Statement Announcing Extensions of Welfare Reform Proposals

PAST PROGRAMS to aid the poor have failed. They have degraded the poor and defrauded the taxpayer. The family assistance plan represents the most comprehensive and far-reaching effort to reform social welfare in nearly. four decades. Today, I am announcing significant extensions of the administration's welfare reform proposals.

BASIC PRINCIPLES

The family assistance plan is based on four fundamental principles:

--Strong incentives to encourage work and training;

--Equity to provide assistance to working poor families;

--Respect for individual choice and family responsibility; and

--Administrative efficiency to earn the trust of the taxpayer.

Administration officials have worked recently to identify ways to extend the principles of this income strategy to other domestic programs such as Medicaid, food stamps, and public housing.

On the basis of this review, I have made my decision to propose basic amendments to the Family Assistance Act of 1970.

HEALTH INSURANCE FOR POOR FAMILIES

The most important proposal I make today is to reform the Medicaid program.

Medicaid is plagued by serious faults. Costs are mounting beyond reason. Services vary considerably from State to State. Benefits are only remotely related to family resources. Eligibility may terminate abruptly as a family moves off often losing more in medical benefits than it gains in income.

In short--just like the existing welfare system--Medicaid is inefficient, inequitably excludes the working poor, and often provides an incentive for people to stay on welfare.

I will propose legislation at the beginning of the next Congress to establish a family health insurance program for all poor families with children. This insurance would provide a comprehensive package of health services, including both hospital and outpatient care.

Final decisions on the specifications of the family health insurance proposal must await further review by the new Domestic Council. We are satisfied that the basic principles will work. This proposal will constitute the second legislative stage of the administration's income strategy against poverty.

UNIFIED ADMINISTRATION OF FOOD

STAMPS AND FAMILY ASSISTANCE

The administration has already made extensive changes in the food stamp program to improve benefits, make them more equitable, and help even the very poorest families to receive assistance. We will propose that the Congress build on these executive reforms to integrate food stamps with family assistance and other income support programs.

Therefore, I plan to:

--Submit a reorganization plan at the beginning of the next Congress to transfer the food stamp program from the Department of Agriculture to the Department of Health, Education, and Welfare;

--Make it possible for a family to "check off" its food stamp purchase and receive its stamp allotment automatically with its family assistance check; and

--Revise the food stamp price schedule to make it rise evenly with increases in income.

ASSISTED HOUSING

Present subsidized housing programs are marked by inconsistencies and inequities. Many families pay the same rent despite wide differences in income. A small increase in earnings may force the family to move, losing much more housing assistance than is gained in income.

We have proposed a solution to many of these problems in the Housing Act of 1970. Rents would vary directly with income. A family would not be forced to move at some arbitrary income limit. We will offer this provision of the Housing Act to the Senate Finance Committee for its consideration.

REFORM OF INDIVIDUAL AND FAMILY

SERVICES

In other amendments, we are proposing significant changes in social services for the poor. This proposal has been developed in recent months and will be ready for submission to the Congress next week. These amendments will:

--Encourage accountability and program results;

--Strengthen the role of Governors, mayors, and county executives;

--Seek to eliminate duplication and overlap.

OTHER MAJOR CHANGES

Other administration amendments to the Family Assistance Act make important changes. For example:

--Phasing out the special program for unemployed fathers, thus eliminating one of the most serious disincentives noted by the Senate Finance Committee;

--Limiting the welfare burden of the States by placing a ceiling on their financial obligations under the program;

--Strengthening the work requirement; and

--Reducing areas of administrative discretion.

Nowhere has the failure of government been more tragically apparent in past years than in its efforts to help the poor. The 91st Congress has an historic but rapidly vanishing opportunity to reverse that record by enacting the Family Assistance Act of 1970. Let there be no mistake about this administration's total commitment to passage of this legislative milestone this year.