Would State Block Grants Deliver Health Insurance Reform?

With the US Senate again considering a fast-track vote on legislation to repeal the Affordable Care Act (ACA), much national attention has focused on a key notion in the proposed Graham-Cassidy Amendment: offering states “block grants” to offset health care costs, but without the prescriptive elements of the ACA.

Don Kettl, Professor at University of Maryland’s School of Public Policy, offers his take on this matter in an article on the Route Fifty website:

There’s a basic assumption in the Graham-Cassidy health care bill. It would slash federal cash for the states that didn’t expand their Medicaid programs under Obamacare by $180 billion, or 11 percent, by the year 2026. It assumes that new block grants for the states would allow them to find enough efficiencies to make up the difference.

That is a very, very tall order. What’s the evidence that the states would prove more efficient managers of health care funding than the feds?

Two things seem certain. One is that it’s going to be impossible for the states to make up the shortfall with greater efficiencies. The other is that we’ll end up with greater disparities in the health coverage that citizens get, as different states go down different roads to cope with the cuts.

Those favoring repeal-and-replace are deep in a corner from which there are few escape routes. But before pursuing the block grant strategy, which would load all the tough decisions onto the states, it’s worth looking carefully ahead at where this road would lead.

Looking specifically at the effect on Maryland, a state that expanded Medicaid eligibility based on the strong federal funding provided through the ACA to do so, Governor Hogan has opposed the current proposal in the Senate. From the Baltimore Sun coverage:

The governor released a statement emphasizing that the current law needs to be fixed, but he rejected the repeal measure sponsored by Republican Sens. Lindsey Graham of South Carolina and Bill Cassidy of Louisiana.

“Unfortunately, the Graham-Cassidy bill is not a solution that works for Maryland. It will cost our state over $2 billion annually while directly jeopardizing the health care of our citizens,” Hogan said. “We need common sense, bipartisan solutions that will stabilize markets and actually expand affordable coverage.”

This high-profile issue is pressing in several ways. Sources differ on the likelihood of a Senate floor vote being called next week, and the prognosis for the proposal’s passage remain very unclear. After the end of September (and the close of the federal fiscal year), the process of budget “reconciliation” closes, and a full 60-vote margin (to overcome an expected filibuster by opponents) would be practically required to enact any changes to federal health care law.