States that choose to participate in the federal government’s block grant program will have to generate more funding in order to stay below the capped funding amount, according to a new report.
The Healthy Adult Opportunity initiative — which the Trump administration announced last month — has made long-term care providers cautious. It allows participating states to receive a block grant for a specific population enrolled in Medicaid — adults under the age of 65 who aren’t eligible for Medicaid on the basis of disability or who aren’t eligible under a state plan.
An Avalere Health analysis found that states participating under the aggregate cap financing model will need to generate up to 8% of total Medicaid savings in order to stay below the cap over the initial five-year period. Under the same model, 13 states would see reductions of less than 2% in total federal Medicaid funding over the five years, while 10 states would see total funding reductions of more than 5%, according to the analysis.
Under the per capita cap financing model, participating states would need to generate up to 6% in savings over the initial five-year period. Twenty-five states would see less than 2% federal funding reductions over that time span.
“The analysis demonstrates that participation in an aggregate cap demonstration will generally create a lower federal funding cap for states than per capita caps; however, the variation between the funding approaches differs by state,” the authors concluded.
“In addition, in the case of an economic downturn, per capita caps would better protect federal Medicaid reimbursement as the total reimbursement to the state would rise with an increase in enrollment,” they added.
The plan has faced much scrutiny from Democratic lawmakers.
The U.S. House of Representatives voted to condemn the plan last week in a 223-190 vote, Inside Health Policy reported. All voting Democrats supported the resolution, while all voting Republicans and Rep. Justin Amash (I-MI) opposed it.