Ryan’s Plan to Cap Medicaid is a Bad Deal for Kids and States

Federal Budget
Health

Screen Shot 2016-06-23 at 9.57.02 AMToday, Speaker of the House Paul Ryan (R-WI) released the long-awaited Obamacare repeal and replace plan which includes an oldies hit-list of Republican health reform ideas. Short on details or cost estimates, once again, the House Republican leadership’s plan calls for dramatic cuts to the Medicaid program by rehashing a proposal to impose per capita caps on Medicaid. While Ryan has proposed Medicaid per-capita caps before as a means to rein in entitlement spending, the reality is per capita caps would dramatically cut federal Medicaid support to the states and would be devastating for the vulnerable populations that rely on Medicaid for their health care.

States should not be fooled! The entire purpose of Medicaid per capita caps is to lower federal Medicaid spending. If approved by Congress and signed into law, states would get a fixed amount of Medicaid funding per population (children, elderly, disabled, etc.) and, no matter how much a state spends on the populations defined under a cap, states would have only the arbitrarily set amount of Medicaid funding. If a state experienced more spending than allowed under the cap (for example, unexpected costs caused by a downturn in the economy, a health care epidemic, or increased costs due to the availability of a new medication, etc.), the state would have to make up the difference. States would have no choice but to make significant changes in their Medicaid programs to make up for the loss of federal dollars, including changes to who is eligible for Medicaid, increases in out-of-pocket costs to families for services, reductions in benefits and services that are available to Medicaid enrollees, and cuts in payments for providers that provide services.

Advocates for children and the poor should consider themselves officially on notice. While it’s extremely unlikely that President Clinton would approve large-scale cuts to Medicaid, it is unclear whether President Trump would entertain Medicaid per capita caps. Come January, Speaker Ryan and other Republican leaders will be ready to attempt a Medicaid restructure including per capita caps if the opportunity allows. Advocates must act now to educate their Senators and Representatives about the harmful effect Medicaid per capita caps would have on state finances and vulnerable populations alike.

As we discuss in our latest fact sheet, “Medicaid Per Capita Caps Jeopardize the Health of Children and Other Vulnerable Populations,” the bottom line is arbitrary cuts to Medicaid – whether through a per capita cap or block grant – would have a devastating impact on children’s coverage. Policy proposals that include per capita caps or block grants for Medicaid do nothing to control Medicaid costs. They just shift the burden from the federal government to the states, which would have to figure out how to make up the difference. States would face two choices – contribute more of their funds to keep the program whole or, more likely, institute deeps cuts to Medicaid enrollees and providers. Millions of children and families who rely on Medicaid for their health care would face increased costs, reduced benefits and many would become uninsured altogether. The remarkable gains in coverage that has cut the numbers of uninsured children in half over the last two decades would surely be reversed if Medicaid per capita caps were enacted into law. One thing is sure, kids would be worse off. We must continue to fight to protect coverage for all of our vulnerable populations but we have a special obligation to keep making progress for our children.