Study: Medicaid block grants would save feds $150 billion

A Republican proposal to fund Medicaid through block grants could save the federal government more than $100 billion over five years, according to a new analysis released Monday.

The analysis from healthcare firm Avalere Health shows that if Medicaid were funded through block grants instead of through the open-ended commitment the program receives now, the federal government would save $150 billion by 2022.

Similarly, shifting to per capita caps, in which states would receive a set amount of money per beneficiary, would save $110 billion over five years.

“Medicaid block grants and per capita caps serve as vehicles to control federal spending on the program and put more of the decision-making on things like covered services and program eligibility in the hands of the states,” said Avalere president Dan Mendelson.Congressional Republicans argue that changing Medicaid’s funding mechanism would give states more control over their programs. Democrats say that beneficiaries would face slashed benefits under either proposal, while states would face more costs.

According to the study, only one state – North Dakota — would see increased funding under the block grant model.

The remaining states and Washington, D.C. would face a reduction in federal funding.

Through per capita funding, 26 states and D.C. would see decreases in federal funding while 24 would get an increase.

The proposals are also opposed by AARP.

“AARP opposes Medicaid block grants and per capita caps because we are concerned that such proposals will endanger the health, safety, and care of millions of individuals who depend on the essential services provided through Medicaid,” Joyce Rogers, AARP’s senior vice president for government affairs, wrote in a letter to lawmakers last week.

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