States would receive a per-capita Medicaid funding rate based on the amount they now spend on each beneficiary under the Medicaid reform plan being considered by the Clinton administration, HCFA Administrator Bruce Vladeck told a Senate panel last week.
The White House proposal would keep Medicaid as a federal entitlement but would give states more control of the program. Republicans are considering a block-grant proposal that would give states a fixed amount and remove all federal strings from the program.
But the idea of a straight block grant has run into trouble over how the money would be divided. States such as Florida and Texas say some provision must be made for their growing Medicaid populations, while states that receive a relatively low level of disproportionate-share funding say that if current levels are locked into place they would be unfairly penalized.
Supporters of a per-capita spending cap such as the one the White House is proposing say it would alleviate the concerns of high Medicaid growth states.
Under the Clinton plan, separate Medicaid-beneficiary per-capita spending amounts would be determined for nursing home residents, the disabled and other recipients. Increases per beneficiary would be made according to a single nationwide percentage rate, Vladeck told Senate finance committee members.
According to Congressional Budget Office projections, Medicaid spending will increase at more than 10% per year from $90 billion this year to more than $170 billion in 2002.
By keeping the percentage increase below 10%, Clinton believes he can save $55 billion. But several committee members argued that by keeping Medicaid as an entitlement, federal spending could still increase dramatically if the number of beneficiaries increased.
Others questioned the plan because it would lock in current funding inequities. For example, in 1994 New Hampshire spent more than $9,700 per Medicaid beneficiary compared with less than $2,700 spent by Mississippi, according to a National Institute for Health Care Management study.
The GOP budget passed last month calls for $182 billion in Medicaid spending reductions over seven years.