Trump and Congress have plans to remake Medicaid, food stamps and rental assistance
Switching from federal entitlements to state block grants could restrict services and increase waits
Nearly two years ago Abby Holmes and her husband Jeremiah left their home and jobs in Brooklyn for Columbus, Ohio.
Between 45% rent hikes and hyper-competitive hunts for a preschool for their son, the couple were ready to leave behind the big city life.
In Columbus they had extended family, affordable rent and, they hoped, the promise of an easier life. But a little over a year after moving, the couple has struggled to find full-time work. Last year, they made about $26,000, which was hardly enough to support the family of four.
They’ve counted on government-funded Medicaid to cover doctor’s visits, medications and the birth of their second child, Eli. Her family hasn’t needed it yet, but Abby knows they could also turn to food assistance and other benefit programs.
Their situation isn’t the only thing that’s changed in the last year.
The Trump administration and Congress have signaled sweeping plans to remake programs that affect the Holmes’ and millions of other families. Medicaid, food stamps and rental assistance are among them. These families could find themselves losing the help they depend on to visit doctors, stay in their homes or put healthy food on the table.
“We would have to regroup in an entire new way,” Abby Holmes said of losing Medicaid. “I would be forced to look for full-time work. My kids would see me less … and our take-home pay would not change because all of that new money would have to go for healthcare, so it is kind of a lose-lose. … We’re living paycheck to paycheck as it is.”
While Republican leaders failed to repeal and replace the Affordable Care Act in March, President Trump’s administration has vowed to cut billions in federal poverty and health care programs and his secretary of Health and Human Services has promised to give states more control over social programs, which typically means budget cuts and diminished regulation.
How successful the Republican party will be in reshaping decades of social safety net programs is unclear as the party is deeply divided. President Trump promised during the campaign to “save” programs such as Medicaid “without cuts,” but has since changed his position since the election.
A Republican-led Congress and the White House now appear aligned and eager to make the most drastic changes in generations to federal entitlement programs that help those in need.
Where are safety net cuts most likely?
The programs most likely to face cuts are Medicaid and SNAP, a nutrition program that provides healthy food for families, housing vouchers and home energy assistance. Changing these programs from federal to state control could create a patchwork of programs that can be confusing and hard to access because of changing eligibility requirements.
Some estimate the changes could eventually cut as much as 30% to 40% from the multi-billion-dollar budget for Medicaid, while changes to food stamp programs and the health insurance rules might make it harder for families to afford groceries or visits to the doctor.
Medicaid covers 70 million low-income children, pregnant women, adults, seniors and people with disabilities, and SNAP helps 43 million people put food on the table.
But the GOP has signaled its intention to shift them from being open-ended entitlements to more-restricted block, or per capita, grants.
Entitlements are unlimited reimbursements to states that expand to cover anyone eligible for help during times of need, such as a recession or disaster. However, block grants function like an annual allowance: The federal government offers states a fixed amount for program funding and states decide how to use that money. If there’s more demand for social services, states must make up the difference or cut benefits.
Congressional Republicans proposed block grant plans in their budgets last year and Trump discussed them during the campaign. In a March letter to state governors (PDF), Tom Price, head of the Department of Health and Human Services, promised to give states “more freedom to design programs that meet the spectrum of diverse needs.”
Block grant reforms “end the misguided one-size-fits-all approach that has tied the hands of so many state governments,” said House Speaker Paul Ryan in a statement on his website. “States will no longer be shackled by federally determined program requirements and enrollment criteria.”
Beyond just state budgets, block grants can also change the way the programs work. Government leaders could, for example, institute requirements that Medicaid recipients have jobs, end federal rules that states pay for programs to help pregnant mothers quit smoking, or create a wait list for insurance.
“We would go from a scenario where the government helps to guarantee access to certain levels of benefits to support kids and families, to a ‘you’re on your own, first-come-first-served’ scenario,” said Kelly Hardy, senior managing director for health policy at Children Now, a California advocacy group.
Pushing for change
Republican and conservative thinkers have pushed to turn entitlement programs into block grants for decades. Ryan, 47, famously said in March that he’d been “dreaming” of cutting Medicaid since he was “drinking out of a keg.”
They argue that the free-spending entitlement approach to poverty and social services hasn’t succeeded. The nation’s poverty rate hasn’t changed dramatically since the 1970s, when programs like SNAP and Medicaid were first introduced and the percentage of children in poverty hasn’t declined since 1970, five years after Medicaid and other “War on Poverty” welfare programs were first signed into law.
“We don’t know what works best,” said Michael Tanner, a senior fellow at the conservative Cato Institute. “But we know what we’re doing isn’t working. Experimentation seems like a good idea.”
That flexibility of block grants could let states tailor social service programs to the needs of their residents, supporters argue.
For example, under block grants, states could combine nutritional benefit money with healthcare funds to offer people at risk of obesity intense nutritional counseling early in life, before they require expensive treatment for diabetes or heart disease, said Tom Miller, a resident fellow at the American Enterprise Institute, a conservative think-tank that has pushed block-grant programs.
