Progress Illinois

Medicaid "reform" as the cure-all to the state's budget woes is one myth that just won't die. The latest Republican official to predict gigantic cost savings without showing any support for the claim is State Rep. Dennis Reboletti (R-Addison), who suggested Monday on WTTW's Chicago Tonight that Illinois could save "over $1 billion dollars" by moving patients into a private managed care network. Here's the excerpt (you can watch the whole panel here):

REBOLETTI: We have talked about reforming Medicaid and saving over $1 billion dollars.

MARIN: What would be the principal reform off of Medicaid?

REBOLETTI: It would be $1 billion going to managed care. And by doing that we looked at the cost savings we would see. We've seen some cost savings in caucus that would save $1 billion off the top.

For those just getting caught up, here's a quick recap and rebuttal.

First of all, some are probably wondering what "managed care" refers to. Made popular in the 1990s, managed care programs -- which can be public or privately-run -- attempt to control costs of government entitlement programs. This can include any combination of delivery system reforms, an emphasis on preventive care, comparative effectiveness research, and financial incentives encouraging beneficiaries to avoid inefficient treatments.

Illinois boasts a fairly new state-run Primary Care Case Management (PCCM) program, called Illinois Health Connect. Last year, it linked up 1.7 million Medicaid recipients with primary care doctors’ offices, saving $100 million in fiscal 2008 through fewer hospital and ER visits. Another disease prevention program -- Your Healthcare Plus -- helped 220,000 Illinoisans more effectively manage their chronic diseases, achieving a net savings of $104 million in the fiscal year that ended June 30, 2008. Indeed, only eight states in the nation have a lower cost-per-patient ratio than Illinois. When it is fully implemented, the majority of our Medicaid and SCHIP populations will be required to enroll in the these programs. And by building in new disincentives to overusing care, Gov. Pat Quinn's Taxpayer Action Board (TAB) estimated that Illinois could net $95 million in FY 2010 savings.

Illinois has also established a voluntary private managed care system that serves 145,000 Medicaid beneficiaries. While small in size, TAB said the program could be "a substantial cost saver" for the Medicaid program "if used appropriately and coupled with improved primary and preventive care."

What Republicans are proposing is not a reform of these Medicaid programs, however. While they lack specificity whenever the issue is discussed, it seems they want to move all Illinois Medicaid users (2.4 million people in 2006, undoubtedly more now) into a private managed care organization (MCO). That's a very radical and problematic plan for a number of reasons, most of which John Bouman of the Sargent Shriver National Center on Poverty Law discussed in this exhaustive August post. Like other private insurance companies, there is an incentive to cherry-pick healthy patients, for example. There are also higher administrative costs, many of which are hidden (PDF) by the providers. And nobody has offered definitive evidence that mandatory enrollment in an MCO would save any money, much less the astronomical figure cited by Reboletti. After all, there has been a 3 percent average annual reduction in the program's cost per person over the last four years. We're already doing a better job of limiting our expenditures.

If Reboletti and other lawmakers like him are going to tout the potential savings of a Medicaid MCO migration, they need to provide hard math. And they should also explain how health outcomes will improve as a result of the proposal. Otherwise, they should be dismissed.