research Council, 2001), concluded that the use of annual income in lieu of a shorter time period for measuring income (e.g., over a month), combined with the failure to fully account for adjunctive eligibility results in a serious understatement of the numbers of infants and children who are potentially eligible for WIC. This finding was based on the analysis of the March 1999 Current Population Survey (CPS) file, which had been modi- fied by the Urban Institute's Transfer Income Microsimulation 3 (TRIM) model. In particular, the TRIM model imputed monthly income and, based 50

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INCOME AND ADJUNCTIVE ELIGIBILITY OFINFANTS AND CHILDREN 51 on the reported participation in Medicaid and other income transfer pro- grams, imputed enrollment in these programs to match enrollment levels found in administrative data. While the CPS-based TRIM data provide one important source of information to judge the accuracy of USDA's current methodology, the Survey of Income and Program Participation (SIPP) is another valuable source of information. SIPP collects monthly income information from respondents, so there is no need to impute them as there is with the CPS. These monthly income reports would more accurately reflect the extent of variability of income over the course of the year than the TRIM-imputed income amounts. In the next two chapters, we examine the impact of in- come variability and adjunctive eligibility on estimates of eligibility by ex- amining data from SIPP in comparison to the CPS. In Appendix C we attempt to reconcile the differences between the estimates of income vari- ability and adjunctive eligibility from the CPS, TRIM, and SIPP. The first section of this chapter reviews the WIC program rules per- taining to income and adjunctive eligibility. This review shows that the program does not contain a single precise definition of the time period over which an applicant's income should be considered in assessing eligibility. This flexibility in program rules implies that determination of an individual's eligibility will depend on a judgment as to whether a pay pe- riod, a week, a month, or a year is the appropriate time period to employ to assess an individual's income eligibility. Given this local flexibility, it is not clear what time period should be used to measure income in order to esti- mate eligibility. An annual income measure is currently used, but there are monthly income alternatives. The final section of the chapter examines the impact of using monthly income instead of annual income and allowing for eligibility through other means-tested programs. INCOME AND ADJUNCTIVE ELIGIBILITY RULES In determining income eligibility for WIC, there are three important concepts: the economic unit, the definition of income, and the time period for which the income is to be considered. WIC policy is to define the economic unit in the following manner: It is reasonable to assume that persons (other than those living in institu- tional settings and homeless facilities) living in the residences of others, whether related or not, are likely to be receiving support and some commin- gling of resources which renders them members of the economic unit with

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52 ESTIMATING ELIGIBILII~YANDPARTICIPATIONFOR THE WICPROGRAM which they live. However, it is possible to establish that more than one eco- nomic unit lives under one roof through appropriate questioning, which helps to make a reasonable determination that there is general economic indepen- dence of the units, i.e., that financial resources and support are retained inde- pendently. For example, a pregnant woman who is sharing an apartment with her sister may be determined to be a separate economic unit from her sister if the certifier can reasonably establish that she has a source of income and is paying her proportionate share of household, living and personal expenses (Final WIC Policy Memorandum 99-4:8~. Income is defined to be the gross cash income before deductions for in- come taxes, employees' social security taxes, insurance premiums, bonds, etc. Income includes the following items: 1. Monetary compensation for services, including wages, salary, com- missions, and fees. 2. Net income from farm and nonfarm self-employment. 3. Social security benefits. 4. Dividends or interest on savings or bonds, income from estates or trusts, and net rental income. 5. Public assistance and welfare payments. 6. Unemployment compensation. 7. Government civilian employee and military retirement or pen- . , sloes or veterans payments. 8. Private pensions and annuities. 9. Alimony and child support payments. 10. Regular contributions from persons not living in the household. 11 . Net royalties. 12. Other cash income. Other cash income includes but is not limited to cash amounts received or withdrawn from any source, including savings, investments, trust accounts, and other resources that are readily available to the family. If a state agency chooses to use income guidelines identical to those used for state or local free or reduced-price health care, it may also wish to use the corresponding health care definition of income. However, when applying the free or reduced-price health care definition of income, the following exclusions must continue to be considered: ~ . The value of in-kind housing or other in-kind benefits.

