Medicaid Block Grants and Per Capita Caps

Where We Stand

NAMI believes that health insurance should provide comprehensive mental health and substance use disorder coverage without arbitrary limits on treatment. NAMI opposes block grants or per capita caps in Medicaid, which impose financing limits that jeopardize coverage and services for individuals with mental health conditions.

Why We Care

Access to health insurance coverage is essential for people with mental illness to access mental health care and successfully manage their condition. Medicaid is a lifeline for tens of millions of Americans as the nation’s largest payer of mental health condition and substance use disorder (MH/SUD) services, and nearly 40% of nonelderly adults covered by Medicaid have a MH/SUD. Through Medicaid coverage, people with mental health conditions can access critical services like psychotherapy, inpatient treatment, prescription medications, and crisis care.

Currently, the federal government pays for a set percentage of each state’s total Medicaid costs. This structure allows federal funding to grow or shrink based on need; if Medicaid enrollment increases or health care costs rise, federal funding scales up accordingly. Restructuring how Medicaid is funded — through either block grants to states or per capita caps — would create barriers for the millions of Americans who rely on Medicaid, including many people with mental health conditions, as well as pregnant women, children, people with disabilities, working families, and veterans.

Block grants impose a cap on the total amount of federal funding for each state’s Medicaid program, and per capita caps are a fixed amount of funding per person enrolled in Medicaid, regardless of real health care costs. Both options would limit states’ ability to keep pace with growth in enrollment and health care costs. If enrollment goes up or costs increase, states would be responsible for 100% of all Medicaid costs above the cap/block grant. These costs may add up quickly due to population growth, a recession (when people lose their jobs and also their employer-sponsored coverage), or other events, like a pandemic or natural disaster.

Most states are required to have a balanced budget. Faced with federal spending cuts due to caps or block grants, states may be forced to reduce the level of benefits, eliminate services, pay providers less, or restrict eligibility to balance their budget. Any of these changes could result in people with mental health conditions losing their coverage or access to some optional services and benefits, such as inpatient psychiatric services for youth, psychotherapy, or prescription medications. Sadly, when people do not get the treatment they need, they can end up in jail, emergency rooms, or homeless.

Over the past 40 years, Congress has repeatedly rejected efforts to block grant the Medicaid program — in 1981, 1995, 2004, and 2017. NAMI opposes policies that impose block grants or per capita caps that jeopardize coverage and services for people with mental health conditions.

How We Talk About It

• About one in five adults in the United States has a mental health condition, but only about half get needed treatment each year.
• Access to health care coverage and mental health care is essential for people with mental illness to successfully manage their condition.
• Medicaid is critical to helping people with mental health conditions, and roughly 40% of people on Medicaid have a mental health condition or substance use disorder.
• Medicaid pays for vital services that people with mental health conditions rely on, such as medications, psychotherapy, intensive and inpatient treatment, peer support, and crisis care.
• Block grants are a cap on federal Medicaid contributions for each state, and per capita caps are a fixed amount of federal government contribution per person enrolled in Medicaid — both of which disregard real health care costs.
• Changes to how Medicaid is funded, like block grants or per capita caps, are intended to limit federal funding.
• These changes could force states to drop people from coverage or reduce mental health services to be able to balance their budget.
• All of this will make it harder for people with mental illness to access the care they need.
• We know that when people do not get the treatment they need, they can end up in jail, emergency rooms, or homeless.
• NAMI urges policymakers to focus on providing the best possible care for people with mental illness and to reject block grants or per capita caps in the Medicaid program.

What We’ve Done

• NAMI-led coalition letter to Congress on protecting Medicaid for people with mental health conditions and substance use disorders
• NAMI coalition letter to Congress on protecting Medicaid for people with serious, acute, and chronic health conditions
• NAMI statement opposing Medicaid block grant guidance