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Michael Petruzzelli

, National Council for Behavioral Health

New Report Highlights Policy Considerations for Implementing Medicaid Per-Capita Spending

September 15, 2016 | Federal Budget | Medicaid | Comments
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Last week, the US Government Accountability Office released a report examining key policy considerations for the implementation of a per-capita cap in Medicaid spending. Per-capita spending would implement a set rate at which states could be reimbursed per enrollee. A perennial goal of the fiscal conservatives in Congress, per-capita spending aims to rein in spending by exerting greater control of federal dollars spent in Medicaid costs, allowing for better budget predictability.

This report was jointly requested by Senate Finance Committee Chairman Orrin Hatch (R-UT) and House Energy and Commerce Committee Chairman Fred Upton (R-MI).  As Congress begins to prepare for a new session in January, leaders are again revisiting options for reforming Medicaid to cut and limit costs to the federal government. Exploratory in nature, this GAO report does lend support to these discussions by identifying current policies and data that lawmakers should consider as they decide how to structure a per-capita cap.

These considerations include:

  • Coverage designs for different subsets of Medicaid populations, and a balance of federal and state authority to prescribe program features;
  • Allocation of funds across states and over time to account for variation in health care needs, geographic variation, inflation or other changes in circumstances;
  • State accountability for the receipt of federal funds including verification of the number and eligibility of enrollees, or measures aimed at tracking the effectiveness of the per capita cap policy in achieving federal objectives;
  • Effects that changes to Medicaid financing could have on other federally financed sources of health care, broader health care costs, states, and Medicaid enrollees.

The National Council has and remains opposed to the implementation of per-capita spending in Medicaid as it does not allow for the flexibility required to serve patients as needed. A review from the Centers on Budget and Policy Priorities in June, 2016, detailed how implementing a per-capita cap would have a similar effect to turning Medicaid into a block grant program. You can read the full article here.