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

Time: 4:30 p.m Central, Tuesday, May 28, 2013. "Mr. Clerk, take the record." With those words the President of the Illinois Senate asked the clerk of the chamber to record the votes on Senate Bill 26, as amended, the bill which would  put Illinois in the column of states that will, come January 1, 2014, offer Medicaid coverage to all low-income state residents. The Senate passed the bill by a vote of 39 to 20, concurring with the House, which passed the same bill the previous day (63 to 55). Thus, pending Governor Quinn’s signature, which he has promised, President Obama's home state will extend Medicaid to all previously ineligible low-income adults under the Affordable Care Act.

As Shriver Center President John Bouman stated:

Passage of this measure helps everyone in the state because it is a key part of the overall reform of the health care system and controlling its costs. But make no mistake: it is also the single most significant blow against poverty struck in Illinois in the last 50 years.

It was clear from the floor debates that these thoughts, as well as the moral conviction that health care should be for all, were prevalent among the supporters of the bill. Opponents of the bill largely cited unsubstantiated fears about future costs and the speculation that the federal government might someday renege on the funding promises in the Affordable Care Act. In fact, however, the opposition was partisan. The Republican caucuses took “caucus positions,” meaning that individual members were not free to vote their consciences or their opinions about wise public policy. 

Enacting this legislation means Medicaid coverage and increased access to quality and affordable health care to those who are uninsured with incomes under 138% of the federal poverty level (roughly $15,856 for an individual). This would make an exponential improvement in their quality of life and economic opportunity. This measure is a crucial part of the overall health reform taking effect since March of 2010. With passage of this law, Illinois joins 28 other states that have supported extending Medicaid to those newly eligible under the Affordable Care Act.

The Affordable Care Act provides that the Federal Medical Assistance Percentage (FMAP) rates for newly eligible individuals are 100% for calendar years 2014 through 2016. Federal financial support will then phase down slightly over the following several years so that, by 2020 and for all subsequent years, the federal government will pay 90% of the costs of covering these individuals (meaning that Illinois will pay just 10% of the cost of care for this new population). Medicaid coverage for the newly eligible group will start statewide January 1, 2014, with enrollment starting in October 2013. (The new coverage took effect January 1, 2012, for Cook County, Illinois, residents.).

 In addition to health improvements for the newly eligible, the law’s implementation will also:

• Ease the financial burden on health care providers. Through 2016, this legislation will bring an estimated $4.6 billion into Illinois in the form of Medicaid provider payments for newly eligible adults, with no net state costs for the care.
• Help stabilize Illinois’s state budget. The Illinois State Budget, Townships, and General Assistance providers will be relieved from paying for coverage of those who are uninsured and are currently ineligible for Medicaid.
• Benefit family economic well-being. New Medicaid will help reduce the financial burden that those who have private insurance pay towards the cost of uncompensated care. According to a report from Families USA, the average family with private health insurance pays an annual “hidden tax” of over $1,000 annually to offset the cost of uncompensated care.
• Create new jobs in Illinois. Adding the new eligibility category to Illinois’s Medicaid program will bring in a large amount of federal funds, which will result in more economic growth and jobs. In Illinois, the total amount of federal Medicaid funding anticipated to accompany the expansion is over $21 billion dollars from 2013 to 2022, which could finance hundreds of thousands of new health care jobs.
• Provide health insurance coverage to veterans. About 13,000 of the newly eligible for the Medicaid Expansion are returning veterans who will not be helped by the U.S. Department of Veterans Affairs.

This new adult coverage legislation, Senate Bill 26, sponsored by Senator Heather Steans and Representative Sara Feigenholtz, was supported by hundreds of business, health care, faith-based, community-based, and patient/consumer advocacy organizations. These supporters conducted public outreach, wrote articles and blogs, and attended the legislative sessions. Thank you to all of the legislators who voted yes on a bill that tackles one of the most fundamental justice issues of our time: access to health care. 

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This week, Rep. Paul Ryan (R-WI), speaking as the leader of the House Republicans on budget issues, released a blueprint for balancing the federal budget over the next ten years. It is similar to the budget blueprint he championed a year ago that was rejected by the President and the full Congress, and the ideas he and Mitt Romney championed in the election that were thoroughly repudiated by the voters in November. It is explicit about tax breaks that mostly serve the wealthy and extremely vague about the cuts to tax breaks and budget lines that would be necessary to balance the budget. 

But there is enough information in Ryan’s proposal to arrive at some reasonable predictions of outcomes. Let’s just focus on some of the main health care ideas. Ryan would turn Medicare into a voucher program, sending seniors and people with disabilities into the private insurance market.  He would block grant Medicaid, severely cutting federal funds (more on that below). And he would repeal Obamacare, with its projected coverage for 36 million Americans who would otherwise be uninsured. The Center on Budget and Policy Priorities estimates that these measures would add 50 million Americans—that’s right, 50 million with an “m”— to the ranks of the uninsured.

Who pays for that? Well, start with the uninsured, who will pay cash for any health care they do get (or go bankrupt), and who will otherwise pay through pain and suffering and a reduced life span. Also states and localities will be forced to levy property taxes to pay for safety net health care systems and other supports. Employers will pay by having more sick and unproductive workers. Families will suffer health and financial stresses. The tens of thousands of uninsured veterans who are not served by the VA system will continue to lack access to health care. And those of us with private insurance will pay higher private premiums in the great cost-shift that supports hospital care for the uninsured. Gee thanks, Rep. Ryan.

Ryan also proposes a Medicaid block grant. This is a colossal trap for the states, coaxing ideological governors aligned with Ryan to betray the financial self-interest of their states. Medicaid currently is a federal-state “matching” program. Whatever the state spends, the federal government matches at a rate that is at least 50%, and in some states is much higher. This system assures the states that if they want or have to spend more money on the program (for example, during a recession when more people fall within the Medicaid income range, or because of a demographic trend such as the aging of the baby boomers, or just because or health care inflation), the federal government will come along. Switching to a “block grant” means that the federal government pays only a capped amount. The entire burden of any need for an increase in spending is on the states—they must either raise the money or cut the program. A block grant would eliminate one of the main ways the federal government helps the states in hard times, and it would squeeze the program so that it covers fewer and fewer people over time. 

The Ryan budget has been said to be dead on arrival. Good.

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Welcome to the third in our series of blogs in which we examine the SMART Act’s changes to the Illinois Medicaid system. As a quick reminder, we think that truly smart health care policy has three components:

1. Providing great outcomes and preventing bad ones.
2. Caring for the whole person.
3. Fiscal sustainability.

This blog will focus on a change we think does achieve smart health care policy—Illinois Medicaid will now no longer pay an extra amount for medically unnecessary, or elective, Cesarean (C-section) births, but instead will cover them only at the normal vaginal delivery rate. Hopefully, this change will decrease the number of parents choosing C-sections for non-medical reasons by creating impetus for parents and health care providers to have a serious talk about why they would like to schedule a medically unnecessary C-section. Even though C-sections are very common and comprise about one third of all births in the United States and a similar percentage in Illinois, a Cesarean birth is still a major abdominal surgery. This means that a C-section comes with all of the risks associated with other common surgeries, including adverse reactions to medications and increased risk of infection for the mother, along with health risks for the baby. To top it off, billing for an uncomplicated C-section birth is almost double that of a vaginal birth. The State of Illinois estimates that eliminating medically unnecessary C-sections will save about close to $3 million in the next year. All those health risks and more expensive, too?  Sounds like a good place to start improving Medicaid. 

