Center for Budget and Policy Priorities: Per Capita Caps or Block Grants Would Lead to Large Cuts in State Medicaid Programs

This issue brief from the Center for Budget and Policy Priorities describes how changing the current Medicaid program to per capital caps would result in large, and over time, increasing cuts to state Medicaid programs, ultimately resulting in millions of low-income, elderly, and sick Americans losing health insurance coverage.

The issue brief notes that while the growth in Medicaid expenditures has been slower than other parts of health care expenditures, any proposal is based on reducing overall federal government Medicaid expenditures, which means cuts in funding available to the states for their Medicaid programs.

The issue brief also notes the impact of the continued aging of the U.S. population, with more and more seniors enrolling in both Medicaid and Medicare. Seniors have higher per enrollee costs in Medicaid. It will be challenging to establish a per capita cap funding formula that will account for these increasing per enrollee costs while achieving overall reductions in expenditures.

In order to sustain their Medicaid programs with reduced funding under per capita caps, states would have to limit eligibility, increase cost-sharing requirements with higher premiums and co-payments, and/or limit the scope of health care and services covered. Any and all of these policy options would result in less access to Medicaid, decreased enrollment, individuals losing their current Medicaid coverage, and less access to needed care and services for those remaining on Medicaid.

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