A joint legislative committee holds the first of two hearings on the state Medicaid program, while social activists argue against cuts.

01:00 AM EST on Tuesday, January 24, 2006

BY ELIZABETH GUDRAIS
Journal State House Bureau

PROVIDENCE -- Lawmakers delved into the gargantuan topic of Medicaid yesterday, opening a hearing on the status, in Rhode Island, of the federal health-insurance program amid pleas from activists not to cut funding.

Jane A. Hayward, the state's director of health and human services, may have summed it up best. "Medicaid is a very complicated program," she said. "It's not easy to understand because there are a lot of moving parts to it."

Hayward gave legislators on the Joint Committee on Health-Care Oversight an overview of the program that spans six state departments and costs Rhode Island $1.7 billion last year. (A slim majority of that spending, 54 percent, is reimbursed by the federal government.)

While the Department of Human Services holds most of the responsibility, and most of the budget -- $1.1 billion -- for administering Medicaid, certain responsibilities fall to other departments. For example, the Department of Health dispenses meningitis vaccines and manages the cases of HIV and AIDS patients. The Department of Children, Youth and Families handles health care for children in foster care and group homes. The Department of Education delivers services to special-education students. The Department of Mental Health, Retardation and Hospitals provides substance-abuse treatment. The Department of Elderly Affairs pays for home care for those who might otherwise be in nursing homes.

Fostering coordination and efficiency between the departments that administer Medicaid funds was part of the reason Governor Carcieri created the Office of Health and Human Services and appointed Hayward, formerly the director of the Department of Human Services. Hayward's office is preparing a report on Medicaid in the state, expected in December, she said yesterday.

Activists who oppose cuts to Medicaid came armed with their own report: "Medicaid in Rhode Island: Now More Than Ever," a study by Community Catalyst Inc. of Boston, in conjunction with Ocean State Action and Rhode Islanders for Social and Economic Security.

The report contests the notion that subsidized health care encourages recipients to seek nonessential treatments. It concludes that Medicaid is cheaper than providing health care for the uninsured through emergency room visits and piecemeal treatment. The average uninsured person costs the state $1,385 a year, but health care for a Medicaid recipient costs the state $1,263, the report says.

Speaking at the end of the four-hour hearing, and in a news conference beforehand, activists took a preemptive strike at the governor's much-anticipated budget address. Carcieri drew ire with his comment to a reporter last month that unsustainable increases in Medicaid spending were "sucking all of the money out of all of the other areas" of the state budget.

Fewer services for the poor isn't the only problem with cutting Medicaid spending, Carcieri's critics say.

Medicaid is "one of the economic drivers in the state," Kerrie Jones-Clarke, executive director of the Rhode Island Health Center Association, said yesterday.

She said Rhode Island's 33 community-health centers employ more than 700 people, and its community mental-health centers employ another 2,000.

The Community Catalyst study found that for every percentage point that Rhode Island cuts from Medicaid spending, the state would lose 160 jobs, nearly $6 million in wages and $17 million in business activity.

Health-care reform looks to be one of the year's principal legislative issues, with several proposals already on the table, including one from the joint commission's co-chair, Sen. Elizabeth H. Roberts, D-Cranston, and commitee member Rep. Brian Patrick Kennedy, D-Hopkinton. Roberts and Kennedy propose creating a new health plan with lower premiums than those currently available to small businesses and individuals without employer-paid insurance by creating a reinsurance fund that pays the bulk of large claims.

Another proposal would mandate, as a percentage of payroll, spending on employee health insurance by the state's largest employers.

The Medicaid hearing continues Monday at 3 p.m. in the State House, Room 313.

egudrais@projo.com / (401) 277-7045