An emerging concern for public policy is welfare reform's potential to inadvertently affect caseload composition by increasing the proportion of recipients with health-related barriers to employment. The authors examine this using data from the Welfare Client Longitudinal Study, an in-depth case study of a large California county. Through quantitative analyses, they examine the extent of change in health-related problems since welfare reform and their potential to progressively impact overall composition of the caseload. They augment this with qualitative data on how local welfare providers are responding to the health-related needs of aid recipients. Results suggest that the burden of health-related problems is growing and that welfare providers may be poorly equipped to respond effectively on their own. The changing composition of welfare caseloads may foster several new policy dilemmas that demand broader attention: states and localities may face difficulties meeting federal workforce participation requirements, may need to restructure welfare-to-work programs to serve a more functionally impaired population, and may need to take steps to better integrate health and welfare services at the local level.