Spending cuts for Medicaid is dominating talk in Springfield, as both Democrats and Republicans point the finger at the health care program as one of the main causes of the state’s budget woes. The current Medicaid debate, though, is perhaps misleading.
Here are some facts to keep in mind:
* Illinois spends about $7.5 billion annually on Medicaid, not $15 billion.
The Chicago Tribune reports today that Illinois spends $15 billion a year on Medicaid, which is a federal-state program that provides health care to the poor, disabled and some children and elderly patients. The Chicago Civic Federation, the research group that got the ball rolling on talking Medicaid costs with its grim budget report last week, stated in its report that Medicaid costs $14.3 billion annually.
These numbers are technically true, but substantially incorrect. The federal government reimburses Illinois (and every other state) at least 50 percent of their Medicaid costs.
Therefore, Medicaid now costs Illinois north of $7 billion each year – obviously a significant sum of money, but a far smaller portion of the state’s annual expenditures.
* Quinn signed major Medicaid reforms into law a year ago.
A bipartisan commission of state legislators held Medicaid reform hearings in December 2010. The commission agreed on a number of reforms that the General Assembly passed and the governor signed into law. These include eligibility cuts to All Kids Illinois and moving more Medicaid patients from institutions to community care settings.
The Civic Federation, for all its warnings – they estimate the state could have $21 billion in unpaid Medicaid obligations by 2017, outlined one specific policy recommendation regarding Medicaid: “The Civic Federation supports aggressive implementation of Medicaid reform legislation passed in January 2011.”
But it's arguable that the state has dragged its feet on implementation. For example, Quinn moved quickly, and with little public input, to shift Medicaid patients to community care settings. The governor announced last month the upcoming closure of Tinley Park Mental Health Center and Jacksonville Developmental Center.
* The federal government largely runs Medicaid.
The federal government sets minimum thresholds for who is eligible and what health services Medicaid provides.
Medicaid will expand in 2014, with implementation of the national health care reform law. At that point, the federal government will pay the entire cost of enrolling every adult whose annual earnings are less than 133 percent of the poverty level. For the state – and thousands of their most vulnerable citizens – to enjoy the fruits of health care reform, Illinois is required to neither cut eligibility nor most services currently provided to Medicaid patients.
* There's nothing left to cut.
Even if Illinois were to suddenly have the power to reduce eligibility and services, what, exactly, would it cut? As Progress Illinois has documented, Medicaid is a very lean program – it provides basic preventive and emergency care to those most in need. The costs of Medicaid have shot up largely because of the recession – they are more people without jobs, or with part-time jobs, in a still mostly employer-based health care society.
The lack of things to cut is seen in the Civic Federation report and the bipartisan commission’s fairly modest recommendations last year. Both the research group and some commission lawmakers recommended more managed care programs. But the cost-savings of managed care are unclear, and the state has a sordid history with managed care.
Illinois has problems paying its bills and Medicaid is a large expense. But Quinn and lawmakers may be hitting a brick wall by focusing on Medicaid as an area to cut.