National election results give Rauner opportunity for Medicaid overhaul

Ted Dabrowski

Former Vice President of Policy

Ted Dabrowski

Craig Lesner

Budget and Tax Research Director

Craig Lesner
November 16, 2016

National election results give Rauner opportunity for Medicaid overhaul

The time is ripe to offer private insurance options to needy Illinoisans through premium-assistance programs and Medicaid savings accounts.

For many Illinoisans, Medicaid means poor access to health care. Long waits for appointments, rejection by doctors, and emergency room visits are commonplace for Medicaid patients. Much of that failure can be blamed on a Medicaid enrollment that has ballooned to 3.2 million Illinoisans, crowding out resources for the very people Medicaid was intended to protect.

That’s a sorry outcome for a state that spends 25 percent of its general fund budget on health care, largely Medicaid. Much of Illinois’ troubles stem from the fact that the state is currently trapped in a federally mandated, matched-funding program that offers health coverage to its poor, but does little to ensure actual access to that care.

But politicians willing to seek much-needed change have the perfect opportunity to enact meaningful reforms that would help Medicaid patients and taxpayers alike, including health savings accounts and premium-assistance programs that would give Medicaid enrollees access to the same kind of health coverage available in the private sector.

In view of the Nov. 8 national election results, with Republicans gaining control of the White House and keeping their majorities in Congress, major changes to Obamacare, including Medicaid, may be on their way. Reforms could eventually turn over control of Medicaid to each individual state.

That’s good news for Illinoisans dependent on Medicaid. Not only will it allow the state to be more efficient and innovative in how it delivers care, but Illinois’ Medicaid enrollees can finally get the access to health care they deserve.

Gov. Bruce Rauner and the General Assembly can champion reforms that give current Medicaid enrollees access to the same insurance plans Illinoisans in the private sector have. Through sliding-scale, premium-assistance programs based on need, paired with health savings accounts, today’s nonelderly, nondisabled Medicaid patients could access health coverage through insurers such as Blue Cross Blue Shield.

Under these kind of changes, Illinois’ most vulnerable wouldn’t be treated like second-class citizens.

Medicaid isn’t working for patients or taxpayers, but enrollment continues to grow

Today, Medicaid patients are often forced to use lower-quality doctors, hospitals and specialists, if they can get access at all. According to a recent report by physician placement and consulting firm Merritt Hawkins, 55 percent of doctors in major metropolitan areas refuse to take new Medicaid patients. Another study by the Department of Health and Human Services found 56 percent of Medicaid primary care doctors and 43 percent of specialists weren’t available to new patients.

Moreover, health outcomes for Medicaid patients are unimpressive. A randomized study by the Oregon Health Study Group revealed that health results of Medicaid enrollees were not significantly better than those of people without access to insurance.

And while one-third of all U.S. children are enrolled in Medicaid, less than half are ever tested for lead – even though the federal government mandates screening for Medicaid patients.

Medicaid’s rapid boom in enrollment has contributed to those poor outcomes.

In 2000, just 1.37 million, or 11 percent, of all Illinoisans were enrolled in Medicaid.

As of 2015, enrollment had swelled to 3.22 million – a 135 percent increase. With more than a quarter of all Illinoisans on Medicaid, it is no longer a safety net for Illinois’ neediest.

illinois medicaid

As the number of Medicaid enrollees has increased, costs have, too. Since 2000, total general revenue fund, or GRF, and GRF-like Medicaid costs have jumped by $7 billion. That increase alone is nearly what Illinois state government appropriates for K-12 education each year.

The recent addition of Obamacare enrollees, while currently funded with federal dollars, will put additional strain on an already overworked health care system. An additional 600,000 Illinoisans have been added to the insured rolls, costing the state $1.8 billion in 2015 alone.

illinois medicaid

A projected $5 billion budget deficit in Illinois means the time is now for reforms

The potential for Medicaid reform is timely for Illinois. Springfield is set to run an overall $5 billion deficit in its general fund this year – crowding out core government services for many of Illinois’ most vulnerable.

Instead of continuing to pour money into a failing system, Medicaid needs comprehensive reform based on expected changes at the federal level. Illinois Policy Institute proposed the following changes in 2013, and now the time is ripe to finally offer private insurance options to Illinois’ neediest residents through:

Federal block grants: Reform should begin with swapping out the current Medicaid financing system of federal matching funds for a block grant. With a block grant, Illinois state government would then have an incentive to reform and innovate how it delivers care without fear of losing its federal funds.

Premium assistance for Illinoisans: With funding secured, Illinois can then transform Medicaid’s fee-for-services and managed care programs into a sliding-scale, premium-assistance program based on need, allowing the state’s most vulnerable the opportunity to purchase private health insurance.

Premium support funds for nonelderly and nondisabled patients would be placed in a Medicaid savings account, or MSA, similar to a health savings account.

Medicaid savings accounts: With MSAs, individuals can select the insurance that best fits their needs and preferences. Patients could also use any remaining funds in their accounts for health care expenses such as doctor visit co-pays, prescription drugs and hospital stays.

To make these reforms work, Illinois must also revisit eligibility requirements to ensure the most vulnerable residents aren’t crowded out of the safety net.

The 2016 election provides an opportunity for real Medicaid reform and improved health care access to those who need it most.

Rauner and the Illinois General Assembly must be prepared to act.

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