Medicaid Enrollment and Capitation Rates: Evidence from Medicare Part D

IB#19-13

The brief’s key findings are:

  • The idea of capping federal Medicaid payments to states at a set amount per person has received recent attention, raising the question of how it would affect enrollment.
  • For insight, this study looks at a current policy that requires states to pay the federal government a lump sum for each senior eligible for both Medicaid and Medicare.
  • This lump sum, which varies by state, is a partial reimbursement for drug costs that the seniors incur under Medicare.
  • The results show that the size of the per capita lump sum that states pay affects how many seniors they enroll in Medicaid.
  • The implication is that, if Medicaid were subject to per-capita financing, the generosity of federal payments to the states would affect program enrollment.