Urban Institute Reports on Block Grants and Per Capita CapsImage Banner

Urban Institute Reports on Block Grants and Per Capita Caps

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Urban Institute Reports on Block Grants and Per Capita Caps

November 3, 2016

In a report dated September 8, 2016, the Urban Institute looked at block grants and per capita caps as a mechanism for controlling Medicaid expenditures. The abstract for the report states, "Block grants and per capita caps have been proposed as mechanisms for controlling Medicaid expenditures. Block grants would allocate money to states based on current overall spending levels in each state, and per capita caps would allocate funds based on current spending per enrollee. In this brief we show that federal spending (adjusted for the size of each state’s low income population) varies across states by more than 5 to 1 and spending per enrollee varies on the order of 2 to 1. In general, high income states will get larger block grants and higher spending per enrollee caps because they spend more today. These disparities would be locked in under these kinds of proposals."

The report analyzes proposals to block grant or institute per capita caps in Medicaid, and then sets forth the impact those proposals would have on a state-by-state basis. The report concludes that it would be very challenging to implement these proposals, given the wide variation in federal spending across states, and that the case for adopting these proposals is "weak" on other grounds as well.