Carcieri urges lawmakers to approve Medicaid overhaul

PROVIDENCE—Gov. Don Carcieri on Friday defended a first-in-the-nation plan to overhaul Rhode Island’s Medicaid system, saying the state would get unprecedented flexibility to care for the poor and elderly as it struggles to close a massive budget deficit.

The Carcieri administration reached a landmark agreement with the federal government last month to set a $12 billion spending cap on Medicaid spending over five years.

In exchange for the spending limits, the state would have the authority to use Medicaid funding in new ways, such as expanding at-home services so elderly patients can avoid more-expensive nursing home care. But Rhode Island would be accountable for any cost overruns if it can’t abide by the spending cap.

The proposal requires the approval of the Democratic-dominated General Assembly. Carcieri has said the plan would save $358 million and contain rising Medicaid expenses. About 200,000 people in Rhode Island, roughly a fifth of the state, receive Medicaid benefits.

“The goal of this is to keep this safety net intact and strengthen it - not to do anything to diminish it,“ Carcieri, a Republican, told members of the House Finance Committee. “We need to put to rest a lot of the fear that’s out there that somehow we’re dramatically changing what is happening today in the level of care.“

The governor’s appearance was an attempt to shore up support from a critical House committee and to assuage concerns over the deal. Critics worry that the cap is too small, that the state doesn’t have the manpower or infrastructure to manage the program and that services would have to be cut if the recession produces a surge in the number of Medicaid recipients.

A report issued Thursday by a Georgetown University health policy institute and the Washington-based Center on Budget and Policy Priorities argues that the $12 billion cap falls well short of what the state will require over five years. That concern was echoed by Finance Committee Chairman Steven Costantino, a Providence Democrat.

“How does this committee know there’s enough money in the cap?“ he asked.

Gary Alexander, director of the state Department of Human Services, said he expects the state will easily remain below the cap and even have a cushion.

“We feel very adequate that we have plenty of money over the five years,“ Alexander said.

Carcieri stressed that legislators would be able to opt out of the program before 2013 if they change their minds. He also said the program wouldn’t prevent the state from participating in any federal stimulus package enacted by Congress.

But Judith Solomon, a senior fellow at the Center on Budget and Policy Priorities, said the money Rhode Island would likely get from the stimulus plan would make the Medicaid proposal unnecessary.

“There’s some breathing room now from the fiscal relief that would make it smart to take another look and think it through in terms of what program changes the state wants to make,“ Solomon said.