Why Rauner should roll back Illinois’ Medicaid expansion ASAP
Services for the most vulnerable Medicaid populations will be first in line for budget cuts. Childless, able-bodied adults will be last.
Illinois’ decades-long, unchecked spending spree will be the biggest challenge facing Governor-elect Bruce Rauner upon taking office. And choosing where and how to cut the state’s budget will be his administration’s toughest job.
By virtue of its size, the state’s $13 billion Medicaid budget will have to be examined for reductions.
Illinois’ Medicaid program is operated and funded jointly by the federal government and the state. Its original purpose was to provide health-care services to the poor and disadvantaged, but today’s program goes far beyond that. In fact, the nature of the program’s expansion may end up coming at the expense of the vulnerable population it was intended to serve.
As part of the Affordable Care Act, commonly known as ObamaCare, states were able to choose to expand Medicaid eligibility to residents making up to 138 percent of the federal poverty level, or $16,105 for a single person and $32,913 for a family of four. As a result of the expansion, Illinois added about 500,000 new individuals to the state’s Medicaid rolls in 2014. Unfortunately, the dramatic growth of the rolls was done with little regard to how the expansion would impact patient care and the state’s budget.
The federal government is supposed to pay for almost 100 percent of Medicaid costs for the expansion population, most of whom are able-bodied adults. This rate will decrease to 90 percent in 2020. Meanwhile, the state picks up about half the tab for the previously eligible Medicaid population. This payment schedule is precisely why attempts to cut the Medicaid budget could have dire consequences for the state’s neediest populations.
A study by the Foundation for Accountability’s director of research and Illinois Policy Institute senior fellow Jonathan Ingram reveals that services for vulnerable Medicaid patients are “a much easier target for slashed services and spending cuts than the ObamaCare expansion population.”
If Illinois sought to rein in Medicaid spending, it would need to cut about $2 in Medicaid spending on the traditional Medicaid population to save $1 of state spending. But because the federal government is picking up most of the tab for the expansion population, a state would need to cut up to $10 in Medicaid spending on the expansion population to save $1 in state spending.
In other words, services for the most vulnerable Medicaid populations will be first in line for budget cuts. Childless, able-bodied adults will be last.
There is also a looming threat that the state could be on the hook for a larger share of the Medicaid bill if some federal lawmakers have their way.
President Barack Obama has previously attempted to break the promise to foot almost the entire bill for Medicaid expansion. The new Republican majority in both chambers of Congress now makes the prospect of the federal government reducing funding even more likely.
The threat of federal cuts to the Medicaid program, coupled with the state’s current budget woes, could make Illinois’ already-dire fiscal situation even worse.
Twenty-three states have, wisely, resisted the temptation to take the federal bait of “free money” to expand Medicaid. Govs. Scott Walker of Wisconsin and Rick Perry of Texas understand that Medicaid is not the only option for providing accessible and affordable health care in their states.
The fact that the federal government can change the rules of the game ─ leaving Illinois taxpayers to pick up an even bigger tab ─ and the potential for further undermining care for the state’s neediest patients are just two more reasons why the Medicaid expansion should be rolled back in Illinois.