Earlier this month, a handful of Republican lawmakers unveiled their alternative plan to the Affordable Care Act. In part, the Patient Choice, Affordability, Responsibility and Empowerment Act (Patient CARE Act) aims to completely restructure Medicaid. Even though its terms appear "sketchy," as the New England Journal of Medicine (NEJM) put it, the proposal deserves recognition.
There are two key parts in the Patient CARE Act regarding Medicaid. First, the proposal calls for eliminating all federal funding for expanding the program. Second, it would end Medicaid coverage for low-income children, pregnant women and families with dependent children.
Instead, the proposal would replace Medicaid's open-ended financing structure with a block grant that would allocate a fixed sum to each state for children and families. These grants have the potential to grow over time in accordance with a specified formula, as the NEJM pointed out.
It's possible that a block grant could save the federal budget money by shifting costs back to the states. However, the maneuver would be troublesome for beneficiaries, according to the article, and would likely create new administrative complexities.
Governors have toyed with expanding the program, but only if block grants are involved. For instance, Alabama Gov. Robert Bentley (R) said he would consider expanding Medicaid but clarified that he's interested only in a federal block grant. However, as the NEJM stated, "the likely adverse effects on the poor and state economies of block-granting Medicaid have been well documented."
The Patient CARE Act differs from previous block-grant proposals because it would shield the federal government from healthcare costs, something that was not part of the original Medicaid deal 50 years ago.
If states opted for block granting, they would forgo billions of dollars in federal funding and generate hardly any savings. "By radically restructuring federal Medicaid financing, the Patient CARE Act becomes a legal 'gun to the head,'" noted the NEJM. "A state that wished to receive continued federal Medicaid funding would be compelled to conform to a new compact without the requisite advance notice of how Medicaid would ultimately be profoundly altered."
- here's the NEJM piece