Proposed Medicaid Funding Changes Could Lead To Medi-Cal Cuts

President Donald Trump and his administration want to turn Medicaid into a block grant program, which means the federal government would give California a fixed amount of funding for Medi-Cal, the state’s version of Medicaid.

Currently, the federal government covers 50 percent of the state’s Medi-Cal cost and 95 percent for Medi-Cal expansion.

Edwin Park, vice president for Health Policy at the Center on Budget and Policy Priorities, says block grants reduce federal Medicaid spending and shift costs to states.   

“If states exceed their cap, states are responsible for 100 percent of Medicaid cost above that cap, whether it’s a cap on the whole program under a block grant or a cap on a per beneficiary basis, under a per capita cap,” he says.

While proponents of block grants argue that states would have more flexibility to innovate and reduce costs, Park says states would likely have to raise taxes, or make cuts to their budget to offset funding reductions.

Park says when costs rise faster than expected, cuts are more likely to occur, which could result in cuts to eligibility, benefits and provider payments.

“On top of repeal of Medicaid expansion, another 14 to 21 million Medicaid beneficiaries nationwide would lose coverage and likely end up uninsured,” Park says.

In California, one-third of residents are enrolled in Medi-Cal.

The $100 billion program receives $66.8 billion from the federal government but under a repeal, the state would lose $17.3 billion for Medi-Cal.