Trump Administration Readies Big Changes for Medicaid
Health Care

Trump Administration Readies Big Changes for Medicaid

Karen Pulfer Focht

The Trump administration is reportedly taking steps toward achieving a longtime conservative goal: allowing states to turn Medicaid funds into block grants.

Health officials are expected to release a plan Thursday that would give states the option to convert some of their Medicaid funding from the federal government into block grants with a fixed cap.

The new program – which will be referred to as “Healthy Adult Opportunity” rather than block grants, according to Politico – would allow states to request capped funding for adults who gained Medicaid coverage through the expansion of the program under the Affordable Care Act. It would also allow states to set limits on benefits and drug coverage for some patients, Politico said.

A major change: Proponents of the block grant approach say it will give states more flexibility in how they spend their Medicaid funds, while providing some limits on the federal government’s open-ended commitment to cover a significant percentage of costs within the program. Critics say capped funds would simply offer a way for states to cut services to vulnerable populations – and would likely be illegal, to boot. Either way, the imposition of a cap on Medicaid funding would represent a significant change in the 55-year-old program, which now covers about 20% of the U.S. population.  

The motivation for states: The program will be voluntary, and Larry Levitt of the Kaiser Family Foundation said an important detail will be how much leeway states are given to limit eligibility and benefits. “No state would volunteer to just get less money from the federal government for Medicaid under a block grant,” Levitt said Wednesday. “But, if the Trump administration allows them to limit eligibility, benefits, or drugs and pocket the savings, some states may jump at the opportunity.”

Questions about the branding: “So states would be allowed to turn away qualified applicants, limit health benefits and deprive people access to medications they need,” said Paul Waldman of The Washington Post. “That’s ‘Healthy Adult Opportunity’ in the same sense that if I shoot you in the kneecap, I’ve given you ‘Mobility-Enhancing Pain Relief.’”

Democrats push back: In a letter to the White House Wednesday, several dozen House Democrats warned against the proposed rule change. “The administration should not issue any guidance encouraging block grant waivers, should reject these waivers and the concept of block grants, and urge any state that is considering this misguided policy to commit its energy to implementing Medicaid as Congress intends,” the Democrats wrote.

What’s next: States will have to apply to the Centers for Medicare and Medicaid Services for permission to begin deploying the block grant option. In the meantime, the new rules are expected to receive multiple legal challenges that could delay implementation until after the 2020 election.