Obamacare Repeal: What May Replace It
Medicaid Block Grants continued...
“In general, the concept is centered on the federal contribution to Medicaid being more budgeted as opposed to open-ended … in exchange for which states would have more flexibility in how to spend that money,” Haislmaier says.
Pros: With block grants, the federal government determines the fixed amount of money states receive to cover their Medicaid population. That amount would probably be set to grow each year at a lower rate than it has in the past, which reduces spending over time. The Congressional Budget Office (CBO) estimated that one Republican plan to turn Medicaid into block grants would reduce federal spending by $1 trillion over 10 years.
In exchange for less federal money, states face fewer restrictions about how they operate their Medicaid programs.
That allows states greater flexibility to design their Medicaid programs in ways that best meet the needs of their residents.
Cons: “It will squeeze the amount of money the states will receive for the program, and it doesn’t adjust with what’s going on in the economy,” Blumberg says.
Today, if the economy goes south and more people sink into poverty, more people then become eligible to get insurance coverage under Medicaid. Under block grants, it’s unlikely that state Medicaid programs could accommodate an expansion.
“Block grants won’t adjust for the fact that more poor people need insurance,” Blumberg says. They also don’t keep up with the rising cost of medical care.
Blumberg says that while states will have more flexibility, block grants will provide fewer protections for people with low incomes and no protection at all for people who suffer economically when the economy declines. The same CBO analysis said the lower expenses would stem from denying roughly 14 million people access to Medicaid.
Health Savings Accounts
Trump has proposed expanding the use of health savings accounts, or HSAs, as an alternative to Obamacare.
HSAs are investment accounts -- like a 401(k) retirement or a 529 college savings plan -- that can be opened by anyone enrolled in a qualified health insurance plan.