1 of 8Start
Block grants give money for federal programs directly to states. Conservatives tend to like them because they prioritize local control, but they also lack accountability and lose value over time.
2 of 8
What is a block grant?
A block grant is essentially a pot of money that the federal government gives to state governments to administer a program. Under a federally guaranteed program,Supplemental Assistance for Needy Families (SNAP, formerly known as food stamps), Medicaid, Medicare, and Social Security are all guaranteed programs (often called entitlements). In some case, such as SNAP, the federal government fully funds the program, and states only share the cost of administering it. In other cases, such as Medicaid, the federal government provides the majority of funding. the federal government pays a fixed percentage of the program’s cost each year. But under a block-granted program, the federal government sets aside a capped dollar amount for the states. That means even if the cost of a program changes (because of inflation or because more people need the service it provides), the amount of money available for it does not increase.
3 of 8
Isn’t state and local control more effective?
That’s the most common argument in favor of block grants, but it’s not true. Most block grants have few accountability measures that keep track of how states spend block-granted money. As a result, block grants often become slush funds that states use for a variety of other purposes—such as filling budget gaps—rather than spending the money on the program it was intended for.
Take the program created under the 1996 “welfare reform” law, Temporary Assistance for Needy Families (TANF), for example. Largely because of lack of accountability, just 1 out of every 4 TANF dollars goes to income assistance for families with kids today. That means people who are eligible for the program often don’t get the help that they need. In Mississippi—the poorest state in the country—nearly every single TANF applicant is rejected.
4 of 8
So what are some examples of block grants?
Perhaps the most well-known block grant (and the one Paul Ryan wants to use as a model for other programs) is TANF. The law converted a cash assistance program known as Aid to Families with Dependent Children (AFDC) into a block grant now known as Temporary Assistance for Needy Families (TANF). Since the funding is set at a fixed dollar amount, it has helped fewer and fewer families over the years—down from supporting two-thirds of eligible families in 1996 to just one-quarter of eligible families today. (For more on how and why that happened, see our explainer on TANF.)
Other significant block grants include the Social Services Block Grant (SSBG), the Community Services Block Grant (CSBG) and the Community Development Block Grant (CDBG). Ironically, these programs have long been targets for elimination by conservatives, who claim they’re not accountable enough. Donald Trump’s most recent budget, for example, calls for full elimination of CDBG—which helps fund things like affordable housing, Meals on Wheels, and natural disaster recovery.
Conservatives will often support block-granting federally guaranteed programs, thereby making them less accountable, and then support eliminating block granted programs precisely because they are not accountable. Rinse and repeat.
5 of 8
What programs are at risk of becoming block grants?
The two highest risk programs are Medicaid and SNAP (Supplemental Nutrition Assistance Program, formerly known as food stamps).
Dating back to at least the Reagan Administration, Republicans have sought to end the federal guarantees in Medicaid and SNAP. Block-granting Medicaid was a centerpiece of George W. Bush’s 2004 budget proposal and both programs have been favorite targets of House Republican budgets in recent years.
While the Republican plan to repeal the Affordable Care Act, “The American Health Care Act,” uses a different method to cut Medicaid benefits (known as “per capita caps”), the results would be similar to those of a block grant. That plan would take away Medicaid coverage for 14 million people by 2026.
6 of 8
What would block grants mean for Medicaid?
Block granting Medicaid would radically transform the Medicaid system. Under outlines released by Republicans, states would get a fixed amount of money based on total Medicaid spending in their state. The funding would change only slightly with inflation.
The problem is that health care price inflation is increasing faster than inflation across the economy. When the Urban Institute analyzed an earlier block grant proposal from Speaker Ryan, they found that up to 21 million people would lose Medicaid coverage—that’s more than a third of all Medicaid beneficiaries. And because of rising costs, the longer a block grant is in place, the larger the cuts would become.
7 of 8
What would block grants mean for SNAP?
Block granting SNAP would eliminate a basic living standard all Americans expect—the ability to put food on the table for their families. First and foremost, SNAP would no longer be responsive to economic downturns like the Great Recession. The cutbacks in hours and widespread layoffs of the recession caused more people to turn to SNAP, and because SNAP is a guaranteed program, the federal government automatically funded the increase. But block grants would leave states to fend for themselves during periods of increased need. As the Center on Budget and Policy Priorities points out, if Congress had block granted SNAP before the Great Recession, its funding would have been cut in half by 2013—likely jeopardizing nutrition assistance for millions.
And, unlike Medicaid, cuts to SNAP would kick in as soon as the block grant takes effect. In a recent budget, House Republicans proposed cutting SNAP by $125 billion in the first 5 years of the block grant. This would cost approximately 10 million people nutrition assistance in just 5 years.
8 of 8
Where can I learn more?
Jeremy Slevin and Rebecca Vallas wrote a helpful explainer on TANF after the 20th anniversary of the 1996 “welfare reform” law last year.
The Center on Budget and Policy Priorities has a great explainer on what block granting would mean for SNAP.
Kaiser Health News has their own helpful explainer specifically focused on Medicaid.
For a broader historical (if a little dated) overview of block grants, read the Urban Institute’s 2004 report.