Medicaid block grants would be risky for our state

The Center on Budget and Policy Priorities has released a new paper that outlines why Medicaid block grant proposals would likely be harmful to our state.

Medicaid is jointly financed, with the federal government paying a fixed share or percentage of a state's Medicaid program costs. (In Washington state it has traditionally been about half). A block grant would replace the current financing system, and the federal government would pay only a fixed dollar amount and leave the state responsible for all remaining costs.  This would radically change how Medicaid is financed in our state and have a huge impact on our state budget.

Estimating health care costs are difficult to predict even a year or two in advance, and the Congressional Budget Office (CBO) projections often overestimate or underestimate actual Medicaid costs.

■ Total Medicaid costs in 2008 were approximately 13 percent lower than the CBO had projected they would be in the estimate it issued five years earlier (in 2003), and 3 percent lower than the CBO had projected just one year earlier, in 2007.
■ In 2009, total Medicaid costs were 9 percent higher than the CBO had projected five years earlier and 12 percent higher than the CBO had projected in 2008.
■ In 2010, total Medicaid costs were about 4 percent higher than the CBO had projected five years earlier and 14 percent higher than the CBO had projected in 2009, [5] likely because the recession turned out to be larger and deeper than had earlier been expected.

Under a block grant, federal funding would no longer increase automatically to help cover unanticipated costs. These costs would be borne by our state as we struggle to recover from the Great Recession.

Read the Center's analysis here