This post is one in our series of blog posts on the harmful impacts of Medicaid block grants.

Dear State Medicaid Director:

I’m following up on a letter you received from the Centers for Medicare and Medicaid Services (CMS) last month, encouraging you to change the way your state funds health services through Medicaid. Don’t fall for this unprecedented plan, a partisan attack devised to sabotage Medicaid coverage and the Affordable Care Act’s Medicaid expansion through the adoption of Medicaid block grants. We’re still facing a substance use disorders crisis, and more people are dying from drug overdoses than car accidents. Now is the time to strengthen access to life-saving health services – not make access harder.

Why would Medicaid block grants be a bad idea for states?

The way Medicaid is financed now – with the federal government repaying a significant portion of the money your state spends on Medicaid – enables your state to pay for comprehensive health services, including those for substance use disorders. Since states cannot always predict every health need or crisis, the current security of federal financial aid when Medicaid costs increase is a way to protect your state budget and the health services people in your state rely on.   

But under CMS’ suggested block grant plan – instead of the federal financial aid growing and expanding as state Medicaid costs increase – the federal government would give the state a fixed amount for the Medicaid expansion population. Yes, this money comes with some “flexibility” in how it may be spent. But if your state needs more money than the allocated amount to cover costs for comprehensive coverage for people with substance use disorders (or any other important health services) you will need to foot the bill yourselves. There are many reasons why this would be a bad idea for the people in your state – it would strain your state budget and make it harder for people to be healthy. To keep costs low, you’d likely have to restrict eligibility or reduce the services that you pay for. This would lock people out of essential treatment for addiction and other illnesses.

Why are Medicaid block grants especially harmful for people with substance use disorders?

People with addiction need reliable coverage for comprehensive services because symptom recurrence is common, addiction is typically intertwined with other conditions, and the illness affects so many aspects of peoples’ lives. A Medicaid block grant structure means people could be at risk of losing certain life-saving substance use disorders services like essential peer recovery supports, community-based programs, and medicine to combat alcoholism. In addition, Medicaid block grants could allow states to roll back financing for prevention and early intervention services that provide young people with the support they need to live healthy lives.

Who will be hit hardest?

Medicaid block grants will harm low-income families and low-income communities of color in particular. Research shows that the unmet need for addiction treatment is worse for African-American and Latinx populations than for white populations. Cuts to Medicaid and the addition of new barriers to coverage would be worse for communities of color, where access to coverage and treatment for substance use disorders is already limited.

Block grants and other cuts to Medicaid would reverse coverage gains that have been made in communities of color through the ACA’s Medicaid expansion, and have the potential to worsen health disparities between white people and people of color. These disparities are partially a result of the “war on drugs” that continues to jail many people of color, while white people often avoid incarceration for similar substance use, and find it easier to receive treatment services.

What should states do instead?

Conversations around transforming the health system so it works for everyone – particularly people who need it most and have the least – will and should continue. For those of you genuinely committed to tackling addiction, you could use Medicaid waivers to expand supportive housing services, community services, and eligibility for substance use disorders services.

With health care as a top voting issue in the 2020 election cycle, you as State Medicaid directors should be thinking about how to innovate to make the health system better and create healthier communities. But converting to a Medicaid block grant is not the way to go.

It’s hypocritical for the Trump administration and CMS to claim they wants to address the drug overdose crisis while simultaneously incentivizing states to spend less money and cut services, which could prevent people with substance use disorders from getting care.

People are alive right now because of the substance use disorders treatment and recovery services they receive through Medicaid. Masked in “increased flexibility to spend your state dollars,” Medicaid block grants would lead to strained state budgets and weaker Medicaid programs that could jeopardize access to lifesaving recovery services. Don’t block grant your program!


Orla Kennedy, policy analyst

Community Catalyst’s Program on Substance Use Disorders and Justice-Involved Populations