TheBipartisan Policy Centerand theMoment of Truth Projecthave also recently released health care reform proposals. The federal government currently pays 90 percent of the costs of medical services provided to those enrollees. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO. In the illustration, states share in half of the Federal savings or additional costs outside of a usual match corridor. If the limits on federal payments were set low enough, additional costsperhaps substantial costswould be shifted to states. Although per-enrollee caps would provide additional federal payments for each enrollee, caps below projections of federal per-enrollee spending would create a loss of revenues to states for each enrollee relative to current law. But both Biden and McCarthy ruled out any Social Security and Medicare . In addition, as health care has consumed a growing share of the nations economy, so have Medicaid and CHIP. The rest would enroll in other coverage, principally through an employer, or become uninsured. 1800 M Street NW Suite 650 South Washington, DC 20036. Caps on per-Enrollee Spending. That decrease in income would result if there was a drop in the demand for services or a reduction in Medicaid payment rates. At the end of the year, actual State spending would be compared to the benchmark in each of the four eligibility categories. Publication Type: MACStats From: Most Current MACStats Compiled Share this page on: Most Medicaid enrollees' income is under 138 percent of the federal poverty guidelines, so the effects of reduced Medicaid spending would fall principally on households toward the bottom of the income distribution. The reason for the difference is that states have limited flexibility to lower enrollment while complying with federal guidelines. In comparison, Medicare accounted for about 21 percent and private insurance accounted for about 32 percent of U.S. health care spending (MACPAC 2021). GSA has adjusted all POV mileage reimbursement rates effective January 1, 2023. EXHIBIT 16. In February, the Supreme Court heard oral arguments in the two lawsuits that paused the implementation of Biden's plan to cancel up to $20,000 in student debt for federal borrowers. States that expanded Medicaid eligibility to 100 percent of the federal poverty level (FPL) for parents and adults without dependent children prior to the ACA (i.e., pre-ACA expansion state) could also receive ahigher matching rate for childless adults. By law, at least 40 percent must be financed by the state and up to 60 percent may come from local governments. 2019). Spending : MACPAC Whether spending for the optional expansion of coverage under the ACA would also be subject to the caps (thus creating additional complexities for states that have not yet expanded coverage but might do so in the future). But these measures are only collected on a voluntary basis and the extent of adoption by the States is unclear. Ohio ranks sixth in the nation for Medicaid spending. But how healthy Caps on Overall Spending. The Medicaid and CHIP Payment and Access Commission is a non-partisan legislative branch agency that provides policy and data analysis and makes recommendations to Congress, the Secretary of the U.S. Department of Health and Human Services, and the states on a wide array of issues affecting Medicaid and the State Childrens Health Insurance Program (CHIP). In 2021, the states received, in aggregate, $521 billion in federal funding for Medicaid and spent $260 billion of their own funds for the program. Under the Patient Protection and Affordable Care Act (ACA, P.L. The temporary increase, part of the American Recovery and Reinvestment Act of 2009 (P.L. If use of privately owned automobile is authorized or if no Government-furnished automobile is available. Total Medicaid spending was nearly $604 billion in FY 2019 with 64.4% paid by the federal government and 35.6% financed by states. Combined federal and state expenditures for Medicaid accounted for about 16 percent of U.S. health care spending in calendar year (CY) 2019, the most recent year for which historical data are available. As noted, the federal Medicaid/CHIP payments made to a state depend on overall state spending on those programs. Two student . CBO and the staff of the Joint Committee on Taxation (JCT) estimate that roughly 65 percent of people who lost Medicaid coverage would become uninsured under caps that were adjusted for inflation using either the CPI-U or the CPI-U plus 1 growth factor. Medicaid and CHIP Payment and Access Commission. But, for those who do work, a loss of benefits could increase the number of hours they work to compensate for the need to spend more of their own resources on health care. Those responses would increase Medicaid spending and lower federal savings. Under this option, the amount that states receive from the federal government to operate the program would be capped. For caps on per-enrollee spending, the federal government would set an upper limit on federal payments for each Medicaid enrollee, on average. In the initial years after expansion, costs for expansion enrollees were higher than those for other non-disabled adults in Medicaid, which were the result of higher than anticipated capitation rates paid to managed