California government officials, providers and Medicaid plans are behind lobbying efforts to cap Medicaid spending per person, sources following the effort say, because state officials and providers see the policy as a way to avert Medicaid cuts during entitlement-reform talks next year and some Medicaid plans in California believe they would profit under per capita caps. Stakeholders from multiple states including California were slated to discuss the per capita caps this week in Chicago, a source says.
Former Senator Tom Daschle said at an AIS Health Business Roundtable conference on Oct. 4 that Congress should fund state Medicaid programs on a capped-per-person basis, which is viewed as a compromise to Medicaid block grants that some Republicans have said they would entertain. Some Democrats are upset that Daschle, President Obama's first pick for HHS secretary before he withdrew over an income tax controversy, has backed the caps publicly before the party even begins to negotiate entitlement cuts.
California's Medicaid program, Medi-Cal, pays providers less than most states, so setting per capita rates based on national averages would benefit the state as well as its plans and providers, sources say. But the outcome of tax referendums on the ballot in California could determine the extent to which providers lobby for per capita caps, because if residents vote for higher taxes, there will be less pressure to cut provider rates.
Also, health care outcomes in California are lackluster, and populations in poor health that cost the system the most offer plans the biggest profit opportunity because there is more room in these populations to improve care reduce spending by improving care coordination.
Democratic California Governor Jerry Brown's administration considers caps a way to avert Medicaid cuts in the state, sources say. State officials expect Medicaid to be on the chopping block, but if Congress instead uses caps to cut spending, the cuts to California could be blunted if the caps are based on national averages that are higher than California rates, sources note.
California officials organized a closed-door meeting in Chicago this week at which other state government officials and representatives for health plans and providers were slated to discuss the per capita cap idea, a source following the issue says. It's not clear what came of that meeting, but the planned gathering indicates that some other states are also interested in the idea.
But how a per-capita approach would eventually play out in California or other states depends largely on how it is crafted, sources caution. States with better provider pay, such as New York, likely would argue for setting caps based on pay in each state, says Bruce Lesley, president of First Focus, so every state would suffer Medicaid cuts instead of penalizing only those that are paying providers better.
Also, policy makers likely would be inclined to set spending caps at different levels for different types of beneficiaries to protect the disabled and frail, he adds, and some states may consider applying the caps only to newly eligible beneficiaries.
But patient advocates are not happy with the idea, which they say is simply being pushed as a deficit-cutter.