Avalere found that capped Medicaid payments through the block grants or per capita caps could reduce federal spending on the program for many states.
The block grants would likely reduce federal Medicaid spend by $150 billion over five years while the per capita grants would reduce spending by $110 billion. "Medicaid block grants and per capita caps serve as vehicles to control federal spending on the program and put more of the decision-making on things like covered services and program eligibility in the hands of the states," said Dan Mendelson, president of Avalere. "The details of block grant and per capita caps are critically important in determining the distribution of funding across states, plans and providers."
The projected reduction in federal Medicaid spending over the next five years for both block grants and per capita caps are:
Block grant: $10 billion
Per capita caps: $7 billion
Block grant: $19 billion
Per capita caps: $13 billion
Block grant: $29 billion
Per capita caps: $20 billion
Block grant: $41 billion
Per capita caps: $29 billion
Block grant: $53 billion
Per capita caps: $40 billion
The programs would impact individual states differently. Avalere modeled how each program would change for states based on 2008 federal funding amounts. Under the block grant model, the only state to experience increased funding would be North Dakota—an 11 percent increase. The largest reduction in federal funding would be Arizona, with a 62 percent drop.
Under the per capita caps plan, 24 states would receive increased federal funds while 26 states would see federal funding drop by less than 30 percent.