In the event of a Donald Trump presidency, Republicans in Congress are likely to push Medicaid to a per-capita capped system, Sen. Bill Cassidy (R-La.) said at a Tuesday panel about the future of Medicaid.
The move would require Congress to establish a limit of federal dollars per person in a state. Spending would grow as the number of enrollees did, and the program would allow states to set eligibility, benefits and delivery system approaches however they choose. States could also decide to pay providers more, an issue that has long been attributed to low access to care.
“There's been a coalescence around the per beneficiary payment,” Cassidy said at a forum hosted by Politico. “It will put a cap on the taxpayer's exposure but in so doing, just like Medicare Advantage does, the dollar is used more effectively.”
The per-capita idea is meant to cut costs and ensure Medicaid's solvency. It has most recently been embraced by Republicans but was also put forward by President Bill Clinton in the 1990s.
As things are now, “Medicaid is the illusion of coverage without the power of access,” added Cassidy, a practicing gastroenterologist. Proponents of changing Medicaid argue the program is wasteful and susceptible to fraud and abuse. The program cost the federal and state governments $545 billion in fiscal 2016. Medicaid covers nearly 72 million Americans, more than Medicare.
The per capita idea was rebuffed by Rep. Frank Pallone (D-N.J.), who was also on the panel.
Pallone said budget-driven measures fail to improve quality or innovation, and that ultimately hurts patients. He also questioned Cassidy's criticism of low reimbursement rates for providers while wanting to reduce Medicaid expenditures.
“You can't have it both ways,” Pallone said.
State representatives from Arkansas and Louisiana, which have GOP-led legislatures, had mixed reactions to the idea.
“If you give us flexibility, and we no longer have to follow particular rules … we can make systemic changes and save money,” said Cindy Gillespie, director of Arkansas' Department of Human Services.
Louisiana Health Secretary Dr. Rebekah Gee said she believed the idea would lead to lost services, especially following an unforeseen disaster such as the floods that recently submerged parts of her state.
Republican hopes of moving to a per-capita cap isn't much of a surprise to Hill insiders. The per-capita idea was included in House Speaker Paul Ryan's 35-page A Better Way white paper released earlier this summer. And in the last three months, both the Medicaid and CHIP Payment and Access Commission and the Government Accountability Office have drafted reports on the concept at GOP lawmakers' request.
MACPAC's June report to Congress outlined the pros and cons of a per-capita model. The approach gives states incentives to run efficient programs and could also provide them with more budget predictability. However, in order to achieve savings, programs or benefits are likely to be cut or states might limit eligibility, and such cuts could increase uncompensated care.
“Furthermore, given that Medicaid spending growth is primarily driven by enrollment increases, per capita caps would not get at the underlying driver of growth,” the report said.
The GAO found that changing Medicaid into a program with per-capita spending caps would require consideration of what benefits would be covered, how the money would be allocated and how states would be held accountable for spending the funds.
The state that has experienced the closest thing to a per capita cap is Rhode Island. In 2008, the state received a waiver for a block grant to restructure its Medicaid program, which made of 30% of the state budget.
Spending for Rhode Island's Medicaid program was capped at $12.075 billion through 2013. The state was exempted from some federal rules such as the “any willing provider” rule that requires Medicaid to pay for care at any doctor or hospital willing to provide it. By 2010, the program saved $1.34 billion according to a state audit.
Even if Trump becomes president and the GOP maintains control of the House and Senate, moving to a per capita system would still be a heavy lift politically, according to an analysis released last week from the Urban Institute.
The fact that pools of money could be controlled by different levels of government and that legislators, policymakers and administrators might debate how to make those decisions based on coverage or cost, could make it virtually impossible.
"There are simply no politically easy ways to implement block grant or per capita proposals in Medicaid given the substantial variation in federal spending across states," the report said.