What Congress can learn from the Rhode Is­land mir­a­cle

State waivers of­fer a work­able al­ter­na­tive to the Med­i­caid cri­sis

The Washington Times Daily - - COMMENTARY - By Stephen Moore Stephen Moore is an eco­nomic con­sul­tant at Free­dom Works and a CNN se­nior eco­nomic an­a­lyst.

You’d be hard-pressed to find a more poorly de­signed pro­gram in the fed­eral bud­get than Med­i­caid — the fed­eral health in­surance pro­gram for the poor. 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 that 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 that is con­sid­ered by the left to be a pol­icy vic­tory. It is swelling the fed­eral and state bud­gets. Oh for the days, when tak­ing peo­ple off of wel­fare was the goal, not putting them on the dole.

Con­ser­va­tives have ar­gued that Med­i­caid’s man­age­ment should be turned over to the states through a block grant al­lot­ment of funds. When the Repub­li­cans pro­posed this in their Oba­macare re­place­ment bill, lib­er­als blew a gas­ket. They hate the idea of al­low­ing the gov­er­nors to run the pro­gram in their states as they see fit free of the thicket of cum­ber­some fed­eral rules. This idea was por­trayed 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 poor qual­ity care with many top hos­pi­tals and treat­ment cen­ters, like Mayo Clinic, 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 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 one of ev­ery five res­i­dents was en­rolled and costs were grow­ing by 7.5 per­cent an­nu­ally. Un­der the waiver, the state’s of­fi­cial Med­i­caid doc­u­ments show that costs rose an av­er­age of only 1.3 per­cent a year from 2009-2012 — far be­low the 4.6 per­cent rate in the other 49 states.

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

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.”

Mr. 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 adds, “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 Repub­li­can block grant makes fi­nan­cial sense and will help en­sure that Med­i­caid doesn’t bankrupt Washington and the 50 states.

But the Trump ad­min­is­tra­tion doesn’t need to wait. It can start this pro­gram to­mor­row. It should put out word to the gov­er­nors that it will is­sue Rhode Is­land-style global waivers for Med­i­caid if they ap­ply for one. The White House has full au­thor­ity to do this and many states will line up for the of­fer.

One big ad­vo­cate for this is Mike Pence. The then-In­di­ana gover­nor once 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.” Mr. 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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