Gencarella: Can We “Make it in RI?”

Thursday, March 19, 2015


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Governor Gina Raimondo

The title of the Governor’s budget, “Make It In RI," belies the stark contrast to the damage she sets out to do and the burdens she plans to place on individual taxpayers as well as small businesses.  

Not to be outdone by her predecessor, former Governor Chafee, Raimondo is doubling down on the Health Exchange in spite of her original disbelief, that the system could not possibly cost the $20 million Liz Roberts projected it would cost to maintain.  Remember, this Exchange is not much more than a big advertising campaign for Medicaid and its expansion. The RI Center for Freedom and Prosperity quotes a Health Exchange advisory group as warning against the formation of a state-based Exchange. Well that warning went unheeded and now the exploding cost of maintaining it is another unheeded warning.  The Governor’s budget includes a new tax (but purportedly not considered a broad based tax increase) on health insurance premiums whether you are in the exchange or not.  So with her new tax plus the federal money expected for this year, there is a total budget of $30 million to run the exchange.  The Governor thought it was high at $20 million, but at $30 million, she’s good with it.  Hopefully, Speaker Mattiello has more sense than that.

Because RI opted to expand Medicaid when it was presented by the federal government, the base of Medicaid recipients increased drastically. When Governor Raimondo spoke to that issue prior to the budget release, one might have expected that she would revisit that policy, again, set in place prior to her arrival. But, once you give something away, it is hard to dial it back, so instead, we are left with runaway Medicaid costs, only expected to get worse as the Obamacare statutes continue to play out. The cost of the Medicaid expansion, about $550 million, is currently funded completely by federal dollars. But beginning in 2017 it will require state dollars as well.  By 2020, the state will be on the hook for 10% of that number. If it were required today, that would be an additional $50 million of your state tax dollars needed to fund the expansion. This is all part of the structural deficit that totals close to $1 billion over the next 5 years.  

Here’s the Medicaid picture.

When the General Assembly enacted last year’s budget, it included projections for this upcoming 2016 year (the year that begins this July 1st). They estimated that Medicaid would be $2.3 billion.  They were wrong, and not by a little.  When they looked at it again in November, they projected another $211 million. That’s an additional 10%. WOW!  How could they get it so wrong?  Well, that’s because that same November revisit indicated that the current year (the one that began last year on July 1st) was off $118 million, or 5%.  It is easy to see why we keep getting the numbers wrong.  There appears to be a multiplier effect once you move to the out years if you get it wrong in the initial year.

Then There’s UHIP (Unified Health Infrastructure Project)

This system, as part of the Health Exchange development, is designed to create a dependency portal or a superhighway that will allow for medical insurance assistance recipients to obtain immediate access to every public assistance program for which they might qualify. So think about it. If the expansion of Medicaid was planned and projected, but the cost still significantly underestimated, what do you think will happen with the cost of RI’s public assistance programs?  Taxpayers should be ready to see them balloon as well. And then let’s talk about the cost of this UHIP system that will provide quick access to every public assistance program. Like the Exchange, it is funded by both state and federal dollars. The Governor’s budget includes $88 million by the close of this year (June 2015) and another $50 million for the 2016 budget.  She points out that the total projected cost for this project is $229 million. These are monies dedicated to creating systems to give away your tax dollars. 

Back to the Governor’s Plan to “Reinvent Medicaid."

The Governor is planning to convene a work group to look at the Medicaid system. She has provided for savings in the next year totaling $175 million, which includes $90 million of your state tax dollars, the rest are federal dollar savings. The $175 million is expected to come from about $78 million alone from capping reimbursement rates.  Another $86 million of the savings is expected through what she called ‘targeted interventions for the highest cost/highest need populations’ and ‘value-based payment approaches in managed care and other areas. How is it that she is only expecting a meager $2 million from predictive modeling that will reduce fraud on both the provider and beneficiary side?  Ken Block was commissioned to study waste, fraud and abuse in the state’s welfare systems and Medicaid was one of those systems.  Governor Chafee swept the report under the rug.  Why doesn't the new Governor dust off that report and either hire Ken or at least get someone in that can take his report and run with it.  There must be significantly more fraud, waste and abuse to be found than the pittance of $2 million.  What kind of hope do you hold out that a working group will find $175 million in savings otherwise?

Why Is There Uncompensated Care In An Era When Everyone Is Insured?

Looking back over the past few budgets, it has been reported that uncompensated care reimbursed to hospitals was $118 in the 2012 budget. Now that Obamacare has been fully implemented and the RI Health Insurance Exchange has performed swimmingly, why should anyone not be covered by health insurance?  One might expect that uncompensated care would have plummeted in the 2016 budget.  But instead, uncompensated care has increased nearly $20 to $137 million!  While uncompensated care may include other charges, according to Terry Gorman of RIILE (Rhode Islanders for Immigration Law Enforcement), a significant portion of uncompensated care is provided for those who receive services but do not have social security numbers. Who would not have a social security number?  Perhaps people who are not citizens of this country. Since you and I are funding expanded Medicaid and now we may pay for the Health Exchange whether we use it or not, we urge both elected officials and investigative reporters to question the uncompensated care issue.  

Whether you believe that immigration should be addressed at the state or federal level, we all know that RI has thrown out a welcome mat for illegal immigrants and our government pushes to extend that welcome mat. The Board of Education, as an end run around the General Assembly, allows in state tuition for illegal immigrants. The current Governor has indicated her support of drivers’ licenses to illegal immigrants as have many other elected leaders. This at a time when even New Mexico’s first Latina Governor,Susana Martinez, has been calling for repeal of that state’s law allowing drivers’ licenses to illegals because of the impact it has had on her state.   

As An Aside.

Did you know your Attorney General, Peter Kilmartin, joined 13 other states and the District of Columbia to fight for illegal immigration? In a presidential executive order (which Obama said no less than 20 times that he did not have the authority, or did not want to exercise the authority, to advance immigration reform), he protected up to 5 million illegal aliens. Kilmartin added RI to a list of states and the District of Columbia to fight an injunction that put a hold on Obama’s executive order. Did you vote Mr. Kilmartin back into office to throw RI’s support behind illegal immigration?

The Taxpayers Lose, Again.

So RI’s solvency hinges upon a working group that is expected to find over a quarter of a billion dollars in Medicaid savings, without taking on the fraud, waste and abuse in the system. That’s a lot of money to bank on. A whopping $90 million is expected in state tax dollars while the remainder is federal money.  We have also been told that Obamacare and the RI Exchange are working famously, that’s why we should keep it, yet the exchange itself will cost Rhode Islanders more money (and will increase after this year when the federal dollars run out), the Medicaid expansion will cost us a fortune, our uncompensated care costs continue to escalate and we can expect an explosion in other welfare systems.  It sounds like a lose, lose, lose situation. 

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Pam Gencarella is a member of OSTPA, a taxpayer advocacy organization in Rhode Island.


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