Trump poised to kick off election-year fight over Medicaid

The Trump administration is poised to kick off a major partisan feud over Medicaid in 2020, as officials are reportedly planning to soon introduce a way for states to block grant Medicaid money.

The guidance, which The Wall Street Journal said could be released as early as this month, will test the Trump administration’s ability to allow states the flexibility to make drastic changes to Medicaid.

Imposing block grants in Medicaid has long been a major conservative goal, and with time running down in President Trump’s first term the administration is facing pressure to come up with health care victories, even though some argue the policy may not be legal without congressional approval.

Administration officials had drafted a guidance that would make it easier for states to apply for a capped payment or block grants, but the White House Office of Management and Budget withdrew it in November.

Legal and budget experts suspected that the administration lacked the evidence needed to make a strong legal argument defending the policy, but administration officials would not publicly comment on it.

Health and Human Services Secretary Alex Azar has been quietly trying to sell states on the merits of imposing block grants, or a per-person spending cap, without congressional approval.

Lawmakers in Tennessee have already submitted a waiver request to the Trump administration to impose block grants, and administration officials have also been urging Alaska’s governor to apply.

Congressional Democrats have warned that they will fight those efforts.

In a letter sent last week, House Energy and Commerce Committee Chairman Frank Pallone Jr. (D-N.J.) and Sen. Ron Wyden (D-Ore.) urged the Department of Health and Human Services’ (HHS) Office of Inspector General to “exercise vigorous oversight” if Tennessee’s waiver request is granted.

“While the Secretary of HHS does not have legal authority to approve a waiver that would convert Medicaid’s financing into a block grant, the administration continues to encourage states to apply for these illegal waivers,” Pallone and Wyden wrote.

Block grants are popular with Republicans who want to constrain Medicaid spending but are fiercely opposed by Democrats, who argue the changes require harmful cuts in the program.

Frank Siano, a principal at EMD Consulting, said he’s concerned that states with block grants may not end up spending the money in a way to ensure adequate coverage.

“If you’re leaving it up to states, are we going to have more problems on health? You’re truly at the whim of your state legislators,” Siano said.

Medicaid is the main source of long-term care coverage for low-income Americans and is a guaranteed benefit.

“I think it’s the holy grail for some conservative thinkers,” said Jon Alker, executive director of the Georgetown University Center for Children and Families, about block grants.

“It ends Medicaid’s entitlement status,” Alker added. “This has been a long-held objective for those who don’t want to spend a lot of federal funds on poor people.”

A block grant would transform Medicaid from an open-ended entitlement program into one with capped benefits. Currently, the federal government matches a certain percentage of state spending, and the funding is open-ended. In exchange, states agree to cover specific services and specific types of recipients.

Under a block grant, states would receive a fixed amount of money from the federal government, regardless of outside circumstances, that they could spend however they see fit. Critics fear a block grant would ultimately lead to states kicking people off their rolls or scaling back services.

Congress already rejected block grants when the GOP’s ObamaCare repeal bill failed in 2017. Allowing states to impose those same changes by statutory waiver would be extremely controversial and have widespread implications about the use of executive power.

Experts said it’s not clear if that waiver authority extends to ideas that Congress previously rejected.

Robin Rudowitz, associate director for the Kaiser Family Foundation’s Program on Medicaid and the Uninsured, said the waivers the administration grants to allow changes to Medicaid afford states broad discretion.

However, she said there’s an inherent tension about just how far the administration can go without Congress, and any changes the administration approves could wind up in court.

“States always say they want flexibility, but what does that mean? What are the provisions that will be waived to grant additional flexibility?” Rudowitz said.

The administration, though, looks poised to push ahead.

In a recent speech, Centers for Medicare and Medicaid Services Administrator Seema Verma hinted that the administration was ready to begin approving proposals like the one in Tennessee.

“Many states have expressed a willingness to be held accountable for improving outcomes in exchange for greater flexibility and budget certainty. Block grant and per capita cap proposals are two such alternative financing approaches,” Verma said.

“We are encouraged by this interest.”