Medicaid Block Grants and Per Capita Caps Would Reduce Health Center Revenue and Service Capacity in Many States
This Study Snapshot summarizes findings from research examining how Medicaid block grants and per capita caps would affect community health centers’ total revenues and service capacity.
In early 2020, the Centers for Medicare and Medicaid Services announced the Healthy Adult Opportunity (HAO) initiative, which allows states to make potentially significant changes to their Medicaid programs in exchange for limits on federal Medicaid dollars. Specifically, states participating in the HAO initiative would agree to capped federal Medicaid funding in the form of per capita caps or aggregate caps (i.e. block grants). First introduced decades ago, these two financing mechanisms have resurfaced periodically in Medicaid policy debates, including in 2017 Congressional proposals to repeal and replace the Affordable Care Act.
With support from the Robert Wood Johnson Foundation, Anne Rossier Markus, Ph.D., J.D., M.H.S., and colleagues at George Washington University used Medicaid provisions in the 2017 Congressional proposals to test models simulating the effect of block grants and per capita caps on community health centers’ total revenues and service capacity. The researchers found that block grants and per capita caps would result in billion-dollar losses to health center revenue by 2024, with the greatest impact occurring in states that chose to expand Medicaid under the Affordable Care Act. Interviews with health center leaders underscore the potential health effects of cuts in Medicaid funding and the challenges that health centers face in planning for these and other policy changes in a rapidly evolving Medicaid landscape.