What Could a Medicaid Per Capita Cap Mean for Low-Income People on Medicare?
Policymakers are giving serious consideration to proposals, such as the American Health Care Act (AHCA),1 that would fundamentally change the structure and financing of Medicaid – the federal-state program that provides health coverage for 70 million low-income Americans, including one in five people on Medicare. Federal financing for Medicaid would be converted to a per capita cap model (such as under the AHCA) or block grant, both of which aim to limit and make more predictable federal spending on Medicaid and provide states more flexibility in their management of Medicaid spending. Such a change could affect low-income people on Medicare because Medicaid help cover Medicare’s premiums and cost-sharing, and pays for services not covered by Medicare, such as nursing home care.
Under current law, the federal government matches state Medicaid spending at a rate determined by a formula set in statute. Federal spending increases in response to the rise in the cost of providing care to enrollees, with no limit on total federal contributions.