Trump Administration Announces Shift to Medicaid Block Grants

This story was updated Feb. 4 to remove the reference to the National Governors Association opposing the Trump administration’s new Medicaid block-grant policy. The NGA has not taken a position on the policy. 

The Trump administration unveiled a plan to allow states to seek a fixed amount of federal money to cover most able-bodied adult Medicaid beneficiaries, instead of a sum sufficient to cover everybody who is eligible for the program.

Democrats, health industry groups and others quickly denounced the plan for transforming Medicaid from an open-ended entitlement program, which it has been since its inception, into one with a spending limit. They said funding Medicaid through block grants would deny health coverage to many people who need it. The plan almost certainly will face a court challenge.

The American Medical Association immediately announced its opposition, saying that federal caps on Medicaid funding “would increase the number of uninsured and undermine Medicaid’s role as an indispensable safety net.”

In announcing the policy, Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, said it would give states more flexibility over their Medicaid programs and put Medicaid on a firmer financial footing.

“Data shows that barely half of adults on the Medicaid program report getting the care they need,” Verma said in a news release.

“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.”

Verma has long favored the change, which conservatives have dreamed of since the Reagan administration. CMS has titled the policy, “Transforming Medicaid: A New Opportunity for Better Health.”

The plan will apply only to the population covered by the Affordable Care Act’s Medicaid expansion. That expansion extended Medicaid benefits beyond the traditional covered groups — low-income children and their parents, pregnant women, the disabled and the elderly — to include other adults who met income thresholds. Expanding Medicaid is a state option; 36 states have done so.

Medicaid, which is jointly funded by the federal and state governments, covers 1 in 5 Americans.

In a mocking tweet, Edwin Park, a professor who analyzes Medicaid at Georgetown University’s Center for Children and Families, suggested a more appropriate title for the CMS announcement would be “Capped Federal Medicaid Funding: A Fiscal Straitjacket for States Leading to Fewer People Covered, Less Access to Needed Care & Poorer Health.”

Even as CMS unveiled its proposal, it has yet to rule on the application Tennessee submitted last fall to expand Medicaid under a similar proposal. Tennessee was the first state to formally request CMS agree to a broad block-grant plan, although other states have expressed an interest.

The agency has given permission to several states to require adults to work to receive Medicaid benefits. Federal courts, however, have prevented those rules from going into effect.