So why are medically unnecessary C-sections a choice for some people? Parents and doctors might schedule medically unnecessary C-sections for a variety of reasons, including wanting to deliver with a particular doctor or on a particular day, desire to avoid prolonged labor pains, or desire to avoid the uncomfortable last few weeks of a pregnancy.

However, the World Health Organization strongly cautions against medically unnecessary C-sections. Medical professionals say that medically unnecessary C-sections are more likely to cause problems for both the mother and the baby. Scheduling C-sections for reasons of convenience often result in the surgeries occurring prior to the 39^th week. Babies do better when their C-sections come no sooner than one week before their due date, if at all possible. This wait allows their lungs, brains and kidneys to finish developing. Babies born by C-section have, on average, more difficulty breathing after birth and have lower Apgar scores. Particularly at risk are those infants delivered before 39 weeks, a segment which includes one in three C-sections.  These infants are at risk for eating and breathing problems, jaundice, and temperature instability and are at greater risk of being re-hospitalized for poor weight gain or failure to thrive. Mothers have a longer recovery time and a higher risk of complications from C-sections than from vaginal births. Complications can include blood clots, excessive bleeding, infections, and injury to the bladder, uterus, or bowel. Of course, all of these avoidable but serious complications cost the Medicaid program more money. 

Some hospitals are already implementing procedures to cut down on their numbers of medically unnecessary C-sections. In Salt Lake City, Intermountain Hospital has implemented a program to encourage parents and health care providers to carefully consider the rationale for C-sections.  This successful program has kept their C-section rate below the national average, thereby   decreasing patient costs by more than $270 million over a 10-year period. The hospital states that $3.5 billion could be saved in annual medical charges if the national rate of C-section births was comparable to their own. In addition to saving money, Intermountain accomplished an even greater goal—better medical outcomes. 

Of course, some situations will call for a Cesarean section for reasons of medical safety, like some births involving multiple children, risky situations or older mothers. Medically necessary C-sections will still be covered at the higher rate under Medicaid; it’s only the elective C-sections that will be covered at the less expensive vaginal birth rate. This should cut down on the numbers of elective C-sections, saving money and improving health outcomes at the same time.  Healthier outcomes for moms and babies from a less expensive procedure?  Sounds like it fulfils all the prongs of our test! 

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The Supreme Court on June 28^th ruled that while the federal Affordable Care Act’s (ACA) Medicaid expansion is constitutional, in the event that a state does not implement the expansion, it would be unconstitutional to withdraw all Medicaid funding from that state. The ruling appears to leave intact both the mandatory nature of the expansion and the other remedies that the federal Medicaid authorities might use to enforce it. The states, however, might view the removal of the most aggressive remedy (full Medicaid defunding) as opening up some additional degree of choice about whether to forego the expansion and risk whatever lesser penalties federal authorities may impose (such as a partial withholding of funds). In Illinois, as in any other state, it is clear that expanding the Medicaid program on schedule in 2014 is by far the smart and right thing to do, regardless of the potential federal penalties for not expanding.

1.  The ACA’s expansion is aimed at covering some of the most vulnerable low-income adults who are otherwise unable to afford private insurance. Not all low-income Illinoisans are currently eligible for Medicaid. Instead, right now, to qualify for Medicaid, a low-income person must fit into a “category,” such as being 65 or over, or totally and permanently disabled, or pregnant, or a child under age 19, or a parent or caretaker relative of a child under age 19. But if you are a single, childless, non-disabled adult without a penny to your name, you do not qualify for Medicaid. This expansion adds another category—having household income less than 138% of the Federal Poverty Level (FPL), which would apply to an estimated 500,000 individuals in Illinois. People in a wide range of circumstances will belong to the “newly eligible” group. Many will be low-wage, part-time workers. Some will be unemployed, either recent or long term. Some will have health conditions that, if addressed by consistent medical care, could and would allow them to get jobs. Some are really destitute, even homeless. Some are young adults, perhaps having aged off Medicaid, which they received as children, but are not fortunate enough to have parents with insurance that would cover them until they turn 26. Others are middle-aged or close to 65. Some are people who had insurance coverage, but lost it through changes in circumstances such as job loss or divorce. 

Of the newly eligible population in Illinois, an estimated 431,000 Illinoisans with household incomes less than 100% FPL will be left in the cold without the Medicaid expansion. The ACA envisioned that these folks would qualify for Medicaid. That’s why the federal subsidy to help pay for private insurance premiums starts at 100% FPL and goes to 400% FPL. So, without the Medicaid expansion, these folks will likely be priced out of affordable health insurance through the Exchange because they won’t qualify for the federal financial help (unless they are lawfully residing residents ineligible for Medicaid). They will have to continue to access safety-net providers and emergency rooms for care, driving up costs for these providers and showing up sicker. And, these folks are still held responsible under the individual mandate to prove insurance coverage or why they are exempt.

2.  Minimal state investment will reap overwhelming benefit. The ACA increased the Federal Medical Assistance Percentage (FMAP) rates for the newly eligible individuals under the expansion to 100 percent for calendar years 2014 through 2016, and then gradually declining to 90 percent in 2020 where it remains indefinitely. By 2020, when Illinois will pay just 10 percent of the cost of care for this new population, the annual state cost is estimated at $157 million. (This is 10% of the current cost per adult beneficiary in Illinois, $3,157, times 500,000 new beneficiaries). But even as this cost will rise due to inflation, it will also be offset by benefits such as larger state tax revenues from increased employment and provider income and an increased insured population. It will also be offset by increased efficiencies due to the new system to simplify and coordinate eligibility and enrollment for Medicaid and the Exchange, which is nearly entirely paid for by the federal government. It may also be offset by the stabilization of the health of almost half of the newly eligible population in the event that the federal government gives permission for Cook County to expand Medicaid early, this year or next. If Cook County is allowed to expand Medicaid early, an estimated 250,000 folks will have medical homes and coordinated care, which would likely stabilize chronic conditions, prevent disabilities, and therefore reduce future Medicaid costs. Finally, state costs can be further minimized by increasing efficiency through care coordination initiatives, especially for persons with chronic conditions and for dual eligibles (persons eligible for both Medicaid and Medicare). The Lewin Group estimates that the ACA will increase Illinois’s Medicaid spending by just 2.8% between 2014 and 2019. The Congressional Budget Office has estimated that the ACA would impose less than a 1% increase in state Medicaid costs.  Moreover, these high federal matching rates are highly likely to stay. In Medicaid’s close to 50-year history, Congress has never decreased FMAP levels in Medicaid other than to allow the expiration of temporary FMAP increases enacted as parts of stimulus packages in recessions. The more states that adopt the “newly eligibles” expansion, the more members of Congress who will resist any reduction below 90% down the line. In fact, with sufficient support, Congress could amend the matching rate, keeping it at 100% indefinitely.

