Medicaid is a federal-state partnership that provides health care to more than 79 million Americans. Since its inception, the federal government has paid a fixed share of states’ Medicaid costs based on incurred costs of care. This allows states to budget for their share of the resources needed for their Medicaid program. A per capita cap payment system would fundamentally change this arrangement and lead to an increased burden on states over time. Under a per capita caps approach, the federal government would provide each state with a fixed amount of federal funding per enrollee. It is estimated that, over time, this fixed amount will not keep pace with inflation or medical costs.
The result could force states to cut or reduce benefits or coverage and reduce provider payments. In turn, this could force essential hospitals and health systems to cut or reduce critical services for all patients.
We urge Congress to reject a per capita cap approach, as it threatens the stability of the Medicaid program, patient care, and state-level finances.
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