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INCOME AND ADJUNCTIVE ELIGIBILITY OFINFANTS AND CHILDREN 53 2. Payments or benefits provided under certain federal programs as specified by law. In addition, no expenses due to hardship or other deductions are allowed unless the state agency can demonstrate that a household's gross income before the deductions does not exceed the limit for reduced-price school meals. The definition of income for WIC purposes, as established by the National School Lunch Program, includes gross cash income earned by any and all members of a family. Cash income also includes student financial assistance, such as grants and scholarships, except those grants and scholar- ships excluded as income, as set forth in Section 246.7 (21 (iv) ofthe regula- tions, such as Pell Grants, State Student Incentive Grants, and National Direct Student Loans (Food and Nutrition Service Instruction Memo 803- 31. USDA provides the following instructions to state and local WIC agen- cies with regard to the time period for which income should be considered when determining income eligibility. In determining the income eligibility of an applicant, the State agency may instruct local agencies to consider the income of the family during the past 12 months and the family's current rate of income to determine which indi- cator more accurately reflects the family's status. However, persons from fami- lies with adult members who are unemployed shall be eligible based on in- come during the period of unemployment if the loss of income causes the current rate of income to be less than the State or local agency's income guidelines for Program eligibility. State agencies have, and should exercise, flexibility in deciding whether to use an applicant's current or annual rate of income. For example, the family of a striker may have a lower income during the period of a strike (depending on the union benefits and other sources of income), but have an annual income which would exceed the WIC limit. In this case, the use of current income (while on strike) may be more appropri- ate. However, in the case of families of self-employed persons, including farm- ers or seasonally employed persons whose income fluctuates, annual income may be the more appropriate indicator of the need for WIC benefits. Other examples in which the use of annual income is more appropriate include: (1) a family member who is on a temporary leave of absence from employment, such as maternity leave or to take an extended vacation; (2) teachers who are paid on a 10-month basis and are temporarily on leave during the summer months; and (3) college students who work only during the summer months and/or their school breaks (Food and Nutrition Service Instruction Memo 803-3:5~.

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54 ESTIMATING ELIGIBILI~YANDPARTICIPATIONFOR THE WICPROGRAM The Panel's Definitions While the regulation appears to be quite specific in its intent to limit WIC eligibility to those individuals with low to moderate incomes, a high level of discretion is left to the local level in implementing these regula- tions. While flexibility and discretion in the program may be desirable, a lack of uniformity and specificity in the eligibility rules creates complexity and uncertainty in estimating the number of individuals who are eligible. In the absence of specific information on the implementation of WIC income regulations across localities and by WIC staff, we use the following definitions to represent the intent of the WIC regulations: Economic Unit: All individuals who are related by blood or marriage and reside in the same household. This is what is known as the census definition of a family. Income: All forms of income received in the form of cash, which in- clude but are not limited to wages, salaries, self-employment income, rents, dividends, unemployment and disability insurance, and the receipt of Supplemental Security Income and TAN F. This concept of income is known as census family money income. Time Period: The previous month will be designated as the appropriate time period for determining both the size of the economic unit and the income to be considered. Although these definitions are certainly not used uniformly in the field to determine eligibility for WIC, we use these assumptions here because they can be operationalized in the major data sets used to estimate eligibility and participation and because they closely match the wording of the legisla- tion. 1 In this chapter, we estimate the effect of using monthly data instead of annual data, accounting for adjunctive eligibility and accounting for certi- fication periods.2 One might believe that, armed with all the relevant infor- 1Differences in how localities implement regulations could cause errors in the estimates presented in this report, as the estimates are made using a single method to account for income and the economic unit, while local practice may vary from that. Such variation increases the uncertainty level in the estimates, but there is no a priori reason to believe there would be a systematic bias in the estimates. 20nce an infant is found to be income eligible, he or she is certified to be eligible for up to one year. Children and pregnant and postpartum women are certified as eligible for 6- month periods.

