As Other States Health Cut Care for the Poor, Gov. Pat Quinn Embraces Illinois Medicaid Reform, Patient Care Safeguards

(Springfield, IL) — States across the nation are ratcheting down Medicaid services and eligibility to hold down costs, but Illinois officials are standing by Medicaid reforms passed in January that Republicans claim just skim the surface.

The $14 billion state-federal program offers health insurance for mostly low-income children, pregnant women, parents with young children, senior citizens and the disabled. Chief among the reforms passed in January were a requirement to move 50 percent of the state’s 2.8 million Medicaid participants to a “medical home” within the next four years through “coordinated” or managed care, and to move residents from nursing homes and other institutional care into community-based settings.

Illinois Senate Republicans believe the state can do better than the $800 million in savings expected from the reforms during the next five years.

“That was a good step one,” said state Sen. Pam Althoff, R- Crystal Lake, who served on the Medicaid reform task force. “But there’s now a step two.”

Julie Hamos, director of the Illinois Department of Healthcare and Family Services, noted the reforms are intended to keep people healthy and thereby hold down costs.

“If Medicaid (health care) services were not in place, sick people without health insurance would have to resort to more expensive hospital and institutional care,” Hamos said in an emailed statement.

This comes as Governor Pat Quinn wants to borrow $2 billion to help pay off a backlog of bills totaling $9 billion to $10 billion. Half of the borrowing would be used to pay off Medicaid bills and garner an enhanced federal match set to end in June with the expiration of federal stimulus funding. Borrowing measures require a three-fifths majority vote in the Legislature, meaning Republicans would have to be on board.

Republicans have put their foot down on borrowing — at least until they see more savings. They’re not alone.

States nationwide are preparing for up to 16 million new Medicaid participants when the bulk of the requirements of the new federal health care law go into effect in 2014. Illinois is expecting 500,000 to 800,000 new participants, mainly low-income childless adults able to participate for the first time. That would add the equivalent of $2.6 billion to $4.2 billion a year in costs to taxpayers, using FY2010 HFS data.

According to HFS data, the average annual cost for a Medicaid participant in FY2010 stood at $5,264. Average annual costs among the key five groups are:

  • Children up to 18, $2,372;
  • Adults with disabilities aged 19 to 64, $22,790;
  • Other adults aged 19 to 64, $4,584;
  • Senior citizens 65 and older, $16,623
  • Partial benefits for all ages, $1,287.

The federal government is expected to pick up most of the tab of new participants until 2020 when its share drops to 90 percent, but states are nonetheless downsizing their Medicaid services where they can to save money now and in the future.

“States are looking at everything they can,” said Melissa Allen, a health policy specialist with the National Conference of State Legislatures.

Mandatory services — those that states must offer to participate in the Medicaid program and receive federal matching grants based on per capita income — are generally off limits.

These include doctor visits; hospital stays and outpatient services; early and periodic screening, diagnostic tests and treatments; laboratory and X-ray services; home health services; and nursing home care, according to the federal Health and Human Services Department.

But limiting or eliminating optional services that states can choose to offer was common in 2010, and will likely continue, said Allen.

“States in 2011 are looking into going deeper into these areas,” she said.

These areas include optometry services and eyeglasses, dental services and dentures, prosthetics, physical and occupational therapy, podiatry services, chiropractic services, private-duty nursing services, prescription drugs, and speech, language and hearing disorder services. States also receive matching funds for optional services.

All states offer prescription drugs, but many implement a preferred drug list and co-payments, as Illinois does.

Additionally, Illinois offers supportive living facilities (a step below nursing home care), inpatient hospital psychiatric services, home care, medical equipment and mental health rehabilitation services, according to HFS.

“Illinois offers a laundry list of optional services,” said state Sen. Dale Righter, R-Mattoon, who co-chaired the Medicaid reform task force.

HFS does not plan on any more changes beyond what is outlined in the reform legislation or FY2012 budget proposal, which calls for a 6 percent Medicaid rate cut to nursing homes and hospitals and the elimination of a $107 million, non-Medicaid prescription drug program for seniors, HFS spokesman Mike Claffey said.

Hamos said eliminating optional Medicaid services is counterproductive.

“The most expensive optional services are pharmaceuticals, supportive living facilities, home care, dental services and medical supplies – total elimination could save $672.8 million – but would undoubtedly result in thousands becoming sicker and requiring more expensive institutionalization or hospital care,” Hamos said in an emailed statement.

According to  the Kaiser Family Foundation, states in 2010 and 2011 aggressively cut back on optional services. In fiscal year 2010, 20 states implemented benefit restrictions, and 14 states planned similar actions in FY 2011, including limiting or cutting adult dental services, imaging services, medical supplies or equipment, therapies or personal care services.

Kaiser is a  nonprofit, private operating foundation focusing on the major health care issues facing the United States, according to its website.

Illinois also uses its Medicaid Family Care program to cover parents with children with incomes up to 185 percent of the federal poverty level, or $41,348 for a family of four — a higher income level than most states, according to Kaiser. Participants pay co-payments, and in some cases, monthly premiums ranging from $15 to $40.

Republicans say the state needs to lower income eligibility levels.

“It’s going to call for tough decisions,” said Righter. “Otherwise, we’re going down a road that cannot be sustained.”

But the federal health care law requires that states maintain Medicaid eligibility standards that are equal to or more inclusive than what were in effect the date the Affordable Care Act became law, March 23, 2010 — called “maintenance of effort.” States must seek waivers to change eligibility standards.

Some states are already pushing for waivers. Arizona GOP Governor Jan Brewer made headlines recently when she proposed eliminating certain organ transplants from the state’s optional Medicaid services, and is now asking to drop eligibility for childless adults.

Kansas Republican Governor Sam Brownback this month wrote the federal government for an overall exemption from the “maintenance of effort” requirement, and asked that the state receive its federal match in a lump sum to do with it as it chooses.
Illinois Republicans claim the state is not doing enough to control costs.

“The common rhetoric is, ‘We have to do more,’” said Righter.

Hamos said the reforms already in place strike the right balance, but patience is needed.

“These changes will not reap huge savings overnight,” she said in a statement.

Mary Massingale, Illinois Statehouse News

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