Conway: Obamacare replacement includes Medicaid block grants

Story highlights

  • The Trump administration's plans to replace Obamacare involve block granting Medicaid funds
  • That strategy is based on comments made by a key Donald Trump aide on Sunday

(CNN)Senior Donald Trump adviser Kellyanne Conway said Sunday part of the new administration's plans for repealing and replacing Obamacare would include converting federal funds for Medicaid into block grants to states.

"The replacement plans, I think everybody knows what some of the contours are now," Conway said on NBC's "Sunday Today" show. "Block grant Medicaid to the states, so people who are closest to those in need through Medicaid -- which guarantees health insurance to the poor -- that they will -- that those who are closest to the people in need are really administering it. You really cut out the fraud, waste, and abuse, and you really help directly to them."
Block granting Medicaid funds to states has long been a popular reform among conservatives, but it's a polarizing proposal that would mean a dramatic change in the way the program is funded. Block grants could allow states more flexibility in the way they spend Medicaid funds, but also create a number of additional problems -- how to determine the amount of money each state receives, how to account for changes in enrollment during economic downturns, and how to regulate the way that states spend the funds.
Progressive critics have also expressed concern that budget hawks would target block grants to cut federal health care spending at the expense of low income enrollees.
Conway's comments are consistent with what Trump had said as a presidential candidate. Throughout his 2016 campaign, he championed turning much of the program over to the states. Instead of funding the program through a federal match based on enrollment, Trump would give states a fixed amount of money, known as a block grant, and let them administer it. His presidential transition platform calls for maximizing state flexibility, enabling them "to experiment with innovative methods to deliver healthcare to our low-income citizens."
Here's how Medicaid works now:
Nearly 73 million Americans are enrolled on Medicaid or the related Children's Health Insurance Program. The programs cost $509 billion in fiscal year 2015, with the federal government shouldering 62% of the bill and states paying 38%.
Most enrollees are low-income children, pregnant women, parents, the disabled and the elderly. Under Obamacare, low-income adults with incomes of up to 138% of the poverty line -- $16,400 for a single person -- were allowed to sign up in states that opted to expand their Medicaid programs. So far, 31 states, plus the District of Columbia, have done so, adding about 15.7 million more people to the rolls since late 2013, just before the provision took effect. (This figure includes both those newly eligible under expansion and those who always met the criteria.)
Capping federal funding is also popular among Republicans on Capitol Hill. House Speaker Paul Ryan would let states choose whether they want to receive a block grant or what's known as a per-capita allotment, which would provide a fixed sum based on enrollment. He would also slow the annual rate of growth of funding.