So, What is a Per Capita Cap – And Why Should I Care?

/ March 21, 2017

By Carol Westlake

About the Author

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Carol Westlake is a nationally recognized leader in the disability community and a lifelong advocate for disadvantaged people. She is the founding executive director of the Tennessee Disability Coalition where she has served for 27 years. The Coalition’s work is grounded in collaborative efforts to improve policy and opportunities for individuals with disabilities and their families. Her background and training are in disability and public policy.   Carol regularly serves on state boards and commissions that affect people with disabilities, especially those that promote access to health care, long term supports and services, and economic self-sufficiency. She has helped to establish a number of disability advocacy programs and agencies in Tennessee. With a passion for serving the community and empowering people with disabilities, she is an active volunteer who serves on a number of nonprofit boards.

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Big changes to Medicaid are being proposed in Washington. Those changes could have a big effect on children and adults with disabilities in Tennessee. In Tennessee, Medicaid is called TennCare. TennCare acts as a health insurance program for low-income people with disabilities, seniors and children.

Medicaid is funded by both the state and federal governments. The federal government matches state spending based on the actual cost of providing services. In Tennessee, the federal government pays roughly $2 for every $1 Tennessee spends on services for those enrolled. In 2015 our state received $6.1 billion. Tennessee counts on the Medicaid funding we receive.

Roughly 283,000 children and adults with disabilities under the age of 65 receive their health coverage through TennCare.   You probably know that TennCare is also the largest source of funding for long term supports and services. This includes TennCare CHOICES (which serves seniors and individuals over 21 with significant physical disabilities), the new Employment and Community First CHOICES program (which serves individuals with intellectual AND developmental disabilities), and the DIDD waivers (which serve individuals with intellectual disabilities and are now closed to new enrollees).

The proposed American Health Care Act – designed to “repeal and replace” the Affordable Care Act, would change federal Medicaid funding to a per capita cap. A per capita cap is a fixed amount per person regardless of the cost of needed services. The intent of a per capita cap system is to reduce federal spending.

Instead of providing matching funds for the actual costs of services, per capita caps mean that the federal government would set a base amount per TennCare enrollee, regardless of cost. This amount would likely be based on our current per-person spending. That base amount could be increased by some percentage over time, based on estimates from the Congressional Budget Office, but would not take into account increases in health care costs or new blockbuster drugs or technologies.

The purpose of moving to a per capita cap system is to save the federal government money. The estimated spending cut is almost a trillion dollars over the next 10 years. Much more of the costs of health care for TennCare enrollees would be shifted to Tennessee. That is not something we can afford.

If the federal government limits its contributions to Medicaid based on a per-person amount, Tennessee would likely run out of Medicaid funding before enrollees’ needs are met. Tennessee currently ranks 39th out of all the states on per-person spending for TennCare. This means that we will likely start behind most other states if there is a shift to per capita caps, and we will sink from there.

Cuts in benefits and services will be inevitable under a “capped” Medicaid system. Talk of reducing benefits and services has already begun in Tennessee. This will likely hit people with disabilities the hardest. Approximately 42% of Medicaid spending is for people with disabilities. Services such as Medicaid waivers and home- and community-based services are considered optional services in Medicaid. States are not required to provide them.  That means that we could lose the DIDD Medicaid waivers, CHOICES and the new ECF CHOICES program.  This could force the state to return to institutional services for people with disabilities and seniors and would shift costs to individuals or family members to make up for the federal cuts.

If the federal government converts Medicaid’s payment system to per capita caps and implements the proposed cuts, it will be devastating to people with disabilities and their families. People’s needs won’t go away, but the resources to help meet those needs will.

Please let your voices be heard!

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