What is a block grant?

A block grant is essentially a pot of money that the federal government gives to state governments to administer a program. Under a federally guaranteed program,Supplemental Assistance for Needy Families (SNAP, formerly known as food stamps), Medicaid, Medicare, and Social Security are all guaranteed programs (often called entitlements).  In some case, such as SNAP, the federal government fully funds the program, and states only share the cost of administering it. In other cases, such as Medicaid, the federal government provides the majority of funding. the federal government pays a fixed percentage of the program’s cost each year. But under a block-granted program, the federal government sets aside a capped dollar amount for the states. That means even if the cost of a program changes (because of inflation or because more people need the service it provides), the amount of money available for it does not increase.