Administration Offers Plan for Medicaid Block Grants, Long a Conservative Goal

The plan — called “the Healthy Adult Opportunity” — comes after Ms. Verma and other Trump administration officials spent months trying to figure out how they could legally approve an alternative to the open-ended federal funding that the Medicaid statute requires. The population affected by the new approach includes adult beneficiaries younger than 65 who aren’t eligible on the basis of a disability or their need for long-term care, and for whom Medicaid coverage is optional for states. Pregnant women are not included in the group.

The plan would allow states to cover fewer drugs for enrollees in the demonstration program, while still requiring a minimum set of benefits.

Republicans have proposed block grants in various forms for decades, going back to the Reagan administration. One such effort provoked a political uproar in 1995, when Congress passed legislation to give each state a fixed amount of federal money for Medicaid, only to see President Bill Clinton veto it.

More recently, Republicans’ bills to repeal and replace the Affordable Care Act in 2017 proposed giving states a choice between a fixed annual sum per Medicaid recipient or a block grant, both of which would have almost certainly led to major cuts in coverage over time. Concerns from moderate House Republicans about the potential of deep cuts to Medicaid — which now serves more than 71 million people, or more than 1 in 5 Americans — helped doom the repeal effort.

Conservatives say Medicaid spending, which consumes a major and growing portion of the federal and states’ budgets — it cost about $620 billion in 2018, and accounted for 9.5 percent of the federal budget — needs to be reined in. The current system of unlimited federal matching funds, they say, has encouraged states to milk as much as they can, sometimes wastefully. Capping funding, their argument goes, would make Medicaid more efficient and ensure it can continue to help the sickest and most vulnerable Americans.

Although the federal government generally pays between 50 and 77 percent of a state’s total Medicaid costs, depending on the state’s wealth, it covers much more — 90 percent of the costs — for the adults who became eligible for Medicaid under the Affordable Care Act. While most adults who qualified for Medicaid in the past were disabled, pregnant or extremely poor parents of small children, the newly eligible group — more than 12 million people in 35 states, according to federal data — includes adults who may be healthy and childless and have somewhat higher incomes.

Ms. Verma has often suggested that adding healthy working-age adults to the program has threatened its viability for more fragile populations, like children, the elderly and the disabled. She did so again on Thursday, saying in a call with reporters that Medicaid “was not originally designed for this group” and that many states had been “far too lax” in verifying whether people are even eligible for the program.

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