Medicaid Per Capita Cap Threatens Children with Disabilities

Proponents of the American Health Care Act (AHCA),which both effectively eliminates the ACA’s Medicaid expansion AND establishes a cap on federal spending cap for the entire Medicaid program, often say that they are preserving the Medicaid program for the “most vulnerable.”

The AHCA would actually do the opposite for the most vulnerable children on Medicaid – those with severe disabilities — and their parents, who will have even fewer choices, and less access to care and peace of mind if it were to become law.

Medicaid is of critical importance to children with special health care needs such as Down syndrome, cerebral palsy, and autism.  A recent report from the Kaiser Family Foundation describes the role of Medicaid for these children, and finds that Medicaid and other sources of public coverage are the primary source of insurance for nearly half (44%) of all children with special health care needs. Children with special health care needs suffer from a range of physical, developmental, and behavioral health conditions. Forty-four percent of these kids live in families with low incomes – at or below approximately $40,000 a year for a family of three.

As my colleague Andy Schneider has blogged about, Medicaid has been accepting children and others with preexisting conditions for more than 50 years!

Even though HHS Secretary Price recently attempted to deny it, an argument for which he received 4 Pinocchio’s from the Washington Post’s “Fact Checker”, the AHCA includes extraordinary cuts to Medicaid. We don’t have the final score yet from the Congressional Budget Office – but it is likely in the range of $840-$880 billion over ten years since the bill’s Medicaid provisions didn’t change after CBO’s earlier score. We have blogged previously on a few occasions about how the cap itself upends Medicaid’s 50 plus year guarantee of coverage for children.

I have strenuously argued elsewhere that providing states more flexibility won’t do the trick to implement cuts of this magnitude without serious pain to beneficiaries.

When cuts of this magnitude are made to the program (federal spending will be approximately one-quarter lower in 2026 than under current law), states have to make bad and worse choices. Given that children make up almost one-half of the Medicaid beneficiaries they can’t possibly be protected if cuts of this magnitude are enacted.

But there is another more complex reality of Medicaid law and the proposed legislation that puts children with the most severe disabilities specifically at risk.

As readers of SayAhhh! know, Congressional leaders are moving the AHCA through the budget reconciliation process because that only requires them to get 51 votes in the Senate. Assuming the Senate starts with a per-capita cap proposal similar to the AHCA approved plan, it would drive states towards certain options to implement these and any future Medicaid cuts. [1]

Let’s unpack what some of those bad choices states are left with when it comes to children.

Bad choice #1: Most children in Medicaid, and many of those with special health care needs, are in what are considered “mandatory” categories – those with incomes below the poverty line and those receiving Supplemental Security Income (SSI). Children with disabilities can be found in both of those categories. These children all receive the mandatory EPSDT benefit. States will have to continue providing these services to these children, although the strong likelihood is that they would slash payments to pediatricians, children’s hospitals and others that serve them.

Bad choice #2:  In virtually all states, children who are severely disabled and require institutional level care can receive care at home through what is known as the “Katie Beckett” pathway – where families can qualify regardless of income. Some of these children are covered through a home and community based waiver and others are able to obtain coverage through an optional state plan category. I invite you to read the story of one of these children, Caroline, whose mother Marta Conner blogged for us about what Medicaid means to their family. These are the children for whom states already have the flexibility to limit services (and many of them do today with enrollment caps on these waivers) and for whom massive Medicaid cuts would only worsen the situation. In the parlance of Medicaid law, these are “optional” children, though these services are anything but optional for these families.

[1] I am leaving aside the block grant option in the House bill for kids here as the per capita cap approach is likely to have more support in the Senate. We will blog on this option shortly.

Joan Alker is the Executive Director of the Center for Children and Families and a Research Professor at the Georgetown McCourt School of Public Policy.