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A "Cap" on Medicaid: How Block Grants, Per Capita Caps, and Capped Allotments Might Fundamentally Change the Safety Net

April 26, 2017

Policy Brief

Authors: Haleigh Mager-Mardeusz, Cosima Lenz, Gerald F. Kominski, PhD

​Changing the Medicaid program is a top priority for the Republican party. Common themes from GOP proposals include converting Medicaid from a jointly financed entitlement benefit to a form of capped federal financing. While proponents of this reform argue that it would provide greater flexibility and a more predictable budget for state governments, serious consequences would likely result for Medicaid enrollees and state governments. Under all three scenarios promoted by Republicans — block grants, capped allotments, and per capita caps — most states would face increased costs. For all three scenarios, the capped nature of the funding guarantees that the real value of funds would decrease in future years relative to what would be expected from growth under the current program.

Although the federal government would undoubtedly realize savings from all three scenarios, the impact might lead states to reduce benefits and services, create waiting lists, impose cost-sharing on a traditionally low-income enrollee population, or impose other obstacles to coverage. Nationally, as many as 20.5 million Americans stand to lose coverage under the proposed Medicaid changes. In California, up to 6 million people could lose coverage if changes to the Medicaid program were coupled with the repeal of coverage for the expansion population.

 

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