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INCOME AND ADJUNCTIVE ELIGIBILITY OFINFANTS AND CHILDREN 55 mation on a WIC applicant, it would be possible to determine whether an individual is eligible for WIC or not. However, the language of the program's eligibility rules and regulations does not lead to strict determina- tion of who is eligible and who is not. Consider the following extreme example. A mother with a child who is 2 years old has annual income that exceeds 185 percent of the poverty guideline. However, in May, she loses her job and her income falls below 185 percent of poverty. In rune, she finds a new job and her income again exceeds the WIC income limits. In this case, would the 2-year-old child be eligible for WIC and, if so, for how many months? If the mother goes to the WIC office in May, her child will meet the WIC income eligibility limits and will be certified to receive ben- efits for 6 months. WIC regulations 246.7(i)~10) state that a participant may not withhold or conceal information to obtain benefits. One interpre- tation of this regulation is that, in rune, the mother is obligated to report to the WIC offices that she has gained employment and report her income. This interpretation implies that the child would have had only one month of eligibility. However, based on correspondence from Food and Nutrition Service (FNS) officials, it is WIC policy to apply the regulation only when the mother is applying for benefits. The mother has no subsequent obliga- tion to reveal that her family's income has changed. When the mother reap- plies for benefits in November, the child would not be recertified if the mother's income continued to exceed 185 percent of poverty. This inter- pretation implies that if the WIC offices do not discover that the mother is employed, the child has 6 months of eligibility. In the panel's Phase I report, the effect of different definitions of the economic unit was estimated and found to have a small impact on the numbers estimated to be eligible (National Research Council, 20011. Use of a restrictive definition of the economic unit (one that would tend to make the family ineligible for WIC) decreased eligibility estimates for in- fants by 0.2 percent and for children by 0.3 percent. Use of a generous definition of the economic unit (one that would tend to make the family eligible for WIC) increased the number of infants estimated to be eligible by 1 percent and increased the number of children estimated to be eligible by 1.5 percent. Relevance for Estimating the Number of Income-Elitrible Individuals v USDA utilizes the March Income and Demographic Supplement to the Current Population Survey to estimate the number of WIC income-

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56 ESTIMATING ELIGIBILITYAND PAR TICIPATION FOR THE ~CPROGR~ eligible individuals. Since the CPS contains only annual income informa- tion from respondents, USDA's estimates of the number of infants and children who are both categorically eligible and income eligible are based on the counts of individuals with annual census family money income less than or equal to 185 percent of the poverty guidelines of the U.S. Depart- ment of Health and Human Services (DHHS). USDA's methodology cur- rently makes a very small adjustment to account for the possibility that infants and children may also be adjunctively eligible through enrollment in other means-tested programs. While the CPS is the primary source of data used for the analysis of many low-income programs, it is not an ideal data base for the estimation ofthe number of WIC-eligible individuals. The CPS survey design requires the household respondent to list the ages of all household members as of March of the survey year; however, annual income information is collected from the previous year. Ideally we would want to know the family structure and membership during the previous year the year for which annual in- come is measured. Given that family structure is not static, especially in the low-income population, the number of family members in the previous year could be quite different from what it is in March of the following year. For example, consider a child who is born in February of the survey year. In this case, the income from the previous year does not refer to the income available to the infant at the time of WIC application, but the income that would have been considered when the mother applied as a pregnant woman. Moreover, the snapshot of the family provided by the CPS is not a true picture of how family membership and hence eligibility can change over the course of the year. Variability of income over the course of the year has always been con- sidered a serious source of bias in the estimates of the number of income- eligible infants and children. For budgetary purposes, USDA is interested in predicting the number of infants and children that will be eligible to participate during the year. Given that the CPS does not collect monthly family income information, USDA assumes that if the family's annual in- come is less than or equal to 185 percent of federal poverty guidelines, the infants and children in the family will be eligible for 12 months. Otherwise they will have zero months of eligibility. The use of annual income to determine income eligibility provides an accurate determination of the number of months an infant or child is in- come eligible only if the family's monthly income is constant over the year. However, if monthly income does vary, then USDA's use of annual income

