Medicaid Per Capita Caps: A Tragedy in the Making

By attempting to “repeal and replace” the Affordable Care Act (ACA) and cut taxes for wealthy Americans, House Republican leadership is threatening the health coverage of millions of low-income children, people with disabilities, and senior citizens that received care through Medicaid with hundreds of billions of dollars in cuts through the imposition of what is called a “per capita cap” in what they are calling the American Health Care Act.

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This new arbitrary payment limit would slash billions of dollars out of the federal contribution made to states that they use to provide health coverage through Medicaid. Consequently, this will encourage states to impose new limits and the rationing of health coverage to millions of our most vulnerable citizens, including newborns, foster care kids, and children with asthma, cancer, sickle cell anemia, cystic fibrosis, spina bifida, or other chronic diseases and life-threatening illnesses.

In doing so, House Republicans would be forcing President Donald Trump to ignore his campaign promise to not cut Medicaid.

The House of Representatives outline of their proposal acknowledges that the “Medicaid program today is a critical lifeline for some of the nation’s most vulnerable patients, as the program provides health coverage for children, pregnant mothers, the elderly, the blind, and the disabled.”

The fact of the matter is that Medicaid has improved the health and access to care for millions of Americans.

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Yet, in order to justify Medicaid “reform”, Speaker Paul Ryan (R-WI) argues that a shortcoming of the Medicaid program is that payments to health providers are lower than average and may result in “low-income patients [having] less and less access to quality care.”

Ironically, the Republican House leadership bill would address this concern — not by increasing payments to providers, as would be logical and that the ACA attempted to address — but by slashing hundreds of billions of dollars out of the program through a per capita cap. Obviously, this is completely nonsensical and would make any current access problems worse.

According to the bill’s summary, the per capita cap “would use each State’s spending in FY2016 as the base year to set targeted spending for each enrollee category (elderly, blind and disabled, children, non-expansion adults, and expansion adults) in FY2019 and subsequent years for that State.”

In other words, the proposed House bill would impose 255 separate caps on the states and the District of Columbia that would require an army of auditors and bureaucratic overseers that taxpayers will have to pay for in order to examine each state’s individual enrollment numbers, expenses per person, and possible gaming of the enrollment categories in order to enforce these newly imposed caps.

For states to compensate for the loss of hundreds of billions of dollars from the federal government under a per capita cap, the Congressional Budget Office (CBO) outlines a number of things that states may do — many of which would negatively impact the 74 million low-income children, adults, people with disabilities, and senior citizens that the program serves. As CBO explains:

Depending on the level of cuts that states would absorb, which we still do not know since the House is moving forward on passing the bill without even having a CBO score, states may be forced to do all of the above. In short, if Congress proceeds to pass and imposes a per capita cap, both the states and the millions of vulnerable people that Medicaid serves would undoubtedly be harmed.

Vulnerable Populations, States, and Providers Will Bear the Burden of Medicaid Cuts

State congressional delegations and the governors, as evident by discussions at the recent meeting of the National Governors’ Association (NGA), are increasingly worried about the impact this will have on their individual states. Members of Congress are also beginning to understand this, as town hall meetings across the country have erupted with angry constituents who have learned they would likely lose their health coverage with repeal of the ACA tax credits and Medicaid cuts.

In a briefing at the NGA meeting, Avalere Health’s Caroline Pearson and McKinsey & Company’s Erica Hutchins Coe explained to governors how the proposed cuts to Medicaid that Congress is considering would create an accelerating and compounding funding gap that would cost states billions of dollars to close or force them to enact “cuts in eligibility, benefits, or payment rates.” States and local governments would be the ones forced to impose most of the pain, even though Congress is the body that shortchanged the program.

The most vulnerable citizens in our society will be the ones put most at risk. If a newborn has birth defects or a child is diagnosed with cancer, a per capita cap or block grant from the federal government puts the state in the position of bearing 100% of all the costs of that chronic disease or illness above an arbitrarily established cap. States would have a fiscal incentive to restrict coverage and benefits, shift costs, and impose other forms of limits and rationing on to vulnerable populations, particularly those with high-cost and life-threatening illnesses.

In the case of Nathaniel Rankin, he is a four-year-old child who was born with “extra tissue in his already abnormally narrow airway” and receives coverage through Medicaid after his parents adopted him. According to STAT, the cost of his medical supplies for home, which includes suction catheters, oxygen tubes, tracheostomy ties, etc. is about $5,000 per month and that does not even include the recent operation he went through at Cincinnati Children’s Hospital to stop him “from aspirating food and liquids into his lungs” and “helped stabilize his airway so it’s not such an urgent emergency is his trach tube comes out.”

Reporter Andrew Joseph explains:

Medicaid per capita caps or block grants would threaten Nathaniel’s care and livelihood as well as that of millions of other citizens that rely on Medicaid for their care.

This is more irony here, in that the Congress — just last year — the passed the 21st Century Cures Act. After the passage of the legislation, House Energy and Commerce Committee Chairman Greg Walden (R-OR) issued a statement that reads:

If this effort is successful, new therapies and drugs will be developed to improve the lives of the American people, but at a cost. Sadly, with the imposition of per capita caps on Medicaid, the federal government will be walking away from helping low-income children, people with disabilities, and senior citizens from gaining access to the “delivery of cures.”

Instead, you can easily envision scenarios where states have to put together panels — yes, panels — of experts to find ways to limit or ration the care of Medicaid enrollees. As Ezekiel Emanuel, Aaron Glickman, and Emily Gudbranson write:

Before acting, Congress should go back to the drawing board and commit to “do no harm,” as all the leading organizations advocating for our nation’s children asked them to do.

The health, well-being, and lives of millions of vulnerable Americans are literally at stake.

@BruceLesley — President of @First_Focus & @Campaign4Kids. Child advocate, husband & father of 4. Basketball fanatic. Follow on Twitter: @BruceLesley.

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