Transforming Medicaid into a block grant or per capita cap program could save the federal government more than $100 billion over five years, a new study found.
The research from the healthcare firm Avalere Health was released as the GOP-controlled Congress eyes overhauling Medicaid as part of a replacement to Obamacare. However, critics say that the move could shift more costs to the state.
Several replacement plans for the Affordable Care Act have advocated replacing Medicaid with a block grant program in which states would get a fixed amount of federal money for Medicaid, or a per capita cap that provides a fixed amount of funding per beneficiary.
Both reforms would replace the current system which has the federal government pay a percentage of the states’ total spending on Medicaid. The Affordable Care Act gave states the option of expanding the program, and 31 states and the District of Columbia chose to expand it.
While both proposals would save federal money, the block grant system would save more.
Avalere found that block grants would result in $150 billion in Medicaid savings over five years compared to $110 billion over five years for per capita caps.
The firm looked at Medicaid funding from the federal government that would have changed under each reform from 2001 to 2008.
The move toward block grants or per capita caps got severe pushback from the powerful senior citizen lobby AARP. The group said last week that both reforms could hit poor seniors.
“We have serious concerns about setting caps at a time when per-beneficiary spending for poor seniors is likely to increase in future years,” AARP said in a letter to House lawmakers.
Currently, four House and Senate panels are writing legislation to repeal Obamacare, and have a goal of getting a House vote by April at the latest.
