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Block Grants and Per Capita Caps Would Devastate Medicaid

Medicaid is a lifeline to nearly 73 million low-income Americans, providing health insurance, assistance with Medicare premiums, long-term services and supports, and financial aid to safety net hospitals and health centers. Seniors, people with disabilities, and many from communities of color rely heavily on Medicaid benefits to survive. Medicaid is becoming particularly important as the number of people living longer with Alzheimer’s disease and related dementias grow. The majority of nursing home residents (about two-thirds) have some form of cognitive impairment. By 2050, Medicaid expenses for this population are expected to climb by almost 400 percent, reaching $172 billion in 2050.

Despite Medicaid’s importance to our nation’s most vulnerable members of society, some policymakers want to cut Medicaid funding by imposing a “per capita cap” or “block grant” system.  

  • Under “per capita caps,” states would receive a fixed dollar amount per beneficiary. Caps could vary for different groups of people, such as the aged, blind, people with disabilities, children, and adults.
  • Under “block grants,” states would receive a lump sum from the federal government to fund their Medicaid programs. 

Proposal

Impact on Medicaid Program

Per Capita Cap

 

Fixed dollar amount per beneficiary

 

 

  • Limits federal funding for state Medicaid programs.
  • Disregards changes in health costs, increasing incentives to ration care.
  • Hits seniors and people with disabilities hardest because the majority of Medicaid spending covers their health care and long-term services and supports costs.
  • Creates a more complex system to administer.
  • Pits beneficiary groups against each other for funding. Expands existing state gaps and differences in Medicaid benefits.

Block Grant

 

 

Lump sum funding

 

 

  • Shifts costs to states by eliminating the guarantee of additional federal funds if state costs increase because of economic downturns, natural disasters or increased demand by growing population
  • Produces large funding cuts over time, forcing states to reduce eligibility and benefits and cut health sector jobs.
  • Increases the financial burden for long-term care users and their families who depend on home- and community-based services.

Under a block grant or per capita cap system, states would have to find additional funding if federal funds did not keep up with their Medicaid population’s needs. States that expanded their Medicaid programs under the Affordable Care Act will be especially hard hit if the Medicaid expansion is eliminated as part of Obamacare repeal efforts as they will lose funding for their expansion and non-expansion populations. States could address their funding shortfalls in any number of ways, including:

  • Scaling back nursing home quality, service and safety protections, endangering the lives of vulnerable seniors.
  • Asking patients' spouses, children or other family members to cover the cost of nursing home care, exhausting much or all of their savings.  
  • Tightening eligibility criteria to home and community-based services, resulting in more individuals moving into nursing homes.

·        Limiting the number of people served.

NATIONAL COMMITTEE POSITION

The National Committee opposes per capita cap or block grant proposals because they would reduce Medicaid benefits and access, jeopardizing the quality of care provided to millions of people particularly seniors and people with disabilities. President Trump, Speaker of the House Paul Ryan and Secretary of the Department of Health and Human Services nominee and Budget Committee Chairman Rep. Tom Price (R-GA) have all supported block grants. The National Committee opposed block grant provisions in H. Con. Res. 125, the Budget Resolution for Fiscal Year 2017, which was introduced by Rep. Price and approved by the House Budget Committee on March 23, 2016.

Instead of cutting the program, the National Committee supports expanding Medicaid because the program has a proven record of saving lives, improving health outcomes and providing health and long-term services and supports coverage efficiently.

                                                                        Government Relations and Policy, February 2017


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