Medicaid Block Grants

Where We Stand

NAMI believes that health insurance should provide comprehensive mental health and substance use disorder coverage without arbitrary limits on treatment. NAMI opposes block grants or per-capita caps in Medicaid, which impose financing limits that jeopardize coverage and services for individuals with mental health conditions.

Why We Care

Access to coverage and care is essential for people with mental illness to successfully manage their condition and get on a path of recovery. Medicaid is the lifeline for much of that care as the nation’s largest payer of mental health services, providing health coverage to more than one in four adults with a serious mental illness. Through Medicaid coverage, people with mental health conditions can access critical services like therapy, inpatient treatment, and prescription medications.

Currently, the federal government pays at least half the amount a state spends on Medicaid — no matter what that amount is. To get federal matching, states agree to certain benefits and standards in their program to protect the health of anyone enrolled in Medicaid. Alternatively, with a block grant, federal spending is capped — leaving states on the hook for extra, unexpected costs that occur when more people are eligible for Medicaid health coverage. These unexpected costs can happen because of population growth, a recession (when people lose their jobs and their employer-sponsored coverage), or other events, like a natural disaster. With a block grant, because the federal contribution is capped, states may choose to reduce the level of benefits, eliminate services, pay providers less, or restrict eligibility to balance their budget. Such changes can reduce access to care for people with mental illness.

Over the past 40 years, Congress has repeatedly rejected efforts to block grant the Medicaid program — in 1981, 1995, 2004, and most recently in 2017. Yet, in January 2020, CMS released guidance that would allow states the option to use a block grant to cover certain individuals within their Medicaid program — in particular, adults with low incomes who are not disabled or elderly. NAMI opposes this option and will work to educate states on the dangers of moving forward with such a proposal.

How We Talk About It

• About one in five adults in the United States have a mental health condition.
• Access to health care coverage and mental health care is essential for people with mental illness to successfully manage their condition.
• Medicaid is critical to helping people with mental health conditions, providing health coverage to more than one in four adults with a serious mental illness.
• A new opportunity for states to apply for block grants in their Medicaid program could impact mental health benefits for many Americans.
• Block grants, by design, are intended to limit federal funding.
• Capping Medicaid with a block grant (a fixed amount of federal funding) may sound reasonable, but with limited federal funding, states could be forced to balance their budgets by dropping people from coverage and reducing mental health services.
• If a state is approved to receive a block grant for part of their Medicaid program, the state could limit some health benefits and coverage for medications — making it even more challenging to see a therapist or afford a prescription.
• All of this will make it harder for people with mental illness to access the care they need.
• And short-changing mental health care will shift costs to communities by pushing people with mental illness into costly emergency rooms, hospitals, and jails.
• NAMI urges states to focus on providing the best possible care for people with mental illness and to reject options to block grant the Medicaid program.

What We’ve Done

• NAMI letter opposing Medicaid block grant guidance
• NAMI submits comments on individual state proposals to block grant Medicaid. These comments are available by request.