The Shriver Brief : Poverty Law Commentary & Insights : Sargent Shriver National Center on Poverty Law : Affordable Housing, Healthcare Reform

When newly-installed Governor Quinn gave his budget address March 18, 2009, he put forth the case for a combination of budget cuts and tax increases necessary for the indebted state of Illinois to get through this devastating recession. Although he pushed this message throughout the legislative session and the Senate approved a substantial tax hike, in the end the budget signed into law on July 15 relies instead on borrowing and harsh cuts to essential services in Illinois.

In a year of many notorious firsts within Illinois politics, this year’s budget is unprecedented in many ways. It relies tremendously on borrowing, jeopardizing the state’s credit-worthiness and resulting in a massive projected deficit of $10 billion for next year. It grants the Governor unheard of discretion by appropriating lump sum amounts to agencies under his control and leaving up to him the decision as to which programs to cut, rather than providing line-by-line programmatic spending authority as in past years, in an attempt to push the blame for the required cuts onto him. To the devastation of the state’s most vulnerable, it makes deep cuts in many programs on which thousands of residents rely.

The full impact of this year’s budget will not be realized until the Governor and his agencies make the tough decisions the legislature chose not to make, deciding which programs will be fully funded, which will be cut, and which will be eliminated. But the ultimate impact of this budget will continue to be felt for years, as the state will cope with addictions that could have been treated, violence and homelessness that could have been prevented, and increased expenses from seniors forced into nursing homes.

Before this budget was even signed into law, the uncertainty caused by the failure to adopt a new budget before the start of the state’s fiscal year and the massive cuts being proposed led to hundreds of social service providers being laid off and thousands of Illinois residents in need of assistance being turned away. Since the adopted budget funds social services at about 85% of the Governor’s requested budget, which already contained cuts, more layoffs will occur and additional services will be cut. But the fight is not yet over. With continued advocacy by the thousands who have written letters, called legislators, attended rallies, and struggled to make their voices heard, the legislature will return in January to renewed cries for the tax increase the state so desperately needs. Perhaps then, when the cuts are real and the legislators see the suffering their cowardice created, they will step up and meet the needs of the people and state they supposedly serve.

To read the Shriver Center's complete analysis of  the Illinois State budget, click here.  

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States across the country are wrestling with budget crises.  In that context attention always turns to Medicaid, just because it is a large budget line, and it is therefore an attractive mark for anti-tax advocates who do not really have viable alternatives to taxes but like to speak vaguely about cutting spending.  The Illinois budget mess offers a lesson in why these folks have the germ of a good idea but are missing the most promising way to achieve it.

Most knowledgeable people concede that there is no way out of the huge Illinois budget deficit but to raise revenues.  Of course, many of those same people do not support raising the necessary revenues.  The opponents disingenuously cry out that Illinois must never increase revenues until it has made “cuts” to the spending side.  Tellingly, they have been unwilling or unable to specify exactly where they would cut the billions needed to balance the budget without increased revenues.  Accountability is not their strong suit.

But there is nevertheless an interesting modest overlap between this “cuts” position of the opponents of revenue increases, and the position of the proponents. Led by the Governor, the proponents are committed to making reductions in state spending, as part of the overall budget package that includes the revenue increases.  Greater efficiency is always a good and desired goal, and it is even more important in such difficult times. Moreover, revenue increases are more palatable, more fair, if state government is making efficiency improvements at the same time.  

So both sides are focusing on ideas for cuts.  One of the centers of attention for this kind of brainstorming is all of the state’s publicly supported health care coverages, popularly lumped together under the term “Medicaid”.  The programs cover children, low income working parents, people with disabilities, and the elderly. The opponents of revenues, citing old and sloppily done consultants’ reports, say that Illinois could be saving $1 billion or more on Medicaid, mostly by imposing hardcore HMO-style managed care, insisting that people use generic instead of costly brand name drugs, and caring for more people in the community instead of nursing homes. The proponents of revenues, citing actual experience in Illinois that shows the state is already realizing significant savings from care management, generic drugs, and community based care, say that they are willing to try any reasonable new ideas, but estimate savings in the tens of millions. The fact is that Illinois is already among the lowest in per person Medicaid expenditures.

Both sides are missing the most likely source of significant Medicaid savings that will neither limit coverage nor impair care. It is not a Springfield initiative, but a Washington DC initiative that will get this done. As should be obvious, Medicaid is just one part of the larger health care system, most of which is in the private sector. Medicaid suffers from the same system-wide phenomena that are driving the dizzying upward spiral of health care costs for all of us – profiteering across the board, inefficiencies, lack of focus on prevention, loss of consumer choice and control, and so forth. It is this increase in cost, decrease in control, and loss of peace of mind that is driving the anger in the American people that in turn is driving the move towards comprehensive reform being led by President Obama. 

These problems in the larger health care system fuel the trend in Medicaid spending. Thankfully, every year Medicaid spending (known as Medicaid “liabilities”) grows at a rate that is smaller than the overall consumer price index for medical related goods and services. Medicaid is a more efficient system. Yet Medicaid costs are necessarily directly related to the larger health system market. When health care costs go up generally, they also go up for Medicaid.

All those folks in Springfield looking for ways to spend less on Medicaid should realize that they are looking in the wrong town. The action on this is in Washington, where the battle over comprehensive reform is playing out right now. Just a couple of days ago, President Obama asked Congress to produce ideas for overall health system reforms to bring down the cost of care, or at least the rate of growth of the cost of care. He noted that in so doing, they would also be helping to produce $200-300 billion in savings for Medicare and Medicaid. 

For those truly interested in controlling the growth in Medicaid spending, the most promising course is to help make sure that the drive for national comprehensive health care reform is successful this year.  Meanwhile, the Springfield folks should tend to the knitting and vote for the revenues needed to fund state government.

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