Rhode Island’s Global Waiver Not a Model For How States Would Fare Under a Medicaid Block Grant
End Notes
[1] These claims are based on a paper written by Gary Alexander, the former secretary of the Rhode Island Executive Office of Health and Human Services and director of the Department of Human Services, for the Galen Institute, a conservative policy organization that favors converting Medicaid to a block grant. See “Rhode Island Medicaid Reform Global Consumer Choice Compact Waiver,” January 28, 2011, available at http://www.galen.org/fileuploads/RIMedicaidReform.pdf.
An example of how the Alexander paper is being used to promote Medicaid block grants and funding caps is a paper written by Douglas Holtz-Eakin, president of the American Action Forum (a conservative policy group closely tied to the American Action Network, which seeks to elect more Republicans to office), which recommends that states seek waivers with capped financing such as Rhode Island’s global waiver. See “Sustainability of Medicaid: Action Steps for Governors to Achieve Meaningful Reform,” American Action Forum, February 28, 2011.
[2] Megan Hall, “Former DHS director published unauthorized report on global waiver,” The Pulse, WRNI Health Care blog, 20 January 2011, available at http://wrnihealthcareblog.wordpress.com/2011/01/20/what-happened-to-gary-alexander/ .
[3] Provisions that are often waived include freedom of choice of provider, the offering of comparable benefits across populations, and the offering of comparable benefits across geographic areas. Medicaid’s matching structure cannot be waived.
[4] For more information about Section 1115 waivers, see Cynthia Shirk, “Shaping Medicaid and SCHIP Through Waivers: The Fundamentals,” National Health Policy Forum, July 22, 2008.
[5] Rep. Paul Ryan (R-WI) and Alice Rivlin of the Brookings Institution submitted a plan to the president’s fiscal commission that included a proposal to convert Medicaid to a block grant. The Congressional Budget Office estimated that this proposal would reduce federal Medicaid funding by $180 billion over the next ten years. For more information, see Congressional Budget Office, “Letter from Douglas W. Elmendorf to the Honorable Paul D. Ryan,” November 17, 2010; and Edwin Park, “Medicaid Block Grant or Funding Caps Would Shift Costs to States, Beneficiaries, and Providers,” Center on Budget and Policy Priorities, January 6, 2011.
[6] For a more detailed discussion of block grants and their potential effects on states, see Edwin Park and Matt Broaddus, “Medicaid Block Grant Would Shift Financial Risks and Costs to States,” Center on Budget and Policy Priorities, February 23, 2011.
[7] Judith Solomon, “Rhode Island’s Medicaid Proposal Would Put Beneficiaries at Risk and Undermine the Federal-State Partnership,” Center on Budget and Policy Priorities, September 4, 2008. During the negotiations, the state conceded that it was seeking a cap that would exceed what the state would need based on historical data, but argued that a higher cap was needed because of the increased costs of an aging population, a weak economy, and the risk the state was assuming. Steve Peoples, “Governor seeks waiver to cap Medicaid at $12.4 billion,” Providence Journal, July 30, 2008.
[8] The Bush Administration had previously been criticized by the Government Accountability Office (GAO) for approving waivers that likely would not be budget neutral for the federal government. The GAO found that in approving waivers for Florida and Vermont, the Bush Administration likely inflated what those states’ Medicaid costs would be in the absence of the waivers, by assuming (without supporting documentation) rates of cost growth under the states’ existing Medicaid programs that exceeded HHS’ own benchmarks. Government Accountability Office, “Medicaid Demonstration Waivers: Recent HHS Approvals Continue to Raise Cost and Oversight Concerns,” January 2008.
[9] See Park, op cit.
[10] Rhode Island would have to submit a phase-out plan to CMS at least six months in advance, unless circumstances made a shorter time period necessary.
[11] Kaiser Family Foundation, Medicaid Payments Per Enrollee, 2007 at www.statehealthfacts.org. A federal block grant would likely lock in state variations in spending, with higher-spending states like Rhode Island faring better than states that now have lower Medicaid expenditures. Edwin Park and Matt Broaddus, Medicaid Block Grant Would Produce Disparate and Inequitable Results Across States, Center on Budget and Policy Priorities, March 11, 2011.
[12] See Marc Levy, “RI officials dispute Corbett nominee’s claims,” Associated Press, February 1, 2011, for more information. Available at http://www.ydr.com/politics/ci_17262346?source=rss.
[13] As the Rhode Island media have reported, many of the financial claims that former state DHS director Gary Alexander makes in his report cannot be corroborated by current DHS officials. See Levy, op cit. Despite this, some proponents of converting Medicaid to a block grant have cited Alexander’s report as a primary source when making claims about savings under the global waiver. As an example, see John R. Graham, “In the Nick of Time: Rhode Island’s Medicaid Waiver Shows How States Can Save their Budgets from Obamacare,” Pacific Research Institute, January 2011.
[14] Some Medicaid spending categories, such as that on Disproportionate Share Hospitals (DSH), Local Education Agencies (LEA), and other adjustments, do not count against the spending targets that are part of Rhode Island’s global waiver. These expenditures are included in the CMS-64 data reports.
[15] The Rhode Island Medicaid program’s low rate of spending growth, both before and during the global waiver, is attributable in large part to the fact that enrollment actually declined slightly between June 2004 and June 2010, from 169,600 to 166,500. Nationally, Medicaid enrollment grew during the same time period from 41 million to 50 million. Kaiser Commission on Medicaid and the Uninsured, “Medicaid Enrollment: June 2010 Data Snapshot,” February 2011.
[16] Since Rhode Island has only submitted global waiver reports to CMS through June 2010, we calculated federal fiscal year 2010 spending by taking the reported expenditures for the first three quarters of federal fiscal year 2010 and estimating costs for the fourth quarter based on the rate of growth in program costs under the global waiver.
[17] Section 1915(b) waivers allow states to restrict the freedom of an individual to choose his or her provider. Under such waivers, states can require beneficiaries to enroll in managed care plans or require them to select providers or suppliers from lists that the state provides.