HHS Nominee: ‘Devil’s in the Details’ of Medicaid Block Grants

President Trump’s pick to lead the Department of Health and Human Services on Tuesday again expressed some support for the idea of converting Medicaid to a block-grant program, though he cautioned that any solution is still far in the future.

Testifying before the Senate Finance Committee, Alex Azar said he can “find a lot of appeal” in block grants, which would replace the current open-ended federal funding structure with a single annual lump-sum payment that states could then disburse as they saw fit.

Still, Azar — the former president of drug manufacturer Lilly USA and deputy HHS secretary under President George W. Bush — emphasized that any final determination on Medicaid funding would come from Congress, and not HHS.


“The devil’s in the details in how one structures the notion of any type of block grant, both in terms of the dollar amounts, and then what strings from the federal government are attached to it — in terms of who needs to be covered, who’s eligible but not necessary to cover,” Azar said. “That all would need to be worked out in legislation, which we’re certainly far from.”

The nominee was responding to a question from Sen. Ron Wyden, who referenced Azar’s previous testimony on Medicaid block grants before the Senate Committee on Health, Education, Labor and Pensions back in November.

“I have actually said before that looking at block granting, and empowering states to be fiscal stewards, can be an effective approach,” Azar said during that hearing.


“I support it as a concept to look at,” he said. “One needs to look at block granting as an abstract.”

Wyden, a Democrat from Oregon, framed Azar’s support for block grants as an attack on nursing home services, pointing out that about two-thirds of residents at skilled nursing facilities receive coverage through Medicaid.

“Would you like to walk back your earlier position with respect to that commitment to older people — who fought the wars and did everything right — that they’re still going to have a guarantee of nursing home coverage?” Wyden asked.

Block grants made headlines last summer, when they formed a key part of the Republican-led plan to repeal the Affordable Care Act. GOP leaders in both the Senate and the House explored using either block grants of per-capita caps — which call for a set amount of per-enrollee spending — to curb Medicaid spending. Under those proposals, Medicaid would have seen funding cuts of about $800 billion through 2026, with tens of millions of Americans coming off the Medicaid rolls entirely.

Outrage over the Medicaid cuts helped to doom the ACA repeal efforts, with a handful of Republicans defecting from the majority in the Senate.

The president nominated Azar to replace former HHS secretary Tom Price, who resigned in September amid a scandal involving his use of private jets at taxpayer expense. Azar has received support from key skilled nursing industry groups including the American Health Care Association and LeadingAge, with AHCA president and CEO Mark Parkinson calling the nominee a “respected and experienced leader.”

Written by Alex Spanko

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