Congressional Republicans Prepare To Undermine Medicaid With Block Grant Proposal

Under today’s Medicaid program, the federal government pays a fixed percentage of each state’s Medicaid costs (anywhere between 50 and 75 percent, depending on need) and requires states to maintain certain eligibility and benefit standards. Govenors that develop a more innovative approach to paying for health care services may receive a waiver from some of the program’s requirements to pursue other alternatives. Republicans — unhappy with many of the federal strings attached to the federal dollars — have long sought to reform this funding arrangement by transforming the matching-fund structure into a block grant system, under which states would receive set “block” of money to do with it as they wished (within certain constraints).

Last month, GOP governors attending the National Governors Association’s winter meeting pressed President Obama on the idea and according to the Wall Street Journal’s Corey Boles and Janet Hook, Congressional Republicans will likely unveil their own block grant proposal when they reveal their budget next week:

Rep. Mick Mulvaney (R., S.C.) told constituents at a town hall meeting in Lancaster on Thursday that the committee soon would unveil a budget resolution for fiscal 2012 that recommends revamping Medicaid to allow states more latitude in spending federal money.

“We’re getting ready to offer people the first real, substantive discussion on a major entitlement — Medicaid — in my lifetime,” the congressman said.

What Mulvaney describes as “more latitude” and greater state flexibility is really a gigantic cost shift from the federal government to the states. Under their proposal, states would receive an annual federal appropriation that would be less than current projected growth of the program, forcing state governments to make up the difference by increasing spending or (more realistically) capping enrollment, cutting eligibility, limiting mandatory benefits and lowering provider reimbursements.


As the CBO put it in examining Rep. Paul Ryan’s (R-WI) Medicaid block grant proposal: “reducing federal payments for Medicaid relative to currently projected amounts would probably require states to provide less extensive coverage, or to pay a larger share of the program’s total costs, than would be the case under current law.”

It’s the kind of policy that would place Medicaid’s 53 million beneficiaries — the great majority of whom are elderly and disabled — in great danger of losing their coverage and jeopardizing the success of health care reform, which relies on the Medicaid program to expand coverage to some 17 million Americans. And that of course, may be the very goal of proposing it.