Ok I get it now. The country I came from has the same thing but it wasn't only for families who are on low income. It was also mid class families too. If you earn under lets say $50.000 per annum then you are eligable for subsidy.
Families had some kind of fund account and the goverment would transfer the money to that account and then families would pay me from their funds. Or families paid some of my fee from their pocket and goverment paid the remainings. I don't think that was for families who on welfare. In fact families who are on welfare had more cash in their hands than families who are working hard! It is NOT fair! but anyway this is another story.