Trump Administration Tries to Turn Medicaid into Block Grants

It has long been a conservative dream to transform Medicaid into a system where the expenditures for the federal government are capped. As opposed to a traditional safety net program, Republicans have aspired to change the Medicaid program to one that functions on a defined budget. Now, the Administrator for the Centers for Medicare and Medicaid Services has announced a plan to do exactly that, allowing states to turn their Medicaid funds into a block grant in exchange for exemptions from certain program requirements. This change promises to be extremely controversial, and opponents argue that the government is using this program as an excuse to cut overall Medicaid spending.

Through block grants, states have the ability to cap their own funding that they receive from the federal government. They would then be able to figure out how they could allocate their budget to provide care. Of course, with a capped amount of money, there is a possibility that some program participants could either be denied care or receive insufficient care.

States Can Decide Whether to Opt into the Program

The program is not mandatory, and states have the ability to decide for themselves whether they wish to participate. There is a likelihood that states that are governed by Republicans may want to receive their Medicare funding through block grants since it has long been a holy grail of the Republican party. Nonetheless, they must apply for a waiver in order to convert to a block grant, and this process will take a considerable amount of time.

One area where states may be likely to cut back care is on pharmaceuticals. The new rules would allow states to obtain a waiver from federal requirements and they would be able to choose which drugs are covered. Conceivably, this would result in a lower level of coverage as the states could decline to cover certain drugs.

Other areas of possible lower coverage remain to be seen. The new rules give states the flexibility to design their own programs. As a result, they may cut out any number of different program benefits to which participants are currently entitled. One of the major criticisms of this plan is that it will ultimately result in a slashing of the social safety net. This is exactly what the Trump Administration wants as it tries to impose cost discipline on the program. However, the Trump Administration argues that it is throwing a lifeline to Medicaid and is acting to preserve the program for the future.

For Some, Medicaid May no Longer Be Open-Ended

However, even the suggestion that Medicaid would not be open-ended in the future is enough to stir up fierce opposition and cause worry among the general public. Over 70 million people are enrolled in the program and receive benefits from it. After nearly six decades, the public has come to expect Medicaid to be an open-ended commitment and a guarantee from the federal government. The prospect that it could be limited frightens those who rely on Medicaid for their health care.

It is questionable whether this new program is even legal. Congress has authorized and appropriated the Medicaid funds, and it is an open question whether a change of this type can be made to the program outside of the legislative process. Nonetheless, the approach taken by the Trump Administration is consistent with its attempts to take action by Executive Order and rule changes as opposed to going through Congress. A change this drastic will likely be litigated, and it is unclear how courts would view this new program. Other Medicaid changes such as work requirements have been put on hold by the courts.

Turning Medicaid into block grants is the biggest change to the social safety net since it was begun under President Lyndon Johnson. This will result in a two-tiered system. On one hand, many states accepted expanded Medicaid funding that came with Obamacare. On the other hand, there are a handful of states that turned down expanded Medicaid and now will be applying for a waiver to further limit Medicaid for its residents. The consequences of this change, if it passes through the courts, will be far-reaching. This policy change has been obscured by the more recent headlines coming out of Washington so the general public is not aware of this. Right now, the House is set to vote on a disapproval resolution, but its power is limited since it is an executive rule.