On Thursday, January 30, the Trump Administration followed up on last week’s reports with their Medicaid Healthy Adult Opportunity proposal. The announcement came through CMS Administrator Seem Verma with careful avoidance of using the term block grant. The Administration is attempting to use their waiver authority to allow a more limited Medicaid block grant. In this case, it would be narrowed to adults who are not considered to be under mandatory coverage, meaning some children’s and disabled adult populations would not be included. States would choose between a fixed block grant total or “per capita cap” that would be a block grant based on individual calculations.

Verma said, “Vulnerable populations deserve better care. Data shows that barely half of adults on the Medicaid program report getting the care they need. This opportunity is designed to promote the program’s objectives while furthering its sustainability for current and future beneficiaries and achieving better health outcomes by increasing the accountability for delivering results.” CMS has been pushing state administrators on how they can receive waivers that will give the state a health care block grant. Also, they have promoted states’ use of waiver authority toward new work requirements that have resulted in reduced coverage.

The day before Congressman Joseph Kennedy III (D-MA) and Congressman Jim Cooper (D-TN) released a congressional letter signed by 35 members denouncing the CMS effort and pointing out it exceeds the legislative waiver authority. Congressman Kennedy will be speaking at the CWLA National Conference on Thursday, March 26.

Congressman Kennedy said, “Limiting treatment options and denying access to prescription drugs will never lead to healthier outcomes for patients or better opportunities for working families. If the Trump Administration chooses to unleash this dangerous plan tomorrow [Thursday], it will only underscore the flagrant disregard they have for the health of the American people. Along with our colleagues, advocates, experts and patients, we will continue to make clear that any effort to steal Medicaid coverage from deserving Americans is not only immoral, it’s illegal.”

Congressman Cooper said, “States may be enticed by the ‘flexibility’ of block grant waivers, but in reality, it just means less federal funding and less accountability for states to do their constitutional duties. They are threatening health care for millions of Americans who need it most. The Trump administration should stop experimenting on people and start extending health care to everyone.”

The Administration and some Republican members of Congress have been pushing Medicaid block grants in some form over the past several years. In 2017 the House of Representatives passed the American Health Care Act (AHCA) that converted the Medicaid program into a “per capita cap” block grant. Under the per capita cap, health care costs would be calculated for each of five groups: children, the elderly, disabled, adults on Medicaid due to the ACA, and all other adults. The base grant (in that bill FY 2016) would be adjusted by an inflation factor each year times the number of people in each category. That formula would result in each state eligible for a maximum amount of federal Medicaid dollars. If any state exceeded that federal amount in a year, the state would have to pay for anything above that cap—a block grant. CWLA opposed that proposal.
This new proposal narrows its population but would still convert a significant portion of Medicaid spend to be spent “flexibly.” Block grants are appealing to state administrators who may be on short terms that end with the next governor. Future cuts and shortfalls due to inflation and federal cuts may end up hitting in the following state administration and future state legislative sessions. Over time there can also be a drift in spending on various and ever-expanding categories of programs, making it hard to assess what the block grant is accomplishing as has happened with TANF. In their report, A Roadmap to Reducing Child Poverty, the National Academy of Sciences stated, “States’ reporting requirements under TANF are quite minimal, so federal policymakers and researchers are unable to determine whether the funds are being spent in keeping with the letter or spirit of the block grant.”

Medicaid matches state health care spending by a low of 50 percent (in FY 2020Alaska, Connecticut, Colorado, California, Massachusetts, Maryland, New Jersey, New Hampshire, New York, Washington, and Virginia) to a high of 77 percent (Mississippi) based on an economic formula adjusted annually. Sometimes the rate can go as high as 83 percent. A state like New York or California gets a 50 percent match while a state like Mississippi receives a match closer to 75 percent. One Medicaid dollar in New York means the federal government is picking up 50 cents on the dollar. In a 75 percent match, state one Medicaid dollar means the federal government is picking up 75 cents on the dollar. Also, the ACA allows states to expand Medicaid to all people up to 138 percent of the poverty level, with the federal government providing up to 90 percent of that cost.

The history of the Social Services Block Grant (SSBG) and the Temporary Assistance for Needy Families (TANF) block grant are similar in that they were both entitlements converted in 1981 and 1996, respectively. In both cases, the block grants were cut and then lost value due to inflation. SSBG peaked at $2.9 billion in the 1980s, and the TANF base grant plus a state supplement was approximately $16.8 billion. It absorbed a $300 million cut, and inflation has eroded its value by more than 35 percent. In the President’s first three budgets he has proposed the elimination of SSBG now funded at $1.7 billion.