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In the News: Texans lucky Gov. Abbott didn’t get wish for Medicaid block grant, funding critics say

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Bruce Lesley was quoted in article for Inside Health Policy published on August 29, 2017 about block grants in the wake of Hurricane Harvey. 

 

Texans lucky Gov. Abbott didn’t get wish for Medicaid block grant, funding critics say (Inside Health Policy)

Hurricane Harvey is the kind of natural disaster opponents of Medicaid funding caps warned about, and they say it would be much more difficult to recover from Harvey if Texas Gov. Greg Abbott (R) got his wish for a Medicaid block grant.

“Gov. Abbott has been a proponent of Medicaid block grants, which would be a disaster for Texas right now, as they would not get a dime in additional support,” said First Focus President Bruce Lesley.

Abbott said he supported block grants during his gubernatorial campaign, but when he responded to a congressional GOP request for Medicaid suggestions, he described a system that seems akin to per-person Medicaid funding, even though he used the term block grants.

“I encourage you and your colleagues to consider transitioning the Medicaid program to a block grant program,” Abbott wrote in the Jan. 10 letter. “The block grants should ensure states retain maximum flexibility in designing their own program and provide some mechanism to account for fluctuations in population growth, the economy and the rising cost of health care.”

Although most Republicans have migrated to support for capping federal Medicaid funding per beneficiary, block grants were part of Republican efforts to overhaul the health care system. Vice President Mike Pence touted block grants, in December, and block grants were part of Republican bills to overhaul the Affordable Care Act. The failed Senate health reform bill would let states use block grants for both the expansion population and non-elderly and non-disabled low-income adults. States that choose block grants would be locked into that financing structure for a decade in the Senate bill.

Block grants would provide states with lump sum federal funding that is indexed for annual inflation but that does not increase or decrease with the number of Medicaid beneficiaries in a state’s program, so when Medicaid enrollment grows due to natural disasters, states are stuck with too little funding, Lesley and others said.

“Under block grants, there’s a fixed amount of money, come hell, high water or hurricane,” said Andy Schneider, of Georgetown University’s Center for Children and Families.

Per-capita caps are better than block grants but also problematic, they said, because they do not adjust for acuity. If there is a surge of injuries or illnesses as a result of the hurricane, Texas would be shortchanged on a per-person basis, Lesley said. The federal government would pay for each person added to Medicaid, but states would not get more money per person, even though beneficiaries need more care than normal due to injuries or illness caused by natural disasters.

Trump on Tuesday (Aug. 29) vowed to swiftly provide emergency funding for the state, but even emergency aid can be fraught with politics, Schneider and Lesley said. Also, recoveries often take many years, forcing states to return for more federal money.

“If you recall, it took months to get a Katrina package and the Texas senators both voted against Hurricane Sandy support and that was also long delayed,” Lesley said. “Thus, what is good about Medicaid now is that it is immediately responsive.”

Anne Dunkelberg, associate director for the Center for Public Policy Priorities in Austin, TX, said state and federal officials have a lot of difficult work to do to help respond to the hurricane. They must figure out where people apply for benefits when local eligibility offices are under water. Also, when beneficiaries evacuate to other states, officials must figure out which state pays for their care. After Katrina, the federal government paid the full amount and figured out which state was responsible later. Separately, CMS already waived the hospital-stay requirement for covering nursing home services.

“I’m relieved that a hard cap on funding is not another challenge they must deal with,” she said.

Dunkelberg also said lawmakers don’t have a common understanding of block grants. Sometimes, the policies lawmakers hope to get out of block grants are already in effect, such as being allowed to charge adult Medicaid beneficiaries co-pays.

The silver lining to Republican efforts to overhaul Medicaid is that lawmakers and the public know more about the program now, she said.

By some estimates, Texas has lost out on between $6 billion and $9 billion a year in federal funding since 2014 by not expanding Medicaid to childless adults, Dunkelberg said. However, she said it’s important to point out that Texas barely covers parents. Although Texas covers 3.1 million children, only about 150,000 of their parents are covered, she said. The income level for Medicaid eligibility is frozen at a level set in 1985, though when the state changed the eligibility formula to Modified Adjusted Gross Income (MAGI), as required by the ACA, that level was bumped up unintentionally from about $250 a month to $335 a month. A single parent of two kids must work less than 10 hours a week at minimum wage to qualify.

“That’s another thing most lawmakers don’t realize,” she said. — John Wilkerson (jwilkerson@iwpnews.com)