A Medicaid block grant would reduce federal spending by $150 billion over five years, and a per capita cap would save $110 billion over the same period of time, a new analysis by Avalere Health finds. One or the other will almost certainly be included in a GOP Obamacare replacement plan.

A block grant would give a fixed amount of money to each state for Medicaid. A per capita cap would limit the amount of funding per beneficiary. These are opposed to the current open-ended system under which the federal government pays a fixed percentage of what a state spends.

Key takeaways:

  • Under a block grant, all states but North Dakota would receive less federal funding for Medicaid.
  • Under a per capita cap, 24 states would receive more funding than they currently do and 26 states plus D.C. would receive less.
  • The impact on states of either model would depend on the state's current federal match rate, Medicaid expansion status and eligibility criteria, scope of benefits, role of managed care and use of provider taxes.

Yes, but: As Caroline Pearson, senior vice president at Avalere, points out, states could respond to either model by cutting enrollment, limiting benefits or reducing payment rates to providers and insurers.

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