Medicaid Block Grants: A Primer

The Trump Administration’s rollout of its new Medicaid block grant policy, dubbed “Healthy Adult Opportunity” was met with backlash from House Democrats, who are moving to vote on a resolution next week that would disapprove the plan.

Block grants give states fixed federal grants to use toward Medicaid spending based on individual expenditures at the state and federal levels, growing annually to account for inflation. States currently share Medicaid costs with the federal government and receive reimbursements for services provided.

Refer to previous Hertel Report posts for more.

By capping funding levels, critics of the policy are concerned that block grants cannot immediately respond to economically vulnerable communities due to inadequate funds or prioritized spending elsewhere.

The policy’s inherent sovereignty, however, can be attractive to states looking to operate a more autonomous Medicaid system as states can shift federal funding to cover state funding and authorize program cuts otherwise prohibited on the federal level.

Check out this Hertel Report post for more insight.

Several healthcare organizations voiced their dissent of the overhaul, including the American Medical Association, whose President Patric Harris said in a statement:

The AMA opposes caps on federal Medicaid funding, such as block grants, because they would increase the number of uninsured and undermine Medicaid’s role as an indispensable safety net…While encouraging flexibility, the AMA is mindful that expanding Medicaid has been a literal lifesaver for low-income patients.

The American Hospital Association (AHA) and the American Health Care Association (AHCA) weighed in on the issue too, saying Medicaid funding is inadequate as-is and capping it would only exacerbate an existing problem.

“Enacting this proposed rule would cut up to $50 billion nationally from the Medicaid program annually, further crippling Medicaid financing in many states and jeopardizing access to care for the 75 million Americans who rely on the program as their primary source of health coverage,” said Rick Pollack, CEO and president of AHA, and Mark Parkinson, president and CEO of AHCA.

The House will vote on a resolution to disapprove the block grant policy on Thursday, according to House Speaker Nancy Pelosi, but the resolution is unlikely to be given a second glance by the GOP-controlled Senate that recently acquitted the President of impeachment inquiries.

In a joint statement, Democratic leaders stated:

Congress has a responsibility to protect Medicaid beneficiaries from the harm that would be caused by this new guidance…The Democratic-led House will not allow this challenge to health care access in our country to go unanswered.

The Centers for Medicare and Medicaid Services (CMS) unveiled the block grant initiative last month and provided guidance to apply for the fixed funding, limited to “healthy adults” earning a certain amount under Medicaid.

If a waiver is approved, states would see a new opening for flexibility in handling managed care contracts. States would not be required to have CMS’ approval for a capitation rate, despite usual measures taken by the agency to review rates.

In a letter sent to state Medicaid directors, CMS writes:

States would be expected to certify that their managed care plans have the capacity to meet the state’s standards for access to care and availability of services.

For more on block grants and the newly issued guidance, check out Fierce Healthcare and Health Exec.

Also, check out The Hill for more insight on the Democratic move.

And take a look at the Center for Budget and Policy Priorities for another perspective.