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Block Grants

ALBUQUERQUE, N.M. — George W. Bush and Congressman Paul Ryan both proposed ending the existing Medicaid funding formula and going to a block-grant approach. The Center on Budget and Policy Priorities estimates that approach would have reduced federal funding in New Mexico by 49 percent between 2001 and 2010 had block granting been in effect.

Medicaid is a program designed to provide health care coverage for low-income citizens. The majority of recipients are children. Most of the rest are elderly and disabled people.

The federal government establishes coverage guidelines that states must follow and pays a share of the costs. In New Mexico, the federal share is substantial. It has been as much as 75 percent, but the state’s improving economy, measured by improving per capita income, has brought the federal share down to about 70 percent lately.

A block grant program would mean the states would receive some amount of money from the federal government and spend it how ever they want. Ryan’s plan would reduce federal Medicaid funding by $810 billion over 10 years. His budget proposal from last year said the grant would be based on each state’s federal funding in some base year. That funding would then increase with inflation and population.

The idea is that the federal government would spend less on health care for the poor and states would have more flexibility to deliver care in any way they choose to whomever they choose. States wishing to maintain coverage at historic rates would have to come up with any extra money they require on their own. Alternatively, they could cover fewer people. CBPP says the Urban Institute estimates that states would respond by cutting millions of people from the Medicaid rolls.

Today Medicaid is an entitlement, by which it is meant that if a citizen meets certain criteria the state has no choice but to enroll him. States are allowed to expand coverage to include people the federal government does not require to be enrolled, and New Mexico has done that. However, states can’t make enrollment more restrictive than the federal government allows.


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