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House GOP Eyes Medicaid Per-Person Spending Cap As Possible Block Grant Compromise

Posted: September 12, 2012

House Republicans have discussed pushing a Medicaid per-person spending cap next year as a possible compromise to the Medicaid block grant proposal in the House-passed budget, according to Rep. Mike Burgess (R-TX), but Democratic lobbyists say it is doubtful Congress could work out a deal in part because per-person caps would create bureaucratic nightmares. Nevertheless, the concept deals with one of the main arguments that Democrats make against block grants, which is that more people need Medicaid during economic downturns and block grants do not account for that counter-cyclical nature of the program.

The concept of capping Medicaid spending per person instead of per state is mostly associated with Republicans -- Rep. Bill Cassidy (R-LA) is pushing the approach in a bill called the Medicaid Accountability and Care Act -- but former President Bill Clinton also entertained the idea in 1997. When the then GOP-controlled Congress passed a Medicaid block grant bill, Clinton vetoed it, then proposed per-capita caps as a compromise. Clinton and Republicans did not work out their differences, but lobbyists say it's plausible that a similar proposal could come up next year during deficit-reduction talks.

Burgess told Inside Health Policy that several House Republicans have discussed the idea and he believes it's a proposal that could gain traction, but he added that he does not know whether it is being seriously considered. He said he likes the idea of money following the person and thinks that it would be a more fair and open way of funding the safety net health care program. However, he said the proposal could create a lot of fights, especially among states, because the approach could lead to some states getting more Medicaid funding than they do now and other states getting less.

Rep. Phil Gingrey (R-GA), who is a member of the GOP Doctors Caucus with Burgess and also is amenable to the idea of per-person caps, echoed the state issue. He said some states have been gaming Medicaid to get more federal money and those states would likely be against a per-capita cap approach.

The National Governors Association in 1997 opposed Clinton's proposal but an NGA spokesperson said the group does not have a position on Cassidy's bill or the approach in general. The National Association of Medicaid Directors also does not have a position, NAMD Executive Director Matt Salo said.

It's not clear how Senate Democrats would respond to a Medicaid per person cap. Sen. Ron Wyden (D-OR), who sponsored a Medicare premium support proposal with GOP vice presidential candidate Paul Ryan (WI), an approach that is in now the House budget, would only say that he opposes Medicaid block grants and declined to discuss per-person caps.

Bruce Leslie, who worked with the White House on per-capita caps as a Senate staffer in 1997 and is now the head of First Focus, said per-person caps are better than block grants, but the policy is unusually difficult to write into law. One of the first problems that would need to be worked out is whether the caps will be nation-wide or by state. If national caps are chosen, states such as New York with higher expenses, would lose out, he said. The policy also would lock in the inefficiencies of states that have done a poor job of rooting out fraud, he added.

Another issue, Leslie said, is that since Medicaid beneficiaries differ significantly, lawmakers likely would try to set higher caps for sicker and disabled beneficiaries. But that would be very difficult to do, would create a lot of bureaucracy, would lead to formula fights among advocates of beneficiaries in different demographics and could allow states to game the system, he said. -- John Wilkerson

Originally published in Inside CMS on September 13, 2012.

Public Content, Vol. 15, No. 33

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