Choose Wisely, Illinois: Alternatives for Balancing the Medicaid Budget

On Thursday, April 19, 2012, the Governor released a proposal for the reduction of the current $2.7 billion Medicaid budget deficit. The proposal, developed with a group of legislators on the Medicaid Commission, includes $2 billion in cuts to eligibility levels, benefits, and payment rates to providers, and a $1 per pack increase in the cigarette tax. Some of the Governor’s most concerning proposals include eliminating the Illinois Cares Rx program, reducing eligibility for FamilyCare, eliminating the General Assistance Medical Program, eliminating the adult dental program, and requiring a co-pay from vulnerable populations utilizing federally qualified community health centers.

Many of these cuts will not be “fixed” by the implementation of the Affordable Care Act in 2014. For example, Illinois Cares Rx covers costs not covered under Medicare or the ACA such as premiums, deductibles, lower co-pays, and medications not covered in the Medicare formulary. The biggest misconception is that the ACA will fill the Medicare “donut hole.” It gradually reduces costs in the donut hole over the next 8 years but never completely eliminates that cost-sharing as Illinois Cares Rx does.

Other cuts may be “repaired” by the implementation of health care reform, such as coverage for low income parents, but at what cost? How much preventative care will be missed in the next 18 months which will cost the state more in expensive emergency or acute care after January 1, 2014?

Medicaid is a vital source of health care for many Illinoisans. Although the Medicaid program must become more efficient to safeguard taxpayer dollars, there are other alternatives to the proposed cuts. Solutions such as cutting prescription drug coverage, eligibility, or optional services are unacceptable and will drive up long-term state costs. The General Assembly and Governor have underfunded Medicaid for 20 years and the cuts do not need to all happen immediately; a multi-year solution is needed to balance the program budget. Furthermore, short term solutions, such as cutting prescription drug coverage, eligibility or optional services are unacceptable, and will only drive up long-term state costs. It is important for Illinois legislators to keep in mind that transformative Medicaid reforms currently being implemented and require time to work, and that The Medicaid budget cannot be balanced with Medicaid cuts alone. New revenue and savings from legislative changes in other budget areas must be applied to Medicaid.

Some of the proposed alternatives are:

Medicaid system Delivery reforms: Reforms such as the Care Coordination Innovations Project, Integrated Care Program, and other projects to better manage the care of some of the highest-need Medicaid patients need time to be implemented to see the full scope of savings and improved health outcomes.

Changes for Nursing Home and IMDs: Nursing homes and Institutions for Mental Disorders (IMDs) have excess capacity, resulting in thousands of empty beds across the state. Reducing the number of licensed beds could save Medicaid money. Refocusing efforts on community-based services, rather than institutional placement, would also reduce costs, and in some cases, qualify for more Federal funding. Also, Illinois could implement the nursing home bed tax, already approved by the federal government, which has not yet been implemented because the nursing home industry has not agreed on a formula to redistribute funds.

Stop paying for medically unnecessary, elective C-sections: C-sections are significantly more costly, require a longer recovery time for both the mother and often the infant, and can lead to complications due to premature birth. Nearly half of all C-sections in the U.S. are medically unnecessary, and it is estimated that Illinois’ Medicaid program spent between $54M and $76M on medically unnecessary C-sections in 2009.

For more information, see the Responsible Budget Coalition's fact sheet on alternatives to the cuts here.

Stephanie Altman
Program and Policy Director
Health & Disability Advocates