With the start of the new Congress and new Administration, healthcare policy is on the front burner in Washington. The future is very uncertain, and the stakes are high. Healthcare touches all of us and affects nearly 20% of the U.S. economy. AARP is very focused on making sure any healthcare reforms protect older Americans and their families, particularly from rising costs that push many to the brink. We are especially concerned about plans for Medicaid, which provides healthcare and long-term services and support coverage for millions of Americans, including 17.4 million low-income seniors and people of all ages who have disabilities.
For these individuals and their families, Medicaid is a vital lifeline. Without it, they would not be able to afford healthcare, nursing home care, or the help they need to live independently in their homes and communities. Because they have chronic conditions or disabilities, many need ongoing assistance for life’s daily tasks—such as eating, bathing, dressing—as well as support managing medications, getting to and from doctor’s appointments, and more.
Many people think Medicare covers this kind of long-term care. It doesn’t. In fact, Medicaid is the main source of funding for this kind of support.
To be sure, Medicaid is complicated. It’s a federal-state partnership where states provide a package of services to qualified individuals based on federal guidelines. Today, everyone who meets the criteria knows that their healthcare will be covered. In return, the federal government picks up part of the tab, sharing the actual cost of services with the states. The cost-sharing formulas and other details are very complex, but that’s it in a nutshell.
The problem with block grants
One of the proposals on the table in Congress is to “block grant” the Medicaid program—that’s Washington-speak for providing each state with a fixed sum of money and significantly fewer, if any, restrictions or guidelines on how they spend it.
There are a number of problems with that approach.
First, if the federal government decides in advance how much money to send out to states, there’s a good chance that, at the end of the day, it won’t be enough to cover actual costs. Things like rising healthcare costs, more people who need Medicaid assistance because of an economic downturn, or emerging acute health needs like the Zika outbreak or opioid addiction are hard to predict ahead of time. So what happens if the federal outlay is insufficient? States would need to cover the difference out of their own coffers or cut services to those most in need.
And, a block grant approach means that individuals who currently are guaranteed access to care—for example, an older American of modest means with Alzheimer’s or a child with a severe disability—would no longer have the assurance that their needs would be covered.
That’s why AARP opposes block granting Medicaid.
“It would end the individual guarantee of coverage and cut services for America’s most vulnerable citizens while shifting a lot more cost of providing care to states and their taxpayers.”
As Congress considers changes to Medicaid, one common-sense approach is to give states more flexibility under the program to provide home and community-based services—things like home care aides, durable medical equipment, and adult day-care—without a lot of red tape and restrictions, the same way they currently provide nursing home care. Our AARP surveys show that 90% of older adults want to stay in their own homes and communities as they age. We also know that providing home and community-based services is cost effective. On average, the per person cost of services delivered in homes and communities under Medicaid is one-third the cost of institutional care. This seems like a win-win; a way to help people the way they want to be helped while reducing overall costs.