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INCOME AND ADJUNCTIVE ELIGIBILITY OFINFANTS AND CHILDREN 57 could produce two potential errors. First, an error will occur if the individual's annual family income is less than or equal to 185 percent ofthe federal poverty guidelines, but for some months the individual has at least one month in which her income is greater than the eligibility limit. In other words, this individual would be ineligible for WIC in the months for which income is above the eligibility cutoff. The second type of error will occur for individuals whose average monthly income is greater than 185 percent of federal poverty guidelines but who have some months in which their income is less than or equal to it. In these cases, the use of annual income understates the number of months the individual would have been income eligible. These two types of errors have opposite effects on the aver- age number of months that family income is less than or equal to 185 percent of federal poverty guidelines. However, as we will see, once WIC certification periods are considered (1 year for infants and 6 months for every other categorical group), more people have annual incomes above but at least one month of income below 185 percent of federal poverty guide- lines. Focusing on the average number of months that family income is suffi- ciently low to qualify for WIC can be misleading. WIC does not require individuals to be income eligible each month during their participation in the program. Once an infant is found to be eligible, the infant is certified for 12 months of eligibility, or until the first birthday. Children must be certified as income eligible every 6 months. This certification process will tend to dampen the impact of errors created because individuals have an- nual income less than or equal to 185 percent of federal poverty guidelines but monthly income that is not consistently below the income threshold. Certification, however, will increase the significance of the errors produced, because individuals have annual income greater than 185 percent of pov- erty but dips in monthly income below the eligibility threshold. The com- bination of the use of annual income and ignoring the certification process may significantly understate the average number of infants and children who are income eligible at the time of application. A final area of concern pertains to the inadequate method currently used to account for adjunctive eligibility through enrollment in the other means-tested programs, especially Medicaid. In an effort to ensure the health coverage of infants and young children, over the past decade the Congress and state governments have increased the income limits for eligi- bility in the Medicaid program. Many states have income limits for infants and children that exceed 185 percent of the federal poverty guidelines (see

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58 ESTIMATING ELIGIBILI~YANDPARTICIPATIONFOR THE WICPROGRAM National Governors Association, 20031. Even in states with Medicaid in- come limits at or below 185 percent of poverty guidelines, differences in how the two programs define income mean that individuals whose income as calculated by WIC was greater than 185 percent of poverty might be income eligible for Medicaid and thus adjunctively eligible for WIC. The Medicaid program uses a net measure of income, allowing various deduc- tions in income. WIC allows no deductions. Hence, estimates of the eli- gible population need to account for adjunctive eligibility. The preceding information describes reasons that the current methods understate the number of individuals who are eligible for WIC. While USDA could easily modify its methodology to account for adjunctive eligi- bility by using participation in means-tested programs reported by the sur- vey respondent, the impact of monthly income cannot be simply intro- duced into estimates that rely on annual income reports from the CPS. In the next section, we use SIPP to examine the consequences of relying on annual income and the failure to fully account for adjunctive eligibility. IMPACT OF MONTHLY INCOME AND ADJUNCTIVE ELIGIBILITY Using SIPP data Gordon et al. (1997) undertook the first comprehensive examination of the impact of monthly income on the estimates of the number of in- come-eligible infants and children.3 Utilizing SIPP data from the 1990 and 1991 full panel files, the authors constructed a pooled extract covering calendar years 1990 through 1992. Table 5- 1 (first column) summarizes this study's results. Employing the USDA methodology with the March CPS public use files, Gordon et al. (1997) estimated that 42.6 percent of all infants and 42.5 percent of children would have been income eligible during the pe- riod 1990 to 1992. When they utilized SIPP monthly income data to con- struct an annual measure of income to mirror the CPS annual data, Gor- don et al. estimated that a slightly smaller percentage of infants (41.7 percent) and children (41.8 percent) would have been income eligible. 3Heiser and Doyle (1990) and Doyle (1990) examined the question of monthly versus annual income; however, both studies employed only one month of SIPP data.

