Medicaid Per Capita Caps What they are and what they aren’t Dee Mahan Director, Medicaid Initiatives FamiliesUSA.org

Federal push to fundamentally change Medicaid…. ……and the ability of states to care for their residents. Since 1965: Guaranteed federal match; guaranteed coverage, benefits Block grant: Fixed amount per state Per capita cap: Fixed amount per enrollee Per capita caps are being talked about in the context of radical changes to Medicaid financing FamiliesUSA.org

What per capita caps are and aren’t They are They are not A way to address enrollment growth concerns A more obscure way to frame cutting Medicaid A way to reduce federal funding A way to shift risks and costs to states A compromise solution Providing the same federal guarantee to states Offering states financial protection Shielding states from large federal funding cuts FamiliesUSA.org

A primary goal is to reduce federal Medicaid spending A per capita cap structure can’t protect states from large federal funding cuts Past House Republican budget plans: Proposed: 33.4% reduction in federal spending 2012-2021 Proposed: 38% reduction in federal support 2013-2022 Proposed: 25% reduction in federal Medicaid spending 2017-2026, on top of cuts from repealing Medicaid expansion. FamiliesUSA.org

The details for setting the cap matter…… What’s the baseline? What’s the adjustment formula? What about the expansion? How are groups determined? What about the out years? Adjustments for innovations? Are there triggers for emergency adjustments? FamiliesUSA.org

Paul Ryan’s “A Better Way” proposal Baseline: 2019 start, based on 2016 cost Adjustment formula: General inflation Expansion funding: Phased out Groups: Children, seniors, adults, blind/disabled Out years: Demographic changes and inflation adjustment make shortfalls grow Innovation adjustments: “This reform will promote good behavior and innovation,” A Better Way Emergency triggers: Not mentioned FamiliesUSA.org

Set funding tends to shrink Set funding for per capita caps would be likely to shrink just like block grant funding FamiliesUSA.org

And Medicaid can become a piggy bank Medicaid capped payments can be cut to fund competing federal priorities Tax code rewrite Infrastructure projects A wall Deficit reduction FamiliesUSA.org

What states might want & what they might get Flexibility they might want Flexibility they will have to use Work requirements Cut required benefits Time limits on eligibility More cost sharing Disenrollment and lock-outs Less reporting Easy to get waivers Cut provider rates Cut enrollees Cut benefits Cut high-cost care FamiliesUSA.org

States are not managed care plans squeezed “At a time when roughly two-thirds of beneficiaries in the program receive their Medicaid benefits through …managed care…transitioning federal financing to what is effectively a per-member-per-month amount is reasonable and responsible,” Paul Ryan, House Republican Health Plan Except…….. There would be no contract term on rates States could not renegotiate bad rates States won’t want to carve out unprofitable areas States cannot pull out of the market if there’s a shortfall FamiliesUSA.org

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