House Republican Policy Brief Lays Out Medicaid Reform and ACA Approach

House Republicans met yesterday behind closed doors to discuss plans to repeal and replace the Affordable Care Act (ACA), and policy documents distributed by House GOP leaders to their membership indicate that these plans include using significant Medicaid financing restructuring to pay for ACA repeal. The documents, outlines of an initial approach by House Republicans, were crafted and agreed upon by House Republican leadership and the two committee chairmen who are charged with replacing the ACA, Reps. Kevin Brady (R-TX), chair of the Ways and Means committee, and Greg Walden (R-OR), head of the House Energy and Commerce Committee, and discuss both a block grant and a per capita cap approach to Medicaid financing.

Through repeal and replace legislation, the documents say, House Republicans will modernize Medicaid: “Instead of burdening states with more mandates from Washington bureaucrats,” the “plan empowers states to design plans that will best meet their needs and put Medicaid on sustainable financial footing.” The policy brief argues that “for too long, states have been treated like junior partners in the oversight and management of the Medicaid program – forced to go through long and cumbersome waiver processes just to make modest changes to their program.” House Republicans “agree control should be returned back to states and Washington bureaucrats’ role in Medicaid reduced.” Instead of simply “expanding a broken program,” House Republicans say, they “instead want to put states in charge of their Medicaid programs and give them the tools, resources, and flexibility to address their unique needs.”

Pointing out that “CBO [the Congressional Budget Office] has noted that Medicaid spending will continue to grow at a rate faster than the economy,” the policy brief argues that “it would be irresponsible for Congress not to make targeted improvements to a program that is mathematically unsustainable.” The brief outlines a plan to transition Medicaid’s financing to a per capita allotment, with a state option to choose a block grant, echoing the approach laid out in Speaker of the House Paul Ryan’s “A Better Way” proposal. 

Beginning “at a year in the future, a total federal Medicaid allotment will be available for each state to draw down based on its federal medical assistance percentage (FMAP).” The policy brief states that the amount of the federal allotment “will be the product of the state’s per capita allotment for major beneficiary categories —aged, blind and disabled, children, and adults—multiplied by the number of enrollees in each group,” but it is unclear whether these are examples of possible categories or House Republicans have definitively settled on these three categories to determine tiered allotments. It is also unclear whether the “aged, blind, and disabled” (abd) category is envisioned to include the population generally served by abd waivers, or whether this would also include other disability groups. The per capita allotments for each beneficiary group would “be determined by each state’s average Medicaid spending in a base year, grown by an inflationary index” that remains unidentified. The brief goes on to say that “some federal payments, including disproportionate share hospital (DSH) payments, administrative costs, and others, are excluded from the total allotment.” How these elements would be funded is unclear, but the document does indicate that House Republicans will repeal the Medicaid DSH cuts.

Under this approach, “states would also have the choice to receive federal Medicaid funding in the form of a block grant or global waiver. Block grant funding would be determined using a base year and would assume that states transition individuals currently enrolled in the Medicaid expansion out of the expansion population into other coverage.” States “would have flexibility in how Medicaid funds are spent, but would be required to provide required services to the most vulnerable elderly and disabled individuals who are mandatory populations under current law.” It is unclear what this means for optional services, including Home and Community-Based Services (HCBS).

FMI: The policy brief is available at