This is part 10 in an ongoing series regarding changes in health care that may take place—and actual changes that do take place—with the Trump administration. The likely implementation issues to be encountered for both potential and actual changes are described, based on detailed methods of analysis. The emphasis is on what these shifts mean for legal practices and how attorneys may prepare in the most effective ways.

The version of the American Health Care Act (AHCA) that has been passed by the U.S. House of Representatives makes use of block grants to the states as a way to revise the Medicaid program. Such block grants take place when federally-collected taxpayer funds are transferred to the states with reduced national control over how the funds are spent.

Block grants are based on a belief that states better understand the needs of their residents and can therefore make more appropriate use of the funds. Some planners and policy makers see variations among state programs as desirable and the most effective way to apply funds to meet health care needs.

Equally important, block grants are seen as a way in which program expenses may be capped by limiting grant amounts and encouraging states to adapt to the proposed funding structure.

At present, the Medicaid program is based on extensive federal statutes, regulations and procedures that must be followed by the states (with some variations among state plans and waivers). State-to-state changes must be made within the constraints of federal guidelines.

Such federal requirements allow attorneys to challenge state actions by reference to the established body of federal law that must be given priority. In representing client interests, attorneys often find themselves referring to these overriding federal requirements when seeking to challenge the ways in which clients are being treated.

Medicaid block grants are intended to reduce the federal constraints and therefore will force attorneys to deal with more state-based law and procedures, with less recourse to overarching federal directives. How attorneys react to this situation will help shape program outcomes.

In addition, individuals and organizations in all states will react to shifts and reductions in funding. As we have noted throughout this series, such reactions may be anticipated and interpreted by referring to “lessons learned” from past experiences gained from implementation of the Affordable Care Act (ACA). Several summary comments may be noted for Medicaid block grants:

Reactions will depend on how financial interests are affected. In general, any reductions in available resources will result in negative reactions. The strength of these reactions will depend on the specific interests and perceptions of the individuals and organizations involved in each state. In turn, the impact of these reactions will depend on the  political power of those being affected.

Negative reactions may be reduced when mandates are replaced by options that provide more flexibility for those affected. In-state reactions will be more intense where federal and state rules restrict the ability of individuals and organizations to seek the best solutions available and deal with the circumstances in which they find themselves.

Technical and administrative problems may be reduced by avoiding complex computer systems and large state bureaucracies. Positive reactions are more likely where operations are more flexible.

Standard cost-benefit studies are of limited assistance, since they do not consider how reactions will change both costs and benefits. Caution should be observed when trying to direct activities toward “optimized” solutions.

The economic and social setting of each state will affect program outcomes—timing is everything.

Wherever block grants take effect, state agencies and the legal system may be thrown into turmoil due to a reduced federal legal base for the Medicaid program. Attorney reactions will be important to shaping grant outcomes.

At the same time, reactions by all affected individuals and organizations will help shape results. If planners continue to neglect the reactions by those affected, the outcomes of state programs are likely to be quite different from those expected. Proposed AHCA block grant designs need to be evaluated in these terms.

This post was written by Ferd H. Mitchell and Cheryl C. Mitchell, Thomson Reuters authors and attorney partners at Mitchell Law Office in Spokane, Wash. They are active in elder law and health law practice areas and have been working together on programs and activities on behalf of the elderly and in health care for more than 25 years. During their studies, they have visited and evaluated the health care systems of Japan and several countries in Europe to learn how the needs of the elderly are assessed and met in other countries, and they have been better able to understand the U.S. health care system and related care issues from these visits. More about the lessons learned from the ACA and issues involved in health program changes may be found in the 2017 edition of the authors’ book, Legal Practice Implications of Changes in the Affordable Care Act, Medicare and Medicaid, published by Thomson Reuters. More about these methods of analysis may be found in Mitchell & Mitchell, Adaptive Administration, published by Taylor and Francis. Follow the links below to read previous installments from this series:

Part One

Part Two

Part Three

Part Four

Part Five

Part Six

Part Seven

Part Eight

Part Nine

The views and opinions expressed in this post are those of its authors alone.