Why Medicaid Block Grants Could Allow Kentucky To Do As It Pleases

Jan 25, 2017

Credit Natalia Merzlyakova, 123rf Stock Photo

  “Medicaid block grant.”

You might’ve heard this term in the past few days. Republican members of Congress have touted the health care idea for many years. But it wasn’t until this weekend — when a top aide to President Donald Trump endorsed it — that the term really turned heads.

Medicaid is the health insurance program for low-income and disabled people. Currently, the federal government gets a bill from Kentucky (and every other state) for every medical claim under the program. The federal government pays a portion, and the state pays a portion.

For a state to get that federal money, they have to do certain things. Or, in some cases, not do certain things.

Kentucky can’t charge a copay for a doctor’s visit or put in a requirement that Medicaid recipients work to get their benefits. To do so, Kentucky must apply for a waiver – and Gov. Matt Bevin did just that last year.

Republican members of Congress — and now President Trump — want to change how the federal government runs the program. They want to give a big pot of money — or block grant — to states every year to run the program on their own.

They argue doing so would give states more ability to change programs without asking the federal government for permission. They also say states would be more vigilant about cutting out waste and fraud because they’d be responsible for all the money.

The nonpartisan Congressional Budget Office estimates that turning Medicaid into a block-grant program would reduce federal spending by $1 trillion over 10 years. It would also dramatically rewrite how Medicaid is deployed in Kentucky and across the country, as well as what kind of care millions of low-income Americans can access.

The Trump administration has said they want whatever plan replaces the Affordable Care Act to provide access to coverage for all Americans.

“So to block grant it, to try and figure out how to cover everybody, is really going to change the program and have states ask tough questions,” said Gretchen Borchelt, vice president of reproductive rights and health at the National Women’s Law Center.

Under a block grant program, states could do almost anything with Medicaid. Kentucky could put in place those copays, for instance, as well as monthly payments, deductibles and a volunteer/GED education eligibility requirement.

And under a common scenario, those block grants would be based on the previous year’s spending. That doesn’t allow for much wiggle room.

Health care experts say this is a bad idea.

“They don’t account for unanticipated increases that can occur if there’s a recession, if there’s an epidemic like Zika, if there’s a new blockbuster drug,” said Judith Solomon, vice president of health policy at the Center on Budget and Policy Priorities.

A major employer shuts down and more people need to get on Medicaid? The state wouldn’t get any more money to make up for those new enrollees. The money pot stays the same. Which, according to Solomon, could lead to either cuts in services or cuts to other sectors, like teacher pay.

There is an alternative scenario in which block grants would be provided to states based on their beneficiaries, to help account for economic fluctuations or other factors that could increase the number of enrollees.

Neither the Trump administration nor Republican leaders in Congress have outlined details of how their plan would work.

For its part, the Bevin administration is in wait-and-see mode while the Department of Health and Human Services reviews its waiver request to change Medicaid as it’s currently shaped in the state.

“The waiver is pending review. The Bevin administration will continue to negotiate with the new HHS leadership regarding the Kentucky HEALTH waiver,” said Doug Hogan, spokesman for the Cabinet for Health and Family Services. “As changes take place on the national level to deal with the failed Obamacare experiment, we will respond accordingly.”

Baby Boomers’ Share

You might not think many seniors have Medicaid coverage. But it’s pretty common for people who need to be in a nursing home or need a home health nurse and don’t have a lot of money to spend.

Almost half of Medicaid funding goes to people over 65 and with disabilities. Medicare, the traditional health insurance program for people over 65, doesn’t pay for nursing home care.

“Medicare has a very limited benefit for these things, and really only for people that are rehabbing, but for people who need this to maintain themselves and aren’t necessarily going to get any better, this is where Medicaid steps in,” Solomon said.

More than 8,000 people a day will turn 65 in the next 10 years. Meanwhile, a study from the Center on Budget and Policy Priorities shows that increases in the block grants every year wouldn’t keep up with the increases in health care costs for those new senior citizens.

The block grant idea isn’t included in the current congressional plan to repeal the Affordable Care Act. It would be presented in the spring when Congress works on the federal budget.

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