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The Healthy Adult Opportunity gives states the opportunity to apply for block grants, which would cap the amount of federal funding they receive to fund Medicaid.

Remember when President Trump said he wouldn’t cut Medicaid

The Centers for Medicare and Medicaid Services (CMS) released a new guidance on Thursday that aims to curb government spending and give states more flexibility in the way they manage their Medicaid programs. The new initiative—dubbed the Healthy Adult Opportunity—offers states the opportunity to use, according to the guidance, “an aggregate or per-capita cap financing model for certain populations without being required to comply with a list of Medicaid provisions identified by CMS.” 

In other words, these Medicaid block grants—which have garnered more support from conservatives in recent years—would limit how much money the federal government distributes for Medicaid spending instead of being open-ended as it has always been.

“CMS recognizes that states, as administrators of the program, are in the best position to assess the needs of their respective Medicaid-eligible populations and to drive reforms that result in better health outcomes,” the guidance states.

The move is an effort to curb Medicaid spending, which has increased since the Affordable Care Act gave states the option to expand eligibility to more healthy, working-age adults. Traditional populations who obtain care through the public program—such as children and people with disabilities—would not be eligible for capped payments. 

Patient advocacy groups say changing the way the largest health insurance program in the U.S. is financed will ultimately hurt families.

Twenty-seven patient and consumer groups, including the National Alliance on Mental Illness, the American Lung Association, the Chronic Disease Coalition, reiterated their opposition in a statement released Thursday. The group also sent a letter to CMS last summer, where they point out that any system designed to cap spending will force states to make cuts to their programs and ultimately limit health benefits. 

“As the gap between the capped allotment and actual costs of patient care increases over time, states will likely limit enrollment, reduce benefits, lower provider payments or increase cost-sharing for patients,” the letter states. “Simply put, block grants and per capita caps will reduce access to quality and affordable health care for patients with serious and chronic health conditions and are therefore unacceptable to our organizations.”

“Simply put, block grants and per capita caps will reduce access to quality and affordable health care for patients with serious and chronic health conditions and are therefore unacceptable to our organizations.”

Medicaid, which ensures one in five Americans have access to a broad array of medical and other services, is financed jointly by the federal government and states. It is an immensely popular program that saves lives. Currently, 35 states have voted to expand access to Medicaid under the Affordable Care Act.

Under the current financing structure, the federal government reimburses states for a portion of each dollar spent on services for Medicaid enrollees, which include older adults, people with disabilities, children, families, and low-income adults. This reimbursement model gives states flexibility within the program to respond to an increase in enrollees when major events arise, including epidemics or expensive new drugs and treatment options. 

If a state applies for a waiver to receive a fixed amount of federal money each year instead, however, it would not be able to lean on the federal government for more funding when cost issues arise, according to critics like the Guttmacher Institute

In a news release, CMS administrator Seema Verna said that the Healthy Adult Opportunity would ensure “[v]ulnerable populations” have access to “better care.”

“This opportunity is designed to promote the program’s objectives while furthering its sustainability for current and future beneficiaries, and achieving better health outcomes by increasing the accountability for delivering results,” she said.

Medicaid advocates are expected to challenge the new funding model in court, according to Politico. Additionally, three dozen House Democrats sent a letter to the administration on Wednesday, urging it to not encourage the use of block grants.

National Health Law Program Director of Policy Leo Cuello lambasted the new guidance in a statement, calling it a “desperate” move to overhaul Medicaid and cut health coverage to the people who need it the most.

“And make no mistake,” he added, “these block grants would be devastating for any state that attempts to implement them, and any irresponsible state leader that pursues this policy will be acting against his or her state’s interests—harming the state budget, rural hospitals, state health insurance coverage—and the people who depend on Medicaid for their health insurance coverage.”

The new plan has people like Jeneva Stone worried for the future. Her son Robert, who uses a wheelchair and is non-verbal, has a rare genetic disorder called Dystonia 16. To manage his condition, he relies on several medications and regular costly visits to the doctor. He, like nearly one in three adults under 65, depends on Medicaid to defray the medical costs associated with his disability. 

Although disabled adults are not among the populations that would be affected by block grants, the move is just the latest in the administration’s efforts to cut Medicaid costs. “You can’t trust this administration,” Stone said.