Medicaid and Per Capita Caps

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Overview

Currently states receive matching Medicaid funding based on the costs of actual services provided. Both the health care bill proposed by the House (the American Health Care Act “AHCA”) and the the bill proposed by the Senate (the Better Care Reconciliation Act “BCRA”) propose per capita caps.

With per capita caps, regardless of services provided, states would receive a preset amount per person based on an initial allotment. This amount would increase slightly every year based on a preset growth index. The problem: actual costs will increase more quickly than capped payments, leaving states with over $772 billion reduction in federal Medicaid funding over the next decade. This cost-shifting onto states will force massive cuts in Medicaid services. 

  • $772 billion cut to federal Medicaid funding over the next 10 years
  • Cuts in federal spending will lead to state budget shortfalls, forcing states to cut services, eliminate optional services likes Home and Community-Based Services (HCBS), or restrict eligibility
  • 23 million people will lose coverage, 14 million from Medicaid
  • Under the Senate Bill, by 2036, Medicaid spending will be 35% less than under current law.

For a great overview of per capita caps, please see this video of Liz, a disability rights activist, interviewing Mara Youdelman, the lead attorney at National Health Law Program. 

What is Medicaid?

  • The primary health insurance program for people with disabilities, older Americans, and low-income populations.
    • Covers more than 10 million non-elderly people with disabilities.
  • Provides a wide range of services that people with disabilities need to live, work and participate in the community
    • Residential supports, employment supports, rehabilitative and habilitative services, medical and nursing services, durable medication equipment, assistive technology, and personal care services
  • Individuals receive Medicaid services through many different programs so may not know they’re supported by Medicaid.  Your Medicaid program may have a different name in your state.
  • People with disabilities make up 21% of the Medicaid population nationally but account for 48% of the total Medicaid costs (in part due to need for long term services and supports).
  • Want more, Policy Basics: Introduction to Medicaid has more info.

Medicaid’s Current Structure

  • Federal government and states share actual costs of coverage
  • Federal government pays an average of 63%
    • Matching rates vary by state from 50% to 75%
  • Some services or populations are incentivized with higher match
    • Community First Choice Option:  provides community based personal care services to people who otherwise might have to receive care in nursing homes — gives an extra 6% federal match 
    • Money Follows the Person:  federal government pays 100% of costs for the 1st year someone moves from an institution to the community.

What do Per Capita Caps mean?

  • Federal government gives the state a set allotment of funding based on a set amount per Medicaid enrollee instead of paying for state’s actual service costs.
  • The starting rate is set base on 2016 and with an annual increase calculated using a standard growth index. 
    • This growth rate is lower than anticipated costs increases in Medicaid. The gap between need and funding will grow every year. By 2036, Medicaid spending will be 35% less than under current law.
  • It does not account for new technologies, aging population, changing health needs, etc.

What Can I Do?

Let your representatives know you support the ACA and reject the ACHA’s denial of future coverage to millions of Americans with disabilities. If these cuts will affect you or your loved ones, tell us your story.

 

Additional Resources
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