Welfare Reform Offers a Window Into Block-Granting Medicaid

Republicans want to do with health care what they already did with cash assistance for the poor. There are lessons to be learned.

Most Republicans in Congress want to turn Medicaid into a block grant program. That may not happen, but the possibility is real enough that it’s worth thinking about how such a massive change might play out. One way to do that is to think back to the last time Congress converted a federal-state entitlement into a flat block grant to states.

The 1996 welfare reform law ended cash assistance for the poor as an entitlement, as was suggested by the program’s new name, Temporary Assistance for Needy Families (TANF). The new law set a time limit for eligibility and also set up work requirements. With the program turned into a block grant, states enjoyed new flexibility for redesigning their programs. Many copied the efforts of states that had already received federal permission to experiment, most notably Wisconsin.

There’s no question that block-granting welfare succeeded in lowering caseloads. By 2006, the public assistance program had 10 million fewer recipients than in 1996, a drop of well more than half. Some of that was due to improvements in the economy, but declining welfare rolls became an annual occurrence, regardless of the economic climate in a given year. The percentage of single mothers who were working increased dramatically.

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