Among the many Republican-backed provisions to cut federal spending is the proposal to transform Medicaid into block grants. Republicans have posited the
“„The states need the flexibility and authority to craft innovative programs to provide medical care to our neediest citizens. But to do so, we need Congress to cut the red tape states must wade through to implement new programs and save money on what we already do. Through greater flexibility in the management of Medicaid, states might be able to reduce substantially the hidden tax increases that forced expansion of the program will impose. Our citizens should not have to wait years for agencies in Washington to green light new healthcare solutions. We need relief now.
“„Converting Medicaid to a block grant is attractive to some federal policymakers because it could produce large federal budgetary savings (and, in doing so, potentially ease pressure on certain other parts of the federal budget — such as the tax code, where, for example, policymakers will face a decision on whether to extend the Bush tax cuts for high-income households beyond 2012). But a block grant would almost certainly shift substantial costs to the states. Instead of the federal government picking up half to three-quarters of unanticipated Medicaid cost increases that result from a recession, the onset of a new disease, or the development of new pharmaceutical or other treatments, states would have to bear allof those costs themselves (once they exhausted their block grant allocation). A block grant would make Medicaid much more financially unpredictable and risky for states.
“„A block grant may also appeal to some federal policymakers because it would force the statesto “be the bad guys” — making the decisions about which people to drop from coverage or which medical services to curtail when federal funding proved inadequate. States would essentially be left “holding the bag” — they would either have to contribute more state funding (by raising taxes or cutting other programs) or, more likely, exercise their increased flexibility to institute wide-ranging cuts in eligibility, benefits, and/or provider reimbursement rates. Those cuts could add millions to the ranks of uninsured. They also could impede access to care for tens of millions of people who continued being covered, as a consequence of substantial increases in co-payment and premium charges or cuts in reimbursements that cause substantial numbers of providers to leave the program.