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Medicaid Block Grants Called False Promise for States

Critics charge a congressional plan for Medicaid to do more with less through block grants is a false promise. (DHS)
Critics charge a congressional plan for Medicaid to do more with less through block grants is a false promise. (DHS)
January 26, 2017

CHARLESTON, W.Va. -- The Trump administration and Republican leaders in Congress say Medicaid funding should be turned into block grants. They argue the increased flexibility would allow for spending cuts without cutting services. But according to critics, that's a false promise.

Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities, said going from a Medicaid program that covers anyone who qualifies to one that gives states a set chunk of money comes with a catch. She said that the budget plans passed by the House so far this year will fund Medicaid below what states need.

"And that's really the key point,” Soloman said. "The idea is to save the federal government money by cutting its expenditures, and thereby shift the cost to the states."

More than half a million West Virginians rely on Medicaid, many of them in working poor families covered under the expansion through the Affordable Care Act. According to a recent study in the New England Journal of Medicine, one death per year is prevented for every 455 people who gain insurance.

Rolling back the expansion could reduce federal spending by 1 trillion dollars over 10 years. Solomon said budget plans passed by Republicans in Congress included another trillion dollar reduction beyond that.

Supporters, including House Speaker Paul Ryan, have argued that block-grant flexibility would allow states to do more with less. But Solomon said for states to improve their programs, they have to spend more to put new systems in place. She said the block grant plans as described would make that impossible.

"This is really a false promise,” she said. "The cuts like those in last year's Republican budget would stymie state innovation that is already under way, which often requires up-front expenditures."

Solomon said states can apply for waivers to change how they run Medicaid now without losing funding. But she said the only additional flexibility offered by block grants comes in the form of decisions that could force people out of the program or cut coverage.

"And the states are not only left holding the bag for the costs, it's the states that have to make the very hard decisions about what to cut,” Solomon said.

More information is available at cbpp.org.

Dan Heyman, Public News Service - WV