If the only consideration is lowering the federal Medicaid budget line item, block granting Medicaid or capping it will do that. It is not going to get to the "root cause" of Medicaid growth which is need. Further, it is pretty tortured logic to think that reducing the Federal contribution is going to result in greater reimbursement to Medicaid providers. Block granting was a disaster for mental health under SAMHSA [Substance Abuse & Mental Health Services Administration]. Under President Ronald Reagan in 1981, the Omnibus Budget Reconciliation Act repealed President Carter's community health legislation and established block grants for the states. Federal mental-health spending decreased by 30 percent. http://www.motherjones.com/politics/2013/04/timeline-mental-health-america Two big drivers of Medicaid costs and also great need are:
Long Term Care, and
We need to be investing even more in dementia and mental health research with possibly some collaborations with CMS to safely lower costs with better treatments rather than arbitrary fiats. [Of course, Congress also just passed the Cures Bill].