GAO report examines how per-capita rates for Medicaid would work

September 08, 2016

Changing Medicaid into a program with per-capita spending caps would require consideration of what benefits would be covered, how the money would be allocated and how states would be held accountable for spending the funds, according to a GAO report, which identified four areas of key policy considerations:

  1. Coverage and flexibility;
  2. Allocation of fund across states and over time;
  3. Accountability; and
  4. Broader effects.

The report offers no stance on whether or how Medicaid should be reformed. The report found:

  • Policymakers would have to decide whether all populations and services should be under a single cap or whether there should be separate caps for groups like children or people with disabilities;
  • Policymakers would have to consider how health care costs vary by geography and the differences in available state resources;
  • How the per-capita amounts change would have to be discussed;
  • State accountability could be ensured by tying certain conditions to the receipt of federal funds or creating health care goals for states;
  • Strong internal controls, performance data and transparency would be needed for a successful program;

The authors state that interviews with experts showed that health care demand and costs either increase or decrease under a per-capita cap system, depending on how it was implemented and whether care shifted to more efficient services or to more costly one, like emergency care.