Market-based Medicaid Reforms Working in Rhode Island

Back in 2008, I wrote about some Medicaid reforms that had taken place in Rhode Island and urged the Richardson Administration to take note and consider similar reforms. Unfortunately, nothing was done and, Medicaid continues to grow rapidly (far more rapidly than the average state) in New Mexico, crowding out other spending and lower taxes.

But, Rhode Island moved ahead and, according to data from the Pacific Research Institute, is seeing excellent results. According to the report:

Rhode Island’s waiver is not quite a block grant. It preserves the Federal Medical Assistance Percentages or FMAP, but 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.

Rep. Paul Ryan’s budget would block grant Medicaid. While Rhode Island’s experience was not a true block grant, it only makes sense that states are going to be more innovative and flexible than the federal government. New Mexico’s leaders (both state and federal) need to start pushing for this reform regardless of the success or failure of Ryan’s budget lest Medicaid continue to consume ever more of the state and federal budgets.