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Memo re: Medicaid Per Capita Cap Proposals [i] (December 1995)

handle is hein.congrec/cbo9184 and id is 1 raw text is: CONGRESSIONAL. BUDGET OFFICE June E. O'Neill U.S. CONGRESS Director WASHINGTON, D.C. 20515 MEMORANDUM December 7, 1995 TO: Interested Parties FROM: Linda Bilheimer SUBJECT: Medicaid Per Capita Cap Proposals Attached is a memorandum outlining important design and implementation issues for Medicaid per capita cap proposals. It focuses primarily on those features of per capita cap proposals that would affect Medicaid expenditures, but also addresses some other policy concerns,. Per capita cap proposals would typically limit average Medicaid expenditures per beneficiary but would not restrict the number of beneficiaries covered by the program. Thus, they would lack the tight controls on Medicaid spending offered by a block grant, but would provide more flexible financial support to states with rapidly growing low-income populations and also during periods of recession. Alternative approaches to capping average Medicaid expenditures--that could make per capita cap proposals closer to block grants--are beyond the scope of this memorandum. An example of such a policy would be to cap each state's average Medicaid expenditures per person in poverty, rather than per Medicaid beneficiary, and compare actual expenditures per person in poverty to that limit. In theory, that approach would accommodate the needs of states with growing poverty populations. But, because of the time lag in obtaining poverty data, such states could have difficulty keeping their Medicaid expenditures within the limits. States would have stronger incentives to contain Medicaid spending than under a typical per capita cap proposal because increases in the number of Medicaid beneficiaries, as well as in spending per beneficiary, would cause Medicaid spending per person in poverty to rise relative to the capped amount. If you have any questions about this memorandum, please call me at 6-2673. Attachment

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