Understanding Medicaid Per Capita Caps
The American Health Care Act (AHCA) is dead for the moment but there is Republican sentiment to resurrect it so you need to know how it will impact you.
“Under the per capita cap, the federal government would pay a flat rate per person for Medicaid services, regardless of how much the services actually cost.”
The American Health Care Act (AHCA) limits the federal contribution to state Medicaid programs. This limit, also called a “per capita cap”, applies to every person on Medicaid: the elderly, children, parents and people with disabilities. To know how these cuts may affect you requires an understanding of Medicaid per capita caps.
The Congressional Budget Office (CBO) analyzed an earlier version of the AHCA and found that many people will lose Medicaid benefits under the AHCA. The CBO also found that individuals who survive the Medicaid cuts are at risk of having their benefits and services reduced. The CBO has stated that every state will lose funding under the Medicaid per capita caps of the AHCA, yet some politicians deny this to their constituents. Some politicians even claim they will get more resources under the caps, despite what the CBO says.
Current federal government contributions to Medicaid
The federal and state governments jointly fund Medicaid. The federal government’s portion of the cost of Medicaid services is calculated using a statutory mathematical formula. If the cost of providing care to people increases, then the federal government’s contribution to the program increases.
How the AHCA per capita cap changes federal funding of Medicaid
Under the per capita cap, the federal government would pay a flat rate per person for Medicaid services, regardless of how much the services actually cost. A state would get the same federal money for a healthy person as for an individual with a dire medical condition who needs significant medical intervention to survive. This block grant or per capita cap model would require states to make up the difference or cut services. 11 million seniors and people with disabilities could be affected by the cuts.
The proposed per capita cap would take effect in the year 2020. The initial cap would reflect how much the states spent per enrollee in 2016. The feds plan to adjust the cap every year, based on the Consumer Price Index for Medical Care (CPI-M).
The ripple effect – Medicare could also suffer
Since Medicaid helps with some costs that Medicare does not cover, such as Medicare premiums, nursing homes and long-term care, many people with low income will lose Medicare and other essential services. They cannot afford them without their Medicaid benefits. Twenty percent of all people on Medicare get help from Medicaid.
Would the proposed Medicaid per capita cap save the federal government any money?
There is no clear consensus on this issue. While some claim the AHCA per capita cap could cut federal Medicaid spending by $834 billion between 2017 and 2026, it is not clear if the cost of services would just shift to other federal programs. The result might be that the cost of services would come out of a different “pocket” rather than services being eliminated or reduced. Since the cap could increase every year according to the CPI-M, some argue that change, if any, would be negligible.
The proposed Medicaid per capita cap will affect every state in different ways. To find out where you stand, contact an elder law attorney in your area.
References:
Georgetown University Health Policy Institute. “Impact of Medicaid Per-Capita Cap Cuts Underestimated by Many.” (accessed July 19, 2017) https://ccf.georgetown.edu/2017/05/18/impact-of-medicaid-per-capita-cap-cuts-underestimated-by-many/
Kaiser Family Foundation. “What Could a Medicaid Per Capita Cap Mean For Low-Income People on Medicare?” (accessed July 19, 2017) https://www.kff.org/medicare/issue-brief/what-could-a-medicaid-per-capita-cap-mean-for-low-income-people-on-medicare/
Forbes. “How Much Will The GOP’s Medicaid Per-Capita Cap Save, If Anything? CBO Refuses To Say.” (accessed July 19, 2017) https://www.forbes.com/sites/theapothecary/2017/06/08/how-much-will-the-gops-medicaid-per-capita-cap-save-if-anything-cbo-refuses-to-say/#708df72d6376
Brookings Institute. “Effects of the Medicaid per capita cap included in the House-passed American Health Care Act.” (accessed July 19, 2017) https://www.brookings.edu/research/effects-of-the-medicaid-per-capita-cap-included-in-the-house-passed-american-health-care-act/
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