Policy Documents

State Medicaid Waivers & The Rhode Island Model

Kendall Antekeier –
July 11, 2011

As Medicaid costs continue to rise above already-unsustainable levels, states are looking for innovative ways to reform the program and save taxpayer money. One reform gaining traction is Rhode Island’s Global Consumer Choice Compact Waiver, approved in 2009. A similar plan was adopted recently with unanimous bipartisan support in Washington State. Rhode Island’s landmark reform involves a federal waiver that ends the current open-ended relationship between the state and federal government and makes it more like a block grant.

Currently the federal government matches dollars a state spends on Medicaid, but the states are then constrained by rigid mandates attached to the money. Rhode Island’s waiver allows the state more program flexibility by offering to accept a fixed amount of money instead of an open-ended matching grant. Such grants encourage lawmakers to keep costs manageable because the state must pay all additional expenses itself.

Opponents of the reform claim it is financially unpredictable and could force states to raise taxes, cut programs, or limit eligibility. However, block-granting gives states more flexibility over how they run Medicaid and manage its costs. According to the Pacific Research Institute, “In 18 months following the waiver, Rhode Island’s Medicaid spending was almost one-third less than budgeted: $2.7 billion versus $3.8 billion.” Meanwhile, the new system has shown no reduction of access to care.

States looking to reduce costs and provide better service to Medicaid beneficiaries should look at Rhode Island’s reforms as a possible model.

The following documents provide more information on state Medicaid waivers and block grants.

Block Grants for Medicaid: What’s the Story?
The State Health Access Data Assistance Center discusses the problems with the Medicaid system, the potential benefits of block grants, and the arguments made against block-granting.

In the Nick of Time: Rhode Island’s Medicaid Waiver Shows How States Can Save Their Budgets from Obamacare’s Assault
The Pacific Research Institute outlines the benefits Rhode Island has enjoyed through its Medicaid reform.

Medicaid Waivers and the Rhode Island Model
This Health Care News article discusses the benefits of Medicaid waivers and reports on the version adopted by Rhode Island.

Health Care Freedom for Washington State
The Washington Policy Center discusses the current Medicaid system and reports on what is expected from the global Medicaid waiver in Washington state.

Lesson for California: Washington State’s Bipartisan Medicaid Reform Will Benefit Taxpayers and Patients
The Pacific Research Institute forecasts the potential outcomes of the Rhode Island model of Medicaid being implemented in Washington.

Governors’ Letter Shows Why Medicaid Block Grants Are Necessary
Michael F. Cannon, director of health policy studies at the Cato Institute, outlines the benefits of block grants.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit the Health Care News Web site at http://www.healthpolicy-news.org, The Heartland Institute’s Web site at http://www.heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.

If you have any questions about this subject or the Heartland Web site, contact Kendall Antekeier, health care legislative specialist, at kantekeier@heartland.org.