Hospital Impact: Replacing Medicaid funding with block grants will burden states, reduce access to treatment

If Medicaid funding is converted to block grants, the cost could be a reduction or loss of services for the elderly, pregnant women, children and people struggling with poverty and/or chronic health issues. (Getty/juststock)

While attempts to repeal the Affordable Care Act have gotten most of the healthcare reform press lately, replacing federal Medicaid funding with block grants is another proposal that could affect millions of underserved Americans.

Implementing block grants could potentially have long-ranging consequences, including similar cuts to entitlement programs like Medicare and Social Security. House Speaker Paul Ryan and Health and Human Services Secretary Tom Price have long been proponents of converting federally funded Medicaid from a defined benefit to a block grant given to each state.

Although touted as a solution that could save upward of $10 trillion over 10 years, the cost could be a reduction or loss of services for the elderly, pregnant women, children and people struggling with poverty and/or chronic health issues.

Medicaid at a glance

Medicaid is a means-tested health insurance program that is jointly funded at the federal and state level. It covers the cost of care for low-income Americans. Eligibility is determined by factors including citizenship, income and disability level. Although states are not required to participate in Medicaid, all of them have since 1982, and many segments of society benefit from its services.

  • Approximately 65% of nursing home residents are supported primarily by Medicaid, according to the AARP.
  • As of 2015, 39% of American children have health insurance through Medicaid, according to the Kaiser Family Foundation.
  • More than 10 million people with disabilities have access to healthcare and home care services through Medicaid, according to MedPac.
  • The National Bureau of Economic Research reports that receiving Medicaid benefits made children more likely to finish high school and graduate college, improving earning ability as well as health.
  • Home care services through Medicaid allow working-class caregivers to continue working and support their family.

The Medicaid program doesn’t just affect those who are eligible, but it also benefits society as a whole by supporting the health, well-being and earning potential of millions of individuals who contribute to our communities.

Changes to federal funding

Medicaid is currently structured as an entitlement, meaning every qualified individual in the U.S. is entitled to healthcare benefits. The program was expanded under the Affordable Care Act with broader eligibility requirements and now covers almost 75 million Americans, according to the Kaiser Family Foundation.

Currently, state and federal funds are combined to cover the costs of the program. The proposed block grants cap the amount of federal money each state receives for Medicaid—regardless of enrollment numbers—and gives states the power to adjust or limit the health benefits each individual receives or to eliminate programs altogether.

RELATED: Hospital Impact: AHCA would drastically alter Medicaid

Republicans often argue in favor of block grants by claiming it would offer states more choice and force innovation. However, states already have flexibility in how services are covered—including the way providers are paid—how services are delivered, and the structure of eligibility levels.

The only “improvement” in state flexibility with block grants is the ability to decide how to make up for funding shortfalls—like which services to cut, which payments to deny, which taxes to raise or which programs to end. Furthermore, a reduction in funding will result in a lack of innovation since basic needs must be met before resources become available for new systems and technology that could benefit the Medicaid program overall.

Sen. Elizabeth Warren, D-Mass., has made it clear that she is opposed to use block grants for funding entitlement programs.

“If people need healthcare, we need to find the most effective and economical ways to do it, but we make sure we’re able to deliver healthcare. We don’t say you’ve met some arbitrary cap for the state of Massachusetts and now you’re done,” Warren said in March, as Politico reported.

A $1 trillion reduction in federal Medicaid spending will result in real-life costs to our society, such as children without basic pediatric care, seniors without caregivers and people with disabilities losing medical care and services that allow them to lead independent lives.

The decision to eliminate collaborative funding at a federal level in favor of implementing block grants only puts citizens and states at risk of a reduced quality of life as they lose necessary programs and benefits in order to bridge the budget gap.

Dr. Rod Amiri specializes in addiction psychiatry. He is a diplomate of the American Board of Psychiatry and Neurology and the American Board of Addiction Medicine. He has received the Patients’ Choice award every year since 2008. He serves patients and families at Malibu Hills Treatment Center, a luxury rehab facility located in Malibu, California.