Economists Oppose Plans to Convert Medicaid to Block Grant

Dear Speaker Boehner, Minority Leader Pelosi, Majority Leader Reid, and Minority Leader McConnell,

We write this letter to oppose plans to convert Medicaid to a block grant and to cut Medicaid benefits.

These changes would do nothing to improve quality but would ration care to millions of America’s most vulnerable citizens.

Medicaid supports health care for nearly 60 million people, including 30 million children. Two-thirds of Medicaid expenditures support services for impoverished people who are elderly or who suffer from disabilities. By spreading the cost of care between federal and state budgets, Medicaid helps state governments maintain services during economic downturns.

Looming budget deficits have led some to propose capping federal spending by converting Medicaid into a blockgrant program. We recognize the challenges posed by budget deficits. Actions must be taken to close those deficits.

Yet block granting Medicaid is both unfair and unwise. During economic downturns it would expose states to the full costs of increasing enrollments just when their revenues are falling. The inevitable result would be curtailed services, reduced eligibility, and increased charges that many low-income patients would be unable to pay, forcing them to forego care or placing burdens for uncompensated care on hospitals and physicians.

Furthermore, a decision to tie the block grant to an economic index (the Consumer Price Index adjusted for population growth) that grows more slowly than medical care spending or actual Medicaid expenditures would cause steady erosion in all of these dimensions.

The only effective and equitable way to curb total health care spending, and the only way to address the fiscal burdens of that care, is to support systemic health reform. The best current hope for doing so is the Affordable Care Act, which should be implemented with vigor.

List of Economists Who Signed the Letter