NYAPRS Note: With confirmation of former Rep. Tom Price as new Administrator for the Health and Human Services agency that ultimately oversees the Medicaid program, recovery advocates are bracing for the possible impact of a move to state block grants.
The specter of block grants and other changes in a post Affordable Care Act world will be a front and center topic for NYAPRS’ upcoming April 27-8 Annual Executive Seminar, “All Hands on Deck! Ensuring a Recovery Focus in a Changing Healthcare Environment” at the Albany Hilton. More program details and registration link next week.
GOP Ramps Up Effort to Transform Medicaid Into Block Grants
Shift has long been a Republican goal, but could present challenges for governors who may have to make do with less
Jennifer Levitz The Wall Street Journal February 9, 2017
Congressional Republicans are stepping up efforts to overhaul how Medicaid is funded, a move that could reduce the funds states receive while giving states more control over the roughly $500 billion program.
House Republicans this week weighed bills on Medicaid eligibility that are widely seen as their first move toward a broader overhaul. Last week, a House Energy and Commerce subcommittee hearing to discuss changes to issues such as eligibility became a platform for debating Republican plans to turn the program—which provides assistance to more than 70 million Americans—into a block grant or other capped spending program, a move opposed by congressional Democrats.
The House can pass Medicaid legislation with just a simple majority, but most bills need 60 votes to clear the Senate. Republicans hold a narrow 52-48 majority in the Senate, so any Medicaid proposals would likely need at least eight Democratic lawmakers to support the bill to make it to the president’s desk. That isn’t the case if Republicans seek to convert most of Medicaid through a budget maneuver process, in which case they wouldn’t need the support of Democrats.
The path forward is still uncertain even though top Republicans have made Medicaid block grants a centerpiece of their health care agenda. Some Republican lawmakers concerned about funding cuts, especially in states that expanded Medicaid, could put pressure on GOP members in Congress not to change the program.
Under the Republican push, Medicaid would transform from an open-ended entitlement program whose conditions are set by the federal government to one in which states receive a fixed amount of funds that they would control. That change, should it be adopted as part of the planned overhaul of the Affordable Care Act, would represent the biggest shift since Medicaid’s inception in 1965, and it is both alarming and intriguing governors.
The policy change “will result in the single largest transfer of risk ever from the federal government to the states,” Arizona Gov. Doug Ducey, a Republican, wrote recently to House leaders, urging caution on a new financing structure while not opposing the idea altogether.
Moving to block grants has long been a goal of the GOP but sets up challenges for states that may eventually have to make do with less, which could trigger adjustments to state Medicaid programs. State legislatures would have to re-evaluate coverage and benefits beyond what is federally mandated or figure out how to fund the shortfall. Republicans themselves, meanwhile, aren’t aligned on the best course forward.
Of the 31 states that opted to expand Medicaid coverage under the 2010 health law, 16 now have Republican governors. Several have said they want to keep that expansion if the health law is repealed. Some governors welcome the expected flexibility of block grants, but caution their support will depend on how the amount of the grants is determined.
Nevada Gov. Brian Sandoval, a Republican, raised concerns about moving to a fixed funding structure in the event of an economic downturn. “I want to make sure that there is something within that that takes into account for a fluctuation in the economy,” he said at a National Governors Association event last month.
Nevada experienced the second highest increase among all states in enrollment in Medicaid and children’s health insurance since the rollout of the Medicaid expansion, behind only Kentucky, according to recent data from Kaiser Family Foundation. In that time, Nevada’s enrollment rose 87% to about 620,000. In 2015, Medicaid spending in the state was $3.1 billion, ranking it 35th among states, according to the Kaiser data.
For many, like Sue Rillovick, who is 59 years old and lives in Farmington, N.H., Medicaid is a safety net in tough times. Ms. Rillovick, an interior designer by training, lost her health insurance after the 2008 economic downturn and for six years she didn’t see a specialist for her diabetes, until her low income allowed her to qualify for Medicaid around 2014. Then, she was able to get treatment for a serious eye condition as well as depression.
Getting her health under control put her on better footing to pursue a new career path. She is now working at a mental-health agency and transitioning off Medicaid to employer-sponsored insurance. “It really changed everything about my life,” she said.
Republican lawmakers working to alter the ACA have yet to coalesce around any one replacement plan. Rep. Tom Price, President Donald Trump’s nominee to head Health and Human Services, has backed block grants. Kellyanne Conway, senior adviser to Mr. Trump, has also said an overhaul of the health law would put Medicaid into block grants. “You really cut out the fraud, waste and abuse,” she said in televised remarks.
The GOP pushed the block grant approach in the past, but hit Democratic opposition. President Bill Clinton vetoed a block grant Medicaid proposal passed by the Republican Congress in 1995.
In recent debates in Washington, Democrats have voiced their discontent with the change. “It appears that yes indeed they intend to target families who rely on Medicaid, for the elimination of care and services disguised by the terminology of ‘per capita caps’ and ‘block grants,’” said Rep. Kathy Castor (D., Fla.).
Currently, the federal government pays an average of about 63% of Medicaid expenses, a smaller share in wealthier states than in poorer states. The dollar amount can rise and fall depending on needs. Block grants would give states a lump sum amount based on a formula that hasn’t yet been determined.
“At a minimum, the Medicaid expansion population should be converted to a block grant program,” Kentucky Gov. Matthew Bevin, a Republican, wrote recently to House leaders, who had solicited input from governors.
Otherwise, he said, spending for the expansion group could crimp coverage for the elderly and disabled. More than half of Medicaid spending goes to seniors and people with disabilities, according to the Kaiser Family Foundation, a health-care research nonprofit.
The rolls for Medicaid and the connected Children’s Health Insurance Program have swelled by around 16 million people since the Medicaid expansion provisions kicked in at the start of 2014, according to federal data.
A shift to block grants or per capita caps for Medicaid would reduce federal funding and hinder flexibility at states, said Massachusetts Gov. Charlie Baker, a Republican. “States would most likely make decisions based mainly on fiscal reasons rather than the health-care needs of vulnerable populations,” he said in a letter to congressional lawmakers.
Diane Rowland, executive vice president of the Kaiser Family Foundation, said a key concern is whether block grant funding would be based on current spending levels, thereby penalizing states that didn’t expand Medicaid. Another concern is what the growth rate will be for block grants to keep up with rising costs.
A 2012 plan by House Speaker Paul Ryan, (R., Wis.) to reduce federal spending included a plan to transform Medicaid funding into block grants. Under this plan, the Congressional Budget Office concluded, states might be able to deliver health care more efficiently, but also “would need to increase their spending on these programs, make considerable cutbacks in them, or both.”
House Republicans later backed an agenda that floated a block-grant alternative called per capita caps, where the amount of federal money states get is tied to the number of beneficiaries. This would mean more funding, for example, in an economic downturn when the number of enrollees rises. That agenda includes block grants as an option, a spokesman for the House Energy and Commerce Committee, which is playing a key role in drafting legislation to dismantle and replace the ACA, said this week.
“In recent meetings with governors, we saw strong support from Republican governors in the per capita approach,” he said.
—Michelle Hackman contributed to this article.
