Washington Post examines Rhode Island plan to cap Medicaid spending in exchange for greater flexibility in overhauling program

Rhode Island Gov. Donald Carcieri's (R) request to CMS last month for a waiver to set limits on state Medicaid spending has "alarmed" congressional Democrats and low-income advocacy groups who said the proposal would reduce access to nursing homes, raise out-of-pocket expenses for low-income families and limit eligibility and enrollment of residents in the program, the Washington Post reports.

Carcieri said the request for the waiver was prompted by pressures of a "national economic downward spiral" and the need to address the rising cost of health care, which he called "the single largest expenditure of the state's budget."

The plan would limit the state's Medicaid contribution in 2009 to 23% of the state's general fund budget, or about $754 million. Federal spending would increase annually at a capped rate of 9.2%, which accounts for a 6.8% increase in annual health care costs and a 2.3% increase annually in enrollment, according to a Center on Budget and Policy Priorities analysis, the Post reports.

State officials estimated that under the plan, state and federal expenses for the program would fall short of projected needs by $231 million in 2009 and by $500 million in fiscal year 2013. To address the shortfall, the state's plan calls for more efficient delivery of health care services by increasing the number of in-home and community care service providers for seniors and the disabled, while lowering the dependence on more costly facilities like nursing homes.

The plan also would levy a premium on low-income families that visit an emergency department instead of a primary care physician; raise their copayments and premiums over the current federal limit; and limit their access to optional services and specific facilities through waiting lists and geographical location restrictions.

In the waiver request, Carcieri said, "The Medicaid waiver would allow the state to implement reforms to protect the long-term viability of the program as well as the individuals it services." A spokesperson said state officials are confident about a quick approval of the request.

However, some congressional Democrats "expressed concern" regarding the proposal, according to the Post. In a statement, Sen. John Rockefeller (D-W.Va.) said, "Medicaid provides a federal guarantee of health benefits for those in need, and that guarantee cannot be negotiated away through secret pacts between the Bush administration and governors seeking to cut Medicaid."

Jeff Nelligan, a CMS spokesperson, said the Bush administration is in discussion with Rhode Island officials "to reach agreement on an approvable proposal." The administration also offered to brief Senate Finance Committee Chair Max Baucus (D-Mont.), Rockefeller and other Democrats about the plan but a date has yet to be set, the Post reports (Montgomery, Washington Post, 9/5).