December 18, 2017

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Everything You Need to Know About Block Grants — The Heart of GOP’s Medicaid Plans

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President Donald Trump’s administration made explicit this weekend its commitment to an old GOP strategy for managing Medicaid, the federal-state insurance plan that covers low-income people — turning control of the program to states and capping what the federal government spends on it each year.

It’s called “block granting.” Right now, Medicaid, which was expanded under the 2010 health reform to insure more people, covers almost 75 million adults and children. Because it is an entitlement, everyone who qualifies is guaranteed coverage and states and the federal government combine funds to cover the costs. Conservatives have long argued the program would be more efficient if states got a lump sum from the federal government and then managed the program as they saw fit. But others say that would mean less funding for the program —eventually translating into greater challenges in getting care for low-income people.

Block granting Medicaid is a centerpiece of health proposals supported by House Speaker Paul Ryan and Rep. Tom Price, Trump’s nominee to run the Department of Health and Human Services. This weekend, Trump adviser Kellyanne Conway emphasized the strategy as key to the administration’s health policy.

But what would this look like, and why is it so controversial? Let’s break down how this policy could play out, and its implications — both for government spending and for accessing care.

Q: How would a block grant work?

So far, Trump hasn’t released details on his particular plan. But the basic idea is that states would get fixed federal grants that would be based on the state and federal Medicaid spending in that state. The grant would grow slightly each year to account for inflation.

Currently, states share the cost of Medicaid with the federal government. Poorer states pay less: In Mississippi, for instance, the federal government pays about three-fourths the cost of the program, compared to 50 percent in Massachusetts.

Use Our Content This KHN story can be republished for free (details).

The federal funding is open-ended, but in return, states must cover certain services and people — for instance, children, pregnant women who meet income criteria and parents with dependent children. Under a block grant, states would have more freedom to decide who qualifies, and for what services.

How much freedom states will have will depend. Many proposals loosen state coverage requirements, which could mean that if states opted to cap enrollment, for example,

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