3. Expanding Medicaid creates jobs. We know from our recent past that an increased federal matching rate in the Medicaid program has an enormously significant economic impact—called a multiplier effect—throughout the economy and positively impacts jobs. When Congress included an increase in the federal Medicaid matching rate in the American Recovery and Reinvestment Act from 50% to 61.88% from October 2008 through December 2010, $1.2 billion per year for that period flowed into Illinois. For FY 2009, one estimate places the value of the wages generated from the Medicaid program that included the enhanced match as high as $15.8 billion, supporting as many as 385,742 jobs. The job growth and wages generated are likely to be much more substantial under the ACA’s Medicaid expansion, since the federal matching rate under the ACA is 100% from 2014 through 2016 and an additional roughly 500,000 newly eligible Medicaid patients are expected to enroll. State and local revenue increases when Illinois residents pay income, sales, and other taxes generated by the federal funding for the Medicaid expansion; this revenue would offset much, perhaps all, of the additional costs.

4. Participating in the Medicaid expansion will help stabilize the state budget. The budget is critically dependent on federal Medicaid funding. The Illinois Medicaid program is by far the largest source of federal revenues to the state. Federal funds also support the Department of Human Services, Department on Aging, Department of Children and Family Services, local public health departments, Cook County Health and Hospitals Systems, Illinois’s state universities, and local school districts’ special education programs, among others. The Medicaid expansion will provide crucial federal funds across the state and local governments to support programs now being delivered to the expansion population with no federal funds, or being withheld from that population due to lack of funds.

5. We pay for the health care for the uninsured in any event, so let’s use federal dollars to pay for their current uncompensated care. A Kaiser and Urban Institute report on state spending under the expansion found that under the expansion, by 2019, Illinois would have reduced its number of uninsured adults in this newly eligible population by over 42% with the federal government paying for over 94% of the cost. This could translate into a decrease in Illinois’s uncompensated care spending of as much as $1.5 billion. And any cost to the state will be there, whether or not Illinois takes the money provided for the expansion. Working Illinoisans in low-wage jobs without insurance still get sick, still get injured. But without the federal dollars from the Medicaid expansion, other Illinoisans with insurance will still have to pick up the cost of their care, to the tune of $1,000 per year in increased annual premiums. And local property taxes are strained to support the township medical assistance programs and safety net health systems that provide care for low-income uninsured people now. In fact, currently over $400 million in services for uncompensated care is being provided annually by just one hospital: Cook County’s Stroger Hospital. 

6. Illinois hospitals need the Medicaid payments to offset reductions in federal funds in other areas. Targeted hospital subsidies, known as disproportionate share hospital (DSH) payments, will decline under the Affordable Care Act. The reduction was justified on the theory that the Medicaid expansion will eliminate the need for DSH subsidies by greatly reducing the burden of uncompensated care. If hospitals lose those payments, and the loss is not made up by the expansion of Medicaid, it will devastate not only hospitals, but entire communities. Many Illinois hospitals, especially in rural areas, simply are not viable if their DSH subsidies decline without being replaced by expanded Medicaid. Hospitals are among the largest employers in their communities. When a hospital closes, the community not only loses a major employer, but providers leave too, and then the community has great difficulty recruiting new industry. Additionally, expanding Medicaid will ensure that Illinois’s medical providers will have the financial support coming from the Medicaid expansion to offset the ACA’s Medicare payment reductions. Doctors and hospitals are counting on the Medicaid expansion (which will bring in revenue for services to the newly eligible and reduce the need for uncompensated care) to be in place as the Medicare payment changes are phased in.

7. Expanded coverage is the linchpin for the big picture reforms that will deliver both better health outcomes and lower costs. Coverage requires an investment (which the federal government virtually entirely funds under the ACA). But the investment will yield returns. Coverage makes possible a relationship with a regular medical provider. That, in turn, facilitates prevention, wellness advice, early detection of conditions, maintenance care (avoiding acute care), a platform for the full use of health information technology that avoids duplication and mistakes and spreads best practices, and care coordination. Coverage thus addresses the cost of health care by improving health outcomes across the system. This overall downward bending of the cost curve helps all of us, not just the newly insured. 

8. Federal Medicaid dollars will finally be paying for behavioral and mental health services for Medicaid enrollees. Under the ACA, the newly eligible population will have a benefit package that includes mental health and behavioral health services. These are costs now being borne by state and local funds, or else the services are simply not being provided—with impact on emergency rooms, state institutions and the criminal justice system. These state and local costs will be replaced with federally funded Medicaid.

9. Illinois’s veterans deserve health insurance. Not all veterans are able to get care at a Veterans Affairs hospital. And, in fact, roughly 43,000 Illinois veterans are uninsured (along with 25,000 of their family members). Illinois needs to take care of veterans, and the ACA’s Medicaid expansion will do just that. At implementation in 2014, nearly half of uninsured veterans will likely qualify for expanded Medicaid coverage. Illinois should serve these veterans, just like they served its citizens.

10. Does Illinois really want to subsidize health care in other states? As Justice Scalia stated in his dissent, “Those States that decline the Medicaid Expansion must subsidize, by the federal tax dollars taken from their citizens, vast grants to the States that accept the Medicaid Expansion.” So if Illinois does not take advantage of the federal 100%/90% funding for the Medicaid expansion, other states that chose to expand will get the benefit of Illinoisans’ federal tax dollars.

11. Expanding Medicaid coverage helps the financial viability of community clinics. Clinics are our best—really only—strategy for providing health care to the uninsured outside of emergency rooms. There will still be plenty of uninsured after the ACA is implemented, plus many of the newly insured Medicaid beneficiaries will get their care from clinics. The only way that clinics can serve the uninsured is by serving a critical percentage of patients who have coverage. The Medicaid reimbursement for covered patients allows the clinic to also serve the uninsured. With a high percentage of patients covered, the clinics will be able to expand capacity to serve the uninsured as well as those newly coverage by Medicaid.   

12. The Medicaid expansion is simply the right thing to do. We have a chance, through the incredible leveraging of federal funds, to provide health coverage—and the chance for better health and upward mobility—to hundreds of thousands of our state’s most vulnerable, needy residents. We can create a system that expands its circle of moral concern to include the uninsured, recognizing as Justice Ruth Bader Ginsburg wrote in N.F.I.B. v. Sebelius, that “[v]irtually everyone … consumes health care at some point in his or her life.”

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In early June, Illinois governor Pat Quinn signed a package of cuts to the Medicaid program that was designed to save the state money and “save” the Medicaid program.

Last week, we examined the three components of a good health care program:

1. Providing great outcomes and
   preventing bad ones.
2. Caring for the whole person.
3. Fiscal sustainability.

This is the second in an ongoing blog series in which we examine the Medicaid cuts from the SMART Act, recently signed by Governor Quinn, and measure them against the standard we have set for good health care. Some of the changes measure up, while others fall short. One of the cuts we think falls woefully short is the near elimination of dental care for adults on Medicaid. 

According to the federal Medicaid rule, adult dental services are in the “optional” service group; this means that states aren’t required to provide these services for their Medicaid-eligible populations. Under the SMART Act, Illinois’s Medicaid program will no longer pay for preventative services for adults on the program; emergency extractions will still be provided. 

These cuts mean that preventive services, like cleanings and even fillings, are not covered by the Medicaid program; sadly, this change means the cut obviously fails our first component—providing great outcomes and avoiding bad ones. Ideally, we would like all Illinois residents to be in good oral health, which is impossible to maintain without a regimen of regular visits and cleanings. These preventive visits are when we catch the little problems, like cavities, before they become big problems, such as completely unsalvageable teeth that need to be pulled, or dangerous infections. 