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INCOME AND ADJUNCTIVE ELIGIBILITY OFINFANTS AND CHILDREN 59 TABLE 5-1 Estimates of Income Eligibility Based on Monthly Versus Annual Income (Percentage of All Individuals), 1990-1992, 1997, and 1998 1990-2 (Pooled Dataja 19976 19986 Infants CPS Annual 42.6 39.7 39.2 SIPP Annual 41.7 38.9 35.1 Average monthly 43.8 43.5 41.3 Eligible in any month 52.1 58.9 57.5 Certification periods 56.6 54.1 Children CPS Annual 42.5 41.1 40.4 SIPP Annual 41.8 42.4 39.6 Average monthly 41.5 44.8 42.1 Eligible in any month 52.8 62.0 59.4 Certification periods 56.8 53.9 aGordon et al. (1997:Table III.1~. The CPS estimates are from panel calculations based on extracts from the Urban Insti- tute TRIM files for the respective calendar years. The SIPP estimates are from calcula- tions made by Bitler et al. (2002~. These results provide some evidence that the annualized SIPP data closely replicate the estimates found in the March CPS. Gordon et al. (1997) then utilized the monthly data from SIPP by first computing the number of months that infants and children would have been income eligible (labeled "average monthly" in the table). They esti- mated that infants would be found eligible 43.8 percent of the total pos- sible number of months that they were categorically eligible as infants. The corresponding estimate for children was 41.5 percent. These average monthly estimates were only 5 percent higher for infants and 1 percent lower for children than the SIPP annual estimates. In neither case were the differences statistically different. The average number of months that an infant or child would have

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60 ESTIMATING ELIGIBILITYAND PAR TICIPATION FOR THE ~CPROGR~ been income eligible reflects the situation in which WIC staff recertify in- dividuals on a monthly basis. This does not reflect actual WIC regulations or practice. As we noted above, it is unclear whether the resulting eligibility estimates based on this certification process will differ greatly from esti- mates based on the use of annual income. To provide an upper-bound estimate of the effect of the use of monthly income, Gordon et al. (1997) estimated the percentage of infants and children that had at least one month of income eligibility. This estimate is intended to reflect a certification pro- cess in which individuals are given 12 months of eligibility if their worst month during the year is less than 185 percent of federal poverty guide- lines. Gordon et al. found that when this upper bound certification proce- dure was employed, there was a significant increase in the number of in- fants (52 percent of all infants, or 25 percent more than when annual income is employed) and children (53 percent of all children, or 26 percent more than when annual income is employed). The Gordon et al. (1997) study suggests that not using monthly in- come nor accounting for the WIC certification process is an important shortcoming of the USDA methodology. However, because the study uses older data and did not simulate realistic WIC certification periods, two members of the panel undertook an similar analysis using data from the 1996 SIPP panel.4 Table 5-1 (second and third columns) presents estimates from the 1996 SIPP panel for calendar years 1997 and 1998. When SIPP data were used to create annual measures of income and family structure for these same years, a smaller proportion of infants was found to be income eligible than implied by the CPS a result that is consistent with the Gordon et al. (1997) study. The results are somewhat mixed for children. In 1997, the annualized SIPP shows a slight increase in the proportion of income-eligible children compared with the CPS, while in 1998 the proportion is lower. These differences are minor, however, so we conclude that the proportion of infants and children who are income eligible based on annual income is roughly equal from the March CPS and from the annualized SIPP data. The use of monthly certification periods (average monthly) continues to create a small increase in the number of income-eligible children (6 percent increase in both 1997 and 1998) but a larger impact on infants (12 4Panel members Janet Currie and John Karl Scholz as a part of a larger research project provided the estimates reported in this chapter (see Bitter et al., 2002).

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INCOME AND ADJUNCTI~ELIGIBILIKOFINFANTS AND CHIDDEN 61 and 17 percent increases). Using the eligible-in-any-month measure dra- matically increases eligibility estimates. Compared with the use of annual income, the SIPP data indicate that there would be between 52 and 64 percent more income-eligible infants in 1997 and 1998, respectively. The estimates for children are equally large 46 and 50 percent in the two years. These estimates of eligibility appear to become significantly larger over the decade of the 1990s. The proportion of infants who were income eligible rose from 52 percent in the early 1990s to roughly 59 percent in 1997. The proportion of children rose even faster, from 53 to 62 percent in the same period. Unlike the CPS data, the SIPP panel data permit a more accurate rep- resentation of the WIC certification process. When this process is consid- ered (e.g., if the monthly family income for a child is below the income eligibility threshold, the child is considered eligible for the next 6 months; for infants, someone who becomes eligible in a month is then considered eligible for the next 12 months or until the end of the calendar year for which the estimates are being made), combined with the use of SIPP monthly income, there remains a significant and large increase in the num- ber of months that infants and children are income eligible compared with the situation when annual income is used. In 1997 and 1998, there are 46 and 54 percent more infants and 34 and 36 percent more children who are income eligible for WIC. These calculations from the 1996 SIPP panel indicate that the impact of monthly income is significantly different from what was found in the earlier Gordon et al. study (19971. Given that the SIPP data are reported and are not the result of imputations, we conclude that the impact of the use of monthly income with certification periods is larger than previous estimations indicated. Compared with the use of annual income, 50 per- cent more infants and 35 percent more children may be income eligible for WIC when monthly income and certification periods are considered. Combined Impact of Monthly Income, Adjunctive Eligibility, and Certification Periods The current USDA methodology makes only a minor adjustment to account for infants and children who gain WIC eligibility by their enroll- ment in TANF, food stamps, or Medicaid. It makes no adjustment for women who gain adjunctive eligibility. Table 5-2 shows the impact of in- cluding all those who report participation in other means-tested programs

