Quick summary:
• GOP proposals to cap or block grant Medicaid funding would dramatically reduce federal support, shifting costs to states and risking healthcare for millions of Americans.
• The Center on Budget and Policy Priorities (CBPP) warns that states would be forced to cut Medicaid eligibility, benefits, and services due to insufficient federal funding.
• Medicaid currently covers nearly 80 million people, including low-income families, children, seniors, and people with disabilities.
• Per capita caps and block grants would not account for rising healthcare costs, meaning states would face growing funding shortfalls over time.
• Millions could lose access to essential care like cancer treatments, chronic disease management, and lifesaving medications, increasing medical debt and worsening health outcomes.
• Historical data shows that if per capita caps had been implemented in 2018, almost every state would have exceeded its funding limit within a few years.
• Critics argue these proposals prioritize tax cuts for the wealthy over the health needs of vulnerable Americans.
Millions of Americans could lose access to healthcare under Republican proposals to overhaul Medicaid, according to a recent analysis by the Center on Budget and Policy Priorities (CBPP). The proposals, which include imposing a per capita funding cap or converting Medicaid to a block grant, would fundamentally change the structure of the federal healthcare program and lead to devastating cuts in funding.
CBPP’s analysis shows that these proposed changes would “dramatically change Medicaid’s funding structure, deeply cut federal funding, and shift costs and financial risks to states.” The study warns that these policies would leave millions without health coverage, increase medical debt, and worsen health outcomes across the country.
The GOP proposals come as Republicans—who now control both houses of Congress and the White House with President-elect Donald Trump’s upcoming inauguration—seek to implement a massive tax cut that would be partially funded by reducing social programs, including Medicaid.
Medicaid is a vital program that provides health insurance to nearly 80 million Americans, including low-income families, children, pregnant women, seniors, and individuals with disabilities. Along with the Children’s Health Insurance Program (CHIP), Medicaid ensures that millions of people can access critical healthcare services they would otherwise be unable to afford.
Medicaid funding comes from both the federal government and states. The federal government covers approximately 70% of Medicaid’s costs, with the remainder paid by states. Total Medicaid spending for the 2023 fiscal year was around $860 billion.
Research shows that Medicaid significantly improves health outcomes, reduces premature deaths, and prevents medical debt. The program provides essential care, from cancer treatments to chronic disease management, and is a lifeline for millions of vulnerable Americans.
The GOP’s proposals: Per capita caps and block grants
Republican leaders have proposed two key policy changes to Medicaid:
1. Per capita funding cap: This would set a fixed amount of federal funding per enrollee. While this might adjust for the number of people enrolled in Medicaid, it would not account for rising healthcare costs or unexpected medical needs, leaving states to cover any funding shortfalls.
2. Block grants: Under this proposal, states would receive a fixed lump sum of federal funding for Medicaid, regardless of changes in enrollment or healthcare costs. This would further shift the financial burden to states and reduce federal responsibility.
Both proposals would result in significant cuts to federal funding, forcing states to either raise taxes or cut Medicaid coverage and benefits.
CBPP’s analysis warns, “Faced with large and growing reductions in federal funding, states would cut eligibility and benefits, leaving millions of people without health coverage and access to needed care.”
Who would be affected?
If these proposals are enacted, millions of Americans could lose their healthcare coverage, including:
• Low-income families: Many families who rely on Medicaid for basic healthcare needs would be left without access to doctors, medications, and preventive care.
• Children: CHIP, which is part of Medicaid, provides essential healthcare services to millions of children. Cuts to Medicaid funding would jeopardize their access to care.
• People with chronic illnesses: Individuals with conditions like diabetes, heart disease, and cancer could lose access to lifesaving treatments and medications.
• Seniors and people with disabilities: Medicaid provides long-term care services for seniors and people with disabilities, including nursing home care. These populations would be particularly vulnerable to funding cuts.
Without Medicaid, many people would face overwhelming medical debt, delayed diagnoses, and worse health outcomes. CBPP warns that “people with cancer would be diagnosed at later stages and face a higher likelihood of death.”
The GOP proposals would also have a significant impact on state budgets. Under a per capita cap or block grant system, states would be responsible for covering any funding shortfalls. This would put enormous pressure on state governments to either cut Medicaid coverage or raise taxes to make up the difference.
CBPP explains that the funding cuts would be “unpredictable and largely beyond states’ control,” with factors such as rising medical costs, demographic changes, and public health emergencies contributing to potential budget crises.
The analysis also highlights that states with lower initial Medicaid spending would be disproportionately affected by the proposals. States that have already implemented cost-containment measures or have restrictive eligibility criteria would have less room to make additional cuts, forcing them to reduce coverage even further.
Republican efforts to impose per capita caps or block grants on Medicaid are not new. Similar proposals were made during the Trump administration, but they failed to pass Congress.
CBPP’s analysis shows that if a per capita cap had been implemented in 2018, nearly every state would have exceeded its funding cap within a few years, resulting in substantial federal funding losses. This would have forced states to make drastic cuts to Medicaid coverage and benefits.
The analysis also notes that Medicaid spending per person has grown more slowly than private insurance, demonstrating that the program is an effective cost-containment tool.
The GOP proposals are part of a broader agenda to fund a massive tax cut that primarily benefits wealthy individuals and corporations. By cutting social programs like Medicaid, Republicans aim to offset the cost of these tax cuts.
Critics argue that these proposals prioritize the interests of the wealthy over the needs of vulnerable Americans. “The federal funding cuts to states would be large and unpredictable,” CBPP warns. “Restructuring Medicaid’s financing would also make the program highly vulnerable to future cuts.”
The proposed changes to Medicaid would have devastating consequences for millions of Americans. Many would lose access to essential healthcare services, leading to worse health outcomes and financial hardship.
CBPP’s analysis concludes, “In short, recent proposals for a per capita cap or block grant would cause people to lose health coverage and benefits, shift costs and risks to states, and destabilize healthcare providers.”
The report emphasizes the importance of preserving Medicaid’s current federal-state financial partnership to ensure that millions of Americans continue to have access to the healthcare they need.
Healthcare advocates are urging policymakers to reject these harmful proposals and preserve Medicaid’s current funding structure. As CBPP notes, “Policymakers should reject proposals for per capita caps and block grants and instead retain the current federal-state financial partnership.”
To learn more about the policy work being done through the Center on Budget and Policy Priorities, click here.
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