Analysis of Senate Bill BCRA

with consideration of HCBS

June 29, 2017


pdf File Analysis of Senate Bill BCRA (586KB) [download]

The Better Care Reconciliation Act (AHCA)proposes to cap Federal Medicaidreimbursements to the states on a per-enrolleebasis, effectively limiting growth to a rate onlymodestly exceeding the rate of inflation. The capwould be set according to each state's 2016 perenrolleespending, inflation-adjusted for eachsubsequent year. Caps would take effect in 2020.The inflation adjustment for 2016 to 2019 is theconsumer price index for medical care (CPIMC)for all types of enrollees, including peoplewith disabilities and seniors who receive HCBS.

Between 2020 and 2024, adjustments depend onenrollment category: the adjustment for peoplewith disabilities and seniors is set at CPI-MCplus 1 percentage point, and the adjustment forother enrollment categories is CPI-MC.

Beginning in 2025, the inflation adjustment isgreatly reducedto the ConsumerPrice Index forall items, which does not take into account thehigher growth rate of healthcare costs.1 Over thepast ten years, the growth in the Consumer PriceIndex for all items averaged 1.8 percent per year,and the CPI-MC increased by an average of 3.3percent per year.

For most people who receive HCBS, it is by farthe largest component of their Medicaidspending. If the AHCA were to be enacted, it isreasonable to assume that most states wouldlimit HCBS spending to the per-enrollee capamount; otherwise, any excess comes entirelyout of the state budget.