This 2011 analysis from the Kaiser Commission on Medicaid and the Uninsured describes the implications of changing the Medicaid program into a block grant. A block grant would provide a fixed amount of federal support to the states for their Medicaid programs, eliminating the guarantee of coverage for all eligible Medicaid beneficiaries as well as the guarantee of matching federal funding to the states based on actual needs. Instead, states would have to use their fixed block grant amounts to cover all their costs. If the need for Medicaid increases (enrollment increases during an economic downturn), and/or a state fails to properly manage its Medicaid costs, states would have to freeze or cap new enrollments, create waiting lists for new enrollments, limit the scope of health care and services provided, or require increased cost-sharing from Medicaid beneficiaries themselves (higher premiums, co-payments, deductibles, etc.). Without the current level of federal regulation of Medicaid, states also could introduce non-health related requirements for continued eligibility, including requirements to seek/find employment or attend job training programs.
Since the stated goal of changing Medicaid into block grants would be to reduce federal government spending, the level of block grant funding would decrease over time. The current variations in spending among the states would be locked in. Ultimately, costs would be shifted to the states, to health care providers receiving Medicaid funding, and to Medicaid beneficiaries themselves.
The issue brief also references how other federal government programs that have been changed to block grants, e.g., the Children’s Health Insurance Program and the Temporary Assistance for Needy Families, have resulted in decreased enrollments, increased barriers and requirements for eligibility, and higher costs for states.