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April 4, 2017

What Congress Can Learn From the Rhode Island Miracle

You’d be hard-pressed to find a more poorly designed program in the federal budget than Medicaid, the health insurance program for low-income Americans. The costs are shared between the states and the feds, which means that the more money a state wastes under Medicaid, the bigger the check Washington writes to the state. No wonder the program costs keep spiraling out of control.

You’d be hard-pressed to find a more poorly designed program in the federal budget than Medicaid, the health insurance program for low-income Americans. The costs are shared between the states and the feds, which means that the more money a state wastes under Medicaid, the bigger the check Washington writes to the state. No wonder the program costs keep spiraling out of control.

Obamacare added nearly 20 million people to the Medicaid rolls, and the Left considers that a policy victory. Federal and state budgets are swelling.

Oh, to return to the days when taking people off of welfare — not putting them on the dole — was the goal.

Conservatives have argued that Medicaid’s management should be turned over to the states through a block-grant allotment of funds. When Republicans proposed this in their Obamacare replacement bill, liberals blew a gasket. They hate the notion of allowing governors to run the program in their states as the governors see fit, free of the thicket of cumbersome federal rules. The Left portrays the idea as heartless and a scheme to rip a hole in the safety net.

In reality, block granting Medicaid to the states would likely add a new incentive structure to control costs while holding state lawmakers accountable for delivering quality care. Medicaid doesn’t do that right now. It delivers subpar care, with many top hospitals and treatment centers refusing to take Medicaid patients.

We already have a wonderful case study of a state running its own Medicaid program, and Congress and the White House should aim to duplicate this success story.

I am referring to the under-publicized Rhode Island experiment of a few years ago. In 2009, Rhode Island received a waiver from federal Medicaid rules in exchange for a cap on federal costs.

It worked like a charm. A 2013 analysis by Gary Alexander, the former secretary of Rhode Island’s Health and Human Services, found that in the first four years the state’s annual cost increases dropped to less than half of the national pace.

When Rhode Island received its Medicaid waiver, 1 of every 5 residents was enrolled, and costs were growing by 7.5 percent annually. Under the waiver, the state’s official Medicaid documents show, costs rose an average of only 1.3 percent a year from 2009 to 2012 — far below the 4.6 percent rate in the other 49 states.

Rhode Island saved money by reducing the amount of emergency-room visits by Medicaid recipients for routine medical needs. The state saved even more by shifting the elderly out of expensive nursing homes, offering home-care subsidies and promoting assisted-living arrangements. Seniors often would rather avoid institutionalization, making this a win-win.

An independent assessment by the economic consulting firm Lewin Group concluded that reforms allowed under the waiver were “highly effective in controlling Medicaid costs.” The program was found to have “improved access to more appropriate services.”

Alexander has become the Pied Piper for Medicaid waivers. “This is such a terrific solution because in Rhode Island we reduced costs and provided better care. When the state had an incentive to save money rather than spend it, this changed everything.” He added, “State waivers are the way out of the Medicaid crisis.”

But the Left and the Washington bureaucrats don’t want to surrender control of the program. They want a universal, one-size-fits-all solution. We know from welfare reform in the mid-1990s (with work requirements, time limits and training programs) that turning control over to the states will lead to innovative solutions that improve people’s lives — and save money. Why can’t that success happen with health care?

Republicans should continue to insist on solutions to Medicaid that provide some federal funding but allow states maximum flexibility. The GOP block grant makes financial sense and will help ensure that Medicaid doesn’t bankrupt Washington and the 50 states.

The Trump administration doesn’t need to wait. It can start this program tomorrow, simply by putting out word that it will issue Rhode Island-style Medicaid waivers to states that apply. The White House has full authority to do this, and many states will line up for the offer.

One big advocate for this is Vice President Mike Pence. Back when Pence was governor of Indiana, he told me: “If Washington would give me 80 percent of the Medicaid money they now send Indiana but got rid of the red tape and regulations, I would take that deal in a minute.” Donald Trump should listen to his vice president and let the Rhode Island miracle take hold in every state in the nation.


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