Funding for low-income children could decrease by $43 billion over the next 10 years if the Medicaid par capita caps are kept in place under the American Health Care Act and the legislation passes as-is, according to new research from Avalere.
Nationwide, children are the largest group covered by Medicaid. Avalere based its research around funding for children who are eligible for Medicaid based on their family's income, not their disability status.
The state-specific reductions vary between per-capita caps and block grants, the latter of which states have the option to select under AHCA for a 10-year period starting in 2020.
Avalere found that per-capita caps would reduce Medicaid funding by a cumulative $42.6 billion over 10 years, with per-state reductions ranging from at least $59 million (North Dakota) or up to $5.08 billion (Texas) over 10 years. The following states stand to see the steepest declines in federal Medicaid spending for non-disabled children per the AHCA's per-capita caps from 2020-2026:
- Texas: $5.08 billion
- California: $4.7 billion
- Florida: $2.29 billion
- New York: $2.64 billion
- Tennessee: $1.91 billion
Examining block grants in isolation, Avalere found states would see a $78 billion cumulative reduction in federal funding over 10 years if all states selected the block grant option. Avalere calculated block grant reductions as percents, finding a range from a 14 percent reduction in West Virginia to a 25 percent reduction in California.
Since block grants create financial incentives for states to reduce Medicaid enrollment, states that select this option are more likely to take measures to reduce Medicaid enrollment growth. "In other words, states may reduce enrollment proportionate to their federal funding reduction under this model in order to maintain current state funding levels or generate savings to be used in future years," according to the research brief. The block grant option is less generous than per capita caps, since it constrains both per person spending and overall enrollment growth.
Access Avalere's complete research, which it completed for the Children's Hospital Association, here.