ObamaCare’s Medicaid expansion bill wrong for Illinois

by Jonathan Ingram Senate Bill 26 passed out of the House Human Services Committee and will head to House for consideration. But the Medicaid expansion this bill proposes is not right for Illinois. First, Illinois is under no obligation to expand Medicaid eligibility. Federal law permits, but does not require, states to expand eligibility levels for...

by Jonathan Ingram

Senate Bill 26 passed out of the House Human Services Committee and will head to House for consideration. But the Medicaid expansion this bill proposes is not right for Illinois.

First, Illinois is under no obligation to expand Medicaid eligibility. Federal law permits, but does not require, states to expand eligibility levels for Medicaid. Across the nation, state lawmakers are taking a very cautious approach and are not rushing into this decision. A majority of states, led by both Democratic and Republican governors, have now either rejected the Medicaid expansion or are leaning that way. In fact, of Illinois’ neighbors, only Kentucky has announced its intent to expand Medicaid eligibility.

Second, there are no reliable estimates of the cost of SB 26. No fiscal note has been filed. Even the estimates produced by the Department of Healthcare and Family Services contain major methodological flaws. The department’s assumptions contradict research published by the U.S. Department of Health and Human Services, the outcomes in other states that have expanded Medicaid eligibility to this group and even Illinois’ own troubled history of Medicaid expansions.

Third, this bill takes away federal subsidies to buy private health insurance. More than a third of the people that this bill would dump into Medicaid are currently eligible to buy private health insurance with federal subsidies. Many others currently purchase private health insurance through their employer or on the individual market. But by making these people eligible for Medicaid, this bill takes away federal subsidies, forcing them into a broken Medicaid program through which they will have poor access to necessary care and experience worse health outcomes.

Fourth, the federal government is unlikely to fulfill its commitment to Illinois. Federal Medicaid spending already represents one-fourth of the federal deficit and is expected to more than double in the next decade. This explains why President Barack Obama’s last three budgets have proposed shifting more of these costs to state governments and why he has included these cost-shift proposals in debt ceiling and fiscal cliff negotiations. One of the two trustees Obama appointed to oversee Medicare warned states that it was a “near certainty” that federal support for Medicaid will be cut in future years.

Fifth, this bill includes a “trigger” to back out of the expansion in case the federal government reduces the enhanced matching rate, but the trigger is unlikely to be effective. Although the U.S. Supreme Court held that the federal government could not require states to opt into the Medicaid expansion, it did not hold that federal requirements on maintaining eligibility would not apply after a state agrees to expand Medicaid. Federal law classifies the expansion population as a new “mandatory population” for states that opt into the expansion, which brings with it the authority of the federal government to take away all federal Medicaid funds if the state were to ever try to roll back eligibility for that group.

Finally, this bill overloads a program that is already on the brink of collapse. More than one-third of Illinois doctors have stopped taking new Medicaid patients altogether; and when they can get care at all, Medicaid patients frequently suffer worse outcomes than privately insured patients and even the uninsured. SB 26 would dump hundreds of thousands of able-bodied, childless adults into a program that isn’t working, crowding out resources for those most vulnerable who are currently on Medicaid. This means that resources for children, the elderly and the disabled will instead be spent largely on young, able-bodied adults without children.

Instead of expanding Medicaid, Illinois lawmakers need to refocus their efforts on improving the quality of the current program, rather than overloading a system already on the brink of collapse.