On Medicaid Money, GOP Has Win-Or-Lose Proposition For States

Kaiser Health News, March 20, 2017

A per-capita system would shift costs and financial risks to the states and could force them to cut benefits or eligibility.

A per-capita system would shift costs and financial risks to the states and could force them to cut benefits or eligibility.

This article first appeared March 20, 2017 on Kaiser Health News.

By Phil Galewitz

New England's bucolic countryside looks much the same on either side of the Connecticut River separating Vermont from New Hampshire.

But Medicaid beneficiaries are far better off in Vermont.

Vermont generously funds its Medicaid program. It provides better benefits, such as dental care, and pays doctors more than New Hampshire's program does. That brings more doctors into the program, giving enrollees more access to care.

New Hampshire has twice Vermont's population, but Vermont spends almost as much on Medicaid and covers more enrollees. Under the complicated formulas that set federal funding, Vermont's substantial investment helps it capture nearly as much aid from the government as New Hampshire gets.

States' policies differ about who or what to cover in Medicaid, and those decisions have led to historical variances in how much federal money they receive. House Republicans' effort to shrink federal Medicaid spending would lock in the differences in a way that favors those already spending high amounts per enrollee.

"Republicans are finding out why changing Medicaid is so hard and why the easiest thing to do is to do nothing given the substantial variation in federal spending across states," said John Holahan, a health policy expert with the nonpartisan Urban Institute.

Here's why.

Medicaid, the national health program for low-income people that covers about 1 in 5 Americans, is 60 percent funded by the federal government and 40 percent by states. Total spending in 2015 was about $532 billion, according to the latest official data.

Kaiser Health News

Kaiser Health News is a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.

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