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.