Rhode Island Governor Offers Proposal for Consumer-Driven Medicaid Overhaul

Rhode Island Gov. Don Carcieri (R) has offered a proposal to save taxpayers $67 million by overhauling Rite Care, the state’s Medicaid program.

Under the proposal, details of which are still being worked out between the state legislature and the Department of Human Services, Rhode Island would agree to a five-year federal spending cap on Medicaid in exchange for more autonomy over its Medicaid programs.

Experts say the plan will provide Rhode Island’s Medicaid recipients with more choice and control over their health care … if it survives the next legislative session, which is not guaranteed.

States ‘Need Flexibility’

“It takes a lot of guts for a state to submit to a cap on federal transfer payments, and Gov. Carcieri should be complimented for doing so,” said John R. Graham, health care studies director at the Pacific Research Institute. “How can bureaucrats in Washington, DC decide what Medicaid services Rhode Islanders need?

“Most states prefer to invest in creative ways to raid the federal treasury to fund their out-of-control Medicaid programs, rather than taking responsibility for managing a limited budget in the interests of their own citizens,” Graham continued. “States need maximum flexibility in managing their Medicaid programs, and I congratulate the governor for taking advantage of the freedom that President Bush has given every state.”

Giving Seniors More Options

William Felkner, president of the Ocean State Policy Research Institute, also sees the governor’s plan as a positive move. “What he’s looking to do is to give the money to the seniors, allowing them the purchasing decisions, so rather than going into a group home or nursing home, they can elect to stay at home and use that for in-home care,” Felkner said. “Basically, it’s like a savings account, but for Medicaid.

“They’re fighting out some of the details,” Felkner continued, “but when it was first introduced, we thought it was a great opportunity to give seniors power rather than giving that to the governor, rather than setting up a government-run system. If we can get people to stay in their homes, we can save money and provide better support.”

“If consumers have more information about and control over their health care and community support options, they will make more reasoned and cost-effective choices about their health, especially if their good decision-making is rewarded,” said Gary Alexander, director of the state’s Department of Human Services. “The Medicaid program must enable consumers to receive individualized health care that is outcome-oriented, and that is focused on prevention, recovery, and retaining and maintaining independence.”

Benefits Will Remain Generous

Opponents of the proposal claim capping federal Medicaid income and altering the way Rite Care is managed could create a “catastrophe” for 186,000 state residents enrolled in the program, in part by requiring beneficiaries to share in the cost of coverage. However, Alexander maintains sharing in that cost is a fundamental part of exercising personal responsibility and control over one’s own health care.

“As the costs of coverage rise, so too should the contributions of beneficiaries within certain income limits,” Alexander said. “Moreover, as Medicaid coverage was not intended to be a substitute for commercial insurance, it is important that beneficiary cost-sharing reflect–albeit at lower levels–other forms of health coverage. Benefits available to most Medicaid enrollees–particularly on the children and family side–are more comprehensive than most plans in the commercial market.”

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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