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Contact: Ed Walz
Phone: (202) 657-0685
Email: edw@firstfocus.net
FOR IMMEDIATE RELEASE

New Analysis: Medicaid Per Capita Caps Bad for Kids, Taxpayers

Health

Contact:
Ed Walz
(202) 657-0685 (office)

Washington — The bipartisan children’s advocacy organization First Focus today released a new analysis concluding that proposals to impose “per capita caps” in Medicaid would put the health of 30 million children at risk. At the same time, the analysis finds that such proposals would dramatically reduce Medicaid funding to cash-strapped states and require the creation of new complex bureaucracies that would divert federal resources from patient care to paperwork and administration.

“Medicaid per capita caps mean more bureaucracy, less health care for every tax dollar, and government health care rationing for kids,” said First Focus President Bruce Lesley.

As an alternative to the proposal by house budget committee chairman Rep. Paul Ryan (R-Wis.) to block grant the Medicaid program, Sen. Orrin Hatch (R-Utah) and Rep. Bill Cassidy (R-La.) have proposed replacing the current federal-state Medicaid funding arrangement with one where Congress sets a different type of arbitrary limit on federal support to states through a “per capita cap” mechanism. One variation of this idea creates “subpopulation” categories for seniors, individuals with disabilities, kids, and adults living in households with incomes at or near the poverty line, establishes a baseline average cost per category, and subsequently ratchets that per-person spending level down over time in an effort to cut federal support to states.

The First Focus analysis concludes that a per capita cap in Medicaid would:

  • Be administratively complicated – Either the federal government or each state or territory would be required to carve up the Medicaid population into distinct groups for which different funding allotments would be set. A new bureaucracy would be required to define population categories, assign beneficiaries to the different subgroups, and to oversee compliance.
  • Shift costs to states – To the degree that states choose to provide doctor-recommended care for children and other Medicaid-eligible people, once a cap is reached the entire cost burden of that care would fall on state governments.
  • Encourage states to ration care – Since states’ reimbursements would no longer reflect the actual costs of care, per capita caps would encourage states to ration care by changing eligibility criteria, cutting reimbursement rates for providers, or adding new administrative barriers to continuous coverage for eligible people.
  • Create additional incentives that could harm children – Because children are relatively healthy and inexpensive to insure, the per capita cap for children will likely be much lower than for other Medicaid-eligible people. For most kids this is not a problem but for children with cancer or Down syndrome or chronic asthma, those with high medical costs, states would have significant incentives to ration their care since it would be funded at state expense.

“Instead of slashing Medicaid for families in need, federal and state policymakers should be working together to deliver more efficient and less costly health care services, especially for the most vulnerable,” said Lesley.

The analysis noted that, while children account for half of the Americans who get their health care through Medicaid, children account for just 20 percent of Medicaid’s costs. It also observed that Medicaid provides care that responds to children’s distinct needs, including vaccinations, well-child check-ups, dental and vision care.

“Per capita caps do nothing to improve access to or the quality of health care for our nation’s most vulnerable citizens. Instead, they will only serve to shift the federal share of costs to states, low-income senior citizens, people with disabilities, and children,” said Lesley.

###First Focus is a bipartisan advocacy organization dedicated to making children and families a priority in federal policy and budget decisions. For more information, visit www.firstfocus.net.