The Illinois Medicaid System

Illinois’ Medicaid system comes under scrutiny and is often cited when lawmakers discuss different ways to cut spending from the state budget because health care is one of the larger portions of the state budget.  Critics, often Republican lawmakers, claim Medicaid is one of the major reasons Illinois faces a $13 billion deficit.  They declare the cost to the state is simply too high.  Their answer: managed care.  From their perspective, if Illinois were to incorporate more managed care into it health care system, it would help cure our mounting deficit.  They often cite a $1 billion savings estimate.  But rarely do you hear any details on how this would be achieved.

The recession has cased surge in Medicaid applicants.  Around the country, states are facing some of the toughest times since the Great Depression.  Not only does Illinois have less money to pay its bills due a dramatic loss of nearly $4 billion in tax revenues since 2008, but as more people lose their jobs, those people become dependent upon state services.  Public assistance such as medicine and food programs typically see more use during a recession and participation and cost will stay high for some time after the economy recovers.  The need won’t be going away for a while.

What is Managed Care?

“Managed care” is used to describe a system that manages health care delivery with the aim of controlling costs, while still providing quality care.  Managed care programs work with networks of doctors and hospitals to bring down cost, giving bonuses for efficiency.  They also aim to achieve cost savings by negotiating with doctors employing disease management and promoting healthy living.  The goal behind managed care is to improve regular access to doctors and, as a result, reduce emergency room use and hospitalizations, which are traumatic and expensive therefore curbing unnecessary costs. 

How does Illinois Institute Managed Care?

What many don’t understand is Illinois has already taken steps towards this, moving Medicaid patients into managed care programs.  As recently as February of 2010, 1.94 million people were enrolled in managed care.  This population represents 77.3% of the estimated 2.5 million Medicaid enrollees. 

How to measure Medicaid Spending

Even with the recession and more people joining Illinois’ Medicaid rolls, Illinois still ranks 42nd in the US in Medicaid spending per patient, which is part of the reason why decreasing costs further is so difficult.  

Medicaid dollars and Federal matching funds

Medicaid is financed jointly by the federal government and each state participating in the Medicaid Program.  Federal dollars are vitally important to low income Illinoisans’ receiving the care they need to stay healthy.  Up until last year, the federal stimulus program (the American Reinvestment and Recovery Act) was put into place by Washington, it was typically a 50/50 split between state and federal dollars that funds Illinois Medicaid program.  Under the federal stimulus, the federal government provided Illinois with $2.9 billion.  To continue to receive this money, Illinois can’t reduce Medicaid eligibility or access.  If our state Medicaid program is reduced, Illinois will lose a great deal of money – your tax dollars. 

Often times, you may hear lawmakers argue that we need to cut Medicaid spending through a number of different means.  Some suggest that we change eligibility, effectively forcing people off of state-run health insurance.  During a time of recession, that’s a tough task.  But the short answer to that is yes, we are taking steps to cut spending: 

• The Senate overwhelmingly passed SB 3707 which would have reigned in the amount of medical spending which can be pushed from one year to the next.
  
• A managed care pilot program is currently in the works.  It will include the senior and disabled Medicaid population in the collar counties around Chicago.  This tends to be the most expensive population because their needs are greater.
  
• Finally, the General Assembly passed  several pieces of legislation aimed at brining more ofyour federal tax dollars back to Illinois, increasing efficiencies with semi-permanent benefit cards (HB 5054), increasing transparency (HB 5241), and strengthening auditing efforts (HB 5242). 

The General Assembly has taken steps, but most importantly, we must be careful when we adjust Medicaid.  This is a delicate matter because we are subject to federal rules and, if not followed properly, we lose critical federal funds.

Without federal matching funds, Illinois would not be able to provide health care services. Cuts in Illinois’ Medicaid program would push thousands of impoverished people into the ranks of the uninsured.  This would set into motion a disturbing chain reaction.  Hospitals and other providers, which are already receiving low rates of reimbursement under the Medicaid program, would have to bear the cost of the newly uninsured.  In turn, those costs will be passed onto both the privately insured consumer and the remaining participants under the Illinois Medicaid program.  The resulting cost shift would increase your insurance bills.  In sum, we all suffer the consequences.