“We tend to put things in silos,” Miller said of the social safety net. “If your focus is on improving people’s health you would think about what could be rearranged. How do we best assist the person in front of us, if you could reshape it and bundle together what the government is offering? Maybe housing is the thing that is going to make them healthy, not another doctor visit.”
Miller pointed to a 2015 study by the Robert Wood Johnson Foundation that gave disabled people on Medicaid cash allowances to spend money on in-home health services they thought they needed instead of trying to file for benefit programs. The study found that issuing cash allowances cost the government slightly more, but only because people more easily accessed the help they were entitled to in the first place.
“States are the 50 experiments, the labs of democracy,” said Tanner of the Cato Institute. “Right now we treat everything as an identical cookie cutter, but maybe a state wants to focus on housing, or the universal basic income, or increasing work requirements.”
Doing more with less
But critics say the talk of innovation distracts from the fact that block grants reduce federal spending.
“Having looked at these proposals, it seems easy to determine that the decision that will be left to the states will be how to deal with less federal money,” said Matt Broaddus, a research analyst at the Center on Budget and Policy Priorities, a nonpartisan think-tank that specializes in welfare policy.
In West Virginia, where 53% of children are covered by Medicaid, a shift to per capita or lump sum block grants could leave state leaders with a $4 to $7 billion shortfall in federal spending over 10 years, a study by the nonpartisfan Urban Institute found.
“If that happens, then we have to figure out where to cut,” said Renate Pore, interim executive director of West Virginians for Affordable Health Care. “Are they going to cut services, like dental care? Are they going to reduce the number of people eligible? People will have coverage that is less affordable, especially children.”
“These are all bad choices,” Pore added.b
Dr. Lynda Young, a primary care pediatrician in Worcester, Massachusetts, said that if Medicaid funding was reduced, fewer doctors might treat Medicaid patients and parents could find it harder and more expensive to bring their children to the doctor.
“When the money is gone, what is going to happen to the kids?” she asked. “They don’t come for routine care, so we’re talking about their general development and health. We look at lead when they come in, we look at anemia, we look at making sure they have enough to eat.”
In Ohio, parents like Abby Holmes might find themselves without coverage while their children have less Medicaid coverage than they did before. Under Republican plans, Ohio could lose $22 to $40 billion in federal health funding from 2019 to 2028, according to the Urban Institute.
And while block grants may promise states a reasonable amount of money when first implemented, studies have shown that over time other social safety net block grants for housing and health insurance don’t grow to account for inflation, rising costs or population changes, leaving states with less spending power each year.
The Center on Budget and Policy Priorities studied 13 federal block grants for programs like child care, substance abuse and maternal health and found that between 2000 and 2016, federal funding fell an average of 26%. Few states could make up the shortfalls and instead reduced benefits or cut people from the programs.
In California, where 42% of children are covered by the state’s Medi-Cal program, families could be forced to spend months on waiting lists before they get coverage.
“We’ve done this before,” said Hardy of Children Now, referring to of earlier California budget cuts. “At one point we had 90,000 kids on a waitlist for a program that overall had a million kids in it.”
Cutting additional programs
While cuts to Medicaid would be the largest and most dramatic changes to federal entitlements under the new Republican plans, they would also potentially cut millions of dollars for the federal government’s food stamp entitlement program, which covers 43 million low-income Americans, almost 70% of whom are families with children.
The Supplemental Nutrition Assistance Program, called SNAP, functions much the same way a Medicaid entitlement does: Anyone eligible for the benefit will be covered and the federal government will reimburse states. But the program could be shifted to block grants, providing a fixed amount of money to states for those who need help buying food.
“Let’s assume the block-grant funding” stays flat, said Stacy Dean, vice president for food assistance policy at the Center on Budget and Policy Priorities. “That means that SNAP can’t expand to meet needs if a state or even a community experiences a downturn, say if a plant closes.”
Like Medicaid, cuts to SNAP could mean fewer people would be eligible for benefits or might have to wait longer to receive them.
“It becomes a real tension when benefits are cut, because SNAP is part of the household budget” Dean said. “At some point you’re going to give up your house rather than allow your kids to go hungry.”
Another program that could be changed to a block grant is Social Security Income, which provides as much as $733 a month in cash assistance to 8.4 million poor and disabled people, including 1.3 million disabled or blind children. Many of the children who receive SSI live with a single parent and receive special education.
Under block grants, states could make it harder for parents with disabled children to receive benefits or could cut the monthly amount of money they receive.
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While Trump and Ryan have made clear they hope to reduce federal spending by reforming Medicaid and rolling back the expansion of other programs that support children, the cost savings now could lead to higher expenses a few decades from now, advocates said. Children who have grown up without healthy food or easy access to doctors struggle with chronic, expensive health problems for the rest of their lives.
“As people grow up without adequate medical care, that really is a big problem,” said Marcia Lowry, head of A Better Childhood, which advocates for abused and neglected children. “It is going to have a big impact on the population, especially the poor population, as they grow up.”