If you are following efforts calling for the repeal of the Affordable Care Act, you’ve probably heard talk of block grants and capping Medicaid funding. What really could be at stake in a block grant system? Robert Wood Johnson Foundation produced this helpful piece on Capping Federal Medicaid Funding.
Currently, Medicaid is an entitlement, meaning the government is legally obligated to pay to provide it for each eligible person, no matter the budget. Federal and State governments share this cost.
Capping federal Medicaid funding would put a limit on the amount the federal government would pay to states each year, with the intent of reducing the amount the federal government pays into Medicaid.
In most of the proposals out today, virtually all Medicaid spending would be subject to one of the following caps, typically calculated based off of a state’s historical medical spending:
Block Grants impose a national cap on federal Medicaid, based off aggregate spending trends for each state not taking into consideration health care costs or population served in each state.
A Per Capita Cap would cap federal funding on a per person basis. Like block grants, this would not account for the actual cost of health needs for the population. Caps are typically specific to population group such as you might see a high cap for elderly and lower for children.
Capped funding is usually coupled with more flexibility for states in who they enroll, how much they pay providers, and what benefits they offer, in hopes of increasing competition. However, with fewer dollars and less regulation, we worry about adverse effects for the Medicaid population that is already dramatically underserved in our region. It was not until the Affordable Care Act that coverage became guaranteed for people with pre-existing conditions, like the 20,000 Medicaid Cancer patients receiving care in Washington.
None of the cap proposals so far include an increase in federal spending. The 31 states with expanded Medicaid, including Washington, naturally serve a larger population and have spent more in recent years. States who had not expanded might face a much narrower funding scope in a capped system, unless funds are “evened out” or taken away from expansion states. In our region the expansion population is over 65,000 people.
Right at the beginning of our Demonstration period, when we have so much opportunity for reform, we advocate for a Medicaid system which preserves eligibility and funding for the expansion population, and protects coverage for those with pre-existing conditions to ensure Washington leaves no one behind in our quest to achieve the triple aim.