Why Block Granting Medicaid and SNAP is a Bad Idea

Jos G. Linn, RESULTS Domestic Outreach Organizer
March 20, 2012

The House Republican FY 2013 budget released today proposes to turn Medicaid and the Supplemental Nutrition Assistance Program (SNAP, aka food stamps) into block grants, just as last year’s Republican budget did. So what is a block grant and why is it a bad idea? A block grant is simply a lump sum grant of money Congress sends to states to use for a specific purpose. RESULTS volunteers are quite familiar with block grants because of our work with the Child Care Development Block Grant (CCDBG), which is a pool of money Congress allocates to the states each year designated for child care assistance. While block grants are appropriate in some cases, when it comes to low-income programs like SNAP and Medicaid, they could be disastrous.

Medicaid and SNAP are entitlement programs. "Entitlement" in this context simply means that if you qualify for services, the government cannot deny you benefits. This contrasts with a program like Head Start, which is not an entitlement program. It receives a fixed amount of money each year and once the money runs out, people can be denied services. This does not occur for SNAP and Medicaid; the government is required to provide food assistance or health benefits as long as the person meets the program eligibility requirements. There are several reasons for this. When these programs were established decades ago, it was because we as a society did not believe that people should go hungry or go without medical care simply because they could not afford it. It was a values choice — by making SNAP and Medicaid entitlements, we ensure that very low-income people won’t go hungry or stay sick.

In additions, SNAP and Medicaid are designed to be counter-cyclical, i.e. they can seamlessly respond to increased need in bad economic times. Conversely, when the economy is good and need decreases, enrollment goes down. SNAP is a great example of this. In the 1990s, enrollment in SNAP fell to its lowest levels in years, bottoming out at an average of 17.1 million people per month in 2000. Because the economy was strong and more people were working, people needed food assistance less. However, as poverty U.S. increased after 2000 and especially after the Great Recession in 2007-08, SNAP now enrolls record numbers, averaging 44.7 million people per month in 2011. Medicaid also saw increases in enrollment as the economy worsened.

Ironically, one of the criticisms of SNAP by House Budget Chairman Paul Ryan (D-WI-1) is that its costs have skyrocketed. That's exactly what is supposed to happen in a bad economy. More people lose jobs, their incomes go down, so they turn to public assistance for help. Because of this, enrollment for safety net programs increases as do the costs of covering more people. The Center on Budget and Policy Priorities estimates that SNAP kept 4.4 million people out of poverty in 2010. What Chairman Ryan seems to ignore is that, when the economy fully recovers and people's income rises, they no longer need public services and costs once again go down.

Block granting SNAP and Medicaid would undo these protections. Transforming these guaranteed benefits to a system where benefits are contingent on a fixed amount of funding each year would inevitably result in cuts to enrollment and services. First, block grant funding would likely fail to increase at the same pace, if at all, as food and health care inflation, thus forcing cuts. We’ve seen this happen with welfare when it was block-granted in the 1990s as the Temporary Assistance for Needy Families Program (TANF). Second, SNAP and Medicaid would also not be able to adequately respond in economic downturns, as they have recently. When more and more people need services but you have a fixed grant of funding that is unlikely to be increased during a recession, people will be turned away to fend for themselves. Finally, states could also be tempted to redirect block grant funds to other areas, putting further strain on already scare resources. As a result, millions of people would fall into poverty with their government essentially abandoning them. This is not the America we want.

There are essentially two types of people in the world. There are those who climb the ladder of success and when they get to the top, they pull the ladder up behind them. Then there are those who climb the ladder of success and when they get to the top, they turn around to offer a hand to the next person. Our success as individuals, as communities, and as a nation is built on those in the second group. We cannot afford to turn our backs now.

TAKE ACTION: Urge members of Congressto reject any plans that try to cut or restructure Medicaid and SNAP into block grants with our online e-mail actions.