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Medicaid Panel Eyes Challenge of Possible Shift to Block Grants

Rep. Tom Price, R-Ga., nominee for Health and Human Services secretary, testifies at his Senate Finance Committee confirmation hearing in Dirksen Building, January 24, 2017. (Tom Williams/CQ Roll Call)
Rep. Tom Price, R-Ga., nominee for Health and Human Services secretary, testifies at his Senate Finance Committee confirmation hearing in Dirksen Building, January 24, 2017. (Tom Williams/CQ Roll Call)

An influential advisory panel is studying the myriad decisions that lawmakers would face if congressional Republicans carry through on their proposals for limiting the federal government’s financial responsibility for Medicaid.

What lawmakers are mulling would be a “major shift in federal policy” regarding the cost of care of “vulnerable populations,” including people living in poverty and those with disabilities, said Sara Rosenbaum, chair of the Medicaid and CHIP Payment and Access Commission, at a Thursday meeting. MACPAC is working to inform policy officials and lawmakers about the steps they would have to address in altering the federal government’s approach to paying for Medicaid.

Members of MACPAC said they would like to see more information on what causes current differences in rates of spending among states. The general health of local populations may play a role, as might decisions about how much to pay doctors and hospitals for care, commissioners noted. Rosenbaum said Thursday’s discussion was only an initial step in what she expects to be “a lengthy exploration” of this topic.

“Just even starting down this path is extraordinarily complicated,” Rosenbaum said. “It’s like one of those great Fourth of July fireworks where you shoot it up in the air and then have those building sparks that add more and more complexity to the picture.”

The rising costs of Medicaid likely will keep lawmakers interested in ways to slow spending growth. In recent years, Medicaid consumed about 9.5 percent of federal spending and about 15.3 percent of state budgets, according to MACPAC figures. By fiscal 2024, combined state and federal spending on Medicaid could hit $890 billion. Recent House budget proposals have envisioned significant savings for the federal government from Medicaid changes, ranging from $700 billion over a decade to $1 trillion for that time period, MACPAC staff said Thursday.

Active proponents of limiting the federal share of Medicaid costs include three Republicans who have gained clout in recent years: Speaker Paul D. Ryan of Wisconsin, House Budget Chairman Tom Price of Georgia and Sen. Bill Cassidy of Louisiana.

Price, who appears likely to win confirmation as the next secretary of Health and Human Services, and Ryan advocated last year in the House GOP’s “Better Way” plan for a capped grant approach to federal Medicaid spending, instead of the current open-ended approach pegged to states’ spending. They argue that a fixed allotment approach would slow growth of Medicaid expenses. A House Budget plan put forward last year offered states the option of block grants or a per capita approach. Cassidy also has backed a per capita approach. He gained a seat in the 115th Congress on the Senate Finance Committee, which oversees Medicaid.

Marsha Gold, the vice chair of MACPAC, said that moves to cap federal responsibility for Medicaid would result in the program having “substantially less money, especially over time.” With reduced federal help, states may reduce the ranks of people covered by Medicaid or the benefits offered, she said. State officials already have been looking for ways to spend their Medicaid budgets more efficiently, having faced  budget pressures in recent years. That makes it unlikely that they could find paths for managing reduced federal support without affecting the people covered by Medicaid, according to Gold.

“People don’t spend what they don’t have, or at least states won’t,” Gold said, adding that changes to federal Medicaid funding could have “a human consequence.”

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