Stateline’s Pamela M. Prah examines the truthiness of the GOP’s favorite argument for block granting the Medicaid program: it worked in welfare reform. In 1996, the Congress passed and President Clinton signed a major overhaul of the welfare program, transforming it from a guaranteed entitlement into a block grant structure where “states are essentially given a set amount of money and allowed to use it as they wish.” “The amount has stayed level since 1996,” Prah notes.
Republicans would do something similar to the Medicaid program: convert the program’s matching rate financing structure — under which the federal government pays 50 to 75 percent of each state’s Medicaid costs — into a block grant system that would allow for greater state control to manage a set “block” of federal dollars that would not keep up with projected health care costs.
The comparison isn’t perfect, but the outcomes may be comparable. As Prah reports, under welfare reform, the government is saving money, but “families who need help are not being served.” “The Center on Budget and Policy Priorities says that before TANF, the federal government and states were helping 75 out of every 100 families with children who lived in poverty. That number, the center says, dropped to 28 families for every 100 in poverty in 2008-09. In seven states, according to the center, TANF served fewer than 10 families for every 100 in poverty.”
Similarly, the GOP’s latest Medicaid block grant proposal reduces Medicaid funding by $1.4 trillion over the next decade — the federal government would spend less money, but cover fewer people. Up to 44 million beneficiaries could lose their Medicaid insurance, a Kaiser Family Foundation estimate recently concluded, a number that could potentially increase during economic downturns. It’s a pattern that’s familiar to welfare reform. When the economy was strong, earnings among single-parent families increased, even though most families remained near the poverty line. Once it slowed, employment fell and poverty increased, but the caseload numbers have flat-lined.