Trump administration urging Alaska to be first to apply for Medicaid block grant

The Trump administration has been urging Alaska’s governor to apply to be the first state to change its Medicaid program funding to a block grant.

“Your Medicaid administrator, Seema Verma, has urged us to be the first state to receive Medicaid dollars as a block grant,” Gov. Mike Dunleavy (R) wrote in a letter to President Trump. “We are eager to do this, but your support of her on this ‘first’ will keep the proper focus and speed on this application.”

{mosads}The letter, dated March 1, was first reported by Alaska Public Media.

Imposing block grants in Medicaid has long been a major conservative goal, and the controversial idea was included in many of the ObamaCare repeal and replace debates. Republicans say policies such as block grants allow for more state flexibility and are more fiscally sustainable.

No states have applied for block grants, but administration officials are working on guidance or a regulation that would streamline the process and encourage more states to sign up.

The move would come through an existing program that allows states to make changes, known as 1115 waivers, to the Medicaid program.

A block grant would transform Medicaid from an open-ended entitlement program into one with capped benefits. Currently, the federal government matches a certain percentage of state spending, and the funding is open-ended. In exchange, states agree to cover specific services and specific types of recipients.

Under a block grant, states would receive a fixed amount of money from the federal government, regardless of outside circumstances, that they could spend however they see fit.

Health groups, however, argue block grants would result in Medicaid cuts, especially in years in which states have unexpected spending, such as when natural disasters strike. Depending on how the block grant is designed, it could also run into legal problems, based on coverage requirements.

Health and Human Services Secretary Alex Azar has also been quietly trying to sell states on the merits of imposing block grants, or a per-person spending cap, without congressional approval.