Federal funding for Medicaid would have dropped by $77 billion over a decade under the 1981 block grant plan backed by President Ronald Reagan, the Center on Budget says. Federal funds for Medicaid during the eight-month recession that ended in March 1991 would have been reduced by more than half under block grants compared with funds that were paid out.
Before, during and after the recession that began roughly a decade later (March 2001 until November that year), the federal government would have delivered less to states than otherwise under a 1995 block grant proposal vetoed by President Bill Clinton, according to the Center on Budget analysis. States would have seen 3%, 8% and 16% less compared with actual funds for the years 2000, 2001 and 2003, respectively, under the block grant plan. (However, between 1995 and 1999 states would have fared better with block grants than current funding formulas.)
Center on Budget researchers Edwin Park and Matt Broaddus say block grants would likely require substantial cuts to Medicaid and called arguments to the contrary “unrealistic.” Lost federal funds would be too great to offset without cuts to reimbursement, benefits or enrollment, the researchers say.
“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, state would have to bear all of those costs themselves (once they exhausted their block grant allocation,” the report says.