Medicaid overhaul may lower elderly services

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By ASSOCIATED PRESS

PROVIDENCE, R.I. Rhode Island is proposing an unprecedented overhaul of its Medicaid program that Republican Gov. Donald L. Carcieri says will save this cash-starved state millions of dollars - but could risk leaving the poor and elderly with fewer services should the plan not work.

Instead of having the federal government reimburse Rhode Island more than 50 cents for every dollar the state spends to care for the needy, disabled and elderly, Mr. Carcieri wants the state to get its federal money in a lump sum.

The federal government would benefit because its spending would be capped over the three-to-five year experiment. In return for agreeing to spending limits, Mr. Carcieri wants freedom from rules governing how the money can be used. For example, his administration wants to use Medicaid money to help keep seniors in their homes with care instead of moving them to nursing facilities.

That freedom comes with a risk. If Rhode Island miscalculates and exhausts its funding too quickly, state officials say they may have to cut services for Medicaid recipients deemed the least needy. Mr. Carcieri's administration is also seeking the authority to charge recipients more for Medicaid coverage.

The plan could affect some 200,000 recipients, or about a fifth of the state's population. Mr. Carcieri and outside experts say no other state has tried such a radical approach, although Vermont came close in 2005 when it negotiated dual caps on its Medicaid spending.

The state needs special federal permission - called a waiver - to revamp the program, said Gary Alexander, director of the Rhode Island Department of Human Services.

Mr. Carcieri is negotiating with the federal Centers for Medicare and Medicaid Services, but it is not clear whether the Republican governor can reach an agreement before President Bush leaves office in January.

A CMS spokeswoman said a decision on Rhode Island's proposal is not imminent.

Because so much hinges on financial management, Rhode Island's recent track record is hardly inspiring. Even before the current financial meltdown, the state was coping with massive budget deficits. A series of budgets have been stitched together by slashing welfare and health care programs, forcing hundreds of state workers into early retirement and even selling land.

Already, Democrats in Congress are deeply skeptical.

Sen. Sheldon Whitehouse of Rhode Island wrote a joint letter with two other Democrats - Max Baucus of Montana, chairman of the Senate Finance Committee, and John D. Rockefeller IV of West Virginia, who leads the Senate subcommittee on health care - that criticized the Medicaid plan.

The three questioned whether the lump sum system is legal, fault it for shifting costs to the federal government and object to increasing co-payments for beneficiaries and creating waiting lists for long-term care.

"While Rhode Island talks a good game about reducing costs, there isn't much in the way of infrastructure to suggest they can actually turn the talk into reality," Mr. Whitehouse said in a recent interview.

Mr. Carcieri argues the state has little choice. By 2011, Medicaid will consume about 30 percent of the state's budget, leaving less money for other priorities like education or highways. The problems will only get worse as baby boomers age.

Judith Solomon, a senior fellow at the liberal Washington-based Center on Budget and Policy Priorities, call Mr. Carcieri's proposal a "dangerous precedent." She estimates it would leave Rhode Island $1.6 billion short of its estimated Medicaid needs. If Mr. Carcieri fails to wring enough savings from the system, Ms. Solomon fears state leaders will simply cut benefits.

"You're really endangering the idea of having a program where those who are eligible get benefits," she said. "That's the fundamental nature of the Medicaid program."