We also want to have a holistic approach to health care. It’s always been confusing to me why dental coverage is singled out as an optional piece. When any preschooler can tell you that your mouth is a part of your body, why can’t our Medicaid program accept this simple fact? Oral health is obviously a part of your overall physical health, and any distinctions we draw between the two are illusory. Poor oral health care is related to other adverse physical conditions, including low birthweights, coronary heart disease, strokes, and even cancer. That’s right—by refusing to cover one part of the body now, we could be setting up other parts of the body for (expensive) future problems. This is an obvious failure on our second component of providing holistic health care.

Our third component is fiscal sustainability. At first blush, it looks like eliminating adult dental will save the state around $35 million,  but let’s think about that number for a second. People with severe dental issues that cause pain or infections won’t all give up on relief—they will look for it. Emergency room treatment is a mandatory Medicaid category for states, so if individuals seeks dental care there, they cannot be turned away. A new report entitled “A Costly Dental Destination” from the Pew Center on the States estimates that preventable dental conditions were the primary reason for 830,590 ER visits by Americans in 2009, which is a 16% increase from 2006. The same report noted that from 2008-11, hospitals in the Chicago area alone saw nearly 77,000 visits for dental-related issues.

According to the Pew report, the average cost of a Medicaid enrollee's hospital treatment for dental issues is approximately 10 times more than the cost of preventive care from a dentist. Dr. Frank Catalanotto, professor of dentistry, noted that “Preventive dental care such as routine teeth cleaning can cost $50 to $100, versus $1,000 for emergency room treatment that may include painkillers for aching cavities and antibiotics from resulting infections.” That’s simply not cost-effective. These visits cost the Medicaid program millions of dollars each year, but they result in very little actual improvement for the patients. That’s because emergency rooms generally don’t have dentists on staff—so doctors can’t get to the root of the problem to fix it, but usually can prescribe nothing more than antibiotics and painkillers. Since the underlying problem continues, patients must return to the emergency room when their symptoms return. So, sadly, this change fails our third component of fiscal responsibility by a wide margin.

However, dental organizations are already speaking out against the cuts. Dave Marsh of the Illinois State Dental Society noted that these cuts are really just shifting the cost of the problem elsewhere: “You're going to see a lot of people waiting when they have tooth decay, toothaches, waiting until it gets to a point where they're going to go to the emergency rooms. And the cost of emergency care, as you're well aware, skyrockets over the cost of dental care."

Sorry, Illinois. This change to “save” the Medicaid program simply doesn’t measure up to the standard of good healthcare. Be sure to check back in with us as we examine other cuts in S.B. 2840 and measure them against our three-part standard.  

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Today, Illinois Governor Pat Quinn signed into law S.B. 2840, which carves $1.6 billion out of the Medicaid program, claiming that it represents a bold plan to save Medicaid. Since the new law cuts the program so deeply and in so many different ways, it is legitimate to ask if these cuts really do improve the program, in terms of policy and long-term financial sustainability, or if they are actually merely expedient and short-sighted. To answer this question, we need to step back and really think about what makes effective and efficient health care policy. It’s a difficult question, and we’ve heard a lot of different answers, but I think we can boil it down to some broad categories. 

1. Good health care policy obviously needs to be focused on providing the best outcomes possible immediately and later. Preventive services are key for this kind of health care; for example, check out the U.S. Preventive Service Task Force’s recommendations of effective and recommended services for adults. But not all procedures are necessary; some may not have any effect or even be harmful. For example, this year the U.S. Preventative Service Task Force issued advice counseling healthy women to undergo Pap tests only every three years instead of yearly. A representative for the task force noted, “We achieve essentially the same effectiveness in the reduction of cancer deaths, but we reduce potential harm of false positive tests […] It’s a win-win […].” We can prevent big problems from occurring tomorrow if we take some reasonable, manageable steps today. Preventing those big problems (obesity, heart disease, diabetes, etc.)  can also save big money, in addition to improving people’s quality of life.
2. Good health care policy also takes care of the whole person, from head to toe. The Medicaid program contains “optional” categories that states don’t have to cover, like prescription drug coverage and adult dental care, but are these categories really optional?  At first glance, dental care might seem like an oft-dreaded luxury, but it is critical to good overall health. Cavities and gum disease contribute to wide-ranging health issues including low birthweights,  coronary heart disease, strokes, and even cancer. As states cut dental coverage, more people are turning to emergency rooms to take care of dental issues (hospital coverage is a mandatory Medicaid category), but that’s a terribly inefficient way to deal with the problem. Emergency rooms usually don’t have a dentist on staff, so all they can do is prescribe pain medications or antibiotics, not treat the root of the problem. The problem is similar with prescription drugs—if people cannot afford their medications, they usually need other medical intervention. Treating people holistically, instead of with a narrow focus on certain aspects, is cost-effective and health-effective.  
3. Good health care policy needs to be fiscally sound not just now, but in the future, too.  We don’t want penny-wise cuts today that are pound-foolish down the line, since Illinois will pay for pieces of the Medicaid program that are mandatory, like emergency room visits and hospital coverage. While some services, like prescription drugs and adult dental care are technically optional, dropping this coverage may cause higher utilization of the mandatory categories, resulting in unforeseen high costs.

Senate Bill 2840 makes dramatic cuts to the Medicaid program.  Some of them are consistent with the above hallmarks of good policy, but more of them simply don’t make for good health care. 

So let’s start on a positive note—some of the bill’s provisions are solid choices that will save money and improve the health of our Medicaid system and our people. For example, one section of the bill deals with increasing the state’s ability to ferret out fraud in the program. There will be increased effort to make sure only eligible people receive Medicaid, including electronically examining residency and income to verify that they meet program requirements. It is estimated that this increased effort will save the state $350 million. We are strongly behind the effort to make sure that Illinois Medicaid uses its resources wisely by only enrolling those eligible for the program and reimbursing vendors fairly. However, it’s worth noting that the intent of the law appears to be that the state use a private company to provide computerized eligibility verifications. This bears close watching because, in the past, private companies have been guilty of inaccurate and profit-motivated caseload reduction. The determinations need to be accurate and procedurally fair. The law also contains welcome measures for finding and preventing fraud on the vendor side of the equation. 

Another provision we’re wholeheartedly behind ensures that Medicaid will no longer pay for medically unnecessary, or elective, cesarean births. A cesarean birth is a major abdominal surgery and comes with all of the risks associated with other common surgeries, including adverse reactions to medications and increased risk of infection. Babies born by c-section have, on average, more difficulty breathing after birth and have lower Apgar scores. Mothers have a longer recovery time and a higher risk of complications from c-sections than from vaginal births. Of course, some situations call for a cesarean section—medically necessary c-sections will still be covered under Medicaid, but elective c-sections will be covered only at the vaginal birth rate. This should cut down on the numbers of elective c-sections, saving money and improving health outcomes at the same time!   

However, there are other cuts in S.B. 2840 that are clearly not good policy and not fiscally sound, or that depend heavily on implementation decisions before they can be judged one way or the other. Among these, the law slashes the Illinois Cares Rx program, the FamilyCare program, and dental coverage for adults, and it applies utilization controls on many services, including especially prescriptions. We’ve already written a blog about the cuts to the Illinois Cares Rx program and you can find that here. Of course, S.B. 2840 wasn’t the only health care related bill this session. There were also changes in the laws regarding hospital charity care obligations and the expansion of Cook County’s Medicaid system. We’re planning blogs on these and other provisions of the law to explain them and examine how they fall short or could be implemented without measuring up to good policy, so please keep us bookmarked and return for an update.   

