Restructuring Medicaid as Block Grants — Unconstitutional Coercion? (New Eng Jour Med)

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Restructuring Medicaid as Block Grants — Unconstitutional Coercion?

Sara Rosenbaum, J.D., and Timothy Westmoreland, J.D.
N Engl J Med 2015

In February 2015, Senators Orrin Hatch (R-UT) and Richard Burr (R-NC), along with Representative Fred Upton (R-MI), unveiled the Patient Choice, Affordability, Responsibility, and Empowerment Act (Patient CARE Act).1 Although its terms remain sketchy, the proposal deserves serious attention. The Budget Resolutions passed by each House of Congress in late March, though nonbinding, assume enactment of some version of the proposal, and Hatch and Upton chair the Senate Finance Committee and the House Energy and Commerce Committee, respectively, two of Congress's most powerful health committees.

The Patient CARE Act would repeal the insurance reforms of the Affordable Care Act (ACA) and substantially scale back its insurance-premium tax subsidies.2 In addition, in the name of “modernizing” and “reforming” Medicaid, it would fundamentally restructure the program. First, the proposal would eliminate all federal funding for the ACA' s expansion of Medicaid eligibility for adults. Second, it would end Medicaid's historical entitlement to comprehensive coverage for low-income children, pregnant women, and families with dependent children, along with the entitlement to long-term care services and support for elderly or disabled Medicaid beneficiaries. For these groups and services, it would replace Medicaid's open-ended financing structure with a block grant that would allocate a fixed sum to each state; these allotments would be allowed to grow over time only in accordance with a specified formula, at a rate well below that of medical inflation. As if to underscore the seriousness of its effect, the proposal notes that “Importantly, no changes would be made to the funding for the acute care of low-income elderly and disabled individuals and traditional Federal matching payments would be continued for services to these groups.” In other words, Medicaid would be block-granted for children, families, and people with long-term care needs, whereas a smaller cluster of non–long-term care services for elderly and disabled beneficiaries would remain legal entitlements.

Such a law would be bad news for beneficiaries and for providers, especially those that serve low-income communities, since under such financing terms few, if any, states could maintain existing coverage for affected populations. With projected federal budget cuts from Medicaid of nearly $2 trillion over 10 years, these changes would force most states to put eligibility, benefit, and cost-sharing protections on the line as they attempted to cope with the brunt of future cost growth. Financial risks associated with health care inflation, changes in technologies and services, and the long-term care needs of an aging population would be largely shifted to the states, as they reached the limits of their capped federal allotments. Moreover, over time, the federal government could ratchet down the caps in an effort to avert further outlays.

http://www.nejm.org/doi/full/10.1056/NEJMp1503455?query=health-policy-and-reform

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1. Cutting Medicaid means cutting medical services

for the poor. Providers could not afford to offer services with the reimbursement gone. As it is Medicaid pays 50% of costs. It pays 100% for new adults in the system due to the ACA. They will become the indigent again with the repub bill.