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Andrew Goodman-Bacon, a Vanderbilt University economist who studies the long-term effects of public safety net programs including Medicaid, says our experiences with federally financed health safety net during the early 1960s can give us a good idea of how the Medicaid limits outlined in the American Healthcare Act might work. He’s the co-author of a paper in the March 15 New England Journal of Medicine that analyzes the historical effects of per-capita caps.

“To the extent that the disagreement about is whether changing financing will make programs more efficient versus smaller, our historical experience pretty strongly suggests that it would make them smaller,” Goodman-Bacon says.

Goodman-Bacon says the per-capita cap method is an old idea: It's how the federal government helped states finance health safety net programs during the decade prior to Medicaid’s establishment in 1965. “The way states responded to these limits on their financing was not to become more efficient,” he says. “Rather, it was to restrict the types of people who could get medical care and the types of medical care they could get through the program.”

For example, Goodman-Bacon says, a number of states excluded children from their health safety net programs, while others only reimbursed lifesaving care. One state, Montana, only reimbursed treatment to save a person’s sight.

“There’s currently no restriction on states’ flexibility to be more generous if they want to be more generous,” Goodman-Bacon says. “So when you talk about granting states flexibility, that only means allowing them to do things that will shrink their programs.”

*Read more about Goodman-Bacon's research on the historical experience with per-capita caps.*Watch an interview with Goodman-Bacon about Medicaid changes here.*Read a Washington Post interview with Goodman-Bacon about the lifetime impact of Medicaid on poor kids.

BONUS EXPERT: Goodman-Bacon’s co-author, Vanderbilt University School of Medicine health policy expert Sayeh Nikpay, studies the impact of healthcare reform on hospitals and healthcare providers and served as a staff economist on President Obama’s Council of Economic Advisers. She describes per-capita caps as a "blunt instrument to reduce costs," and says, "Medicaid already provides good value." To speak with Nikpay, please call the Vanderbilt University School of Medicine's news office at 615-322-4747.