Per Capita Caps in Medicaid Would Result in Devastating Funding Cuts

Republican plans to repeal the Affordable Care Act—including the American Health Care Act passed by the House—go well beyond repealing the health care law to a wholesale gutting of Medicaid funding, using what is called a “per capita cap” model.  All indications are that the Senate Republicans are seriously considering this model, which will lead to enormous cuts to the Medicaid program.

A Medicaid per capita cap is just that—a fixed amount the federal government pays each state for each person in the state’s Medicaid program.  While on its face that may sound like an adequate funding structure, a per capita cap amounts to a giant funding cut to Medicaid in all states.

Per Capita Caps End the Federal Government’s 50-Year Guarantee of Matching State Medicaid Spending

Per capita caps would end the federal government’s 50-year-plus guarantee to match each state’s actual Medicaid spending. In its place, Republicans want to give states funding that is capped at a pre-set amount and a pre-set growth rate.

We oppose per capita caps because the federal cap will not keep up with actual spending on health care in the states. In the House bill (the AHCA), the drop in Medicaid funding as a result of per capita caps was hundreds of billions of dollars. Read more about what this drop in Medicaid funding will mean for states in our fact sheet: Per Capita Caps: Shifting Costs to the States.