Last month, the Centers for Medicare and Medicaid Services (CMS) announced a plan that could lead some states to receive less federal funding for Medicaid.

The move is in keeping with previous CMS efforts under the Trump administration to reduce the number of people receiving Medicaid benefits and to roll back regulations for health care services.

How is Medicaid funded and how could that change?

More than 71 million Americans receive health insurance through Medicaid, which is jointly funded by states and the federal government.

The federal portion of Medicaid health care costs, called matching funds, depends on the state. That amount is based on a formula that takes into account a state’s per capita income.

For the wealthiest states, the federal government covers half of their health care costs, while low-income states receive more. This year, for instance, the federal government will cover 77 percent of Mississippi’s Medicaid health care costs.

Under the CMS plan, states could seek waivers that would allow them to cover some Medicaid recipients’ health care costs with block grants. Unlike matching funds, block grants are capped and can’t be adjusted to reflect a state’s actual expenses.

States that use block grants would not receive additional federal funding to cover enrollment spikes during recessions or other unexpected increases to health care costs. States that run the block grant program under budget would be able to keep unused federal funds.

Would the change impact children’s health care coverage?

Rep. Kendra Horn (D-Oklahoma) said the block grant plan “would slash and cap Medicaid, hurting the people Medicaid is supposed to help. This scheme would take the funds our state uses for SoonerCare, putting coverage for 500,000 children at risk.”

SoonerCare is Oklahoma’s program for Medicaid and the Children’s Health Insurance Program (CHIP). About 716,000 Oklahoma residents were enrolled in Medicaid or CHIP last November. About 502,000 of those receiving benefits were children.

Horn’s statement is incorrect, because the block grant program is limited to certain adults and wouldn’t involve children’s health care plans.

Would the block grants impact seniors and people with disabilities?

Rep. Matt Cartwright (D-Pennsylvania) said on Twitter that “Medicaid block grants put health care for children, seniors and individuals with disabilities at risk,” suggesting elderly and disabled people could see coverage cuts.

The block grant would only apply to adult Medicaid recipients who are under 65 years old, don’t have a disability and don’t need long-term care.

Would block grants lead to Medicaid cuts and reduced health care coverage?

Some Democrats have equated the block grant program to Medicaid cuts, which are baked into the plan from CMS.

To account for the capped funding, CMS will allow states to cut some benefits for adults covered by the block grants. The health care plans would still have to meet certain requirements, but states will be free to reduce coverage in ways that would ordinarily break Medicaid rules.

For instance, Medicaid plans cover all drugs as long as they’re medically necessary. States that receive block grants could limit prescription coverage for affected adults. States also would be able to eliminate retroactive coverage for new recipients of the block grant program.

The plan would also give states the ability to pass health care expenses on to Medicaid enrollees. Participating states could charge block grant recipients with premiums and out-of-pocket costs that aren’t allowed in other plans.

An attempt to replace the Affordable Care Act in 2017 included an option for states to receive block grants. The Congressional Budget Office projected that the block grant proposals could cut a third of Medicaid spending.

Contact Big If True editor Mollie Bryant at 405-990-0988 or bryant@bigiftrue.org. Follow her on Facebook and Twitter.

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