The Return Of Trumpcare

The Trump regime is expected to announce on Thursday plans to shift Medicaid funding to block grants, which would allow states to cap Medicaid spending and basically throw millions of people off of coverage.

The Trump administration is finalizing a plan to let states convert a chunk of Medicaid funding to block grants, even as officials remain divided over how to sell the controversial change to the safety net health program.

CMS Administrator Seema Verma plans to issue a letter soon explaining how states could seek waivers to receive defined payments for adults covered by Obamacare's Medicaid expansion, according to seven people with knowledge of the closely guarded effort. An announcement is tentatively slated for the end of next week, more than one year after Verma and her team began developing the plan.

Capping Medicaid spending, even among just Obamacare's expansion population, would be a major transformation of how the federal government finances the safety net health care program that has grown to cover about 1 in 5 Americans. The plan is guaranteed to enrage critics and invite attacks from Democrats in an election year.

Republicans have long argued that states should receive defined funding for Medicaid, instead of the current open-ended structure in which the federal government matches state spending. Democrats, along with many hospital and physician groups, have fiercely opposed the idea, warning that strict funding constraints would result in cuts to enrollment and health care services.

Democratic lawmakers have promised to fight the administration on block grants, contending CMS doesn’t have the authority to restructure the program’s financing without congressional approval.

Even as Verma and her aides work to push through the block grant plan, Trump officials are still battling over its scope and how to best guard it from lawsuits the administration expects from Medicaid advocates. Even the terminology is in flux, as officials work to identify an alternative to the term “block grant,” which has negative connotations in the advocacy community. The plan still needs sign-off from health department lawyers.

Meanwhile, there is internal debate on how broadly to publicize the effort. Verma, who two sources said sees the plan as a legacy-defining achievement, is pushing for an in-person event to announce the policy. Other officials, however, argue a high-profile rollout is unnecessary and could bring more scrutiny on a controversial proposal.

The White House will have final say on whether to pursue or halt the plan, the officials said.

President Donald Trump, who last week lashed out as HHS Secretary Alex Azar over negative health care polling, recently voiced concerns about fueling perceptions that he's cutting Medicaid and other health care services during an election year, said two officials with knowledge of the president's comments. Trump's remarks Wednesday about his willingness to look at entitlement cuts quickly became fodder for Democrats, as they accused him of violating a campaign pledge to leave those programs alone.

Medicaid block grants are punishment for states with large populations, specifically California, New York, and Illinois, but also Florida and Texas, so I don't think those states are going to be lining up to take advantage of them. (Texas might out of spite but health care cuts in an election year are never popular, and cutting health care in Florida is a political non-starter.)

However smaller states like, say, Kentucky or Louisiana could rush to embrace block grants in order to "save money" and that's the real killer.  That would force states to cut Medicaid rolls, and there's plenty of state legislatures who would love to do just that.

Expect a lengthy court battle over this one...unless the Supreme Court makes it a moot point by killing the ACA in June.