Medicaid block grant proposal would be ill-advised (Capitol Update)

In an interview last week, Governor Stitt said his forthcoming plan to defeat the Medicaid expansion initiative petition is adoption of a Medicaid “block grant” program. He gave no details. A block grant is a grant program wherein the federal government gives to a state a certain amount of money for a designated purpose. The state is free to use the money generally how it pleases to accomplish the purpose, and when the money is gone, it’s gone.

Medicaid, on the other hand, is by federal law a matching program. In 1965, Congress established a healthcare plan for children, pregnant women, and the elderly who meet certain poverty guidelines. Medicaid provides that if a state spends its dollars to provide healthcare to the Medicaid population, the federal government will match it up to a certain percentage. So long as the state spends its money for the permissible healthcare, it is entitled to receive the match. In Oklahoma, the match is currently about 66 percent federal and 34 percent state.

All states agreed to join Medicaid and provide the healthcare to their citizens. In 2009, the Affordable Care Act expanded Medicaid to adults who meet the poverty guidelines but were previously not covered. The match rate for the new population was 100 percent during the first five years and remains permanently at 90 percent federal, and 10 percent state. Fourteen states, including Oklahoma, have not agreed to the Medicaid expansion and are not providing the coverage. Since we don’t spend the money, we don’t get the match. Oklahoma is estimated to be losing about $1 billion per year in federal match money.

The Trump administration is in the process of issuing regulatory guidelines changing Medicaid from a matching program to a block grant program with a cap on the federal participation. In anticipation, Tennessee recently submitted a waiver application to change its Medicaid program to a block grant. If the Trump administration approves the Tennessee proposal, it will be immediately challenged in court and will almost certainly be tossed out, becoming one more unsuccessful Trump administration effort to change statutory law without approval from Congress.

Since Governor Stitt’s suggested proposal has not been revealed and may not have been fully developed, it is impossible to know how it would compare with Tennessee’s plan or whether it would in fact be a “block grant” program. One can hope that a block grant proposal is only one possibility being discussed by the governor’s advisors, and it was just “top of mind” when the governor was interviewed. There may indeed be an “Oklahoma plan” for Medicaid worth considering, but hopefully the governor won’t propose an ill-advised block grant scheme that will fail legal muster and, without Congressional approval, will almost surely never be implemented.


Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1990. He currently practices law in Tulsa and represents clients at the Capitol.

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