Republican proposals to impose a per person cap on federal Medicaid funding or turn the government health insurance program for lower-income Americans into a block grant would leave millions of people without coverage or care, according to an analysis published Tuesday.
The Center on Budget and Policy Priorities (CBPP), a progressive think tank, examined GOP policy proposals including the per capita funding cap and making Medicaid a block grant and found that such policies "would dramatically change Medicaid's funding structure, deeply cut federal funding, and shift costs and financial risks to states."
"Faced with large and growing reductions in federal funding, states would cut eligibility and benefits, leaving millions of people without health coverage and access to needed care," CBPP added.
According to the analysis:
Many of those losing Medicaid coverage would be left unable to afford lifesaving medications, treatment to manage chronic conditions like cardiovascular disease and liver disease, and care for acute illnesses. People with cancer would be diagnosed at later stages and face a higher likelihood of death, and families would have more medical debt and less financial security. A large body of research shows that Medicaid improves health outcomes, prevents premature deaths, and reduces medical debt and the likelihood of catastrophic medical costs.
"Before resurrecting harmful per capita cap proposals, policymakers should consider how similar past proposals would have impacted states' budgets and thus their ability to support Medicaid enrollees," CBPP advised.
The analysis comes as Republicans—who control both houses of Congress and, starting on January 20, the White House as President-elect Donald Trump takes office—pursue a massive tax cut that would be funded in part by cutting social programs including Medicaid. GOP lawmakers are also considering work requirements for Medicaid recipients in order to help pay for the tax cut, which critics argue would primarily benefit rich people and corporations.
According to a 2024 report by the National Association of State Budget Offices, Medicaid—which, along with the related Children's Health Insurance Program, serves nearly 80 million U.S. adults and minors with limited income and resources—makes up more than half of all federal funding for states.
Total Medicaid spending was approximately $860 billion for fiscal year 2023, with the federal government contributing around 70% of the funds. The CBPP analysis notes that "under a per capita cap, states would get additional funding as the number of enrollees increased, but if the caps were set at an insufficient level, the state's funding shortfall would grow as more people enrolled."
The report also says that "the design of per capita caps can expose states to cuts even if spending falls below caps for some eligibility groups, and even if spending growth falls below the cap on average over time. And as the caps would be permanent, the size of the cuts and the number of states affected would continue growing over time. These losses in federal support would impose significant strain on states and put millions of people at risk of losing benefits and coverage."
Under a block grant, "the funding shortfall would be even worse since federal funding wouldn't change in response to enrollment increases," the analysis states.
"In short, recent proposals for a per capita cap or block grant would cause people to lose health coverage and benefits, shift costs and risks to states, and destabilize healthcare providers," the publication concludes. "The federal funding cuts to states would be large and unpredictable. Restructuring Medicaid's financing would also make the program highly vulnerable to future cuts, as it would impose a funding formula that could be easily ratcheted down further—for example, by setting the cap or its growth rate even lower. Policymakers should reject proposals for per capita caps and block grants and instead retain the current federal-state financial partnership."