The House GOP wants to convert Medicaid funding to an annual block grant for each state, a radical restructuring of the program. The proposal, had it been in effect over the past 10 years, would have cost Illinois billions.
The State of Illinois' Medicaid program seems to be the place lawmakers turn whenever they look to slash state spending. Gov. Pat Quinn signed a package of changes into law last January that, among other measures, requires Medicaid enrollees to prove they live in the state, adds income limits to the state's health care program for children, and seeks to shift more patients to coordinated care. The changes are purported to save up to $770 million over five years. The Quinn administration's proposal for the state's 2012 budget puts $552 million in cuts to Medicaid reimbursement rates on the table, while the Senate GOP wants deeper reductions to the program next year.
These have been difficult discussions. But had the new plan put forth by Washington Republicans for the joint federal-state health insurance program for the poor and disabled been in effect over the past few years, the debate in Springfield would have only been harder. And at the end of the day, the state's poor and uninsured -- not to mention health care workers and the economy here generally -- would have been worse off.
In all, Illinois would have lost out on more than $9.3 billion in federal Medicaid funds between 2000 and 2009 had the House GOP's new Medicaid pitch been the law of the land over those years, the Center for Budget and Policy Priorities (CBPP) finds. That's a 17 percent cut -- less than the national average but substantial enough to have advocates for the poor and health care reformers across Illinois sounding the alarm.
Currently, the federal government on average pays 57 percent of the costs of Medicaid, with states ponying up the remaining 43 percent, a Kaiser Family Foundation brief (PDF) from this past January calculates. No state gets less than 50 percent covered, and for every $2 that states pay for a Medicaid-covered service, they recieve at least $1 back from the federal government, Kaiser explains.
Under the House GOP plan, shepherded by U.S. Rep. Paul Ryan, such cost sharing would end. The Wisconsin Republican wants to give each state a block grant to pay for Medicaid starting in 2013 and increase its dollar amount only by inflation each year. The GOP says this will reduce federal government Medicaid outlays by $1 trillion, a full fourth of the total cuts claimed in the Republicans' tax slashing, Medicare-ending budget pitch.
(Ryan's budget proposal, by the way, cuts deep into the Obama administration's Affordable Care Act. The federal health care reform act expands Medicaid elgibility starting in 2014 so more people can access health insurance -- up to 750,000 people in Illinois could gain health care -- and the bill provides the bulk of the dollars for that expansion. Ryan proposes rolling back that expansion, meaning those 750,000 uninsured Illinoisians will lose out.)
CBPP, besides gaming out how states like Illinois would have fared between 2000-2009 had Ryan's proposal been in effect, estimated the impact of the pitch going forward. Since inflation is less than the current growth rates for Medicaid -- health care inflation rates are rising across all public and private systems -- states would lose out, and lose out big, over time. This table lays out the nationwide impact of the cuts:
By 2030, the federal contribution to the program would be down 49 percent, CBPP finds.
A coalition of Illinois-based health care reformers, unions, doctors' groups, and advocates for the poor recently sent a letter to the state's congressional delegation, warning them of the consequences of Ryan's plan (full disclosure: SEIU Healthcare IL and IN was a signatory to the letter; the union's state council sponsors this website.) Here's what they said about the "devastating" block grant idea, and what it would mean for a range of constituencies in Illinois:
[A] Medicaid block grant would simply shift costs to states, beneficiaries and health care providers. Facing such large cuts in federal funding, state would have to contribute much more of its own funds — by raising taxes or cutting other spending — or as is more likely, would have to slash eligibility or benefits that increase the number of uninsured and reduce access to needed care. They would also have to curtail payments to the hospitals, nursing homes, doctors, home health agencies, and pharmacies that serve our residents on Medicaid. This would strain Illinois’ overall health system, making it less able to serve the health and long-term care needs of Illinoisans.
President Obama is scheduled to respond to Ryan's budget plan later this afternoon. How he discusses Medicaid will be one critical element of the speech.