Proposals are emerging in Congress to cap total federal spending at levels that would force all deficit reduction to occur only through spending cuts, which would require cuts and structural changes to Medicaid. Under the current law, the federal government provides open-ended financing—it pays a fixed percentage of states’ Medicaid costs (FMAP), whatever those costs are.
Under proposals to convert Medicaid to a block grant or otherwise cap federal funding, the federal government would no longer pay a fixed percentage of states’ Medicaid costs. Instead, the federal government would provide each state with a fixed dollar amount, with states responsible for all remaining Medicaid costs. This shifts the burden not only to states, but also to Medicaid beneficiaries and the providers that support them.
As these proposals and discussions take place in Washington and in states, ANCOR members should be a part of the conversation and build their understanding of what a federal spending cap or block grant could mean for community services and supports. States are already struggling to balance their budgets and a spending cap or block grant would make for very difficult budgets sessions in the future.
Watch for more resources, grassroots efforts, and analysis in the coming months. In the meantime, the Center on Budget and Policy Priorities has resources that discuss how block grants and spending caps would work and their effects on Medicaid funded services.