Illinois Medicaid expansion costs are already double initial projections

Jonathan Ingram

Director of Research at Foundation for Government Accountability. Lawyer. Libertarian.

Jonathan Ingram
March 9, 2017

Illinois Medicaid expansion costs are already double initial projections

Between 2014 and 2016, Illinois’ Medicaid expansion cost $4.6 billion more than its supporters had forecasted, crowding out services for Illinois’ most vulnerable residents.

Illinois taxpayers have paid $9.2 billion for the state’s Medicaid expansion, slightly more than double what politicians initially projected. Massive cost overruns have left fewer resources for other priorities, including education, public safety, and even services for the most vulnerable. As Congress now prepares to offload more expansion costs onto state budgets, Gov. Bruce Rauner should begin the process of rolling back the Medicaid expansion before it’s too late. That means stopping new enrollment as soon as possible and letting the program gradually unwind as current enrollees improve their financial situations.

Obamacare projections vs. actual costs

In January 2014, Illinois extended Medicaid eligibility to a new class of able-bodied childless adults, as permitted by Obamacare. At the time, the administration of then-Gov. Pat Quinn and the Illinois General Assembly promised taxpayers that the expansion would cost no more than $4.6 billion during the first three years. Those costs would initially be borne by the federal government, but the state began picking up a share of the costs starting in January 2017.

New data provided by the Illinois Department of Healthcare and Family Services now confirm that the Medicaid expansion has been far more expensive than advertised. Between 2014 and 2016, taxpayers paid out a whopping $9.2 billion for Illinois’ Obamacare expansion – slightly more than twice what was initially forecasted. That total includes nearly $7.7 billion in fee-for-service payments to medical providers and capitated payments to managed care companies serving this population. It also includes an extra $1.6 billion in supplemental payments to hospitals.

illinois health care medicaid


Higher costs mean delays for needy patients, budget woes for state

Ultimately, this means fewer resources for other critical priorities, including education and public safety. But it also means less funding available to provide services for Illinois’ high-need residents. Nearly 20,000 children and adults with autism, epilepsy, developmental disabilities and other critical conditions are currently languishing on a Medicaid waiting list for needed home and community-based services. Nearly 70 percent of those individuals have reported an emergency or critical need for services. Many will die before ever getting the services they so desperately need.

If Illinois does not quickly begin unwinding the Medicaid expansion disaster, these funding challenges could soon have even more devastating impacts on the state budget. Republican leaders in Congress have already proposed shifting more Medicaid expansion costs onto state budgets, beginning in 2020. Under state law, Illinois’ Medicaid expansion should automatically terminate within four months of a federal funding change – removing 650,000 or more able-bodied adults from the program overnight. If the General Assembly changed state law in order to continue the expansion, it would need to come up with billions of dollars in new funding, putting other priorities at even further risk.

Policymakers shouldn’t wait until 2020 to address the pending crisis caused by Obamacare’s failed Medicaid expansion. Rauner should at a minimum begin preparing a Medicaid waiver to freeze enrollment in the expansion program as soon as possible. Under this approach, no new applications for Obamacare’s Medicaid expansion would be approved, but those already enrolled would be allowed to stay in the program until their situations improved and they became ineligible.

This approach has a proven track record. Arizona and Maine closed off new enrollment in earlier expansions after facing massive cost overruns. Based on the experiences in those states, enrollment in Illinois’ expansion could drop by nearly 45 percent in just the first year as existing enrollees gradually cycle off the program. Enrollment would continue to decline until the end of the transition period.

Not only would this leave Illinois in a better fiscal position when the new federal funding changes go into effect, but it would also provide immediate relief to taxpayers and protect limited resources for seniors, poor children, and individuals with disabilities.

Illinois’ Obamacare expansion is spiraling out of control. The governor should look for ways to rein in this expansion before it eclipses all other spending priorities.

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