On April 14, the Kaiser Family Foundation released a brief examining the impact of converting Medicaid into a block grant program, as proposed under U.S. Rep. Paul Ryan’s (R-WI) $3.5 trillion FY2012 budget.  The authors note that the proposal would substantially limit federal risk and spending growth but caution that it would shift costs to states, likely resulting in reduced provider reimbursement rates.  The brief also cautions that converting Medicaid into a block grant program could jeopardize the program’s role in health reform’s coverage expansion. 

From the report: 

As state and federal policymakers face budget shortfalls and recurrent budget deficits, proposals to lower Medicaid spending by converting the program into a block grant have re-emerged. The FY 2012 budget resolution released April 5, 2011 by the House Committee on the Budget includes an estimated savings of $1.4 trillion in Medicaid related to converting the program to a block grant and repealing health reform.  Such changes represent a fundamental change in the entitlement nature and financing structure of the program that would have major implications for beneficiaries, providers, states and localities. Such changes could also affect the ability of Medicaid to maintain its current roles in the health system.

Full report:  Implications Of A Federal Block Grant Program For Medicaid (PDF | 455.71 KB)

Kaiser Family Foundation.  (2011).  Implications of a federal block grant program for Medicaid.