WASHINGTON-The Republican House and Senate budget blueprints agree that Medicaid should be turned into a capped state block-grant program to save hundreds of billions of dollars over a decade. But both Republican and Democratic strategists say the proposal will not be enacted this year—and won't be seriously considered unless Republicans win the White House and hold Congress after the 2016 elections.
The proposal to block-grant Medicaid would cut federal funding by $913 billion over the next decade, according to the House budget plan.
Restructuring the Medicaid program into a block-grant model would mean the federal government would make a fixed contribution to the states that would not necessarily keep pace with rising Medicaid costs. States would receive a fixed dollar amount that would rise annually with general inflation and population growth, under the GOP proposals. This would give states the flexibility to do what they want with their Medicaid programs, including customize delivery systems and reduce eligibility and benefits, without strict oversight by the CMS.
“State legislators and governors know far better than Washington what their citizens need and how to offer it,” according to the budget blueprint laid out March 17 by House Budget Committee chairman Tom Price (R-Ga.). Both the House and Senate budget plans also would repeal the Affordable Care Act and its expansion of Medicaid to adults with incomes up to 138% of the federal poverty level.
The chances of the block-grant proposal and ACA repeal being enacted while President Barack Obama is in office are close to zero, many political observers say. “The (Republican) game is to survive Obama as best as we can and take the White House and then change can happen. Status quo is the best one can hope for," said Bradley Blakeman, a principal at the 1600 Group, a consulting firm.
Some Democratic observers agree it won't pass under Obama. “These guys know it will never get through. The whole budget proposal is another Obama bash,” said Robert Weiner, a Democratic strategist and former White House spokesman.
The proposal also will be resisted by governors, including Republicans, because they know that block-granting Medicaid would put greater financial burdens on the states, particularly in times when the economy turns down and more people become eligible, experts say. And the governors would be on the hook for tough decisions about cutting eligibility and benefits when the federal payments fell short under block grants.
“At the end of the day, this is a cap,” said Elisabeth Burak, senior program director at Georgetown University's Center for Children and Families. “Things like economic downturns are not taken into account.”
The annual increase in the overall block-grant funding would average about 4.7 percentage points less than Medicaid's current projected growth rate over the next 10 years, which includes factors such as rising healthcare costs and the aging of the population, according to an analysis by the left-leaning Center on Budget and Policy Priorities.
When former House Budget Committee Chairman Paul Ryan (R-Wis.) proposed a Medicaid block grant in 2012—which the Republican-controlled House approved—the Congressional Budget Office said that state flexibility to run Medicaid would come at a price (PDF). “Even with significant efficiency gains, the magnitude of the reduction in spending relative to such spending in the other scenarios means that states would need to increase their spending on these programs, make considerable cutbacks in them, or both.”
As many as 14 million could lose or never gain access to health coverage should Price's proposal become law, based on a recent CBO estimate (PDF) of how many people would join Medicaid as the result of expansion in the next decade.
Congressional Republicans have been pushing for block-granting Medicaid at least since the 1990s, and a standoff over the Medicaid issue and over Medicare restructuring between President Bill Clinton and a GOP-controlled Congress led to a government shutdown in 1995 that helped the Democrats in the 1996 elections.
Despite years of making no progress in turning Medicaid into a block-grant program, Republican lawmakers will continue to push for it because their constituents say they want tangible solutions to bring down the federal deficit, said Ford O'Connell, a GOP strategist who worked on Sen. John McCain's presidential campaign in 2008.
Follow Virgil Dickson on Twitter: @MHVDickson
