Block grants that are fully funded transfer risks from the federal government which has the deepest and most comprehensive ability to cheaply eat risk due to its ability to borrow and its ability to spread risk across 330 million people to individual states that are severely constrained in their ability to borrow in a crisis. The block grants in Cassidy-Graham are not fully funded so it is a cost shift as well as a risk shift to the states. A new risk to state fiscal capacity in a CG world is happening now:
Hurricane Maria wrecked Puerto Rico:
— ABC News (@ABC) September 22, 2017
over the next several months, “the combination of the financial crisis, the health-care crisis and now these two natural disasters, it’s a recipe for a lot of people to feel that they’re hopeless and they need to come to the [mainland] United States,” said Rep. Nydia M. Velázquez (D-N.Y.), whose Brooklyn-area district has a significant Puerto Rican constituency. Velasquez, who is awaiting news about family members on the island, warned that if legislation addressing the economic problems isn’t coupled with federal hurricane relief , “we’re going to have an unprecedented number of people who will continue to leave the island.”
If Medicaid, Medicaid Expansion and Exchange funding is block granted based on 2014-2017 expenditures and a state receives a significant external population shock like a large migration from Puerto Rico, the number of people who need assistance paying for their healthcare will increase without a concurrent increase in resources. According to Wikipedia, nine states had a higher proportion of residents with ties to Puerto Rico than the US national average. These nine states have 72% of the Puerto Rican population in the states. All nine of these states are net cash flow losers under Cassidy-Graham even without an immigration shock.