Senate Republicans may consider providing equal funding to states, like South Dakota, with low Medicaid spending costs. Sen. Mike Rounds has indicated that he would support a (financial) way to recognize low-cost states for their efficiency. South Dakota is a low-cost state.

States that elected not to expand Medicaid would suffer under the House version of the AHCA since the baseline would be considerably less than the baseline for states that expanded Medicaid. This baseline is critical should the Senate prescribe a per capita formula going forward.  Conceptually, the per capita cap formula contained in the House version of the AHCA includes three parts:

  1. Medical expenditures from FY 2016
  2. Enrollment numbers
  3. The medical care component of the consumer price index

Although it is unclear how often the per capita cap will be adjusted with new numbers for enrollment, what is certain is that expenditures will be frozen at FY 2016 spending.

Senate negotiations continue to determine the best structure and incentives to encourage good outcomes and cost effectiveness.  An idea under consideration would utilizing the inflationary index with an aggressive growth rate to determine yearly increases in federal funding for states that demonstrate low-cost efficiencies in a given year.  In addition, the Senate is discussing allowing states the option of requesting the use of block grants rather than the per capita Medicaid formula.