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62 ESTIMATING ELIGIBILI>~D PAR TICIPATION FOR THE ~CPROG~ TABLE 5-2 Percentage of Infants and Children Who Are Income Eligible and Adjunctively Eligible Calendar Year 1997 Calendar Year 1998 Infants CPS Annual income Annual income and adjunctive eligibility SIPP Annual income Monthly income Monthly income and adjunctive eligibility Children CPS Annual Annual income and adjunctive eligibility SIPP Annual income Monthly income Monthly income and adjunctive eligibility 39.7 46.7 38.9 56.6 60.0 41.1 45.2 42.4 56.8 59.0 39.2 46.7 35.1 54.1 58.1 40.4 46.0 39.6 53.9 56.7 aPersons who report participation in TANF, food stamps, or Medicaid are included as adjunctively eligible for WIC regardless of their incomes. on CPS-based estimates of eligibility (using the annual measure of income). Estimates for both infants and children are presented. The impact of this simple alteration in the USDA methodology has a substantial impact on the estimate of the number of eligible infants and children in 1997 and 1998. The proportion of eligible infants is estimated to increase from 39.7 to 46.7 percent, or by 18 percent; a similar increase is found in 1998. The proportion of children increases from 41.1 to 45.2 percent in 1997, which is a 10 percent increase; a slightly larger increase is found in 1998. This comparison suggests that failing to consider adjunctive eligibility serves to understate the number of infants and children eligible for WIC, and the magnitude of these numbers may be overstated because some of these people may also qualify if a monthly income measure is used. Indi- viduals who participate in these means-tested programs can have moderate income when considered on an annual basis, but they are most likely to have low incomes for several months during the year. Hence, including

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INCOME AND ADJUNCTIVE ELIGIBILITY OFINFANTS AND CHILDREN 63 those who report participation in these means-tested programs will include some individuals who have monthly incomes that would have qualified them for WIC although their annual income exceeded the WIC income limits. To more accurately reflect the marginal effect of adjunctive eligibil- ity, we employed the SIPP data. The results of these calculations appear in Table 5-2. As we have already observed, the use of monthly income and certifica- tion periods has a significant and substantial impact on the estimates of the number of income-eligible infants and children. Estimates of income-eli- gible infants increased by 46 and 54 percent in 1997 and 1998, respec- tively. The number of income-eligible children rises 34 and 36 percent. The marginal impact of using the SIPP-reported enrollment in TAN F. food stamps, and Medicaid to simulate adjunctive eligibility is smaller in com- parison to the impact of monthly income and is smaller in comparison with the impact that was found in the CPS. Compared with the estimates that incorporate monthly income and certification periods, adjunctive eli- gibility increases the estimates of the number of WIC-eligible infants by roughly 6 percent, while estimates of income-eligible children are increased by 5 percent. To the extent that comparisons between the CPS and SIPP can be made, these estimates suggest that a significant proportion of the impact of adjunctive eligibility found in the CPS reflected eligibility that also could be gained through consideration of low monthly income. The relatively small impact of considering adjunctive eligibility found in SIPP as well as in the CPS could be the result of the underreporting of participation in TANF and food stamps. But underreporting of these pro- grams is a less serious problem for estimating WIC eligibility, because the income eligibility limits of these programs are considerably below the in- come eligibility limit of the WIC program, and thus few people will gain eligibility for WIC through participation in TANF or food stamps alone. Underreporting of participation in Medicaid is potentially a much more serious problem, because the income eligibility limits of Medicaid are, in most states, equal to or above the WIC eligibility limits. Thus, there is potential for a greater number of people to gain eligibility for WIC solely through enrollment in Medicaid. Some studies have attempted to gauge the extent of underreporting of Medicaid in the CPS and SIPP, but mixed results have been found, and none of the results pertains exactly to the WIC-eligible population of in- fants and children under the age of 5, pregnant women, and women less than 12 months postpartum. Wheaton and Giannarelli (2000) found that

