WSJ Touts RI Medicaid Waiver As Model For Reducing Entitlement Costs

WSJ: “If Congress And The White House Are Serious About Reducing The Cost Of Entitlements, They'll Grant A Rhode Island-Style Waiver To Any State That Requests One.” From a March 28 Wall Street Journal editorial headlined, “Rhode Island's Medicaid Lesson”:

Medicaid is the major cost driver in state budgets these days, so several Governors have proposed a deal to the White House and Congress: They'll take less money in return for the flexibility to run the program with fewer federal strings. A case study in the potential benefits is coming from liberal Rhode Island, of all unlikely places.

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Rhode Island agreed to a global cap on expenditures over five years of $12.075 billion in exchange for broad reform authority. The waiver is not a pure block grant, because the state agreed not to drop coverage for anyone eligible under federal Medicaid rules and retains the federal-state cost sharing for Medicaid expenses.

The results? After 18 months, Rhode Island's Medicaid spending, which was projected to reach $3.8 billion, has declined to $2.7 billion, according to a report by Mr. Carcieri's Office of Health and Human Services. The state implemented a blizzard of reforms, including wellness programs, co-payments, audits of hospitals and nursing homes, fraud prevention, and letting seniors move from nursing homes into home and community care. The state has also saved a bundle by replacing federal “any willing provider” rules--which require that Medicaid dollars flow to any federally approved doctor or hospital regardless of cost--with competitive bidding.

Not every Rhode Island reform has worked, and some critics question whether the savings are as large as advertised. The state HHS is studying that issue now. But what almost no one challenges is the improvement in the quality of patient care.

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Rhode Island's experiment highlights the perverse Medicaid incentives that could be fixed with a more complete block grant. The states and the feds share the cost of Medicaid, with the federal government covering between 50% and 70% of a state's Medicaid bills. This rewards states for wasting health-care dollars, because every dollar spent brings another 50 cents or more via taxpayers from other states. Spending caps can be abused when they are used to limit care, but combined with flexibility in this case they improve care.

At least a half a dozen Governors are now asking Washington for a Rhode Island-style waiver, including Haley Barbour of Mississippi, Tom Corbett of Pennsylvania and Rick Scott of Florida. Waivers like this are how Governors like Tommy Thompson of Wisconsin and John Engler of Michigan led the way in reforming welfare in the 1990s. If Congress and the White House are serious about reducing the cost of entitlements, they'll grant a Rhode Island-style waiver to any state that requests one. [The Wall Street Journal, 3/28/11]

CBPP: Claims Touting RI Waiver As Model For Other States “Generally Do Not Withstand Scrutiny”

CBPP: Claims Made By Those Touting RI Waiver As Model For Other States “Generally Do Not Withstand Scrutiny.” In a March 22 report, CBPP stated: “Those who claim that the Rhode Island global waiver is a model for other states and for the Medicaid program generally have made a number of claims about the Rhode Island experience and its applicability elsewhere. Close examination reveals, however, that these claims generally do not withstand scrutiny.” CBPP then noted:

• The federal-state spending cap that the global waiver placed on Rhode Island's Medicaid program was set at a level far above what the state projected it would spend on Medicaid in the absence of the waiver. Moreover, because the state was allowed to claim additional federal Medicaid funds for services that the state previously covered on its own, federal costs increased. In contrast, any block grant proposals that Congress is likely to consider would provide states with substantially less federal funding than they otherwise would get; such proposals would be designed to produce sizeable federal savings.

• Rhode Island's Medicaid director has questioned the accuracy of claims made by the former state political appointee who has been promoting the global waiver as a model and claiming it has saved Rhode Island over $100 million, and whose statements and paper are the basis for the recent swell of interest in the global waiver. Referring to a report written by this former Rhode Island official for a conservative policy organization that has long advocated block-granting Medicaid, the current Rhode Island Medicaid director has said there is little in the current Rhode Island Medicaid director has said there is little in the report that is accurate.

• Rhode Island could have instituted the cost containment measures authorized under its global waiver -- such as adopting competitive contracting for various goods and services reimbursed by Medicaid and shifting more people who need long-term services and supports from costly nursing homes to community-based care -- under current Medicaid rules and more limited waivers, without a global Medicaid expenditure cap. States do not need to agree to a global cap to get the flexibility to institute these measures. [CBPP, 3/22/11]