CBO analyzes Medicaid caps to curb federal healthcare spending

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The federal government could reduce its Medicaid contributions to states as a deficit reduction measure, but the move likely would achieve savings only by putting seniors at risk, according to the Congressional Budget Office.

The CBO's new report on routes to deficit reduction includes 16 healthcare related options. The first option is imposing caps on federal spending for Medicaid.

The federal government would face several decisions if it pursues Medicaid caps, which the CBO described. For instance, it could impose an overall cap or a per-enrollee cap, and it could specify spending and eligibility categories that would be affected.

However, for the government to realize substantial savings, it is likely that any cap would hit the elderly and disabled, the report noted. This is because these groups currently account for 65% of Medicaid spending, the CBO stated.

Proponents of caps note that scaling back federal Medicaid contributions might necessitate that states have greater flexibility in how they run the program, according to the report. By making it easier to implement managed care and deliver home- and community-based long-term care, the caps might in fact drive efficiencies and improve quality of care for seniors, the argument goes.

Overall caps could save the government an estimated $450 billion between 2016 and 2023, according to one CBO estimate. Per-enrollee caps could save an estimated $610 billion in that period.

Click here to access the complete report, released Wednesday.