The Providence Business News reported today that RI will not be receiving the $108 million from Medicaid it was expecting. This is good news for a few reasons.
Firstly, Rhode Island wasn’t the only state to lose Medicaid funds – the total amount taken off the table was $16 billion. That’s $16b less in spending – which is good news #1.
Secondly, the RI General Assembly put a provision in the budget that allows the governor to unilaterally cut spending to make up for the lost funds. This will put significant pressure to look for spending cuts – good news #2.
Lastly, and most important – the loss of these funds will enable RI to make important changes in Medicaid eligibility. Here’s why: The Obama Administration made these additional Medicaid funds available, starting last year, on the condition that states would not change benefit eligibility requirements. Now if the bonus FMAP disappears effective Dec. 31, 2010, states will have nothing to gain and lots to lose by failing to tighten eligibility rules. They’ll still be constrained by federal law but they won’t lose money by implementing allowable changes. Rather they’ll reduce their costs and create stronger incentives for responsible LTC planning.
What do I mean by tightening eligibility rules? We wrote extensively on this subject in our study Doing Long Term Care RIght where we identified millions of dollars that are being used to provide tax-funded benefits for not only the middle class, but the affluent as well. As an example, there are people with severe disabilities receiving Medicaid (tax funded) healthcare right now that have million dollar trust funds. Why are people struggling to get by forced to pay for healthcare for someone with such wealth? How does this happen? Because the current eligibility guidelines do not count money in trust funds when calculating one’s ability to pay. These are the kinds of changes we can now make – good news #3.
Please read the report for details.