The NCSL Blog

13

By Lisa Waugh

The new Congress and the Trump administration have promised substantial changes to the Medicaid program, which could give states both new responsibilities and flexibility.

Block grants illustration; credit: FloridaPolitics.comHouse Speaker Paul Ryan has outlined his priorities in an overview document titled A Better Way to Fix Health Care, which promises to empower states to design Medicaid programs that best meet their needs. Learn more about this and other proposals on NCSL’s website.

(Illustration courtesy of FloridaPolitics.com)

Dr. Tom Price, recently confirmed as secretary of Health and Human Services, will lead the process to change states’ approaches to their Medicaid programs for the administration. His confirmation hearings, which indicated support for converting Medicaid to a block grant, provided a sneak peek at this administration’s likely approach to reforming Medicaid. In addition to block grants, another Medicaid reform known as the per capita cap reimbursement mechanism has gained traction.

To understand these proposals, it first helps to remember that Medicaid currently functions as an entitlement program, meaning that states must cover all people who meet eligibility requirements. The federal government reimburses states a certain percentage of Medicaid costs (which varies by state) for serving all people who qualify.

Block Grants would provide states with a specific funding level for the federal portion of the Medicaid program. The amount would be based on a formula calculated for each state. This provides the federal government with a limit on Medicaid spending, with an anticipated reduction in federal spending over time.

Under a block grant, the Medicaid program would likely no longer be an entitlement program, and the feds would no longer reimburse states according to the current open-ended formula. States would likely have to absorb any unexpected extra costs due to increased enrollment or other unexpected changes. States would likely have additional flexibility, however, to establish enrollment caps or waiting lists, or reduce eligibility levels. Innovation would be encouraged through increased flexibility for the states to design and administer their local programs. 

Per Capita Caps would provide a set amount of funding per Medicaid enrollee. The federal government would determine a base year of per enrollee spending and then that amount would increase over time by a pre-set amount (e.g., inflation or inflation plus a percentage).

Per enrollee caps could be determined for a state’s entire Medicaid population or separate caps could be calculated for broad Medicaid coverage groups (e.g., children, adults, elderly and people with disabilities). States would receive the sum per enrollee multiplied by the number of enrollees in each group. The federal government would not necessarily limit federal spending for any specific enrollee, but would limit federal funding to the states to an amount equal to the cap multiplied by the number of enrollees.

What is a Medicaid percapita cap? Credit American Action Forum.

For additional information on these two policy strategies, check out the following resources:

NCSL continues to monitor issues as state policymakers await further information about these and other pending changes at the federal level. Stay tuned for future blogs that highlight news about Medicaid changes and other issues.

For more information contact:

Lisa Waugh is a program director in NCSL's health program.

Email Lisa

Posted in: Federalism, Health
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About the NCSL Blog

This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.