The health care debate has been in large part characterized by rhetoric and misinformation with little discussion on how the House’s American Health Care Act would actually impact states. The Congressional Budget Office – with its poor track record of analyzing proposed legislation – estimates that it would cut Medicaid spending by $800 million over ten years by rolling back the Medicaid expansion under the Affordable Care Act (i.e. Obamacare) and by implementing Medicaid per capita caps.
Medicaid is jointly funded by the states and federal government with the federal government providing matching funding for a state’s Medicaid costs. This method has been much criticized because it actually encourages states to spend more on Medicaid benefits because the federal government will pick up approximately half the cost. Under per capita caps, the federal government would cap its contribution to the states based upon a preset formula. This would fundamentally change how the Medicaid program is funded. Many argue that it would bring some much-needed fiscal discipline to the Medicaid program that was greatly expanded under Obamacare and would force states to prioritize how much they want to budget for Medicaid.
With the Senate having yet to even pass their own health care bill, it’s much too early to tell if Medicaid caps will become law. However, be skeptical of arguments that insist that “people will die” if Obamacare is modified. As is often the case, the facts are much different from such rhetoric.