Rhode Island Seeks Caps on Medicaid, Will Shift Costs to Emergency Room Patients

In response to an ongoing state budget crisis, Rhode Island Gov. Don Carcieri (R) has requested the federal government relax its strict Medicaid regulations in exchange for caps on state spending and federal contributions to the program.

The state’s plan is to cap Medicaid spending at 23 percent of the general fund budget—$754 million, according to state figures—and request federal contributions to its Medicaid program be fixed at 9.2 percent annually.

In return for limiting costs, Carcieri, a former businessman, is requesting leeway from the federal government to increase premiums and copayments for enrollees and to shift costs to put greater financial responsibility on those who visit emergency rooms instead of primary care physicians for routine illnesses. The federal government requires states to meet numerous requirements in order to receive matching federal funds for Medicaid.

The Bush administration is negotiating with Rhode Island over the best way to implement the new policy, according to a spokesman for the Centers for Medicare and Medicaid Services (CMS).

Experts Praise Governor’s Plan

Experts praised Carcieri’s attempt to rein in runaway Medicaid spending, while reiterating the need for nationwide Medicaid reform.

“This waiver should be seen as both a troubling sign for government-run health care advocates and as a warning to other states,” said J.P. Wieske, director of state affairs at the Council for Affordable Health Insurance. “The rich benefits that encourage utilization and discourage participation in private market health insurance desperately need reform. Like public housing in the ‘80s and ‘90s, this system is desperately broken and needs reform.”

“This global Medicaid waiver is akin to the welfare reforms of 1996,” said William J. Felkner, president of the Rhode Island-based Ocean State Policy Research Institute.

“Rhode Island’s small size is the perfect laboratory to develop this program,” Felkner said, “and if free-market reforms can slow or reverse the rampant growth of Medicaid, the resulting programs can be a model for other states.”

Fresh Approach

“This is a step in the right direction,” said Devon Herrick, Ph.D., a senior fellow at the National Center for Policy Analysis. “The Rhode Island waiver is an admission that there are limits to the burdens state taxpayers should be forced to bear.

“In return for increased flexibility, the proportion of funds that federal taxpayers must bear will also face limits,” Herrick continued. ”This is a departure from maximizing federal payments, which is the typical way states hope to cover Medicaid shortfalls. It’s encouraging that Rhode Island’s governor realizes that states cannot expect to merely shift their excess spending onto federal taxpayers.”

Other Problems Remain

Other analysts caution the move will not solve all of the Ocean State’s health care cost problems. They say much more must be done.

“It’s a good start, but only a start,” said John R. Graham, director of health care studies at the Pacific Research Institute. “Rhode Island ranks a lowly 48th out of 50 in the U.S. Index of Health Ownership, and it’s not simply because of Medicaid, but also because of a bad tort environment and over-regulation of private health insurance.”

Katie Flanigan ([email protected]) writes from Georgia.

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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