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64 ESTIMATING ELIGIBILITYAND PAR TICIPATION FOR THE ~CPROGR~ the percentage of households (with a noninstitutionalized head) reporting Medicaid participation in the March CPS accounted for only 68 percent of the Medicaid caseload in 1998. In a slightly different comparison of the number of survey-reported Medicaid recipients under age 65 (which again, does not exactly match the WIC-eligible population) to the number of recipients reported in the Medicaid administrative files under age 65, Bitter et al. (2002) found overreporting of Medicaid receipt in 1997 in both the March CPS and SIPP. The ratio of reported recipients to administrative totals was 112.8 percent in the March CPS, and 117.9 percent in SIPP. However, the 1998 ratios show sizable underreporting of WIC participa- tion in the March CPS (87.3 percent) and a slight underreporting in SIPP (95.7 percent).5 In a study that linked individual Medicaid records in Cali- fornia to individual SIPP survey responses of Medicaid enrollment for re- spondents from California, Card et al. (2001) found that SIPP underesti- mates the California Medicaid enrollment totals by about 10 percent. This study also found that some respondents who reported Medicaid enroll- ment were not identified as actual Medicaid enrollees by the administrative data. Such false positive reports for low-income children were not small, either (possibly up to 20 percent for poor children in California). It is difficult to gauge the exact magnitude of this problem, however, because the administrative data from the Medicaid program are not re- ported specifically for the age group of infants and children under age 5. In comparing SIPP reports to CPS reports, it appears that SIPP data have a higher proportion of infants and roughly an equivalent proportion of chil- dren reporting Medicaid participation. In 1997, 26.2 percent of infants and 20.6 percent of children reported Medicaid participation. In the same year, the CPS indicates that 24.7 percent of infants and 21.2 percent of children participated in Medicaid. In 1998, the proportions were similar. The SIPP data reports that 24.9 percent of infants and 19.5 percent of children were in the Medicaid program, while the proportions from the CPS are 22.9 percent and 19.2 percent, respectively. 5Bitler et al. (2002) used the Medicaid recipiency report for each member of the house- hold, summed these for the household, and weighted them by the household-supplement weight, which may explain the difference in their results compared with the Wheaton and Giannarelli (2000) results.

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INCOME AND ADJUNCTIVE ELIGIBILITY OFINFANTS AND CHILDREN 65 Ceri'ficai'on Periods and Elig~bilit~r Accounting for monthly income, certification periods, and adjunctive eligibility has a large impact on the estimated number of eligible persons. This might raise concerns that the 6-, 9-, and 12-month certification peri- ods allow some people who gain eligibility for WIC due to one or two months of low income or means tested program participation to continue to be certified for WIC for months in which they are not income or adjunctively eligible. Table 5-3 attempts to explain how prevalent such people might be. The 1997 SIPP data are used to split the estimates of eligible infants and children into one of three categories: (1) those whose months of eligibility exactly equal the number of months for which they would be certified as eligible (e.g. they are eligible each month after the month in which they were initially certified as eligible); (2) those whose numbers of months of eligibility are less than the number of months they would be certified as eligible but who have annual incomes below 185 percent of poverty or who report participation in means tested programs TABLE 5-3 Percentage Distribution of the Number of Months of Simulated Certification by Simulated Months and Type of Eligibility for Infants and Children in 1997 Distribution of Simulated Months of Certification Simulated Months and Type of Eligibility Infants Children Total Every montha 67.8 74.3 72.8 Not every month but simulated eligibility based on annual or adjunctive~ 14] 11.2 11.8 Not every month but at least one month oflowincomec 18.1 14.5 15.3 aNumber of months of simulated eligibility exactly equals number of months of simu- lated certification. Number of months of simulated eligibility less than number of months of simulated certification, but annual income is less than 185 percent of poverty or adjunctively eligible. Number of months of simulated eligibility less than number of months of simulated certification, annual income greater than 185 percent of poverty, not adjunctively eli- gible, but had at least one month of income below 185 percent of poverty.

