Stitt considers Medicaid block grant for Oklahoma

Nov. 10--Gov. Kevin Stitt believes he has found a solution to Oklahoma's health care problems.

"The solution for Oklahoma is a block grant," he said during a recent radio interview in response to a question about his health care plan.

A Medicaid block grant, which would require approval from the federal government, would completely overhaul how Oklahoma's Medicaid program, SoonerCare, is funded.

Stitt talked broadly about health care when a KOKC host asked Stitt to respond to the latest news on the effort to put Medicaid expansion on the ballot next year.

The governor criticized proposed State Question 802 for seeking to put Medicaid expansion in Oklahoma's constitution, a move Stitt said will "handcuff" the state's ability to deliver services.

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"Do we want more federal dollars in our system? Absolutely, and I'm going to show Oklahomans a plan to get there," he said.

Up until this point, Stitt has been largely quiet on the details of his health care plan. The somewhat vague reference to block grants serves as the first glimpse at his proposal.

The governor's office declined to elaborate on Stitt's comments.

Despite saying very little, Stitt's revelation speaks volumes about what he sees as the future of health care in Oklahoma and brings up questions about Medicaid block grants.

What is a block grant?

A block grant -- one of several types of grants the federal government offers to states -- is a lump sum of money for a state to spend on a broad issue.

In this specific instance, the funds would go toward providing health care coverage to low-income residents.

The amount of funding Oklahoma would receive would be based on certain metrics, like how many people are enrolled in the state's Medicaid program.

How do block grants differ from how Medicaid is traditionally funded?

Medicaid is an entitlement program, which means everyone who qualifies is guaranteed coverage

The program is jointly funded by the federal government and the states. As of September, 791,203 Oklahomans were covered by the state's Medicaid program, dubbed SoonerCare.

The federal government reimburses each state for a share of its Medicaid costs based on the federal medical assistance percentage rate, which varies by state. Poorer states pay less.

The federal government currently reimburses Oklahoma at a rate of 66% for most Medicaid costs.

Block grants have long been a popular concept among Republicans and President Donald Trump is no different.

Early on in his presidential tenure, Trump proposed a Medicaid block grant system as part of his plan to replace the Affordable Care Act. An adviser to Trump said Medicaid block grants would "cut out the fraud, waste and abuse" to get help directly to people in need.

Conservatives say Medicaid block grants allow states more flexibility in how they operate their Medicaid programs. Concerned about rising health care costs, they also see it as a way to reduce Medicaid costs at the state and federal levels.

In his interview, Stitt hinted his office has been in communication with the Trump administration about his block grant proposal.

Tennessee is seeking to be the first state to convert Medicaid into a block grant.

Tennessee Gov. Bill Lee's proposal requests a $7.9 billion block grant to operate the state's Medicaid program.

The federal government currently pays the state about $8 billion for Medicaid services.

Under the proposal, Tennessee would not receive less than $7.9 billion if Medicaid enrollment decreased and a per capita funding mechanism would increase block grant funding during an economic downturn.

Tennessee, which has consistently come in below federal health care spending projections, also would be able to pocket half the Medicaid funds it saves each year -- therefore incentivizing the state to reduce its Medicaid spending.

The state's block grant proposal would apply to its current Medicaid population as the Tennessee does not intend to expand coverage. But a block grant system could be used to expand Medicaid coverage.

Tennessee received 1,802 public comments on its block grant proposal. Of those, only 11 were supportive of the plan, according to The Tennessean newspaper.

Other states, including Utah and Alaska, also are exploring Medicaid block grants.

Just as opponents of Medicaid work requirements have sued in numerous states to block Trump administration changes to Medicaid, states' block grant proposals could wind up in court.

Critics of Medicaid block grants say they will reduce the amount of funding states receive, leading to fewer people receiving Medicaid coverage.

Because under a block grant system, a state would receive a lump sum of money, the system doesn't as easily take into account how many people qualify for Medicaid.

Take, for example, during an economic downturn. As economic conditions worsen, more people tend to qualify for Medicaid benefits as they lose their jobs or struggle with lower incomes. A block-grant system wouldn't necessarily take those factors into account.

But measures could be put in place to make a block grant more reflexive of changing economic times. The Tennessee proposal, which has not yet been approved by the federal government, would adjust annually for inflation and federal funding would increase if the state's Medicaid enrollment climbs.

Is there an alternative proposal?

Stitt is poised to unveil his health care plan at a time when efforts to expand Medicaid to roughly 200,000 more low-income adults are ramping up.

Supporters of Medicaid expansion turned in a record number of signatures to put a state question on the ballot next year. All that's left is waiting to see if the measure qualifies and when it might come up for a vote, which Stitt will get to decide.

State Question 802 would expand Medicaid to all adults whose income does not exceed 133% of the poverty level, or up to $17,236 annually for an individual or $35,534 for a family of four.

Yes on 802 campaign manager Amber England said Stitt's health care proposal is too little, too late because Oklahoma voters have lost faith that any politician cares enough to come up with an actual solution to improve health care coverage and save the state's rural hospitals.

"At this time it's not clear exactly what the governor is going to propose, but I'm not sure it matters in the eyes of voters," she said. "They simply don't trust politicians to actually fix the problem. That's why they overwhelmingly signed the petition to put Medicaid expansion on the ballot so they can decide this issue for themselves."

It is unclear if Stitt's Medicaid block grant proposal would seek to expand Medicaid to cover more working-class adults.

Oklahoma is one of 14 states that have not expanded Medicaid.

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