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Block Grant Funding Threatens Medicaid

On July 30th Medicaid turns 54! For more than fifty years, the guarantee of Medicaid has been a lifeline for tens of millions of children, people with disabilities and low-income seniors. Today, it is the largest health insurer for our nation’s children, providing comprehensive, affordable health coverage for more than 1 in 3 children, including nearly half of children with special health care needs. But at a time when we should be celebrating Medicaid’s success, the Trump Administration continues to take actions that jeopardize the program’s future and reverse the decades of progress made in reducing the rate of uninsured children. In addition to approving harmful waivers, it has recently been reported that the Centers for Medicare and Medicaid Services is developing guidance to encourage states to make detrimental changes to the structure of their Medicaid programs by converting them to a block grant or per capita cap funding structure.

If this sounds familiar, it’s because we had this fight in 2017 – but back then it took place on Capitol Hill. But fortunately, Congress rejected those efforts to dramatically restructure Medicaid, which makes this renewed effort even that much more troubling.

Last week Avalere released a new report that examines the effect block grants and per capita caps could have on children enrolled in Medicaid. It confirms our concerns: converting Medicaid funding to a block grant or per capita cap would dramatically decrease federal Medicaid funds going to the states and put current Medicaid protections at risk. This change to Medicaid funding would dramatically alter the current structure of the program and its core protections, giving states a fixed dollar amount of federal funding in exchange for additional “flexibility” and locking in current spending inequities. According to Avalere’s analysis, a shift to a block grant or per capita cap policy would cut federal funding for children anywhere from $89 billion to $163 billion over 10 years depending on the specific policy change. This reduction in federal funding and the fact that the growth of funding would be unable to keep up with growing health care costs would shift the costs to states and local communities. These pressures may force states to offset limited funding by reducing eligibility, increasing beneficiary cost sharing, reducing covered benefits, raising taxes or reducing spending in other parts of state budgets. Simply put, children and other vulnerable populations that rely on Medicaid would suffer the consequences.

These structural changes and resulting cuts to Medicaid funding will put a large financial burden on states, push millions of children into the ranks of the uninsured and underinsured and undo decades of progress for children’s coverage. Capping and cutting funding for Medicaid has been repeatedly rejected – most recently by Congress in 2017 – and it is critical that we continue to reject any proposals that change Medicaid’s funding structure and instead work to build on Medicaid’s success. Read Avalere’s full report.

2019-07-26T10:10:26-05:00July 26th, 2019|