Recently, there has been much discussion in the news about the possibility of Congress radically altering the Medicaid program by converting it into a block grant system. Such a change would convert Medicaid into a system in which each state would receive a finite amount of funds to administer its individual Medicaid program. These funds are referred to as “block grants.”
Currently, Medicaid is an entitlement program. This means that the federal government administers Medicaid by providing funds to states based on the number of individuals who apply and qualify for benefits pursuant to federal law. Under the current system, once it is determined that an individual meets the clinical and a financial requirements of the Medicaid program, that individual is then entitled to benefits. Denying Medicaid benefits to an individual who qualifies for them is a civil rights violation under federal law. As a condition of the continuing receipt of federal funds necessary to administrate Medicaid programs, states must therefore abide by the federal law governing the Medicaid program.
In contrast, under a block grant proposal, the federal government would grant each state a finite amount of money to administer its Medicaid program, i.e. a “block” of funds. The states would then be free to take the federal funds and allocate them in accordance with how state lawmakers saw fit. Once the funds were depleted, there would be no remaining resources that a state could tap into from the federal government to distribute benefits to individuals who may otherwise be eligible to receive them had the block grant not significantly capped funding in their state.
Although block grants have been touted by lawmakers as providing states with “flexibility” to administer their Medicaid programs, states actually risk losing a substantial amount of federal Medicaid funding if block grants are enacted. One study has estimated that the block grant proposal could lead to a $1 trillion cut to the Medicaid program. Some governors are against the proposal as they fear that shifting to block grants will create a budgetary shortfall in their states that will make it impossible to provide Medicaid benefits to all individuals who qualify. Massachusetts Governor Charlie Baker, for example, submitted a letter to Congress voicing his opposition to block grants.
If enacted, block grants have the potential of creating lengthy waiting lists for Medicaid eligibility, even for elders who are living in nursing homes. Facilities that accept Medicaid benefits, such as nursing homes, could face a shortage in payments. Disabled individuals who rely on Medicaid benefits to access services and supports necessary for them to remain in the community could have their benefits cut and also be placed on a waiting list for services. Individuals could have less protection when seeking to assert their eligibility for benefits, as states could be free to implement their own eligibility rules that are not necessarily in accordance with existing federal law.
It is anticipated that any block grant proposal will face considerable opposition from a number of organizations who advocate for the elderly and disabled, such as the AARP and the Center for Medicare Advocacy. It is not yet known whether a block grant will definitely be proposed by the current administration or Congress. The Trusts and Estates team at Mirick O’Connell will keep our clients apprised of any significant developments and changes to the Medicaid program as they occur.