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Last week, the Illinois General Assembly overwhelmingly voted to end Illinois Cares Rx, which is a state prescription assistance program that helps more than 150,000 Illinois citizens afford prescription drugs. Illinois Cares Rx was designed to help truly needy Illinois seniors and persons with disabilities obtain the prescription drugs necessary to maintain their health and combat illness. To be eligible, individuals had to be at or below $22,340 in yearly income. If Governor Quinn signs the bill into law, their coverage will end July 1 of this year. While losing Illinois Care Rx assistance is going to be a serious blow, Illinois low-income seniors and person with disabilities may be eligible for other programs, such as Medicaid spenddown, Medicare Part D, or the AIDS Drug Assistance Program, all of which are described below.

The Medicaid spenddown is still an option for many of the Illinois seniors who will be forced off Illinois Cares Rx. Medicaid spenddown can help individuals afford health care that would otherwise be unobtainable due to cost. The spenddown program is designed to help people who are ineligible for regular Medicaid because their incomes are too high or they have too many assets, as long as those people have significant monthly health costs. 

Who is eligible for spenddown and how can you estimate the spenddown amount? Almost anyone who is eligible for Medicare is eligible for spenddown, as long as they have medical expenses that are high enough to meet their “spenddown amount.” Spenddown is a little bit like having a health insurance deductible. Based on your income and your assets, you are assigned a monthly spenddown amount. For an individual, the income dividing line between regular Medicare eligibility and Medicaid spenddown eligibility is $956 per month (not counting SSI income), or $11,472 a year. That means that an individual whose income is over that amount must spend down to that amount in order to receive a monthly Medicaid medical card. In other words, if your income is $1,000 per month, the spenddown amount is $44, and if monthly income is $1,500, the spenddown amount is $544. An individual will also have a spenddown if their assets are over $2,000 (although some assets, like one’s home, are exempt from this limit).      

Once you are assigned a spenddown amount, you are responsible for showing that you have either paid or unpaid medical bills; once the bills equal the spenddown amount, you are eligible for a Medicaid card and assistance paying for your health care expenses for a month. So, if your spenddown amount is $100, you are eligible for Medicaid assistance after you show that you have monthly medical bills equal to that amount. You can submit expenses monthly or, if you have large bills for something like a hospitalization or expensive testing, you can use those bills to satisfy several months of your spenddown amount.

Paid or unpaid bills for the following can count towards meeting your spenddown limits:

• doctor services;
• hospital services;
• nursing home services;
• clinic services;
• dentist services;
• podiatrist services;
• chiropractor services;
• medicines, medical supplies and equipment that are prescribed by your doctor;
• eyeglasses;
• medical or personal care in your home;
• health insurance premiums, including Medicare premiums;
• speech, occupational and physical therapy;
• transportation to and from medical care; and
• co-payments or deductibles you pay for medical care.

To apply for the Medicaid spenddown program, contact your local Department of Human Services (DHS). Use this locator to find the office closest to you. The Department of Human Services will decide if you are eligible for Medicaid without a spenddown, or, if you are ineligible, will assign you a spenddown amount.

There may also be another option for seniors losing their prescription coverage. It appears there will be an open enrollment period for individuals to change their plan choice in Medicare Part D after Illinois Cares Rx ends. (We’ll keep you updated when we get more facts on this). Medicare Part D is available to anyone who is eligible for regular Medicare, but it is offered through private insurance companies that contract with Medicare to offer this additional coverage. Typically, you pay a monthly premium, deductible and co-pays, depending on which plan you choose. After you satisfy your deductible, you will be responsible for a co-pay for each prescription up until you reach the “donut hole,” when you will pay the full cost of the prescription until you have spent about $3,600, after which the insurance kicks in again. (The Affordable Care Act is working to close this “donut hole” over several years.) All Part D plans will include their own formulary, or list of covered drugs, so you should confirm which ones cover your particular prescriptions. Because of the existence of Illinois Cares Rx, many people chose cheaper and less comprehensive plans, or perhaps did not enroll in Part D at all. However, it appears that they will be allowed to enroll in a Medicare Advantage Plan with drug coverage or a Medicare Prescription Drug Plan that will replace some of the coverage lost with the ending of Illinois Cares Rx. This chance to join lasts for two full months after the month in which coverage is lost.  

Additionally, some Illinois Cares Rx enrollees are AIDS patients. AIDS treatments are notoriously expensive, with some treatments topping over $25,000 a year. Those individuals may be eligible for the AIDS Drug Assistance Program (ADAP). Individuals whose incomes are less than 300% of the federal poverty level (about $33,500) are eligible for the program. ADAP provides 81 different drugs on its formulary, including all anti-retroviral therapies approved by the U.S. Food and Drug Administration. Clients do have a benefit cap of $2,000 per month (except for a few Category V drugs), which is sufficient to support triple and quadruple combination therapies. You can apply for ADAP online.

The elimination of Illinois Cares RX is effective on July 1, if the Governor signs the bill as is. As you can tell from this blog, that leaves precious little time for seniors to make the complicated choices and actions necessary to rearrange their drug purchasing and transition to the new system. Advocates have asked that Governor Quinn amendatorily veto the bill to keep Illinois Cares Rx on the books, or, at a minimum, to delay the effective date to January 1, 2013, to allow for a smoother transition—let’s keep our fingers crossed. Of course, we will keep you updated on any developments.   

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The Illinois General Assembly is currently debating where to cut $2.7 billion dollars (roughly 18 percent of spending) from the state’s health insurance program for certain low-income populations. The thinking is that these “savings” will Band-Aid the hemorrhaging state budget deficit and root out fraud. If the Medicaid program were a patient, it would be on the surgery table preparing for amputation of a few healthy limbs.

And while this might prevent some problems, it is much more likely to cause larger, more serious ones. Of course we need to manage Medicaid spending so that the program is working efficiently. But cutting almost 18 percent of the program in just one year is not the way to do it.

Why should you care that these low-income folks may be cut from the Medicaid program or have severely reduced access to medical services? Because every dollar Illinois cuts means a little more than a dollar in federal funding is lost from Illinois’s economy, creating a negative ripple effect of economic harm. The proposed 18-percent cut to Medicaid would put 25,600 Illinois jobs at risk and reduce business activity by roughly $3.3 billion. 

And you should care because medical needs and costs don’t disappear when Medicaid is cut. The people who lose coverage or vital services like dental care still get sick, and then forgo or delay necessary medical care, and eventually end up in the emergency room. And by that time, they are often more expensive to treat. For those who lose coverage, manageable health conditions, such as high blood pressure and diabetes, may deteriorate and lead to hospitalizations. And a portion of these costs go unpaid and are eventually passed on to all of us--consumers, employers, and businesses--in the form of higher insurance premiums.

Rather than imposing such drastic cuts on the Medicaid program, let’s instead look at thoughtful alternatives to closing the budget gap. First, the state needs to raise revenue. The cigarette tax is an important and necessary step in that direction. Second, there are already processes in the works that promise to produce sustainable savings and improve care in the Medicaid program. For instance, let’s allow the state’s new Medicaid reform plan, which includes increased care innovation for high-cost enrollees, to take effect. And new care coordination entities, such as the Medical Home Network, show great promise for increased efficiencies for Medicaid enrollees.

