The House bill to repeal the Affordable Care Act (HR 1628) would convert Medicaid into a per capita cap or block grant to the states, eventually shrinking coverage for children and youth now covered under the program, experts say.
Under the House bill, the federal government starting in 2020 would no longer pay a fixed percentage of states’ overall Medicaid costs, as it does now. Instead, it would pay only a fixed amount per beneficiary, with the amount set to grow at a slower rate than the projected growth in Medicaid costs. States would therefore see less federal Medicaid funding than under current law, with the cuts growing each year, according to an analysis by the Center on Budget and Policy Priorities.
The per capita cap establishes separate funding caps for people with disabilities, children, youth, young adults, and expansion enrollees. States receive an overall amount of funding that’s the sum of each population’s per capita cap multiplied by actual Medicaid enrollment in each such population group. That means that even if the cap amount for one group was adequate, a state would still face a substantial overall federal funding shortfall if the cap amounts for other groups were increasingly inadequate. And, to compensate for a substantial overall federal funding shortfall, a state would have to cut Medicaid across its entire program — regardless of how much each population’s per capita cap contributed to the total funding cut in that year.
House Republicans purported to protect seniors and people with disabilities by providing a “more generous” growth rate for those groups’ caps starting in 2020 than the growth rate it provided for children and other adults. But that will not sequester them from benefit cuts if the amount paid to the state was inadequate.
Moreover, Medicaid costs are already much higher for seniors and people with disabilities and, in coming decades, average health and long-term care costs for seniors will rise significantly as baby boomers move into very old age. Those 85 and older cost 2.5 times more than younger seniors. The per capita cap locks in current Medicaid spending per beneficiary (as of 2016) and thus won’t adjust for this cost growth, so states will have to cut Medicaid deeply to balance their budgets.
Even excluding populations or benefits from the cap wouldn’t protect them from cuts. The House bill, for example, excludes from the cap spending related to the Medicare Savings Programs (MSPs) — which help low-income Medicare beneficiaries with Medicare premiums and cost-sharing, and for which some seniors on Medicaid are eligible. The MSPs would still be vulnerable to cuts that states would make in response to the per capita cap and, as a result, seniors on Medicaid who benefit from these programs would still be adversely affected.
In essence, no one with Medicaid coverage can or will be protected from the large and growing Medicaid cuts that states will have to make due to federal funding shortfalls under the overall per capita cap. Nor can any benefit that Medicaid provides be protected.
Senate ACA Bill
Senate Republicans reportedly will retain the House health bill’s Medicaid per capita cap in their bill, but some of them are considering a change that would reset or rebase the annual cap amounts for states every two or three years. Depending on its design, the proposal could put states at serious risk of getting even less federal Medicaid funding over time than under the House bill, thereby making its Medicaid cuts even deeper.
For example, states that achieved efficiencies without harming beneficiaries — such as through delivery system reforms — that lowered their per-beneficiary spending for one or more population groups would effectively be punished for doing so. Their per capita cap amounts would be rebased and cut further.
Or say, if a state’s per capita cap for one group (e.g., seniors) provided more overall federal funding and partially offset inadequate federal funding for another group (e.g., children), the per capita cap amount for seniors that would otherwise apply would be cut to equal actual spending per beneficiary on seniors. Rebasing in this way, however, would leave the state with even less total federal Medicaid funding moving forward than under the House bill.
Info: https://goo.gl/np3bPP (report).