December 11, 2018

A Medicaid Block Grant Makes No Sense for Florida

The idea of block granting Medicaid has been floated before by state leaders. But whether it’s a block grant for the entire program or just a Medicaid expansion block grant, the model makes no sense for consumers, providers and taxpayers.

The current financing structure for Medicaid provides Florida open-ended federal funding, at the rate of a 61 percent match, to meet the state’s growing health care needs.

In contrast, a block grant would cap federal Medicaid funds regardless of enrollment growth or increases in health care costs. Florida would no longer have flexibility to step up and meet unexpected health care costs arising from, for example, natural disasters, pandemics or new medical advances. Thus, billions of dollars of health care costs would be shifted to the state and state taxpayers.

In Florida, Medicaid covers more than 2 million children and 1.7 million adults- primarily seniors and persons with disabilities. Inevitably, with an ever-shrinking Medicaid pie caused by capped funding, Florida legislators would face gut-wrenching political choices to cut their constituents’ Medicaid benefits, eligibility or provider reimbursement.

The block grant path is particularly risky given the state’s unique demographics. Florida is one of the fastest growing states in the country, with disproportionate growth in the most medically expensive populations: the elderly and people with disabilities. And the state already has one of the highest rates of uninsured residents in the nation.

Moreover, Florida has one of the “leanest” programs in the country. The state’s annual per person Medicaid expenditure rate is in the bottom five states. Capped funding would lock Florida into lower federal funding compared to other states, with adverse consequences compounding over time as need outpaced funding.

Even if a block grant was limited just to the expansion population, it means that Florida would be giving up millions of federal dollars that could be used to free up state dollars currently being used to support services for the uninsured, like mental health care. Under expansion, the federal government would pay 90 percent of the cost.  Capping this generous open-ended federal funding means capping savings the state would otherwise realize and shifting more costs to Florida taxpayers.

Many people in the group that would benefit from Medicaid expansion are uninsured older residents (55-64) and those with disabilities. Their health care needs don’t go away. With the financial squeeze caused by a block grant, the state could face having to limit their enrollment or cut eligibility or services. This would shift more demand to state resources and increase uncompensated care burdens.

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