care plans. Another consideration about the base year is whether any unique policies or economic conditions were in effect that influenced Medicaid spending and enrollment in that year. That year, federal spending for Medicaid administration was $20 billion, or about 5 percent of total federal Medicaid spending. Many view Medicaid reform as a partisan issue. The net savings from capping overall spending would depend greatly on the growth factor. This is despite the fact that Medicaid now covers more than 50 million Americans, including many of the most vulnerable Americans, and is slated to expand further. Per enrollee benefit spending is estimated to have increased by 3.6 percent between 2016 and 2017. Data sources: Congressional Budget Office; staff of the Joint Committee on Taxation. This policy would be enacted in 2023 and would take effect in October 2024. Reduce Federal Medicaid Matching Rates - Congressional Budget Office The Medicaid statute permits states to raise their share of Medicaid expenditures through multiple sources, including state general revenue, contributions from local governments (including providers operated by local governments), and specialized revenue sources such as permissible health care-related taxes. The Social Security Administration has two programs that offer financial aid to disabled recipients. In contrast, Medicaid is a shared responsibility between the federal government and states, and most of the programs funding flows through state budgets. EXHIBIT 16. Medicaid Spending by State, Category, and Source of Funds 117-169) did not include any drug pricing provisions directly affecting Medicaid. Between SFY 1989 and 2008, Medicaids share of state budgets reflected similar trends regardless of whether federal funds were counted (Figure 2). While there is considerable innovation occurring in State Medicaid programs to address quality and cost problems, it is occurring through a one-off waiver process that does not necessarily provide strong and systematic support for the most effective reform efforts. Moreover, as we noted in our report, some States like Oregon, California, and New York are now implementing waivers that have an element of State shared savings and shared risk. Consistently tracking the quality of care across all 50 States is a challenge in part because of well-documented variations in the use and type of quality measures adopted by each States Medicaid program. 2016). In fiscal year (FY) 2019, total Medicaid benefit spending was estimated at $594.6 billion, including $80.0 billion in spending on newly eligible adults (CMS 2020)). State and Local Expenditures | Urban Institute Kazakhstan: Advance market reforms first, pour concrete later, The Sustainable Development Goals and the United States: Turning US commitments on sustainability and equity from rhetoric to action, Artificial Intelligence & Emerging Technology, approximately $491 billion in fiscal year 2013, Medicaid was just under 20 percent of States overall spending from general funds in 2012second only to K-12 education spending, Alan Weil of the National Academy of State Health Policy independently proposed a similar concept. Effective/Applicability Date. Total Medicaid federal and state expenditures in the U.S. 1966-2019 The most important statistics Percentage of U.S. Americans insured by military health care 1990-2021 . We hope that these are indications of a growing consensus on Medicaid reform. For the purposes of these estimates, CBO anticipates that, on average, states would replace about one-third of the lost federal funds; however, the agency does not project how individual states would respond to the change. Even so, many state efforts may require some time and significant modifications to succeed. Medicaids share of state budgets varies across states and differs substantially depending on how it is measured. Medicaid spending and enrollment are likely to increase in FYs 2020 and 2021 due to the COVID-19 pandemic and its effects on the economy and beneficiaries health needs. For the caps on overall spending, the agencies estimateusing the CPI-U growth factorthat the additional marketplace and employment-based coverage would increase federal outlays by $68 billion and decrease revenues by $17 billion from 2024 through 2032. The foundation of Medicaid Shared Savings should be improving the quality of care for Medicaid beneficiaries. Per-Enrollee Caps. That's because having better access to health care in the long term is associated with being healthier, staying in school longer and eventually earning . Funding for education is generally a state and local responsibility, but the local portion is generally not reflected in state budgets. This plan would bring an additional $1.62 billion in federal funds to the state over two years and expand Medicaid to 138% of the federal poverty level adding 89,700 people to the program. The per capita rates would be based on historical State spending, but could be adjusted to account for the impact of coverage expansions or other population shifts within enrollment categories that might impact per capita cost estimates. Between 1970 and 2014, U.S. health care spending increased from 7.0 percent of GDP to 17.5 percent; over the same period, Medicaid spending increased from 0.5 percent of GDP to 2.9 percent (OACT 2015a, 2015b). In general, overall caps would consist of a maximum amount of funding that the federal government would provide a state to operate Medicaid. . Caps on federal Medicaid spending would represent a fundamental restructuring of Medicaid financing. 