President Donald Trump and his advisers spent much of the week explaining — or attempting to explain — a statement that he is willing to consider cuts or changes to so-called “entitlement programs” such as Medicare and Social Security during a second term.
The reality is that the Trump administration isn’t just open to doing this: It’s already hard at work on a controversial plan that could weaken funding and coverage for one vital entitlement program — Medicaid, which covers medical and long-term care for the poor, the disabled and the elderly. The administration is finalizing the plan, and an announcement touting it is expected this week, according to Politico.
Enough is known about the plan’s underlying strategy — “block-granting,” which would cap federal contributions to the program — that deep caution is in order. Whether or not the official pushing the changes has the legal authority to implement the plan is also in question. The lead administration advocate, Seema Verma, has been under fire for using tax dollars to hire pricey outside consultants to boost her personal image.
More than 71 million Americans, including 1.1 million Minnesotans, rely on Medicaid, which is funded jointly by the federal government and the states. It is a vital source for nursing home care and is “the nation’s largest payer of mental health services, providing health coverage to 27 percent of adults with a serious mental illness,” according to the Center on Budget and Policy Priorities. In 2018, expenditures nationally came to $597 billion.
Republicans for decades have unsuccessfully sought to change the program’s current open-ended funding to block grants, with the aim of saving money and providing states with flexibility. Those are admirable goals, but this would be a sweeping change. Right now, the federal government shares costs with the states. It pays a set percentage of the program’s costs, with the resulting funding going up or down depending on medical expenditures and enrollment for the year.
Under a traditional block grant scheme, the feds would pay a set sum to the states, an amount that would not go up to respond to a sudden spike in costs — for example, one caused by a large outbreak, a crisis such as widespread opioid addiction or enrollment growth due to an economic downturn. Block-granting would transfer the risk to states, which could in turn limit enrollment or benefits if they ran short of funding.
“One thing is sure. The people the program was designed to serve always lose in a block grant,” said Andy Slavitt, a Minnesotan who used to run the same federal agency as Verma during the Obama administration.
Republicans made block grants part of their 2017 push to repeal and replace the Affordable Care Act. But a Congressional Budget Office report showing the dramatic reduction in federal funding for Medicaid helped deal these efforts a fatal blow. The report concluded that Medicaid spending “would be 26 percent lower in 2026 … and the gap would widen to about 35 percent in 2036,” if the Senate bill with block-granting at its core had passed.
Verma’s plan likely would be more nuanced than congressional efforts, and it could have some protections to prevent states from reducing benefits or enrollment. But what is known about efforts by Tennessee, one of the earliest states seeking federal approval to shift to block-granting, has triggered serious criticism from health care advocates. Politico also reports that the plan is controversial within the administration itself. Verma’s office did not respond to a request for comment.
Putting forth the plan like this in an election year is risky. But there’s an admirable, if brutal honesty about Verma’s willingness to outline what entitlement reforms would look like. Politicians often talk about the need to rein in entitlement spending without saying what that actually involves. There are less harsh ways to achieve Medicaid savings than what Verma will offer, but at least she’s putting a detailed vision out there to debate.