Let’s remember that quick fixes sound good but often have long-term negative impacts. And like an amputation, they can be both irreversible and regrettable.

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There’s no debating that Illinois could use some healthcare help. The state is ranked the 29^th healthiest state—not the absolute bottom, but nowhere near the top. A recent poll also listed Illinois as the 31^st most obese state and 25^th for diabetes—not exactly stellar statistics. The same source noted that ,while Illinoisans benefit from high usage of early prenatal care and a comparative availability of primary care doctors, the state faces severe challenges, including prevalent binge drinking, high pollution levels, and a high rate of preventable hospitalizations. 

These problems are not insurmountable. However, we all know the state is in a budget crisis.  Governor Quinn has announced a plan to drastically reduce spending and raise revenues for Medicaid. We understand the state budget crisis, but obviously, people in Illinois need medical services, and the state is currently struggling to provide them.  

Luckily, the Affordable Care Act is there to throw a lifeline out to health service providers and state agencies and especially to the real people who need healthcare. Thanks to the ACA, the states will spend about $90 billion less on healthcare with the implementation of the law than they would have spent without it. Thousands of people will still be getting the increased services mandated by the Act, but much of the funding will be federal rather than state. 

It’s important to note that these benefits are not in the distant future; Illinoisans from birth to retirement are already benefitting from the Affordable Care Act.  

Assistance from the ACA starts when kids are young; the ACA has already provided:

• $10.3 million for Maternal, Infant, and Early Childhood Home Visiting Programs. These programs bring health professionals into individual homes to connect families to the services they need to raise happy and healthy kids. These services include prenatal care, pediatric care, education, and parenting skills.   
• $191,000 for Family-to-Family Health Information Centers, organizations run by and for families with children with special health care needs.
• $4.9 million for expanding and improving school-based health centers. Illinois funds 38 school-based clinics that provide screenings, physicals, exams, and more to students.
• $555,000 to support the Personal Responsibility Education Program, which educates youth on abstinence and contraception to prevent teen pregnancy and sexually transmitted infections, including HIV/AIDS.

The ACA is also spending money putting people to work at improving healthcare! Illinois has received:

• $400,000 to support the National Health Service Corps, by assisting Illinois in repaying educational loans of health care professionals in return for their practice in health professional shortage areas. This program is designed to help medical, dental, and mental health providers who choose to work in needy communities to repay their student loans. This is a particularly critical program because these professionals provide medical and dental care that individuals desperately need; the program allows professionals to provide care to needy individuals without worrying about their reimbursement rates or their ability to pay back debt.
• $5.1 million for health professions workforce demonstration projects. This program is designed to supplement the workforce in areas that are either already short-staffed or expected to be in the future. The Illinois Workforce Investment Board’s report noted  shortages of both registered nurses and licensed practical nurses in Illinois. 

And the ACA helps elderly Illinoisans, too!

• $457,000 to support Aging and Disability Resource Centers (ADRCs). ADRCs help seniors and people with disabilities understand long-term care options including community care. 

So far, Illinois has received $170.7 million in grants due to the Affordable Care Act.  These grants are creating tangible improvements to the physical and fiscal health of our state.  Thanks, Affordable Care Act!

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The United States Supreme Court will hear arguments later this month on constitutional challenges to aspects of the nation’s health reform law, the Patient Protection and Affordable Care Act (ACA). The issue that gets the most attention concerns the “individual mandate,” which involves whether the Constitution allows the federal government to impose a tax penalty on people who fail to buy affordable health insurance. 

But there is another issue of immense importance that the justices will decide. They will rule on the constitutionality of the ACA’s expansion of Medicaid to cover all of the country’s lowest income people. Half of the 32-million-person reduction in the uninsured promised by the ACA will come from this guarantee of coverage for the poor under Medicaid.

Medicaid is a cooperative federal-state program. The federal government offers significant funding to the states to cover low income people—no less than half the cost, and much more than that in many states. States that opt into the program must comply with the federal rules about who gets covered. States know in advance that Congress may expand Medicaid, and Congress has done so many times since 1965. However, Medicaid has never covered all poor people. Instead it specifies coverage only for certain categories of poor people: children, parents, people over 65, and disabled people.

Under the ACA, Congress expanded Medicaid to cover everyone with incomes under 133% of the federal poverty level. It provides 100% federal funding for this expansion for several years, and permanently provides 90% funding for the expansion into the future. This simple step will cover 16 million Americans. It is a part of the overall strategy of the ACA to bring down the cost of the health care system by featuring prevention, early detection, wellness, care coordination, health information technology, and avoidance of unnecessary emergency room visits and acute care episodes. All of these benefits are fostered when people have a relationship with a regular doctor, which is made possible by insurance coverage.

The briefs have been filed in the Supreme Court on the challenge to the Medicaid expansion. The states that oppose the expansion of the Medicaid program under the ACA lost on this issue in the Eleventh Circuit federal appeals court, so they are the petitioners in the Supreme Court. Their claim is that the ACA gives the states no choice but to implement the Medicaid expansion and that this violates Congress’s power under the Constitution’s “Spending Clause” (Article I, Section 8) to attach strings to the money that the federal government offers to states by effectively depriving the states of any choice to turn it down. The petitioners make this claim with two main arguments.

First, they contend that Congress knows of the immense importance of Medicaid funds to the states and, even though Congress will fully fund the Medicaid expansion, it has effectively deprived states of any choice to decline to expand the program. They argue that their states would have to decline to participate in Medicaid altogether in order to decline the expansion. This cannot be a “voluntary acceptance,” the argument goes, and this imbalance of power is an impermissible coercion of the states into an “all-or-nothing choice”: abide by the federal requirements and expand Medicaid, or lose all Medicaid funding.

Second, the petitioners construe the ACA to impose a “universal mandate” that everyone have health insurance. They reason that, since the ACA does not provide the states with another federal mechanism to cover the health insurance of the state’s neediest citizens, the ACA forces the states to participate in Medicaid in order for their citizens to comply with the “mandate.”

The government, in its brief defending the ACA and the lower court ruling upholding the Medicaid expansion, points out that the Supreme Court has already decided that Congress has the power to attach strings to the money it offers to the states; this is well-settled law.

Further, the strings attached to the expansion are not onerous, since the federal government will ultimately assume 90% of the cost of the Medicaid expansion under the ACA (starting with 100% for the first few years). All of the states accepted the Medicaid deal knowing that the average federal contribution to Medicaid is 57%, and knowing that Congress reserved the right to change or expand the program, which it has done repeatedly since 1965. By assuming a higher funding burden for the expansion, which the federal government was not required to do under the terms of the Medicaid deal that all the states accepted, Congress avoided any sense of taking unfair advantage of the deal.

Second, in the government’s view, the states seem to be arguing that the more money that Congress provides to the states, the less say that Congress should have over how the states may use those funds; this is contrary to common sense.

Finally, in response to the argument that Medicaid is necessary to fulfill the ACA individual mandate, the government notes that the ACA has exceptions from the individual mandate for certain low-income individuals (including those who would be eligible for Medicaid under the ACA expanded criteria). Therefore, it is simply not true that Medicaid is “required” to comply with the individual mandate; the people who are covered under the ACA-Medicaid expansion would most likely qualify for waivers from the individual mandate, if necessary.

