New Hampshire Union Leader Editorial Board Advocates For Block Granting Medicaid

Union Leader: A Block Grant Program For Medicaid Would Give States “More Flexibility, Not Less, In How They Spend Medicaid Dollars.” From a Union Leader editorial headlined “Medicaid choices: There are more than two options”:

The Affordable Care Act would accelerate that trend, when it needs to be reversed. In addition to making tens of thousands more Granite Staters eligible for government-funded health insurance, the law would bring thousands more onto the rolls through the individual health insurance mandate. Those already eligible for Medicaid but not participating would have to choose between buying insurance or getting it “free” from the government. Most are likely to go on Medicaid.

There is a better way. States could be given more flexibility, not less, in how they spend Medicaid dollars. That would encourage states to spend less, not more, and make the system more efficient.

One good way to do this is to block grant Medicaid money to the states. That would encourage innovation and competition. Some states would spend every dime, others would seek savings. The experimentation would lead to improvements in the program and cost savings as states looked to others for ideas. [New Hampshire Union Leader, 8/9/12, emphasis added]

Block Grants For Medicaid Hurt Those Most In Need As Well As Their Medical Providers

CBPP: States Would Achieve “Flexibility” By Cutting Enrollment, Eligibility, And Benefits When They Are Most Needed.  According to the Center on Budget and Policy Priorities, cuts to Medicaid under a block grant system would “likely become deepest at times when individuals and families most need Medicaid, such as during a recession”:

As a state's block-grant amount became increasingly inadequate over time, states would likely make up for the shortfall, at least in part, by exercising the greater flexibility they would be given to restrict enrollment, eligibility, and benefits. These cuts would likely become deepest at times when individuals and families most need Medicaid, such as during a recession.

Such cuts could be devastating for tens of millions of low-income Medicaid beneficiaries. For example, states might be given flexibility to cap Medicaid enrollment, leaving uninsured a substantial number of people whose low incomes would otherwise qualify them for Medicaid. Many current beneficiaries could also be made ineligible and end up uninsured, as states narrow coverage. [Center on Budget and Policy Priorities, 1/6/11]

Block Grant Financing Would Cap Funding And Prevent States From Responding To The Increased Need For Medicaid During Economic Downturns. According to the Center on Budget and Policy Priorities:

During a recession, when people lose their jobs and access to employer-sponsored insurance, many become eligible for and enroll in Medicaid.  According to modeling by the Urban Institute, a one percentage-point increase in the unemployment rate results in a 1 million person increase in Medicaid enrollment among children and non-elderly adults.

[...]

Even under Medicaid's current financing structure, states have had great difficulty absorbing the significantly higher Medicaid enrollment-related costs that have resulted from the current economic downturn, because those higher costs have coincided with plummeting state tax revenues and large budget shortfalls.  (This has been true even though Congress temporarily increased the federal share of state Medicaid costs.)  Recessions would pose dramatically greater risks to states under a block grant: their capped funding would be far less than the amount of funding they would receive under the existing financing system. [Center on Budgetary and Policy Priorities, 2/23/11]

CBO: If States Have To Reduce Medicaid Benefits Or Eligibility, Low-Income Patients Will Have To Pay More Out-Of-Pocket And Providers Could Lose Money. In its analysis of the GOP's “Path To Prosperity,” which advocated for block granting the Medicaid program, the Congressional Budget Office wrote:

If states reduced spending for their Medicaid programs, there would be a number of potential implications for both providers and beneficiaries. Given that payment rates for providers under Medicaid are already generally lower than they are under Medicare and private insurance, if states lowered payment rates even further, providers might be less willing to treat Medicaid enrollees. As a result, Medicaid enrollees could face more limited access to care. If states reduced benefits or eligibility levels, beneficiaries could face higher out-of-pocket costs, and providers could face more uncompensated care as beneficiaries lost coverage for certain benefits or lost coverage altogether. [CBO, 4/5/11]

CBPP: Medicaid Block Grants Would “Scale Back Provider Rates” To Many Types Of Healthcare Providers. A Center on Budget and Policy Priorities report found that block granting Medicaid would lead to reducing provider rates:

States facing inadequate block grant funding would also likely have to further scale back provider rates.  These rate reductions likely would apply not only to hospitals, nursing homes, physicians, and pharmacies in Medicaid fee-for-service but also to managed care plans that currently serve low-income children and their parents.  That, in turn, could cause some providers and plans to withdraw from Medicaid, threatening beneficiaries' access to needed care, particularly in communities - such as rural areas - that already are underserved.  It also would place greater pressure on providers such as community health care centers and safety-net hospitals, which rely on Medicaid funding but which would face increased patient needs because of increases in the numbers of uninsured individuals if Medicaid enrollment were capped and eligibility restricted under a block grant." [Center on Budget and Policy Priorities, 2/23/11]

Block Granting Medicaid Would Cause Job Losses

CBPP: Block Granting Medicaid And The Supplemental Nutrition Assistance Program Would Hurt The Economy And Cause Job Losses. According to the Center on Budget and Policy Priorities, converting Medicaid and SNAP to block grants “would not only increase hardship and destitution in recessions, but also would further weaken a slumping economy and lead to the loss of many more jobs.” From CBPP:

The plan justifies its large food stamp cuts by claiming that the trend in food stamp costs “is one of relentless and unsustainable growth.” The claim is false. Food stamp costs have risen sharply in the past few years due mainly to the recession and a temporary food stamp benefit increase of the 2009 Recovery Act. As the economy recovers, food stamp costs will drop and, by the end of the decade, will return to about 2005 levels as a share of Gross Domestic Product (GDP), according to the Congressional Budget Office (CBO)

