Quick Hit Adam Doster Friday October 1st, 2010, 10:31am

Why Does Illinois Spend So Much On Medicaid?

Why does Illinois spend a huge chunk of its annual budget on Medicaid? It's not because of "waste, fraud, and abuse," as GOP gubernatorial nominee Bill Brady proclaims. It's not because Illinois offers free coverage to middle-class households, as the Tribune asserts. Illinois spends a lot on its public health program because demand is extremely high.

This is a point we can't stress enough. Between December 2007 and December 2009, enrollment increased in Illinois by almost 200,000 people. This spike tracks with national data; a new 50-state survey from the Kaiser Family Foundation found that states experienced rapid growth in their Medicaid enrollment last year because unemployment was so high. (In an employer-based health care system, no job means no insurance.) "For nearly all states," Kaiser writes, "the single most significant factor in Medicaid spending growth is the growth in the number of persons enrolled in the program."

That's not to say enrollment is the sole cause of spending growth. State officials also report that health care inflation and an increase in the utilization of services play a part. On that front, Illinois is already implementing policies to "bend our cost curve," in the parlance of our times. Its two public programs that employ "managed care" principles, Illinois Health Connect and Your Healthcare Plus, saved roughly $440 million last year. Both plans, mind you, would be eviscerated if the GOP mandates that all patients enroll in private managed care programs.


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