This article from the Center for Budget and Policy Priorities discusses the implications of capping Medicaid funding or changing Medicaid to a block grant financing model. Such changes would require states, providers, and beneficiaries to cover additional costs if capped federal funds do not meet the needs of the beneficiaries. The article continues by analyzing the other effects that could be expected from such changes.

From the report:

Proposals to convert Medicaid into a block grant or otherwise cap its funding are receiving renewed attention in the emerging debate over cutting federal spending. For example, Rep. Fred Upton (R-MI), the new chair of the House Energy and Commerce Committee, reportedly has already discussed block-granting Medicaid with some governors.

Such proposals would have far-reaching adverse effects. In particular, they would shift costs and risks quite significantly to the states, to tens of millions of low-income Medicaid beneficiaries, and to the health care providers that serve those beneficiaries.

Full Report: Medicaid Block Grant or Funding Caps Would Shift Costs to States, Beneficiaries, and Providers

Center for Budget and Policy Priorities. (2011). Medicaid block grant or funding caps would shift costs to states, beneficiaries, and providers. Park, E.