Medicaid and the Children’s Health Insurance Program (CHIP) together provide comprehensive healthcare coverage to 42.1 million children in the United States. For the 80% of children in poverty covered by CHIP and Medicaid, this coverage could mean the difference between a lifetime of health or one of the complications and preventable conditions. Medicaid and CHIP coverage allow children to access necessary physical and behavioral health care, especially in the earliest years of development. The programs also provide critical coverage for children with special health care needs, including those with disabilities, children and youth currently or formerly involved with the foster system, and children of color.

Despite its importance, a study committee of the House leadership has crafted a plan for budgetary changes that, if developed into federal legislation, could bring devastating cuts to Medicaid. 

Medicaid is currently funded through a federal-state partnership, in which the federal government pays a fixed percentage match for each dollar a state spends on Medicaid. The match percentage considers a state’s per capita income, so that states with lower incomes get more support. Under this approach, when state costs rise, the federal government shares in the increased costs. This flexible financing structure makes Medicaid funding responsive to state needs.

In an effort to undermine Medicaid and strip its funding, the House leadership has proposed a “block grant” system to fund the program. This system would limit federal funding by giving states a fixed amount of overall funding for their respective Medicaid programs without considering the costs states actually incur. The leadership’s study committee budget plan suggests converting Medicaid to five block grants for each of the following groups: Children, seniors, people with disabilities, pregnant women, and all other beneficiaries (including parents). 

Additionally, the proposal would reduce the federal match for state Medicaid programs to a 50/50 ratio for all states regardless of per capita income, disproportionately harming states with high rates of poverty. Funding would only be adjusted based on population changes and would not account for increased health care costs for any reason, including natural disasters or pandemics. No matter what the emergency, states would bear 100% of the cost burden. When these unexpected increases arise, states will have no choice but to slash eligibility, reduce benefits, and decrease payments to providers, including pediatricians. 

Rationing health care means everyone loses but children bear some of the worst consequences. Fixed funding does not adequately meet the needs of children, and would result in limited resources for essential health care services. The House proposal also appears to relax some of Medicaid’s requirements, risking child-specific benefits such as the Early and Period Screening, Diagnostic, and Treatment (EPSDT) benefit. Children with special circumstances stand to lose the most from these proposed changes:

  • Children with special health needs, including disabilities: Capping Medicaid funding would disproportionately affect children with special health needs by limiting access to costly services such as therapies, medications, and specialized treatments, including some that would not be available through private insurance. 
  • Foster youth: The fixed funding structure of block grants would limit access to essential health care services for foster youth, a group that already displays an increased risk of negative health outcomes, including developmental delays, behavioral and emotional problems, and other health conditions including diabetes, heart disease, cancer, stroke, and obesity.  
  • Children of color: More than half of children who identify as Native American, Black, Hispanic, or multiracial have Medicaid as their source of health insurance. Children of color in the United States face an array of health disparities, including higher rates of chronic conditions such as asthma, obesity, diabetes, and hypertension. 

Congress should be working on ways to improve Medicaid for children, not developing ideas that will curb access, delay care, and produce poorer health outcomes. To learn more about the potential impact of block grants on children and to view First Focus on Children’s alternate policy recommendations, visit our policy brief on Medicaid block grants.

For questions, please contact Abuko D. Estrada, J.D., Vice President, Medicaid and Child Health Policy, at abukoe@wordpressmu-1207585-4417844.cloudwaysapps.com or Abbie Malloy, Director, Health, Environmental, and Nutrition Policy at abbiem@wordpressmu-1207585-4417844.cloudwaysapps.com.