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66 ESTI~TING ELIGIBILI>~D PAR TICIPATION FOR THE ~CPROG~ and are adjunctively eligible; and (3) those whose number of months of eligibility are less than the number of months they would be certified and have annual income above 185 percent of poverty and are not adjunctively eligible. It is this last group that is of most concern because presumably they only have a few months where their incomes dip below the eligibility threshold, yet they could be certified for receipt of WIC for more months. Table 5-3 shows the distribution of the number of months of certification to these three types of eligible infants and children.6 The last row in Table 5-3 shows the number of case months during 1997 that fall into the third category that is, months in which an infant or child was certified as eligible but not eligible that month based on that month's income, nor annual income or adjunctive eligibility. Ofthe months that were certified to infants, 18 percent were to infants whose monthly household income exceeded eligibility limits in one or more of the months in which they were certified, whose annual household income exceeded 185 percent of poverty, and who did not report participation in programs that confer adjunctive eligibility during the calendar year (the third group from the above classification). And 14 percent of all the months certified to children were to children with similar eligibility status.7 Although 18 and 14 percent of the certification months are not small numbers, it is important to recognize that many of the individuals that these months represent could have been eligible for 5 months of a 6-month certification period, but would have one month included in the last cat- egory. We calculated the average number of months of certification and the 6Note that censoring before 1997 means we do not observe the full income and certifi- cation periods of all individuals. Table 5-3 includes those individuals who were certified in 1996 but have certification carry-over periods into 1997. 7We also examined the reported participation rates of those falling into the third cat- egory of eligibility. Twenty-five percent of infants and 11 percent of children in this category reported participation in WIC. These are low participation rates compared to those of all eligible infants and children (see Chapter 8). However, these rates are not adjusted for underreporting of WIC participation (as Chapter 8 estimates are) because we do not have information to allocate aggregate levels of participation into the three types of eligibility categories in Table 5-3. Those persons who have fewer months of income eligibility than they would have been certified for (third category) have greater incomes and thus may have higher rates of underreporting of WIC participation. This may be due to a greater perceived stigma or because they do not recall short periods of participation (they may have picked up WIC benefits only for the one or two months they had low income even though they were certified for more months).

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INCOME AND ADJUNCTIVE ELIGIBILITY OFINFANTS AND CHILDREN 67 average number of months of eligibility of infants and children who fall in this third category. We find that infants from this category received 5.8 months of certification on average but were eligible for 1.6 months on average. Children received 4.5 months of certification for 1.9 months of eligibility on average. SUMMARY Neither the CPS nor SIPP data are ideal for estimating the number of WIC income- and adjunctively eligible infants and children. The SIPP data provide a more reliable estimate of monthly income, which is demonstrated by the large and significant effect of using monthly income for eligibility estimates. The use of the SIPP data requires that reported enrollment in means-tested programs must be employed to impute adjunctive eligibility. There is some question about whether the reporting of participation in these programs is accurate. Thus, some concern must be given to whether total eligibility is understated. At this stage, the panel cannot assign too much confidence to the point estimates. However, one conclusion is ines- capable the use of the public use CPS files significantly understates the proportion of infants and children who are eligible for WIC on the basis of monthly income. Instead of roughly 40 percent eligibility of all infants and children, the true percentage of all infants and children who are WIC eli- gible may be as high as 54 percent. CONCLUSION: The current method used to estimate income eligi- bility for infants and children significantly understates the numbers eligible because income variation over time and adjunctive eligibility are not adequately measured. The essence of this conclusion is that our estimates show that more people are eligible for the program when monthly income and adjunctive eligibility are considered in the estimation methodology. It does not neces- sarily imply that these additional eligible people will participate in WIC. Those who gain eligibility through Medicaid participation or because they have a few months of income below 185 percent of poverty are likely to have higher incomes than other eligible people. These higher income groups may find the relatively small value of WIC food packages too small to entice them to participate. The only claim of the conclusion is that current methods used to estimate eligibility underestimate it.