Converting the medicaid program to a block-grant would actually put more pressure on state budgets than the current reduced funding partnership with the states as health care cost rise with the growth of the older population.
Funding for housing, health, and social services block grants has fallen significantly over time, an examination of several decades of budget data demonstrates. This is a red flag, since Congress may soon consider proposals to convert more programs into block grants. This includes programs that serve families and individuals who are low income or otherwise vulnerable, such as Medicaid, which President Trump and some Republicans in Congress have called for block-granting.
Since 2000, overall funding for the 13 major housing, health, and social services block grant programs in the federal budget has fallen by 27 percent after adjusting for inflation, and by 37 percent after adjusting for inflation and population growth (see Figure 1). Measuring from the year in which each block grant was established in its current form, ten of the 13 block grants have shrunk in inflation-adjusted terms — four of them by more than half. All but one of these block grants have shrunk after adjusting for both inflation and population growth. The largest block grant program examined here, Temporary Assistance for Needy Families (TANF), has lost a third of its value due to inflation, and the amount of basic assistance it provides has fallen even more as states have used their added flexibility under the block grant to shift funds to other purposes.
– Center on Budget and Policy Priorities