Medicaid Per Capita Caps: A Cut in Sheep’s Clothing

Executive Summary

For more than 50 years, Medicaid has efficiently provided health care to low income individuals and families through a unique federal-state partnership, with the federal government contributing a guaranteed amount of each dollar a state spends on Medicaid. Under the American Health Care Act (AHCA), Republicans propose to terminate this open-ended partnership through the use of per capita caps. Medicaid caps divorce funding from states? actual expenditures, replacing a funding guarantee with an artificial cap, and forcing states to massively cut health care. In this issue brief, Senior Attorney Jennifer Lav argues that proposed caps lead to massive cuts in funding, and substantial inequities between states. Caps turn short-term state budget decisions into permanent ceilings without regard for a state?s future needs and cannot accommodate the widely variable growth rates among different subpopulations in different states.