The Shriver Center is an amicus curiae in this case and supported a “friend of the court” brief written for the Center and other amici by the National Health Law Program. The brief goes into greater detail about the history of the Medicaid program, stressing that the ACA’s Medicaid expansion is well within the arrangement that all states have accepted in choosing to participate in the program.

The outcome of this case will affect millions of uninsured people and impact the ACA’s overall strategy to improve the nation’s health and bring down the cost of the health care system. Moreover, it could significantly alter the power of the federal government to attach strings to federal money that it offers to states in many varieties of programs beyond Medicaid, such as transportation, education, social services, and many more.

The Court will hear arguments on this issue later in March and will rule by mid-summer.

This blog post was co-authored by Brandon Jordan.

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Governor Pat Quinn released his proposed budget for Fiscal Year 2013 on February 22. The Governor will now work with the General Assembly to craft a budget that can gain a majority of votes in both chambers by the May 31 deadline. Low-income people and their advocates have much at stake, and perhaps more to lose, than in any previous session of the legislature. 

There is a lot to be concerned about in the Governor’s proposed budget. Most troubling is his call for $2.7 billion in unspecified cuts to the Medicaid program. Such savings cannot be achieved without doing severe harm to health care for the poor. We’ll have much more to say about this in a future post. 

The proposed budget also includes major cuts to the child care assistance program, home visiting programs, community care programs, and emergency and transitional housing. Also it would reduce lifetime eligibility for the Temporary Assistance for Needy Families (TANF) program from five to three years. 

On the plus side, the proposed budget would significantly increase funding for the Preschool for All and TANF programs. 

The Heartland Alliance has issued this release, which gives an excellent description of the threats posed to poor people by the proposed state budget.

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Coauthored by Rachel Gielau

On July 30th, 1965, President Johnson signed Medicaid into law. Its mission, then and now, is access to quality, affordable health care. For 46 years, Medicaid has been a lifeline to millions of America’s most vulnerable people, including low-income seniors, people with disabilities, children and their parents, and pregnant women. Today, the public health insurance program is the second largest health insurer in the United States, providing quality coverage and peace of mind to one out of five Americans.

Unfortunately, in the midst of the budget battles being fought in Washington Medicaid is under attack. Right-wing proposals like the U.S. House-passed Republican budget plan calls for debilitating cuts that would end the Medicaid program as we know it, slashing the program by about one-third and shifting costs onto states, beneficiaries and providers.

But individuals and families in Illinois depend on Medicaid!

• For 46 years, Medicaid has been the foundation of health coverage for Illinois’ most vulnerable populations. Today, more than 2.5 million Illinoisans (60 percent are children; 20 percent are elderly, blind, or disabled adults) rely on Medicaid.  
• Children depend on Medicaid! Almost 1.5 million children, or 43 percent of all kids in Illinois, rely on Medicaid for their well-child doctor visits and other health care needs. For most low-income children, Medicaid is the only source of affordable coverage available. 
• Medicaid is a lifeline! For more than 559,000 Illinois seniors and people with disabilities Medicaid provides affordable long-term and specialty care. Access to these services helps avoid the use of institutionalized care, keeping costs down and families together.

And we know that Medicaid works!

• Medicaid makes Illinoisans healthier! Medicaid has been proven to increase access to affordable health care for low-income people, which improves the health and financial stability for families everywhere.
• Because of Medicaid, low-income children in Illinois are able to get a healthy start in life. Medicaid helps Illinois children be better students and develop healthy living habits early in life. With access to well-child care, our children get the primary care they need to avoid absences from school and prevent costly chronic health conditions later in life.
• The success of public health insurance programs like Medicaid and the Children’s Health Insurance Program (CHIP—called All Kids in Illinois) has kept uninsured rates for children from spiking due to the economic recession.  
• Medicaid is more cost-effective than private health insurance! Medicaid spending per enrollee has increased at a slower rate than that of private insurance. Also, Medicaid spends less per enrollee than private insurance does. In fact, “Medicaid costs 27% less for children and 20% less for adults than private insurance.”
• Medicaid stimulates the economy and supports jobs in Illinois. Every dollar spent on Medicaid in Illinois generates matching federal funds that come back to the state, increasing economic activity and creating jobs. In 2009, Medicaid funding brought an additional $46 billion in business activity, $15.8 billion in wages, and support for 385,742 jobs to local economies in Illinois.
• While America and Illinois can take pride in Medicaid as it turns 46, the program needs and is getting 21st Century improvements.   Primary care case management, medical homes, electronic medical records, disease management, coordinated care and other initiatives aimed at improving the quality of care for Medicaid patients and controlling costs are all in effect or on the drawing board in Illinois and elsewhere. 

Medicaid just marked its 46th birthday. We think it has improved with age. And as we sing at the end of the birthday song, “Happy birthday to you—and many more.”

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Two minor features of the Illinois Medicaid Reform law that passed last January required approval from the federal Medicaid agency, Centers for Medicare and Medicaid Services (CMS), before they could be implemented. They were to be effective on July 1, but on June 24, CMS denied permission for Illinois to implement the changes. The proposed changes would have called upon applicants for the program to provide pay stubs for a whole month’s income instead of just one paystub (the current policy), and it would have required cumulative paper evidence of Illinois residence in addition to the applicant’s sworn statement under penalty of perjury (the current policy). Current policy also calls for rigorous electronic monitoring of both income and residence and full authority to demand additional proofs if any questions arise. 

While there is anecdotal evidence that there are instances of beneficiaries receiving Medicaid coverage based on incorrect income or residence information, there was never any evidence that significant savings would be gained by implementing the proposed changes. Indeed, there was never any evidence that savings, if any, would exceed the undeniable cost of administering the new policies. Implementation would have demanded new document-processing capacities, changes in notices and computer settings, and more staff.

In fact, the Illinois General Assembly, perhaps forgetting that it had previously mandated these new staff and operations-intensive Medicaid policies, slashed funding for staff and operations in the recently enacted budget. That budget decision would have made successful implementation of these new policies very difficult, if not impossible. The CMS denial of permission to implement the changes relieves Illinois Medicaid officials of having to launch a futile and distracting attempt to implement with no resources.

For several reasons, the proposed policies are counter to the smart trends in Medicaid policy indicated by research, best practices, experience in the leading states, and policy directions in the reform law. It is not cost-effective to administer the program through staff-heavy, old fashioned welfare bureaucracy. There are excellent electronic tools that accomplish good accountability and fraud prevention. Indeed, this is one of the main reforms in the Illinois Medicaid Reform law and a much more promising direction than the old-fashioned measures that CMS prohibited.

What policies like those CMS prohibited accomplish in terms of “savings” is mostly the denial or delay of coverage to eligible people, through red tape, understaffing, and mistakes. This blocks a major cost-saving theme of both the federal and state reforms–primary care, prevention, and early diagnosis. Those are the types of care facilitated by insurance coverage. Without coverage, people must wait for care until their conditions are acute, and they must go to the emergency room or be hospitalized. That is a bad health outcome, and it costs money. Senator Kirk has been quoted claiming that CMS’s action will cost Illinois $800 million over six years. That is clearly not the case. CMS’s action is likely to save Illinois money.

 Finally, this is not a story of “Washington bureaucrats”. CMS was not making a judgment call, but carrying out the will of Congress. In the health reform law, Congress placed a high value on stability in the Medicaid program during the reform process, and provided that states may not cut back the eligibility and services features of their Medicaid programs during reform (which will see a massive infusion of federal funds for Medicaid in the coming years).

