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The ABCs of Medicaid Block Grants

The Brownback administration says block grants are essential. Critics say they would hurt Kansas

By Mike Shields | May 02, 2011

Sam Brownback of Kansas is among the two dozen Republican governors across the U.S. who have asked the federal government to convert Medicaid to a block grant.

But a range of health policy experts say that is a bad idea, including in Rhode Island where Medicaid most closely resembles what the GOP governors say they want.

Opponents and supporters alike say capping the federal dollars that now pay the majority of the costs to provide health coverage for the nation’s poor, disabled and frail elderly could help cut federal spending. But that would be at the expense of states and Medicaid beneficiaries or providers who would assume risks now borne by the federal government.

Block grants are fixed-sum awards that give state or local governments broad flexibility to design and implement programs. Federal oversight and requirements are light. Most federal aid, including Medicaid, currently is distributed as “categorical” grants, which can only be used for narrowly defined purposes.


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Critics say the block grants would be particularly harmful to states, such as Kansas, that currently have relatively low Medicaid enrollment because of tight eligibility restrictions. And they point to the histories of other "categorical" programs that have been converted to block grants in the past 30 years as evidence that the gains in flexibility and efficiency purported or sought by block grant supporters have not materialized.

There seems little likelihood that Medicaid block grants will happen with Barack Obama in the White House. And the debate over them, much like the one over health reform in general, has become highly partisan.

Even as GOP governors were asking for the block grants, 17 Democratic governors wrote a letter to leaders of Congress opposing the proposed caps on federal Medicaid dollars to states.

"Untested and hazardous"

Medicaid was launched during the administration of Lyndon Johnson and has been largely unchanged for 40 years. Efforts to reform it were made by President George W. Bush. And Republicans now are attempting the largest overhaul of the program since it was created.

The White House and the U.S. Department of Health and Human Services have signaled their willingness to work with states on dealing with their Medicaid problems, but Obama officials have made no bones that the willingness does not extend to block grants.

“The administration is against block grants. That’s been made clear,” said Dr. Donald Berwick, director of the federal Centers for Medicare and Medicaid Services (CMS). “I am, too. They are untested, they’re hazardous. What we’re doing to patients and states is saying: You’re on your own. We issue a block grant to a state and what if next year there’s a big flu outbreak or the recession comes back? Well, then they’re on their own.”

In 2009, during their final few days in office, Bush officials granted Rhode Island a “global Medicaid waiver,” results of which have been praised by conservative policy analysts as far removed as California. But health policy experts in Rhode Island and current Gov. Lincoln Chaffee, a Republican while in the U.S. Senate but now an independent, said conservative praise for the Rhode Island experiment has been overblown or inaccurate.

“The experience here has been mixed,” said Michael Trainor, Chaffee’s spokesman. “The flexibility that was expected has been somewhat compromised by interference by our General Assembly. I know our governor doesn’t believe it’s a silver bullet by any stretch. Next year is our first opportunity to re-up or withdraw and that's definitely under consideration.” More on Rhode Island.

Berwick’s comments were made April 14 to a few hundred health care journalists at a conference in Philadelphia. But similar signals were sent by the administration earlier this year soon after the GOP governors made their public push for block grants.

The budget plan passed last month by Republicans in the U.S. House among other things would convert Medicaid to a block grant. But that plan is not expected to pass the Senate, which has a Democratic majority.

Though the idea of a Medicaid block grant remains controversial and untested, Brownback administration officials insist it is essential for advancing their plans to “remake” the Kansas Medicaid program. Those plans remain in development. Public meetings about the makeover plan will be scheduled this summer, the governor has said.

Lt. Gov. Jeff Colyer is leading the administration’s Medicaid reform effort. He said a block grant is a must, if the state is to have the flexibility needed to mold a cost-effective program responsive to diverse Kansas needs.

"Washington shouldn't be dictating"

“We've got to have a flexible program that solves Kansas problems with Kansas solutions,” Colyer told KHI News Service last week. “Washington shouldn't be dictating the structure of our Medicaid program. We have some unique opportunities here in Kansas.”

Colyer earlier this year in private meetings was telling people the administration hopes to cut between $200 million and $400 million in state Medicaid costs in time for fiscal 2013. That, however, seems an increasingly unlikely target and Colyer has not been repeating those figures lately.

Colyer was asked what it would mean for the administration's makeover plans, if Kansas weren’t granted a block grant waiver.

“Then the federal government may be forcing changes in Kansas that clearly are not in the best interests of patients,” he said. “We need the ability to have our own flexibility and creativity. If you make this one-size-fits-all, if you have do every last entitlement the way a Washington bureaucrat wants, then it’s hard for us to come up with solutions.”

Audio clips

Shannon Cotsoradis of Kansas Action for Children

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