Gov. Demands Medicaid Transformed into Block Grants

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March 6, 2011; Source: Kaiser Health News | Mississippi Governor Haley Barbour had a characteristic message for a Congressional committee recently: "Ya'll would save a lot of money if you let us run the program." Barbour was referring to Medicaid, specifically the idea of converting Medicaid into a block grant program amounting to about $400 billion (the combined federal and state cost of Medicaid in 2009 was $366 billion).

Like other block grants, this would give states a Medicaid lump sum, which the states could use to cover the medical needs of the poor as they see fit. The Republicans have been toying with the idea of a Medicaid block grant, taking aim at one of the three big entitlements. Medicaid, along with the other two entitlement programs, Medicare, and Social Security cost the federal government $1.5 trillion, or roughly 43 percent of the total federal budget.

Democrats are distinctly cautious about the idea, concerned that, as Henry Waxman (D-CA) said, "you have no guarantee that people who are now covered will continue to be covered, or whether [the states] will simply cut back on their Medicaid program." For their part, governors always want flexible money from the feds and have been concerned that when health insurance reform shifts the cost of new Medicaid recipients onto the states beginning in 2014, the cost of the state share will force cutbacks in other programs such as education.

This isn't a new idea. Newt Gingrich led Congress to pass legislation to put both Medicaid and welfare, into block grants, but President Bill Clinton only accepted the welfare part, resulting in the Temporary Assistance for Needy Families (TANF) program.

Although the Republicans haven't made a formal pitch this time around, there is an idea proposed by Congressman Paul Ryan (R-WI) and Brookings Institution senior fellow Alice Rivlin (President Clinton's director of the Office of Management and Budget) that would convert the federal share of Medicaid in to a block grant by 2013 and indexed to grow with the size of the Medicaid population and the growth of the gross domestic product per capita plus one percentage point.

Nonprofits have a ton of block grant experience to share, having worked with TANF, Community Development Block Grants, Community Service Block Grants, Social Service Block Grants, and more. Where is the voice of the nonprofit sector writ large, not just the health policy-focused nonprofits, on what block-granting Medicaid would do?—Rick Cohen