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5 Ways Plans to Cap Medicaid Funding Put Seniors at Risk

February 22, 2017

The plan to replace the Affordable Care Act (ACA) that Congressional leaders released last week contains drastic changes to Medicaid funding that would raise costs and ration care for both older adults and people with disabilities, throwing the lives of families into chaos.

The new Congressional proposals would cap the level of Medicaid funding for states, either through block grants or per capita caps. Under such a plan, federal payments would drop sharply and some federal protections could evaporate because states could receive money with few requirements. Below are five ways older adults would be harmed by the proposed changes to Medicaid funding.

  1. Per-capita caps or block grants would result in devastating cuts in Medicaid funding.
    The primary purpose of restructuring the Medicaid program through per capita caps or block grants is to cut federal funding for Medicaid. For example, the FY 2017 House Budget proposal released last year cut federal funding for Medicaid by $1 trillion over a ten-year period, from 2017-2026. Such deep cuts would almost necessarily result in fewer services and benefits for the people who rely on these programs–especially older adults and people with disabilities whose care makes up nearly half of Medicaid spending.
  1. Seniors could lose the assistance they need to remain living at home.
    Programs that help keep seniors at home and in their communities could be shrunk. Over two-thirds of Medicaid funding for seniors pays for long-term services and supports. If Medicaid is capped and cut, states would not have enough money to cover the home and community-based services that residents need. States may be forced to reduce the number of people who can receive help, the number of hours of service they get, or the type of services they can receive.
  1. Poor seniors could face unaffordable medical costs.
    Medicaid helps the poorest seniors and people with disabilities pay for the costs that Medicare does not pay. If Medicaid is cut through per capita caps or block grants, states may cut back on paying for Medicare premiums or cost-sharing. This could force millions of low-income older adults and people with disabilities to forego needed medical care, or leave them with medical bills they cannot afford.
  1. States would have less money available as residents age and need more services.
    Per capita caps and block grants are designed based on baseline funding formulas, which have not yet been determined. Unless that formula grows at the same rate as medical inflation, and takes into consideration the increased health care needs of an aging population, states would lose Medicaid funding each year. States may cut rates for providers, which would reduce the number of providers willing to participate in the program. As a result, by 2026, when baby boomers reach the age of 80 and beyond, states would not be prepared to meet the health care needs of their older residents.
  1. States would be forced by inadequate funding to shrink the safety net for seniors.
    Per capita caps and block grants shift costs from the federal government to states. With less money for Medicaid from the federal government, state budgets will be even tighter than they are now, shrinking the safety net. States may be forced to cut not only Medicaid services, but also other programs that help older adults, such as meal programs and senior centers. This could leave seniors at risk, isolated and unable to get the help they need, and put greater pressure on family caregivers.

For more on how capping Medicaid funding harms older Americans, see Justice in Aging’s Fact Sheet and Issue Brief.

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