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Illinois Prepares for Medicaid Expansion

By Dr. Ram Krishnamoorthi
. 2 Comment(s)

On May 28th, the Illinois state legislature passed a final bill to expand Medicaid eligibility according to the plans set forth by the Affordable Care Act. In sending this bill to Governor Pat Quinn to sign, Illinois is one of 27 states now on their way to accepting Federal funding to expand access to health coverage to tens of millions of uninsured Americans.

Illinois currently has about 1.7 million uninsured individuals, or about 13% of the population. Under new Medicaid eligibility rules, any adult whose income falls below 138% of the federal poverty line will now be eligible for Medicaid, doing away with requirements that largely reserved Medicaid to women with children, the disabled, or the elderly poor.  A study by the by the Urban Institute estimates that 700,000 Illinoisans who are currently uninsured would now be eligible for Medicaid—522,000 who would be newly eligible and 178,000 who are currently eligible but not enrolled. Citing this and another co-authored study by the Kaiser Family Foundation, the Center on Budget and Policy Priorities (CBPP) predicted that about 573,000 adults (both uninsured and currently insured by other means) would take advantage of new eligibility and enroll in Medicaid.

This represents a positive turnaround for Illinois’s current Medicaid recipients and uninsured because just one year ago, the Governor signed into law $1.6 billion in cuts to Medicaid, as part an effort to address Illinois’s struggles with a severe fiscal deficit. If Federal Medicaid dollars had not been accepted, this dramatic slashing would have cut 25,000 adults from coverage. In addition, cuts to dental, vision, and podiatry care and changes to mental health coverage. The move was seen as devastating among health care advocates for the poor, who remain the most vulnerable during a time of economic downturn and slow recovery in poor neighborhoods.

The reason that the legislature targeted Medicaid for cuts is that Illinois, like other states, has deeply felt the increasing fiscal burden of health care. Since the year 2000, the number of Medicaid recipients doubled from 1.4 million to nearly 3 million today.

The amount that Illinois has spent on Medicaid has steadily increased to about $6 billion in 2010. However, as Medicaid is a Federal-State partnership, Illinois’s share of the cost has decreased from 50 to 40% from 2006 to 2010, and the Federal government gradually increased its share to about 60%, largely because of Recovery Act funds in 2009.

The reason that Medicaid expansion is such a good deal for Illinois is that the Federal government with pick up 100% of the cost of the newly eligible Medicaid recipients recipients through 2017, and then 90% after that. The CBPP estimated that if Illinois did not expand Medicaid, that over the next 10 years (through 2022), the state would spend about $4.2 billion anyway for the growing population of Medicaid-eligible adults. By passing the Expansion bill and accepting Federal dollars, the state would only spend 5.2% more than it otherwise would have over this 10-year period, given the current trends in health care.  And it would further save in its costs of paying hospitals and doctors for uncompensated care for the uninsured as many of these would be newly covered.  

Another promising set of reforms that may help costs and improve quality of care, is Illinois Medicaid’s adoption of Managed Care schemes. The 2012 law mandated that half of Medicaid recipients be enrolled in a managed care plan, with the aim of controlling costs through better chronic disease management and coordination of care to prevent expensive complications and hospitalizations. Late last year, Illinois selected eight managed health plans to deliver this care, with special programs for different populations, such as very costly dual-eligible recipients. Since many of these plans will be paid based on quality measures, a higher level of scrutiny will come for taxpayer dollars and for patients’ care and safety than traditional fee-for-service Medicaid has accorded before.

Many physician groups, such as the Illinois State Medical Society, have been frustrated with Medicaid and are skeptical of expansion. They threaten that many doctors are already refusing to take Medicaid patients and established physician shortages will be exacerbated with the new crop of insured patients. They cite the low payment reimbursement rates of Medicaid, often only 67% of what Medicare pays for similar services, and the poor reputation of the Illinois Medicaid program, frequently not getting paid for up to a year or not at all. Some estimate that Illinois has more than $2 billion in unpaid Medicaid bills sent by doctors and hospitals.

With Medicaid expansion, however, $4.6 billion may flow from the Federal government to Illinois to pay Medicaid providers.  The Illinois Hospital Association has been supportive of Medicaid expansion, as up to half of reimbursements to hospitals in Illinois comes from Medicaid and Medicare, and many member institutions are safety net providers. The same is true of thousands of community health clinics, county and municipal hospitals, mental health clinics, and nursing homes who provide care for the poor, the disabled, and the elderly who have tragically faced bankruptcy from medical bills without adequate health coverage.

To bring some relief to these Medicaid providers, in 2013 and 2014, the Affordable Care Act appropriates funding for increased reimbursement for primary care services, to the level of Medicare reimbursement rates, though this increase will expire at the end of those two years. Also, $40 billion has been allocated to expanding community health clinics, and a tripling of the physicians headed for the National Health Service Corps will help fill the need to provide care for underserved areas and new Medicaid patients.  To continue the trend, primary care groups and hospital associations should advocate for extending this increased funding in the subsequent years.

The pragmatic approach of the ACA calls for getting as many Americans covered as possible under the new rules, and Doctors for America is committed to aiding this enrollment effort in Illinois for its 1.7 million uninsured. We will partner with organizations such as Enroll America to get as many of the potential 700,000 Illinoisans covered. Opponents of Medicaid expansion warned that it will be too costly, arguing that the state has suffered from the recession and a fiscally crippling health care budget. But in reviewing the fiscal facts, expanded coverage may just be the medicine that Illinois needs.  

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  1. Scott Poppen

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    Good for Illinois! "2 billion dollars in unpaid Medicaid bills" Unbelievable! No wonder the ISMS is skeptical. Great opportunity to manage the Medicaid program correctly this time and change some mines.
  2. Vijay Jayaraman

    Permalink
    A timely and concise review of the healthcare situation we will soon face. I think it is interesting what is considered "unpaid Medicaid bills" as I believe it is common practice by hospitals to overcharge in efforts to get the most return. I think the focus on primary care is key. I worry that larger hospitals/ health systems will aggressively try to divert funds their way instead.

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