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Trump Administration Inviting Medicaid Block Grants, Undermining Access to Behavioral Health Care

The Trump Administration’s new guidance inviting states to apply for federal waivers to convert their Medicaid programs for adults into block grants — with capped federal funding and new authority to cut coverage and benefits — would put coverage and access to treatment and recovery services at risk for millions of people with behavioral health conditions, including mental health and substance use disorders (SUDs).

States could seek waivers that would affect adults under age 65, other than those whom federal law requires them to cover, including the 17 million people covered by the Affordable Care Act’s (ACA) Medicaid expansion.

Before the expansion, many low-income, non-elderly adults with behavioral health conditions weren’t eligible for Medicaid and were largely left uninsured. The Medicaid expansion has enabled millions of people with mental health conditions and SUDs to get coverage. For example, 32 percent of Michigan’s expansion enrollees have a mental health condition, and nearly 10 percent of Ohio’s expansion enrollees have a SUD diagnosis. The share of mental-health-related and opioid-related hospitalizations in which the patient was uninsured each fell dramatically in expansion states, which provides further evidence of large coverage gains for these groups.

These coverage gains have improved access to care, including medications and services to treat behavioral health conditions. Following the expansion, the number of Medicaid-funded prescriptions for mental health conditions rose by 19 percent more in expansion states than in non-expansion states. The expansion also boosted admissions to facilities providing medication-assisted treatment — the gold-standard treatment for opioid use disorders — by about 50 percent.

Block-grant waivers would jeopardize these gains by:

  • Giving states new authority to take people’s coverage away. States, for example, could take away Medicaid from people who don’t meet a work requirement. That would harm people with mental health conditions and SUDs, who often face barriers to work and are particularly likely to struggle with reporting requirements and red tape even if they’re working or should be exempt from work requirements. Taking away coverage will make it hard for many people to get treatment and stay employed.
  • Giving states new authority to cut or restrict essential benefits for people with mental health conditions and SUDs. The new guidance requires states to cover behavioral health services but lets them waive standards and oversight of private managed care plans, which cover most adult Medicaid beneficiaries. Without federal standards and oversight, states could try to save money by letting plans offer such narrow provider networks that enrollees wouldn’t have access to behavioral health providers or by letting plans use tactics (such as overly stringent prior authorization requirements) to deny needed care, including behavioral health care. The guidance would also let states eliminate the non-emergency medical transportation benefit, creating another barrier to accessing behavioral health care.
  • Cutting state funding. States adopting block-grant waivers would have to accept annual caps on their federal funding, with states responsible for 100 percent of costs above the caps. While the caps would rise each year, costs for the adults subject to the guidance will rise faster, the Congressional Budget Office projects, so states would likely hit the caps frequently. Had similar caps been in place in the 2000s, nearly all states would have faced federal funding cuts and 26 would have faced cuts of more than 20 percent. States that hit or risk hitting their caps would face pressure to cut Medicaid spending by using the authority described above. They might also cut payment rates to behavioral health providers; both Wyoming and Maine responded to prior budgetary pressures by cutting payment rates for substance use treatment. Even if states didn’t cut payment rates, a federal funding cap would strongly deter them from improving rates. Raising Medicaid behavioral health payment rates can improve access to care by leading more providers to accept Medicaid, according to the Government Accountability Office.

Block-grant waivers would roll back the progress under the Medicaid expansion in helping people get needed care for both behavioral and physical health conditions. That’s why groups like the National Alliance on Mental Illness and American Psychiatric Association, as well as many physician, hospital, and patient advocacy organizations, have opposed them forcefully.