Medicaid Funding Caps Would Lead to Cuts, Less Innovation

Plans by President-elect Trump, House Speaker Paul Ryan, and Health and Human Services Secretary-nominee Tom Price to radically change Medicaid's structure by converting it to a block grant or “per capita cap” and cut its federal funding over time would likely mean benefit and eligibility cuts and less state innovation, as I explain in a new paper.

Under Medicaid's current structure, the federal government pays a fixed share of each state's Medicaid costs in providing covered services to all eligible beneficiaries who apply. States have lots of flexibility on how they deliver health care, and every state designs its Medicaid program to fit its needs and environment. The significant innovation that's happening in most states today is due to Medicaid's flexibility and financing structure.