Federal Medicaid Reform

What Could Medicaid Reform Look Like?

President-elect Trump supports turning Medicaid into a block grant program in order to decrease costs to the federal government and increase states' roles in managing Medicaid [4]. House Speaker Paul Ryan's plan gives states the option of a per-capita allotment or a block grant for Medicaid, which is aimed at encouraging states to innovate, manage care, and utilize Medicaid waiver programs. Per-capita allotment would allocate Medicaid resources to states based on the number of beneficiaries in each programmatic category. Ryan's block grant option provides maximum flexibility in Medicaid design; minimum requirements would remain, such as paying for care for the vulnerable elderly poor and for individuals with disabilities, but other eligibility requirements would be at the discretion of the state [5]. President-elect Trump's nominee for secretary of the US Department of Health and Human Services, Representative Tom Price, similarly proposes combining Medicaid and the Children's Health Insurance Program into a single program funded through block grants [6]. Another health leader in the new administration is likely to be Seema Verma, Trump's nominee for director of the Centers for Medicare & Medicaid. As a consultant to the Medicaid expansion of Indiana and Kentucky, Verma helped craft a plan that placed more responsibility on Medicaid beneficiaries, including monthly premiums and work or volunteer requirements [7].

Impact on North Carolina

North Carolina's plan for Medicaid reform is consistent with the vision of Medicaid reform emerging from the new administration. However, it is likely that the goals of federal Medicaid reform—more budget predictability for the federal government and a lower total federal contribution—would increase the financial responsibility and risk to North Carolina. These changes would leave the state responsible for a greater share of the costs of Medicaid and/or require the state to reduce eligibility or benefits.

Another question under federal Medicaid reform is whether Medicaid-expansion and non-expansion states will be treated the same under the proposed changes. Currently, North Carolinians' federal taxes are helping to pay for Medicaid expansion in other states (approximately $1 billion per year) [8, 9]. If block grants or per-capita allotments are based on states' current Medicaid criteria, non-expansion states will get significantly less funding than expansion states. Under proposed changes, however, Medicaid allotments may decrease in Medicaid-expansion states or may be supplanted with premium tax credits to be used for the purchase of health insurance.

Regardless of what proposals emerge, the fiscal impact—as well as the impact on the health and well-being of North Carolina's most vulnerable residents—is likely to be significant. It is imperative that North Carolina's Congressional delegation examine potential short- and long-term impacts of changes to Medicaid allocation on North Carolinians. Support for health reform should not be partisan but should include careful analysis of North Carolina's current Medicaid program and the impact that changes to Medicaid will have on our state's physical and fiscal health.