Illinois’ Unpaid Bills Could Top $34 Billion in 5 Years

(Springfield, IL) – Illinois’ difficulties reining in its pension costs are expected to pale in comparison to its efforts to control Medicaid, the state’s other big expense.

A new report released Monday from the Civic Federation, a Chicago-based nonpartisan policy group that focuses on state spending, predicts Illinois’ Medicaid costs will skyrocket over the next five years.

Laurence Msall, federation president, said lawmakers and governors have spent Illinois into a deep hole by expanding Medicaid, which provides health-care coverage to low-income families.

“What is most frightening is that even after the income tax, the state was not able to pass a budget to fully fund Medicaid,” Msall said, referring to a 67 percent personal income tax increase and a 48 percent corporate income tax increase in January 2011.

But even with that additional revenue, Illinois lawmakers still had to pay more than $1 billion in 2011 Medicaid bills.

The Civic Federation report paints a grim picture for Medicaid spending:

  • Illinois is on pace to spend a total of nearly $14 billion on Medicaid this year
  • Illinois’ Medicaid costs are expected to increase 41 percent over the next five years.
  • Gov. Pat Quinn is budgeting only a 13 percent spending increase.

Illinois will see as many as 296,000 new people enroll in Medicaid once the federal Patient Protection and Affordable Care Act takes effect in 2014.

Under the new law, which is designed to make health care and insurance more accessible, the federal government will pay 100 percent of the cost of new Medicaid patients for two years. After 2016, Illinois will have to pay 50 percent of the costs.

The Civic Federation report also details increases in pension spending from $5.7 billion this year to $7.8 billion in 2017, and unpaid bills from $8.6 billion this year to $34.5 billion in five years.

Msall added that Medicaid spending is the biggest single cost for state government. The Illinois Department of Healthcare and Family Services expects to spend a total of $14 billion on Medicaid this year, that includes both state and federal dollars.

The Civic Federation report calculates pension spending to rise 35 percent over five years, while Medicaid spending is expected to jump 41 percent.

But it may be more difficult to cut Medicaid spending.

Illinois lawmakers refused a request from Quinn last year to lower the amount paid to doctors, hospitals and pharmacists who serve Medicaid patients. Instead, lawmakers delayed payments by hundreds of days and will pay some Medicaid bills next year.

State Rep. Patti Bellock, R-Hinsdale, said, “The hospitals and Medicaid providers asked for a delay rather than a rate cut.”

But Bellock said Illinois cannot trim the size of the Medicaid program.

“So the (federal government) is preventing us from moving forward with the some of the things we need here,” Bellock said. “Some of the major parts of the reform bill we did last year, the income verification and the citizen verification, are being prevented by” Washington, D.C.

Bellock was a key player in Medicaid reform legislation that focused on income and residency verification that Quinn signed into law last year. But those reforms have been stalled, because provisions in the federal health-care law prohibit states from changing Medicaid eligibility.

However, Republican Comptroller Judy Baar Topinka said Illinois is not completely stifled by the federal government.

“We have some legislation on managed care, so now you have to implement it. Then I think you have to be more direct about fraud,” Topinka said. “And there is a certain amount of eligibility (reform) you can do through fraud. If they’re not eligible, get ’em out. ”

Msall said Illinois can save money on Medicaid by closing state-run institutions and moving people to community care programs. Quinn has proposed closing at least two institutions, one in downstate Jacksonville and the other in Cook County.

Topinka said lawmakers are going to have to make a lot more difficult decisions on Medicaid, but she said Illinois has run out of time to “kick the can down the road.”

“I think we have the political reality that if we don’t take care of this problem…the situation will get so dire that the public will scream and unelect people on the basis of what (voters) will feel is ineptitude and a lack of responsibility,” Topinka said.

Benjamin Young, Illinois Statehouse News

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