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Medicaid Reform: Are Block Grants Coming

Posted on: March 6th, 2017
Posted by:  Jennifer A. Johnson

Medicaid, the single largest source of health coverage in the United States, provides health coverage to almost 75 million Americans, including children, pregnant women, parents, seniors and individuals with disabilities.
 
Medicaid is a federal program, but it is administered by the states. To participate in Medicaid, federal law requires states to cover certain groups of individuals, such as low income families and individuals receiving Supplemental Security Income (SSI). States may choose to cover other groups, such as individuals receiving home- and community-based services.
 
Funding for the Medicaid program comes from both the federal government and the individual state governments. Currently, the federal government gives each state a specified percentage of its program expenditures. This Federal Medical Assistance Percentage (FMAP) is based primarily on the per capita income of the state receiving assistance, so it can vary widely from state to state. For example, a rich state like New Jersey might receive $1 from the federal government for every dollar it spends on Medicaid while a poor state like Mississippi would receive $3 for every dollar it spends. The FMAP is adjusted every three years to account for changes in the economy.
 
Conservatives have long argued that Medicaid would be more efficient if states received a lump sum—a block grant—from the federal government and could then manage the programs as they saw fit. President Ronald Reagan proposed block grants in 1981, Speaker Newt Gingrich in 1995, and President George W. Bush in 2003. President Clinton agreed to block grants with the Temporary Assistance for Needy Families (TANF) program. Now that Donald Trump is President, and Republicans have control of both the House and the Senate, block grants are back on the table.
 
Proponents claim this could save the government billions of dollars and give the states more opportunity to be creative with their programs. Critics are afraid that people will not have access to the care they need. They are concerned that the states would cut benefits or force beneficiaries to take on more cost-sharing. Most of the Medicaid spending is on the elderly and disabled, with Medicaid paying for the care of almost two-thirds of the people in nursing homes, and critics are afraid they will suffer the most. In addition, they claim hospitals and clinics that treat large numbers of Medicaid beneficiaries will likely have to adjust their services and staff.
 
Of course, this is all speculation right now as no details on a block grant plan are available. But they may be coming soon. Republicans have placed a high priority on repealing and replacing Obamacare. That, and portions of a block grant proposal, could be accomplished through a process called budget reconciliation. Because it would only require 51 votes in the Senate, a Republican plan could pass without Democrat support. If a block grant plan for Medicaid is included, look for details on the implementation and see how the critics’ concerns are addressed.
 

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