How Medicaid caps would impact seniors


June 22, 2017

Editor’s note: This piece was written by Joe Caldwell, PhD, the Director of Long-Term Services and Supports Policy at National Council on Aging. It was originally published on NCOA’s blog on June 19. 

The health care debate is full of buzzwords and technical jargon that can make it hard to understand exactly how proposals would impact real people.

Medicaid per capita caps is a good example.

The Congressional Budget Office estimated that the House’s American Health Care Act would cut Medicaid by more than $800 billion over 10 years. These cuts would come from two sources—first by rolling back the Medicaid expansion under the Affordable Care Act, and second, by implementing per capita caps.

Why do per capita caps matter for low-income seniors on Medicaid? Because they would fundamentally change how the program is structured.

Medicaid is funded jointly by the federal government and the states. Today, the federal government gives states matching funds to cover a percentage of their actual Medicaid costs. This keeps Medicaid affordable for states.

Under per capita caps, the federal government would limit, or cap, its contribution to the states based on a preset formula. This means states would be left paying the true cost of care for people in need. Many predict that states would face severe funding gaps and have to cut back on services to make up the difference.

Certain States Hit Hard

Medicaid per capita caps would hurt seniors in all states, but some states would fare worse than others. Here’s why.

First, the caps would be set based on each state’s 2016 Medicaid costs. This means states that were efficient and kept their costs low that year will be locked into a lower federal contribution. North Carolina, California, Nevada, Georgia, and Florida are examples of states that fall into this category.

Second, the caps would not adjust for an aging population. This means states whose 65+ population is growing faster than the national average will be locked into a smaller federal contribution that will not keep pace with growing costs. In fact, the caps would begin when baby boomers start turning 80. People aged 85+ are more likely to need long-term services and supports, and the cost of their care is 2.5 times more than people aged 65-74.

A new study by the Community Living Policy Center examines how caps would affect state spending on home and community-based services. Here are 5 states that would be hit hard:

  1. Alaska
    By 2025, Alaska’s 65+ population will increase by 53.5% and, even more striking, its 85+ population will jump by 66.5%, the highest in the country. Over time, Alaska’s older population will outpace the caps, and the state will face a funding crisis. Under the AHCA, Alaska also will have to abandon its plans to apply for Medicaid’s Community First Choice option, which allows the state to offer seniors more care at home instead of in nursing homes. The AHCA repeals this option.
  2. Arizona
    By 2025, Arizona’s 65+ population will increase by 64.2%, the highest in the country, and its 85+ population by 37.7%. Compared to other states, Arizona spends more of its Medicaid funding on care at home and in the community, instead of in nursing homes. But as the growth of its aging population outpaces the growth in federal funding, Arizona will likely have to cut those services.
  3. Nevada
    Nevada would face a double hit. It has one of the lowest spending levels for Medicaid seniors in the country: $13,226 per enrollee, compared to $17,522 nationally. But it also has a rapidly growing aging population. By 2025, its 65+ population will increase by 56.4% and the 85+ population by 49.9%. As a result, Nevada will be locked into a low amount of federal funding at the same time its aging population is exploding.
  4. Georgia
    Georgia faces a similar situation. It spends $14,142 per senior enrollee, which is below the national average. And its 85+ population is expected to grow 29.8% by 2025. These factors will make it difficult for Georgia to meet the growing costs of care for its senior population.
  5. Florida
    Florida has three factors working against it. First, it spends just $14,253 per senior enrollee, which means it will be locked into a low federal contribution. But, its annual Medicaid spending increases faster than most states each year. And lastly, Florida has the third-fastest growing population of people 65+. According to estimates, over 6 million people will be 65+ in Florida by 2025. How Florida will afford these growing health costs with a low federal match will be a severe challenge.

NCOA is working with dozens of other national aging and disability groups to urge Congress to reject Medicaid per capita caps because of the impact they will have on seniors in need.

What do you think of this Medicaid proposal? Share your thoughts in the comments section below.

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