Gov. Quinn signs Medicaid package that fails to deliver

Earlier this afternoon, Gov. Quinn signed the “Medicaid reform” package. As you may recall, Quinn called on lawmakers to reduce Medicaid spending by $2.7 billion in his February budget address. The Institute offered a 59 point plan to help lawmakers hit that target. Our plan would have reduced Medicaid spending by $2.7 billion without cutting reimbursement rates...

Earlier this afternoon, Gov. Quinn signed the “Medicaid reform” package. As you may recall, Quinn called on lawmakers to reduce Medicaid spending by $2.7 billion in his February budget address.

The Institute offered a 59 point plan to help lawmakers hit that target. Our plan would have reduced Medicaid spending by $2.7 billion without cutting reimbursement rates that are already so low that providers can’t afford to take new Medicaid patients. That plan, endorsed by several lawmakers and presented to the Medicaid working group, reduced spending by making the program more transparent and efficient in the delivery of care.

Sadly, Gov. Quinn signed a package that ultimately fails to deliver on his promises to taxpayers:

• The package makes a number of changes to the Medicaid program, but found just $1.6 billion in savings, including a 3.5 percent rate cut to hospitals. This falls far short of the $2.7 billion in savings promised by lawmakers and needed to ensure the Medicaid program is both sustainable and protects the most vulnerable.

• The package imposes new taxes on tobacco products and hospitals. The package increases cigarette taxes by $1-per-pack and imposes new taxes on “roll-your-own” tobacco products. This more than doubles the state’s tax on tobacco, raising the total tobacco tax in Chicago to nearly $5-per-pack, second highest in the nation. We’ve previously highlighted why relying on tobacco taxes for Medicaid spending is bad public policy. The package also includes new taxes on hospitals, which will be shifted onto Illinois consumers.

• The package implements ObamaCare ahead of schedule. Despite the fact that a majority of states are suing the federal government over a forced expansion of Medicaid, this package permits the Governor to move forward with his plan to implement ObamaCare’s massive expansion of Medicaid nearly two years early in Cook County. His administration estimates that the plan would add approximately 250,000 people to the Medicaid rolls. Keep in mind: the Supreme Court could strike down this provision (or the law in its entirety) any day. And, as we’ve explained in the past, this plan will hurt Illinois and Cook County taxpayers at a time of record government deficits and debt.

Overall, Gov. Quinn’s package endorses a permanent income tax hike by keeping Medicaid spending at unaffordable levels and relying on temporary tax dollars to finance it. This does not clear the path for the repeal or eventual sunset of the 2011 income tax hike. Worst of all, the package fails to fix the actual problems with the state’s Medicaid program by leaving in place a broken system where spending will continue to rise faster than revenues and the most vulnerable will be turned away from quality care.