After months of negotiations, the General Assembly advanced a massive Medicaid reform package this week. State Senator Christine Johnson (R-Shabbona) said the biggest win for the citizens of Illinois was the passing of Senate Bill 3397 – the Section 25 Reform that will tear up the Governor’s Medicaid “credit card” by changing the state law that has allowed administrations to buy Medicaid services in one fiscal year, but not pay for those services until the next fiscal year.
The program, which provides health care to 2.7 million Illinois residents in need, will end this current fiscal year (though June 30) with $1.9 billion in unpaid bills, according to Governor Quinn’s Office.
“The Illinois Medicaid system is literally on the brink of collapse. Without this fundamental restructuring of the program, the Civic Federation estimated we could have $21 billion in unpaid Medicaid bills by 2017,” said Sen. Johnson.
“This is a big win for Senate Republicans who have been pushing for this legislation for over a year and even bigger win for the health care providers who will finally be paid what they are owed. However, the greatest victory is for the people who truly need this program because this legislation will ensure that Medicaid will remain solvent and available.”
Senator Johnson also voted for Senate Bill 2840, which through targeted reforms and reductions of services and programs, is expected to reduce Medicaid liabilities by an estimated $1.6 billion in Fiscal Year 2013. The bill advances $1.36 billion in benefit cuts and $240 million in provider rate reductions. Johnson said the bill was a bipartisan step in the right direction in paying the State’s backlog of Medicaid bills.
“Besides just reducing the program funding, this bill also enacts many of the reforms the Senate Republicans proposed last year in our ‘Reality Check’ plan (illinoisrealitycheck.com) that addressed out-of-control state spending. Until now, many of those ideas have been largely ignored. I am very happy that both parties were able to bring some ideas to the table on this very serious issue,” Johnson said.
Senate Bill 2840 targets eligibility verification as a way to produce significant cost savings, including turning over the verification of continued eligibility (re-determination) to a private entity, which is expected to save the state $350 million. Additionally, the Department of Health Care and Family Services (DHFS) will be required to file timely reports with the Auditor General, providing specifics on efforts that have been taken to implement the reforms.
As part of the legislation, DHFS will enhance eligibility verification procedures and tighten asset testing for seniors seeking Medicaid payment for nursing home care. The bill requires data sharing between the state’s employment security agency and DHFS to help verify income eligibility.
The measure will save $50 million by reducing eligibility for Family Care to 133 percent of the federal poverty level, which is more in line with other states, and will terminate the Illinois Cares Rx prescription drug assistance program. Instead, low-income seniors utilizing Illinois Cares Rx will be able to access federal assistance, as has been done in many other states.
DHFS will also be required to implement co-pays in all areas of the Medicaid program, the maximum co-pay being $3.60 for brand name drugs. The co-pay for generic drugs will be $2. This is expected to free-up $44 million within the program.
Senator Johnson voted against House Bill 5007 that would allow for a Medicaid expansion in Cook County. The legislation allows the City of Chicago to expedite by two years the influx of new Medicaid enrollees in Cook County expected under the federal Affordable Care Act (“Obamacare”), to expand eligibility for Medicaid benefits to up to 250,000 childless adults.
Though proponents insist that there will be no cost to the state, Senator Johnson pointed out the measure is in direct conflict with the bipartisan Medicaid reforms passed by lawmakers in 2011, including P.A. 96-1501 that prohibited any expansion or creation of Medicaid programs for two years.
Sen. Johnson also expressed skepticism that a Medicaid expansion of this magnitude could be implemented at no cost to taxpayers. If the federal ACA is struck down by the courts after the Cook County residents are added to the Medicaid program, it is likely Cook County would turn to the State to fill the funding hole.
“Working on the Medicaid Task Force I have learned that the only way we can make our Medicaid program sustainable again is to reform the program from the inside out by cutting waste and spending and paying our backlog of bills. It simply isn’t logical to add people to a failing program,” said Sen. Johnson.
Senator Johnson voted against Senate Bill 3261 which changes non-profit hospitals’ eligibility standards requiring them to provide free care to low income patients to receive property tax exemptions. This initiative directly contradicts the aim of Medicaid reform because it will encourage people to use expensive and overcrowded emergency rooms to see primary care physicians instead of participating in a coordinated care system or ‘home base’ doctor. These costs will be offset by working class families in the form of higher insurance premiums.
Senator Johnson also voted against Senate Bill 2194 that will increases cigarette taxes by $1 per pack and doubles the tax on other tobacco products from 18 percent to 36 percent. She said the problem is not in the raising of cigarette taxes, which will help people quit, but that relying on a shrinking revenue source for growing Medicaid expenses is a shortsighted solution that does not solve the real problem.
She also questioned how the relatively small revenues raised by the tax hike would solve the state’s financial problems after a 67 percent tax hike last year failed to do so. The measure also spells out requirements that hospitals must meet in order to qualify for property tax exemptions as not-for-profits and imposes charity care requirements on for-profit hospitals.
“Although I did not vote in favor of all of this legislation, I am truly proud of the General Assembly for coming together and settling on some solutions to these epic problems that are threatening the survival of our Medicaid system and state. These are not perfect answers, and there will be many more difficult decisions on the long road ahead, but at least for once we seem to be going in the right direction,” Sen. Johnson said.
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