Issue Brief | Dec 19, 2016

Capping Federal Medicaid Funding: Key Financing Issues for States

Cindy Mann, Deborah Bachrach, Patti Boozang, Jocelyn Guyer, and Anne Karl, Manatt Health

Proposals for the incoming Congress and presidential administration to repeal the Affordable Care Act (ACA) have also included a call for a fundamental overhaul of the Medicaid program by imposing caps on federal funding to states.  Such capped funding would replace the central feature of Medicaid’s financing structure, the federal government’s legal obligation to share all allowable state Medicaid costs.  While the design of various proposals to cap federal Medicaid funding may differ in several ways, they all aim to allow the federal government to achieve budget certainty and reduce federal Medicaid spending.  This issue brief, developed by Manatt Health, reviews past proposals and explores financing issues that arise in the design of capped federal funding.