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Wall Street Journal’s Endorsement of Rhode Island Medicaid Full of Holes

In an editorial today, the Wall Street Journal claims a Medicaid waiver in Rhode Island shows that states would do well and beneficiaries would not be hurt by less federal funding if policymakers converted Medicaid to a block grant.

The Journal bases its case on an unauthorized report from Rhode Island’s former Medicaid director that has been rebutted by current state officials, our own analysis, and a recent independent report in the state.  Rhode Island’s waiver was a “sweetheart deal” between the outgoing Bush Administration and the state’s governor that allowed the state to claim millions of dollars in additional federal funds in return for accepting a cap on its Medicaid spending at an inflated level that it never expected to reach anyway.

Rhode Island’s waiver did not save $1.1 billion over 18 months as the Journal claims.  Instead, it generated $23 million in state savings over three years, according to a recent independent report that Governor Lincoln Chafee commissioned.  Moreover, the report found the state has achieved additional savings by utilizing existing flexibilities available to all states for Medicaid.  These findings are consistent with our previous analysis of Rhode Island’s waiver, which showed that Rhode Island could have achieved the positive policy outcomes without a cap on federal funds.

In misrepresenting the financing of Rhode Island’s waiver, the Journal ignores the disastrous effects that a block grant would have on seniors, children, persons with disabilities, and health care providers.  Consider the block grant in the budget of House Budget Committee Chairman Paul Ryan, which the House passed last week and which would slash federal Medicaid funding by 34 percent by 2022.  The Urban Institute projected that a similar block grant in last year’s House budget would have resulted in between 14 and 27 million people losing health coverage by 2021.