Finally, the impact of the Ryan plan would be harshest during recessions. Currently, Medicaid as well as SNAP (formerly known as food stamps) respond automatically to assist more people when, during recessions, more people lose their jobs, income, and health insurance. This automatic response both lessens hardship and keeps the economy from plunging deeper into recession, by adding more purchasing power to the economy that replaces part of the loss of demand from consumers and businesses. The Ryan plan would convert both Medicaid and SNAP to block grants, however, which means they would no longer respond automatically to increased need during recessions. That would not only increase hardship and destitution in recessions, but also would further weaken a slumping economy and lead to the loss of many more jobs. [Center on Budget and Policy Priorities, 4/6/11]

Block Granting Medicaid Would Hurt New Hampshire Citizens

New Hampshire Could Lose Approximately $2.79 Billion Over 10 Years If Medicaid Was Block Granted. According to an April 2011 analysis by Families USA, “the health care program reductions in the House Republican budget proposal would massively cut federal support for Medicaid in every state. The cuts to states total $771 billion over 10 years. Cuts of this size would drastically reduce states' ability to continue to provide health and long-term care to their residents.” The analysis found that block granting Medicaid under the GOP budget would cause New Hampshire to lose approximately $2.79 billion of funding under the existing Medicaid program from 2012-2021:[Families USA, April 2011]

CBPP: Had Medicaid Block Grants Been In Effect From 2001-2010, New Hampshire Would Have Lost 21 Percent Of Its Funding. A Center on Budget and Policy Priorities report examined “how states would have fared in the past decade if the Ryan Medicaid block grant had been in effect can help to illustrate the proposal's likely impact on individual states in coming years.” CBPP “estimated how much federal Medicaid funding each state would have received under the block grant if it had taken effect in 2001, and compared those amounts to the funding that each state actually received for 2001 through 2010.” CBPP found that if Medicaid block grants had been in effect from 2001 to 2010, New Hampshire would have lost 21 percent of its funding. From CBPP:

[Center on Budget and Policy Priorities, 4/20/12]

Turning Medicaid Into A Block Grant Program Would Hurt NH's Elderly Population, Specifically Elderly Women. From a report by the National Women's Law Center:

Women would be hard hit by Medicaid cutbacks.

Because the majority of New Hampshire's Medicaid dollars fund services for elderly individuals and those with disabilities -- the majority of whom are women -- Medicaid budget cuts and eligibility cutbacks could greatly impact these populations. If states attempted to spare elderly individuals and those with disabilities from eligibility and service cuts, even greater program cuts would be necessary for the remaining adults and children who receive Medicaid. Such cuts would also harm women because they constitute a majority of these remaining adults' receiving Medicaid.

Women comprise a majority of elderly individuals who receive Medicaid in New Hampshire. 27% of New Hampshire's federal and state Medicaid dollars funded services for elderly individuals in 2007. Women made up 74% of these elderly individuals in New Hampshire. [National Women's Legal Center, June 2011]

Previous Block Granting Attempts Would Have Caused Millions To Lose Coverage Nationally

A Block Grant Proposal From 1995 Would Have Put A Cap On Medicaid Spending. From a 2005 study by Jeanne M. Lambrew, former director of the Office of Health Reform at the Department of Health and Human Services: 

In 2003, President Bush proposed converting Medicaid from an entitlement to a block grant program. Similar ideas from President Reagan in 1981 and Congress in 1995 were introduced by not enacted. [...The 1995 plan] would have based the federal funding caps on a complicated formula intended to measure each state's need. Specifically, each state's annual cap would have begun with its historical spending and would have, through growth rate adjustments, determined the amount based on the national spending for poor  residents, adjusted for the state's input costs (e.g., local wages), case mix (e.g., the level of sickness of enrollees), and number of poor people. Despite efforts to link the caps to the concept of need, the actual amount of each state's allotment would have been reduced on a prorated basis to ensure that the total of all states' allotments would meet an annual aggregate cap on federal Medicaid spending, which was specified in the law. The policy would also have changed the states' contribution to Medicaid, thereby lowering it for many. This policy, with modifications, was passed in both the Republican-dominated House and the Senate as part of a larger effort to balance the budget. [“Making Medicaid a Block Grant Program,” 1/26/05, via AUCD.org, emphasis added]

If The 1995 Proposal Had Been Successful, Over Six Million People Would Have Lost Medicaid Coverage By 2002. According to Lambrew's study:

According to a 2005 study of previous Medicaid block grant proposals by George Washington University Professor Jeanne M. Lambrew, who now heads the Office of Health Reform at the Department of Health and Human Services: “Even though it would have lowered federal spending less than expected, the 1995 block grant would have had a significant programmatic impact on Medicaid. After subtracting the estimated $7.5 billion in UPL spending (conservatively assuming that these payments did not fund services in 2002), federal Medicaid funding in 2002 would have been $15.8 billion less than it was under current law. To put this into perspective, the one-year reduction in federal funding under the block grant would have exceeded federal Medicaid spending on prescription drugs or home- and community-based services and would have equaled half of all Medicaid spending on nursing homes. If this loss of federal funding had been absorbed through eligibility restrictions, then more than 6 million people would have lost Medicaid coverage in 2002, using actual spending and enrollment data and assuming proportionate cuts across beneficiary groups. The states could have responded to these reductions in federal funding by increasing their own spending in order to maintain services for their Medicaid enrollees. However, the amount required to do so would have been equivalent to a 40 percent increase in the $40 billion shortfall that was estimated for 2002, prior to the states' actions to close this gap. It is important to note that this analysis does not take into account the amount of the states' share of spending that would have been reduced under this proposal. Had this been included, the reductions just described would have been larger in some states. [”Making Medicaid a Block Grant Program," 1/26/05, via AUCD.org, emphasis added, internal citations removed for clarity]