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How Medicaid’s Addiction Treatment Services Will Change as a Block-Grant Program

Last weekend Counselor to the President, Kellyanne Conway, said in an interview that replacing the Affordable Care Act could include a shift in Medicaid’s financing to block grants. Since it was created in 1965, Medicaid has been a open-ended federal entitlement program, meaning that the federal government gave more money to states if medicine became more expensive or more people needed coverage through the program; the program matched changing needs. Given the ongoing opioid epidemic and the importance of affordable health care, what would a change to Medicaid’s financing mean for people receiving services through state-based Medicaid expansion programs?

One part of the Affordable Care Act authorized the federal government to finance an expansion of state Medicaid programs, increasing federal funding in state health expenses to cover Americans within 138% of the federal poverty level. Under federal law, anyone who qualified for the state-based insurance coverage was entitled to a certain level of care for an array of physical and mental health services, including addiction treatment services.

Currently the number of people accessing mental health or addiction treatment services varies greatly from state to state. In Ohio more than 500,000 adults received treatment for mental health and/or addiction treatment services through the state’s Medicaid expansion program, while states like Texas did not expand Medicaid at all. But because even the states that didn’t expand Medicaid still benefit from federal funding for patients at or below the national poverty level, anyone enrolled in Medicaid is likely to be impacted by the proposed shift to block grant financing.

Unlike how Medicaid funding works now, block grants do not respond to economic changes. Block grant funding is a type of financial dispersal in which the federal government gives states as a sum with general provisions on how it is to be spent. The amount is set, but states use it as they please. This is done because states vary in the types of programs they have to meet local needs. For example, the federal government might give each state a million dollars for road improvement. One state might fix potholes. Another might repair a bridge. A third might build part of a new road. All these expenditures would be allowable with a block grant for roads. Unfortunately, these grants do not take into account need, so a state that has an increased need for road improvement because of storm damage would not receive more aid based on that need.

Exactly what the change looks like will vary depending on the kind of block grants the federal government administers to states. In a fixed rate model, the government agrees to pay states a fixed amount of money, no matter how many people need coverage or what kinds of health services they need.

Alternatively, the federal government could agree to pay states a certain amount of money for each person the state’s Medicaid program elects to cover. This per capita allotment model is intended to account for ebbs and flows in the economy, when more or fewer people utilize government safety nets to meet basic needs like health coverage. This will cost the federal government more in times when the economy is poorest. Also, unless they’re adjusted for inflation both fixed and per-capita block grants would mean a smaller and smaller pool of funds every year, suggesting a slow death of attrition for Medicaid as a federal program.

Twelve percent of Medicaid enrollees are diagnosed with a substance use disorder (SUD). If federal funding for health care shrinks overall and coverage for all conditions decreases, it makes sense that coverage for addiction treatment services will decrease as well. Limiting access to addiction treatment services could be a disaster, resulting in thousands of preventable deaths.

It is crucial that everyone be able to access quality addiction treatment, no matter their income. At the end of Conway’s interview, she confirmed that President Trump is committed to keeping health care affordable and accessible to all. In order to meet this goal, special attention needs to be paid to health care services to the poor and how those services will be funded.