Last week, the Trump administration rolled out its waiver program to start providing Medicaid as block grants to states that apply, a program designed to restrict and shrink the program. It puts two powerful industry groups—doctors and the pharmaceutical industry—in strong opposition to the administration.
The drug-makers are angry because the guidance for the waiver would allow states to exclude some prescription drugs from coverage, but still receive the guaranteed drug rebates included in Medicaid. They provide large discounts to Medicaid, and have viewed that as a trade-off that ensures states have to cover all FDA-approved prescription drugs in their Medicaid programs. This is a reversal from previous policy from Trump's Centers for Medicare & Medicaid Services (CMS).
In 2018, it rejected a waiver request from Massachusetts to exclude some drugs from its program and keep the rebates—precisely what it is now going to approve. "This CMS guidance is a complete and arbitrary reversal of the agency's Massachusetts waiver decision 18 months ago and flies in the face of clear statutory requirements and contractual obligations," Pharmaceutical Research and Manufacturers of America CEO Stephen Ubl said in a statement. It also violates federal law and the Medicaid statute with its treatment of prescription drugs. That opens states taking the waiver and CMS up to lawsuits.
The American College of Physicians isn't any happier with the new rule, arguing on more humanitarian grounds because "it will increase the number of people without health insurance coverage for essential health care services. […] Fewer patients will be covered, and those who remain covered will have less access to health care services." The physicians have a financial concern, too, that states will reduce payments to doctors who see Medicaid patients, but ultimately that hurts patients by driving doctors out of the Medicaid program. In the end, it's potentially less access for every Medicaid patient. With another potential public health emergency lurking with the coronavirus spreading from China, the ACP points out that "enacting a cap on Medicaid funding leaves states unprepared to respond quickly to potential public health crises."
The almost certain promise of lawsuits and the strong opposition of industry types lobbying states against taking these block grants could limit the damage the new rule does to the program. Some states might not be willing to take that on.