WASHINGTON, July 24,
2024 /PRNewswire/ -- Paragon Health Institute, a
leader in health care research and market-based policy
recommendations, has released a proposal for Medicaid finance
reform. At the heart of the proposal is correcting the flawed
federal medical assistance percentage (FMAP) for determining
federal Medicaid funding, which rewards more money to richer states
with more wasteful Medicaid programs. This methodology has created
an environment where the wrong states receive more assistance.
Worse still, because of the Affordable Care Act's creation of a
higher FMAP for the able-bodied, working-age Medicaid expansion
enrollees, traditional beneficiaries of Medicaid have resources
diverted away from them.
![Paragon Health Institute is an independent, non-profit, non-partisan research institution that examines how government health programs are working and develops health policy solutions to make life better for Americans. Paragon’s orientation is to empower patients, unleash providers and entrepreneurs to develop methods and products to improve American well-being, and reform government programs to align incentives to focus on maximizing value from our health care expenditures. (PRNewsfoto/Paragon Health Institute) Paragon Health Institute is an independent, non-profit, non-partisan research institution that examines how government health programs are working and develops health policy solutions to make life better for Americans. Paragon’s orientation is to empower patients, unleash providers and entrepreneurs to develop methods and products to improve American well-being, and reform government programs to align incentives to focus on maximizing value from our health care expenditures. (PRNewsfoto/Paragon Health Institute)](https://mma.prnewswire.com/media/2423462/Paragon_Health_Institute_Logo.jpg)
Medicaid is a government program created to pay health care
expenses for low-income pregnant women, children, seniors and the
disabled. It was later expanded under the Affordable Care Act to
cover millions more able-bodied, working-age adults. The FMAP is
the percentage of Medicaid costs paid by the federal government.
For traditional Medicaid enrollees, a state's FMAP is largely
determined by its per capita income with a 50 percent floor in the
wealthiest states. States with lower per capita income receive a
higher FMAP. However, for states that added Medicaid enrollees
through the Affordable Care Act's expansion, there is a much higher
FMAP for this expansion population. Their FMAP was initially 100
percent from 2014 to 2016, declining to 90 percent in 2020—a level
at which it is scheduled to remain indefinitely. In contrast, the
average FMAP across every state in the nation is around 60
percent.
Starting in 2026, Paragon proposes phasing down the 90 percent
FMAP for expansion enrollees until it would reach parity in
2034 with each state's FMAP for traditional enrollees. States would
be permitted to keep Medicaid expansion and reduce eligibility to
only households below the poverty level, while households earning
above the poverty level would be eligible for tax credits for ACA
exchange plans. This policy would better protect services for
traditional enrollees, better align state incentives to get value
from expenditures and eliminate their incentive to enroll as many
people under the expansion as possible, and significantly increase
enrollment in the exchanges relative to Medicaid. Drew Gonshorowski, Senior Research Fellow at
Paragon Health Institute, stated, "Our research demonstrates health
care resources are being diverted away from traditional Medicaid
enrollees to expansion enrollees, with Medicaid enrollees having
more difficulty accessing medical appointments after expansion.
Paragon's recommendations would end the discrimination against the
truly needy."
Paragon also offers a second proposal that would add an
important reform to the phasedown of the ACA expansion FMAP. The
second proposal reduces the FMAP floor that benefits wealthy states
from 50 percent to 40 percent. The only jurisdiction affected by
the 40 percent floor would be the District of Columbia, the U.S. jurisdiction
with the highest per capita income. States with the highest per
capita incomes, such as California, Connecticut, Massachusetts, and New York, would have FMAPs between 45 and 50
percent, based on their state per capita income. This policy would
create greater equity in the federal support across the
country—reducing the gap in federal funding per person in
poverty—although wealthy states would still receive more federal
funding per person in poverty after our proposal takes full effect.
The phasedown of the standard FMAP would also start in 2026 and be
complete in 2034.
Alongside the benefits previously stated, Paragon's proposal
would reduce federal deficits by more than $500 billion over the next decade while
increasing private health insurance coverage by more than 5 million
people.
Launched in late 2021 by Brian
Blase, Paragon Health Institute provides health policy
research as well as market-based policy proposals for improved
outcomes in the public and private sectors. Journalists and health
care analysts can review Paragon's latest studies and commentary at
paragoninstitute.org.
Contact:
Anthony Wojtkowiak
media@paragoninstitute.org
703.527.2734
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SOURCE Paragon Health Institute