Washington Proposals to Block Grant Medicaid Should Alarm Pennsylvania’s Elected Officials
Our February edition of Health Law PA News reports on the efforts of the Trump Administration and Republican leaders in Congress to fundamentally change the structure and financing of Medicaid. They are proposing what many refer to as a block grant program. This means the federal government would give a set amount of money to each state for Medicaid; it would be up to the states to spend it however they like. Pennsylvania will not benefit from this so called “flexibility.”
Our colleagues at the Kaiser Family Foundation and Community Legal Services have written excellent analyses about the implications of capping federal Medicaid funds. Simply put, Medicaid block grants make future federal budget projections look good at the expense of state budgets.
Block grants (and per capita caps) offer the federal government an easy and quick mechanism for reducing its contribution to state Medicaid than the current cost-sharing arrangement. There’s no magic in how Congress reduces spending under a block grant mechanism. It just says it will do so, and leaves the hard and painful decisions to others—like Pennsylvania policymakers!
How will Pennsylvania officials act when Washington forces them—via Medicaid block granting—to provide the same amount of health care with fewer dollars? Raising taxes has been an anathema to state lawmakers, and there are no easy ways to trim a Medicaid program that already operates with low administrative costs and low provider reimbursement levels.
Facing federal funding reductions, Pennsylvania would likely cut eligibility, benefits, and reimbursement to providers. These cuts would put populations that disproportionately rely on Medicaid at risk including low-income children, the elderly and individuals with disabilities.
Capping and reducing federal financing for Medicaid will shift costs to states. Perhaps Pennsylvania officials will find a way to reduce Medicaid spending without causing problems; problems like when, in 2011-12, thousands of children lost their Medicaid coverage and angrily complained to members of the General Assembly. If they can’t, though, state officials will have to budget with less from the federal government, make the hard choices and face the brunt of the blame.