Summary

Low- and moderate-income expectant mothers, their infants, and children with special health care needs are the intended beneficiaries of Maternal and Child Health Services block grants. This important federal program helps states deliver basic health care services, like prenatal and postpartum care, to those who might otherwise do without. GAO examined the current formula under which program funding--$453 million in fiscal year 1990--is allocated among the 50 states and the District of Columbia. Its recommendation is that Congress adopt a formula that distributes state funding according to the following three factors: concentration of children at risk, costs of providing health care services, and states' ability to finance maternal and child health services. In redesigning the formula, however, Congress will need to strike a balance between equity for beneficiaries and state taxpayers. GAO's weighing of these two concerns in its example of a new allocation formula shows one way Congress' preferences could be implemented.

GAO noted that: (1) the adoption of a formula that balances the beneficiary equity standard and the taxpayer equity standard could substantially improve MCH program equity; and (2) it developed a formula that would redistribute $80.4 million, increasing grants for 26 states and decreasing grants for the 25 remaining states. GAO found that: (1) the current MCH allocation method does not compensate states for their varying concentrations of children at risk or take into account the differences in health care costs from state to state; and (2) in some cases, MCH funding actually runs counter to the two equity standards, because the current fund distribution method directs more aid to states with lower concentrations of low-birthweight babies than to those with higher concentrations. GAO also noted that: (1) it developed two alternative methods for phasing in its new MCH formula; (2) under the first alternative, the overall MCH appropriation would remain the same and the portion of MCH funds distributed under the existing allocation method would be reduced; and (3) under the second alternative, Congress would increase overall MCH appropriations so that the new formula could be phased in without reducing funds currently going to individual states.