In August 2008, Rhode Island applied for federal permission to radically transform its Medicaid program. Rhode Island asked for a fixed amount of federal funds each year along with permission to bypass longstanding federal standards protecting Medicaid beneficiaries. However, the terms and conditions of the waiver fail to take into account the impact of the recession and the five-year cap on federal funds is too low. This makes it likely that the state will have to make cuts in benefits, provider payments, or eligibility to stay under the cap.