Health Affairs

Per Capita Caps in Medicaid

Bethesda, MD -- A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation discusses per capita caps, a proposed reform to Medicaid that would limit the amount of federal spending per beneficiary. The proposal's supporters contend that it could help control the growth of federal spending on Medicaid. Critics disagree, saying that instead of slowing the rate of spending growth, it would only shift the costs to the state, ultimately limiting poor Americans' access to care.

Topics covered in this brief include:

• What's the proposal? This program would link spending growth to enrollment and not rising per beneficiary spending as is the case now. Medicaid currently covers 60 million Americans and accounts for roughly 8 percent of the US federal budget, not counting state contributions. Per capita caps are generally considered a middle ground between Medicaid's current approach and other proposals that would use block grants to fund the program.
  
  
• What's the debate? Although people believe the per capita cap approach would incentivize states to be efficient, others question whether a per capita cap would truly save the federal government money. Much of the growth in Medicaid spending over the past decade has been due to increases in enrollment. Also, spending per enrollee has grown at a slower pace than total Medicaid spending. The brief highlights major criticisms of this proposal.
  
  
• What's next? Whether a Medicaid per capita cap will emerge as part of entitlement reform efforts is unclear. Caps were floated during the recent fiscal cliff budget negotiations, but no specific proposal was offered by either Congress or the White House.

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically and health policy briefs published twice monthly at www.healthaffairs.org. Read daily perspectives on Health Affairs Blog. Download weekly Narrative Matters podcasts on iTunes.