A number of people are holding up Rhode Island as an example of how block grants would succeed in reducing Medicaid spending without reducing benefits. There was a great piece in yesterday’s NYT that showed that’s not quite true:
Under the experiment, which was born in a 2009 agreement between the state and the federal Centers for Medicare and Medicaid Services, spending on Medicaid was capped at $12 billion through 2013. The state would be responsible for all costs above that amount, rather than sharing those expenses with the federal government.
In exchange, the federal government granted Rhode Island more flexibility in how it runs its Medicaid program.
Did it work? Did Rhode Island suddenly whip up some system that provided better care to more people for less money? Not so much:
The agreement’s impact on the state’s bottom line is murkier. State spending dropped in 2009 and rose again the next year. Mr. Costantino [current Rhode Island secretary of health and human services] said he has tried several times, to no avail, to corroborate the savings claimed by Mr. Alexander [former Rhode Island secretary of health and human services] in his paper, which was published on the Web site of the conservative-leaning Galen Institute.
In an early version of the paper, Mr. Alexander said that Rhode Island had saved about $150 million during the first 18 months of the agreement. A later version lowered the estimate to $110 million. The paper does not detail how he arrived at those numbers, nor does it explain the reason for the change.
Mr. Alexander, now Pennsylvania’s acting secretary of welfare, did not respond to requests for comment left with a spokesman in his office.
So, it turns out, giving states more flexibility didn’t allow them to magically make things better. This should not surprise you; if it was easy to do this, everyone would. If a governor had a brilliant idea, wouldn’t he or she share it with the rest of the country?
There is one other key difference between the Rhode Island deal and Rep Ryan’s budget. It’s that the amount of money promised to the state in the form of a block grant was huge, not reduced:
Though Rhode Island’s agreement limits federal contributions, the cap was set so high, Mr. Costantino said, that the state is unlikely to hit it. If it did, the state would be spending so much on Medicaid, the program would become unsustainable, he said.
Total spending in fiscal 2009 fell more than 25 percent below the agreement’s annual target. Last year, spending was 17 percent below the target.
Even with the increases in spending in the last few years, they were nowhere near the block grant cap. So no one should have felt any pain at all. Rep. Ryan’s plan, on the other hand, would significantly cut spending by 35% by 2022 and 49% by 2030.
There are those of you who will claim that this makes all the difference, that if we cut spending now, then Rhode Island have followed suit. Perhaps. But then you’re making an argument that Rhode Island is an example of a failure of block granting Medicaid, not a success.