Can States Substantially Reduce Medicaid Spending Through Delivery System and Financing Reform?

To achieve federal Medicaid savings and make federal expenditures more predictable, the American Health Care Act (AHCA) and the Better Care Reconciliation Act of 2017 included a Medicaid block grant and per capita caps. In these proposals, if Medicaid program costs exceed the funding limits set by the cap, states will have to increase state spending or reduce spending to stay within the budget ceiling. This approach is not new. Presidents Ronald Reagan and George W. Bush proposed Medicaid block grants, and Congress passed a Medicaid block grant, which was vetoed by President Bill Clinton and did not become law. Although block grants and per capita caps do not intrinsically require Medicaid funding reductions, these proposals set the available federal funds substantially below expected expenditures. For example, the Congressional Budget Office estimates that the AHCA’s Medicaid financing changes, along with its repeal of enhanced federal matching funds for the Affordable Care Act’s Medicaid expansion, would reduce federal Medicaid spending from 2017 to 2026 by $834 billion, resulting in a 24 percent reduction in federal Medicaid funds by 2026. Can States Cut More Than $800 Billion In Medicaid Expenditures Through System Reform? A central policy question, which received little attention in the debate over block grants, is how states would reduce expenditures so that they met the federally established budget targets. Although states could reduce Medicaid eligibility, cut ben...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: Costs and Spending Long-term Services and Supports Medicaid and CHIP Payment Policy Medicaid block grants per capita caps RTI International Source Type: blogs