Report: Medicaid Per Capita Caps and Addressing Medicaid’s Biggest Cost Driver

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The vast majority of Medicaid spending increases over the past few decades has been the result of skyrocketing enrollment. Capping spending growth per enrollee will improve the sustainability of the program from a federal perspective, but the impact may be small and will not address the underlying cause of spending growth. In order to protect resources for the most vulnerable, states will need new tools to help manage enrollment. The American Health Care Act lays the groundwork for this new flexibility, giving states the option to create work requirements for able-bodied adults on Medicaid for the first time ever. The Senate should build upon this new flexibility and provide states with additional tools to ensure the program can become sustainable over the long run.

Congress should provide states with at least four additional reforms to give states the flexibility needed to protect limited resources for the truly needy:

1. Allow states to make eligibility and benefit changes prospectively,grandfathering existing enrollees
2. Allow states to check assets for most enrollees
3. Allow states to verify eligibility more frequently
4. Allow states to lower the home equity exemption