NCPA - National Center for Policy Analysis

Medicaid Reform Working in Rhode Island

April 12, 2011

Federal taxpayers pay about 53 percent of Rhode Island's Medicaid costs.  This has created a perverse incentive for state politicians to increase dependency on Medicaid in order to capture more federal funds.  The "stimulus" bill of February 2009 increased Rhode Island's match to about 64 percent.  Fortunately, Rhode Island succeeded in crafting a mechanism to restrain out-of-control Medicaid growth, says John R. Graham, director of health care studies at the Pacific Research Institute.

In August 2008, Governor Carcieri tasked his Secretary of Health and Human Services, Gary Alexander, to apply for a "Global Consumer Choice Compact Waiver" from the federal government.

  • Rhode Island's waiver is not quite a block grant -- it caps aggregate federal and state spending through 2013 at $12.075 billion.
  • Nevertheless, it appears to have had the results one would expect from a block grant -- spending has plummeted from what was anticipated.
  • Remarkably, through the first six quarters of the waiver (January 1, 2009 through June 30, 2010) actual spending was only $2.7 billion versus $3.8 billion budgeted.

Rhode Island's reform benefits not only the state but federal taxpayers nationwide.  The state's latest (March 2011) mandated quarterly report, which presents financial performance from July 2009 through December 2010, announced that cumulative total Medicaid savings from the waiver were $1.3 billion, says Graham.

Source: John R. Graham, "Good News for All States and All Taxpayers: Rhode Island's Medicaid Waiver Survives Scrutiny," The Pacific Research Institute, April 4, 2011.


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