Medicaid Per Capita Caps

Elder Care Attorney CT

Health care reform legislation has been a major topic of debate at the federal level for a number of years now.  Current Republican efforts are focused on trying to change the Affordable Care Act that was passed during the administration of President Obama.  Several months ago the Republican controlled House of Representatives unveiled their latest proposal which is termed the American Healthcare Act.  If it is passed, that Act would include a massive overhaul in the way that Medicaid is administered and its impact would be felt particularly hard in certain states.

Medicaid is a program which is administered by each state separately.  But it is funded jointly between the states and the federal government.  The current funding system is for the federal government to give each respective state matching funds to cover a portion of that state’s actual Medicaid costs.  That means federal contributions will adjust as each state’s Medicaid care costs change.

The proposed American Healthcare Act would make a major change to that Medicaid funding system.  The Act would put a “per capita cap” on the amount the federal government will contribute to a particular state.  The cap, or limit, would be based on a preset formula.  In other words, the amounts contributed to a particular state would no longer be tied to a particular state’s actual financial need.

The proposal would hit particular states harder than others due to the way the caps will be calculated.  First, the amounts would be set according to each state’s actual 2016 Medicaid costs.  So states that operated more efficiently and managed to keep their costs low in that year would effectively be punished as compared to states that were less efficient and spent more on care.  According to the National Council on Aging (“NCOA”), those states include North Carolina, California, Nevada, Georgia, and Florida.  See https://www.ncoa.org/blog/straight-talk-medicaid-caps-seniors/?utm_source=ncoa&utm_medium=homepage

Since Connecticut spends a relatively high amount per Medicaid enrollee it would fare better than most states.  According to a Center on Budget and Policy Priorities (“CBPP”) report, the state ranks 11th amongst the 50 states in the amount spent per Medicaid enrollee.  See Table 2 in https://www.cbpp.org/research/health/medicaid-per-capita-cap-would-disproportionately-harm-some-states#_ftn19.  However, since the Federal funding will be essentially fixed that means that each year going forward, more and more of the burden will fall on the state budget.  It is also likely to increase the cost of private pay rates and may eliminate or reduce support for home based care.

Secondly, once those caps have been locked in for particular states, they will not be adjusted as time goes on.  Those same five “efficient” states happen to be states whose population of those 85 years or older is growing much faster than the national average.  That same NCOA article references a statistic that the cost of care for seniors over the age of 85 is about 2.5 times as much as the cost for people in the 65-74 age range.  So those five states in particular will feel severe budget pressures when the cost of Medicaid-related care skyrockets yet federal funding contributions remain locked in based on 2016 Medicaid spending levels.

Third, that same CBPP report highlights another area in which per capita caps could harm Connecticut significantly.  The report explains that the current Medicaid contribution shifting mechanism automatically adjusts for increased Medicaid costs in the wake of periodic natural disasters.  The report lists Connecticut as a state with a higher than average natural disaster risk (also see http://www.corelogic.com/about-us/news/corelogic-identifies-us-states-at-highest-risk-of-property-damage-loss-from-natural-hazards.aspx).  So there would no longer be an increase in federal Medicaid contributions if and when Connecticut is hit with a major natural disaster.

Although the impact of this systemic change would be felt most acutely in the five states referenced above, nonetheless all of the state governments will need to confront dwindling federal Medicaid dollars.  And one simple way states to keep their costs down is to deny more Medicaid benefits in the first place.  So in our practice the inevitable result will be a need for us to fight even harder in advocating for our Medicaid clients.  And we suspect that folks who think they can tackle a Medicaid application without the assistance of an experienced elder law attorney may find they are engaged in a battle that will be increasingly harder to win.

If you have any questions about the issues presented above or care to discuss any other planning issues, please call us at 860-769-6938, visit our website at http://www.weatherby-associates.com or email us at info@weatherby-associates.com.

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