Health care free market advocates have long supported block grants to states for Medicaid financing. The Trump Administration is poised to release guidelines for block grants in the near future. (here) A block grant would give a fixed amount of federal taxpayer money to each state and allow that state to use that money as it saw fit for its Medicaid program.

As background, Medicaid began in 1965 as a safety-net program for children of low-income families, the disabled, and some long-term care. Congress set up the financing for Medicaid on a shared basis with states. Theoretically, states would pay half and the federal government would match the state’s contribution. The reasoning at the time was that states would not want to burden their taxpayers with ever-increasing taxes to support the Medicaid plan. Hence, the cost and size of the program would remain small and would remain a true safety-net.

Tragically, the exact opposite has happened. If a state pays one dollar for Medicaid, the state then receives a matching dollar from the federal government. The program has consequently exploded such that it is now one of the top three budget items for every state. In Washington state, Medicaid is number two behind K-12 education. According to the Medicaid and CHIP Payment and Access Commission, combined federal and state spending on Medicaid from 2013 to 2018 in Washington state alone increased by 60 percent. (here)

Obamacare compounded the spending problem in Medicaid by offering states an expanded program to include all able-bodied, low-income adults age 18 to 64. The incentive is that the federal government will cover 90 percent of the costs of the expanded plan.

No surprise, Medicaid is now the largest health insurance program by number of enrollees. One out of five Americans nationally and one out of four in Washington state are enrolled. Spending likewise has increased from $500 million its first year to almost $600 billion last year. (here)

Block grants are intended to control costs in Medicaid, to allow states more regulatory power over the program, and to prioritized people who could benefit from the plan. Opponents of block grants argue that Medicaid must remain open-ended with unlimited financing.

Federal spending on health care is one of the largest drivers of the ever-rising national debt. (here) As mentioned above, Medicaid spending is also one of the largest budget items for every state. Placing a limit on Medicaid spending through block grants is not only fiscally responsible, it also would force state officials to prioritized the most vulnerable and give them priority to enroll in the program.