Center on Budget and Policy Priorities: Correcting the Record – Medicaid Block Grants Would Affect More Than Healthy Adults

WASHINGTON, Feb. 29 -- The Center on Budget and Policy Priorities issued the following blog:

Health and Human Services Secretary Alex Azar says that our analysis of how the Trump Administration's "Healthy Adult Opportunity" Medicaid block grant proposal would affect pregnant women, low-income parents, and people with disabilities is incorrect, claiming that block grants would only affect "healthy adults" and wouldn't affect people's eligibility for coverage. He's wrong on both counts.

The Administration's block grant guidance invites states to seek demonstration projects (often called waivers) that would cap their annual federal funding and give them new authorities to cut coverage and benefits for certain adults under 65 years of age "who qualify for Medicaid on a basis other than disability or need for long-term care services and supports."

As the Administration's guidance of January 30 makes clear, that includes people eligible under the Affordable Care Act's (ACA) Medicaid expansion, who are not all "healthy adults" -- as Secretary Azar claimed at this week's House Energy and Commerce Committee hearing in response to a question from Rep. Ben Ray Lujan, who relied on our paper. Millions of adult Medicaid beneficiaries have serious physical disabilities or mental health conditions, but they don't qualify for Medicaid based on a disability because the disability isn't severe enough to meet Medicaid's strict standards for disability-based coverage. Instead, most of these adults are covered under the ACA's Medicaid expansion. And among such adults who don't have a disability, many have serious chronic conditions that require regular medical treatment.

Moreover, the guidance isn't restricted to adults who qualify under the expansion. States can include in their block grant demonstrations any group of adults that Medicaid isn't required to cover under the program's statute. These adults include very low-income parents with incomes above the income levels that the state used to determine eligibility for cash assistance in 1996, and pregnant women with incomes above 138 percent of the poverty line. Most states cover pregnant women with incomes above 138 percent, and the median state income level for pregnant women is 200 percent of poverty. The guidance could affect these so-called "optional" pregnant women, making it harder for them to get needed prenatal care.

The block grant waivers could limit coverage for prescription drugs and other benefits in ways that Medicaid does not otherwise allow. People subject to the waivers also could be charged co-payments above the nominal levels that Medicaid normally allows, making it less likely they will get the health care they need.

And contrary to what Secretary Azar claimed at the hearing, the block grant guidance would let states take coverage away from people who would otherwise be eligible. People could lose coverage because they don't meet a work requirement, pay premiums, or meet other restrictions that the guidance would let states impose. Premiums significantly reduce low-income people's participation in health coverage, extensive research shows, and nearly 1 in 4 Arkansas Medicaid enrollees subject to its work requirement lost coverage.

As Secretary Azar did at the hearing, the Administration has consistently sought to distinguish between adults covered by the Medicaid expansion and the "truly vulnerable." That distinction is artificial: the expansion covers exclusively poor and near-poor adults, the overwhelming majority of whom would otherwise be uninsured and would struggle to get needed care. Regardless of distinctions, the Administration's block grant guidance puts coverage and access to care at risk for those it agrees are "truly vulnerable," including people with disabilities, others with serious health needs, and pregnant women.