Medicaid Financing: Dangers of Block Grants and Per Capita Caps Summary and Full Report

February 09, 2017

Since 1965, Medicaid has been providing affordable access to health care for children, workers, seniors, and persons with disabilities through a shared state-federal funding arrangement that guarantees a minimum package of health benefits to all who qualify. The 2016 elections have spurred a renewed conversation in Washington about fundamentally changing the financing structure of Medicaid to one based on block grants or "per capita caps." These discussions have intensified quickly and without any evidence that such changes are necessary or in the best interest of patients. The consequences of such a drastic change to Medicaid would be far reaching and cause significant damage to a program that's vital to the vulnerable people it serves. Such changes would place severe fiscal pressures on states and threaten patient access to care. Any discussion about strengthening the program should build on the current successful foundation rather than threatening states' financial stability—and patients' health and well-being—with drastic changes to the program's financing and structure. CLASP draws on the lessons learned from Temporary Assistance for Needy Families and the Child Care and Development Block Grant to demonstrate the detrimental effect a block grant or per capita cap would have on Medicaid.

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