Kansas Health Institute | Information For Policy Makers. Health for Kansans.

TOPEKA — Supporters of making Medicaid a block grant have recently pointed to Rhode Island as an example of how well the idea could work if every state had one.

"State block grants would empower governors to make smarter investment decisions and encourage longer-term projects that may have up-front expenses but substantial future savings," wrote Douglas Holtz-Eakin in an April 13 issue brief from the conservative American Action Forum (PDF). "Rhode Island is a compelling example of how state block grants can infuse a sense of urgency into the Medicaid program."

"Rhode Island’s reform benefits not only the state but federal taxpayers nationwide," wrote John R. Graham, director of health care studies for the Pacific Research Institute, a conservative think tank. "Predictably, the waiver has come under attack from those who prefer to spend more money and have less local control over Medicaid."

Not a block grant

But Medicaid experts in Rhode Island say what the state got in the waning days of the Bush administration wasn't a block grant, it was a qualified "global waiver." Nor has it worked nearly so well as conservatives in California and elsewhere claim.

Graham's assertion — published in Rhode Island's leading newspaper — that the state had saved $1.3 billion was dismissed as wildly inaccurate by Medicaid experts in the state.

Even the $100 million in savings in Rhode Island claimed in the American Action Forum report were called exaggerated.

Rhode Island has realized a few million in savings since the global waiver became effective. But those savings could have occurred anyway, local experts said.

"There's really nothing in the global waiver that led to Rhode Island having the ability to curtail costs that other states can't do with Medicaid as is or with other waivers," said Linda Katz, executive director of the Poverty Institute, a small think tank in Providence that monitors Medicaid and other social service policies in Rhode Island.

Katz said the state saved $1 million the first year of the waiver instead of the $22 million that were projected. In the second year, she said, it saved about $6 million.

The savings came largely from keeping more disabled and elderly people out of nursing homes by providing in-home care, she said.

Shocked to be a model

"But the state did not need a global waiver to accomplish savings by increasing home- and community-based services (for the elderly). We already had the authority to do that," Katz said. "What the state did not have was sort of the fire in the belly to move from nursing home care to home- and community-based services. The waiver lit a fire under our Executive Office of Health and Human Services.....and that's a good thing."

Katz said Rhode Island prior to the waiver had already started a program encouraging elderly or disabled Medicaid beneficiaries to enroll in managed care programs. By the time the global waiver was granted about 75 percent of those populations had signed up for managed care. The voluntary program became mandatory with the waiver, she said, but that also could have happened without the waiver.

"It's really shocking to me and others who know about the waiver in Rhode Island that it is being touted as a model for other states," Katz said, "because it's 180 degrees different than a block grant. Bottom line is that the state could have done all it proposed to be doing anyway."

She also said officials are missing the mark if they think a Medicaid block grant as proposed by Republicans in the U.S. House would improve flexibility for states.

"It's hard to move nimbly on innovative programs when you don't have any money," she said. "And that's what will happen. I think the states that want to do right by assuring all their residents have access to services and are wanting to do that in the most cost-effective way, a block grant is not something that's going to help you get there."

"Sweetheart deal"

Four days before leaving office, the Bush administration on Jan. 16, 2009, working with then Gov. Donald Carcieri, a Republican, agreed to give Rhode Island $12.75 billion to cover five years worth of Medicaid services.

Katz and others said the spending cap the feds agreed to was significantly more than Rhode Island had projected to spend over the same period without the waiver.

Analysts at the Center on Budget and Policy Priorities have described Rhode Island's global waiver as a "sweetheart deal" in which the state was given more money than it ever expected to spend, a deal "impossible to replicate," for other states because of what it would cost the federal government to accomplish.

According to that analysis, the Rhode Island deal cost the federal government more rather than saving it money.

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