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Medicaid “Block Grant” Guidance Will Likely Encourage States to Undermine Coverage

Tomorrow’s expected Medicaid guidance from the Centers for Medicare & Medicaid Services (CMS) will reportedly encourage states to seek federal waivers capping their federal funding for the Affordable Care Act’s (ACA) Medicaid expansion and weakening federal protections for the low-income adults it covers.

Here are four points to keep in mind in evaluating the guidance, along with links to relevant CBPP reports.

  • Capping funding while weakening beneficiary protections would put beneficiaries, providers, and states at risk. Medicaid’s coverage guarantee means that coverage is there when you need it: people who lose their jobs or get sick can enroll if they meet program eligibility rules and will receive a core set of health care services that all states must cover. Weakening that guarantee — or eliminating the federal standards and oversight that ensure that states, health plans, and providers comply with it — would worsen access to care, health, and financial security for beneficiaries and likely increase providers’ uncompensated care costs. Meanwhile, capping federal funding would likely shift costs to states, since they would be solely responsible for unexpected costs above the cap instead of sharing those costs with the federal government as they do today.
  • The Medicaid expansion has improved access to care, strengthened financial security, and saved lives. In making its case for the guidance, CMS officials will likely argue — as they have in the past — that the Medicaid expansion doesn’t improve beneficiaries’ health. Such claims are indefensible in light of recent research finding that the expansion saves lives. If all states across the country adopted it, it would save as many lives each year as seatbelts do (see graphic).

    A second, even more recent study — this one a randomized trial, the gold standard for scientific research — also finds Medicaid coverage for adults saves lives. Other strong evidence shows that the expansion improves financial security and access to care, such as by reducing medical debt and preventing evictions.

  • Patient advocates, doctors, and hospitals overwhelmingly oppose block grant waivers because they would weaken access to care. Tennessee’s proposal to convert most of its Medicaid program to a block grant has drawn widespread opposition from advocates, doctors, and hospitals, including AARP, the American Cancer Society Action Network, American Academy of Pediatrics, Federation of American Hospitals, and Children’s Hospital Association, among many others.
  • The guidance reflects the Administration’s broader Medicaid agenda. After Congress rejected its efforts to repeal the ACA (including its Medicaid expansion) and cap and cut funding for the rest of Medicaid through legislation, the Administration has pursued the same goals through litigation — by urging the courts to strike down the ACA — and administrative actions. The forthcoming block grant guidance is just the latest of these actions. While it won’t include the deep funding cuts found in legislative block grants and per capita cap proposals, it’s likely intended to lay the groundwork for such legislation, which the President’s budgets have consistently advocated.