The initiative, called the Healthy Adult Opportunity (HAO) initiative, would allow states to submit a Section 1115 waiver to implement a block grant or per capita cap alternative for certain Medicaid populations while being granted increased flexibility to administer their Medicaid program. Many Republicans have long supported the idea of Medicaid block grants as a way to allow more state flexibility while controlling federal spending.
Democrats traditionally worry that it could lead to reduced access and services. In the lead-up to the announcement, a group of House Democrats sent a letter to the Administration warning that “guidance providing states a roadmap to obtain Medicaid block grant waivers not only defies Congress and the federal Medicaid statute but if implemented, will threaten healthcare for millions of individuals.” Many legal experts have questioned whether the Centers for Medicare and Medicaid Services (CMS) has the authority to implement block grants, and the proposal is sure to face legal challenges if granted to any state.
Ultimately, the initiative creates only an option for states to pursue. It is not a mandate, and states must pursue the waiver to implement a block grant or per capita cap for this initiative to move forward. Oklahoma Governor Kevin Stitt (R) has already announced that his state plans to submit an HAO waiver. It remains to be seen which other states, specifically non-expansion states, will pursue this initiative.
A more detailed analysis of the Medicaid block grant proposal can be found in this McDermott+ Insight article.
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