1800 M Street NW Suite 650 South Washington, DC 20036. Capped federal spending would create uncertainty for states as they planned future budgets because it could be difficult to predict whether Medicaid spending would exceed the caps and thus require additional state spending. Why does in-kind assistance persist when evidence favors cash transfers? The caps could also target spending for nondisabled adults and children but leave spending for the disabled and elderly uncapped. During the Great Recession, contributions to the non-federal share increased by 21 percent as more than 10 million additional people enrolled in Medicaid. Qualified individuals include low-income adults, children, pregnant women, elderly adults, and people with disabilities. The other nine states that haven't adopted Medicaid expansion are Wyoming, Kansas, Texas, Tennessee, Mississippi, Alabama, Georgia, South Carolina and Florida, according to the report.. KFF reported in June that the federal government spent more than $117 billion in enhanced federal Medicaid funding to discourage states from disenrolling people during the COVID-19 pandemic. Between CY 1970 and CY 2018, total U.S. health care spending increased from 6.9 percent of gross domestic product (GDP) to 17.7 percent; over the same period, Medicaid and CHIP spending increased from 0.5 percent of GDP to 3.0 percent (MACPAC analysis of national health expenditures here). While performance measures will never be perfect, the implementation of Medicaid Shared Savings should include a plan for steady improvement in performance measures and supporting data to move toward outcomes-oriented measures, including patient-reported outcome and experience measures. From 2018 to 2027, expenditures are projected to increase at an average annual rate of 5.3 percent and to reach $1,007.9 billion by 2027. New York's State Share of Medicaid Spending is Due to Jump 22 Percent For per-enrollee caps, the agencies estimateusing the CPI-U growth factorthat the additional coverage would increase federal outlays by $50 billion and decrease revenues by $13 billion from 2024 through 2032. The independent source for health policy research, polling, and news. Who has to leave the Federal Reserve next? PDF What is a Medicaid Waiver? - The SCAN Foundation The FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures, but exceptions to the regular FMAP rate have been made for certain . If reductions in federal payments were large enough, states would probably resort to a combination of all approaches. States in the upper quartile of per capita spending could have their benchmark set relatively higher compared to other States, but the growth rate would be lower. Total Federal and State Medicaid expenditures rose to approximately $491 billion in fiscal year 2013, and Medicaid was just under 20 percent of States' overall spending from general funds in . How will the Supreme Courts affirmative action ruling affect college admissions? But as our Bending the Curve report showed, bipartisan Medicaid reform is possible. The savings would represent about 20 percent and 13 percent, respectively, of projected federal Medicaid spending in 2032. Alternatively, the growth factor could be set to make the increase in federal Medicaid spendingoverall or per enrolleematch changing prices in the economy as measured, for example, by the consumer price index for all urban consumers (CPI-U). The net savings could be made larger or smaller by adding or subtracting additional percentage points from the CPI-U, and the change to net savings would be reasonably, though not perfectly, proportional to the change. Karaganovs nuclear rant ought to scare Lukashenko. First, if projected spending growth, which averages 5.5 percent in the second half of the 10-year period, was substantially lower in the absence of the caps than CBO projects, the savings realized by capping Medicaid spending would be significantly smaller. Conversely, a lower shared savings rate will increase Federal savings at any given savings level, but may not be enough of an incentive to drive Medicaid reform in the States. 1 Medicaid's share is estimated because spending for the program cannot be precisely isolated in the data on combined state and local spending from the U.S. Census Bureau's Survey of Government Finances (SGF), for which SFY 2012 information is the most recent. Each of the four benchmarks would increase over time; we would suggest setting the growth rates in a way that reflects national spending trends but is somewhat below current-law projected growth. Medicaid Shared Savings must overcome a number of key implementation challenges, including finding reliable ways to measure per-beneficiary spending and spending benchmarks, developing robust systems of quality measurement relevant to Medicaid beneficiaries, and conducting effective ongoing evaluation to identify what approaches are working or not, and to ensure progress.