Kellyanne Conway, a counselor to Trump, told NBC News’s Sunday Today with Willie Geist, that the health care law that will replace Obamacare will turn Medicaid — a joint state-federal health insurance program for the poor — into a block grant program. The change would mean the federal government would give money to the states to implement Medicaid as they see fit.
“Those who are closest to the people in need will be administering it,” Conway said in the interview, which was recorded the Thursday and Sunday. “You really cut out the fraud, waste and abuse, and you get the help directly to them.”
Medicaid is now funded by the federal government and states together and it has an open-ended funding stream, meaning it pays for all health costs to which its beneficiaries are entitled under the law.
Conservatives who are concerned about the impact the growth in health care spending will have on the federal and state budgets have advocated block grants as a way to cut the Medicaid costs.
But many health policy analysts say that block grants could lead to reductions in care. “A Medicaid block grant program would institute deep cuts to federal funding … and threaten benefits for tens of millions of low-income families,” said Edwin Park, vice president for Health Policy at the Center for Budget and Policy Priorities, in a report on the group’s website.
Block grants can take several forms. Under one scenario, the federal government would offer a fixed sum of money to each state, which would grow with inflation. Since the rate of overall inflation is typically lower than inflation in the health care sector that leads to an erosion of spending over time. And such a fixed block grant means less money is available when the economy is suffering and more people qualify for Medicaid benefits.
Another scenario offers states an allowance for each beneficiary. Under such a plan, spending would increase in bad economic times to cover the additional people who need care. However, overall benefits could still fall over time, depending on how the program accounts for rising health care costs.
Conway didn’t give details about how a block grant program would be structured.