The two provisions that Congress blocked in this instance were very minor details in the Illinois Medicaid reform law. The three major themes of that law–care coordination, long-term care rebalancing, and expansion of information technology to improve and streamline the eligibility process and prevent fraud–are proceeding steadily towards implementation.

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On June 17, Dr. Karin Rhodes and her colleague Joanna Bisgaier of the University of Pennsylvania released a report on access to subspecialty doctors by children covered by Medicaid in Cook County, Illinois. The authors also published an article about the study underlying the report in the New England Journal of Medicine . 

Dr. Rhodes undertook and was paid for the study pursuant to a contract with the Illinois Department of Healthcare and Family Services, the state’s Medicaid agency. The study was part of the department’s compliance with a 2005 consent decree in the case of Memisovski v. Maram, which followed a 2004 federal district court ruling that the state was not in compliance with Medicaid Act requirements that children receive recommended levels of preventive care and treatment of diagnosed conditions, and that they receive care at least to the same extent as children covered by other forms of insurance. 

Following the consent decree in Memisovski, Illiniois has undertaken very significant reforms of the primary and preventive care system for children on Medicaid. It improved the rates paid for office visits to primary care doctors and dentists, and it held the processing time for those services to a reasonable level, even during the recession (when all other state bills were being delayed for many months). It launched a statewide “medical home” initiative designed to match children up with primary care doctors, which has had considerable success. Other strategies to improve primary care have been launched, and the overall effort continues.

The consent decree was less specific with respect to access to specialty care to diagnose conditions or especially to treat diagnosed conditions. It provided that the department undertake a study to examine the extent of access problems, and it left the remedies for any such problems to be determined after the study was completed. However, Illinois was not idle on this front. It enacted a round of rate increases for some pediatric specialists, and it included children in a disease management program for people with chronic illness. 

The study released last Friday, however, shows that there is a very serious problem with access to specialty care for children covered by Medicaid and other public insurance, particularly as compared to children covered by other forms of insurance (mostly employer-based private insurance). Using a “secret shopper” methodology, the investigators posed as parents seeking care for a child, saying in one call that the child’s coverage was Medicaid and in the next call that the same child’s coverage was Blue Cross Blue Shield PPO (which dominates the market in Illinois). The Medicaid-covered children had very significant disadvantages for almost all sub-specialties in both the ability to get an appointment and in the waiting time for the appointment if it was granted. The one exception was psychiatric care, where there was a severe access problem regardless of type of insurance. 

At the time of the original court order and consent decree, Illinois authorities were dealing with an inherited problem resulting from decades of underfunding and neglect of access issues in the state’s Medicaid program. They have been working to comply with the decree and improve the program, in spite of the grinding recession-driven budget crisis in the state. Representatives of the children in the case look forward to working in cooperation with state authorities to find and implement solutions to these newly documented problems with specialty access. 

Meanwhile, the study has resulted in media coverage, and some commentators are attempting to use it to bolster current attempts by conservatives to cut spending on Medicaid or relieve states of the duty to comply with Medicaid’s federal rules guaranteeing children access to all needed care. Medicaid is not “broke”; it is underfunded. The underfunding causes it to fall short on its ability to deliver the kinds of quality health care that, over the long term, would save money by supporting healthier people. And Medicaid is not “broken”; it is falling short of its full potential. It provides plenty of essential health care to millions of children, working adults, people with disabilities and seniors. Cutting them off of Medicaid would hurt them immeasurably. And starving the program of funds would only exacerbate the problems with access and the efforts to expand the health care workforce needed to provide adequate care to all beneficiaries. Just because there are flaws in the program does not mean the program must end for millions of beneficiaries. If we scrapped every governmental program that has flaws that need fixing, where would the armed forces, roads, or schools be? Medicaid is essential, but it can and should improve, especially on this issue of access to needed care.   

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Experts from the National Senior Citizens' Law Center exposed the flimsiness of this argument in a blog for the American Constitution Society yesterday.

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States can relax a little about the impact health care reform will have on their budgets, particularly the large expansion of Medicaid. States have been made skittish about their state budgets because of structural deficits and recession-driven shortfalls. Thus, even the fact that the Medicaid expansion will be 100% federally funded for the first few years, and ultimately 90% federally funded from 2020 onward, has not been completely comforting. The states are nervous about predictions that some analysts have made that the implementation of national health reform will add difficult levels of new spending to their budgets. This has the potential to dampen states’ willingness and confidence to embark on aggressive implementation efforts. 

But the predictions of dire impact on state budgets are not accurate. At least three studies now estimate that health care reform will have a positive impact on state budgets, reducing spending in an array of areas to more than offset the marginal increase in state funds spent on Medicaid.

First, there is a very recent report issued by the Urban Institute (commissioned by First Focus), “Net Effect of the Affordable Care Act on State Budgets.” The report compares the increased costs states will experience due to the expansion of Medicaid coverage for low-income adults in 2014 with the savings states will realize from the law. The report takes into account savings that will come when states move people currently covered by Medicaid at income levels above 133% of the poverty level into the private insurance exchange, where the subsidies for premiums and co-pays are entirely federally financed. In Illinois, the FamilyCare program currently covers adults up to 185% of the poverty level with a 50% federal match. The Urban Institute’s report also takes into account the savings states will realize when new Medicaid beneficiaries no longer use uncompensated health care (mostly emergency room care) and state-funded mental health services.

The study does not take into account significant scheduled increases in the federal matching rate for Children’s Health Insurance or a variety of other health care cost savings that will be brought about under the reform law, but nevertheless it finds that state savings under the Affordable Care Act will exceed state costs by between $40.6 and $131.9 billion during 2014-19.

The Urban Institute study is consistent with earlier findings by the Council of Economic Advisers (CEA) and the Lewin Group that, on balance, states will realize significant net budgetary gains from the legislation. The contrary analyses, among other flaws, recognize or describe only state costs and not potential state gains.

The CEA report profiled 16 states, finding that each would experience net fiscal gains from the Affordable Care Act, totaling between $3 billion and $4 billion a year for all 16 states combined. The states were Arkansas, California, Florida, Idaho, Indiana, Iowa, Maine, Michigan, Minnesota, Nebraska, Montana, North Carolina, Oregon, Pennsylvania, Vermont and Wyoming.

The Lewin report found that, on balance, the Affordable Care Act will save states $106.8 billion during 2010-19, including $100.6 billion in 2014-19.

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Every time you see a healthy, happy child this fall, there’s a good chance we’ve got Congress to thank for it. If you’ve never heard of the Federal Medical Assistance Percentage (FMAP), doesn’t worry – almost no one has. But FMAP – the share of Medicaid costs covered by the federal government – is a lifeline for the 1.6 Illinois children who depend upon Medicaid for the health care they need to grow and thrive. FMAP helps seniors, people with disabilities, and parents stay healthy, too. This week, as part of its response to the recession, Congress extended a temporary FMAP increase that will provide $545 million dollars to help Illinois avoid drastic cuts that would have put children’s health at risk and cost state employees and local health care providers their jobs. And these funds will generate additional economic activity in Illinois. Every $1 million in federal funds generates $1.7 million in business activity on average, 17.1 new jobs, and $600,000 in wages and salaries.

Keeping kids covered is a win for our state. Kids get the checkups and preventive care they need to stay healthy, so they miss less school and so problems like nearsightedness and hearing trouble don’t hold them back. Parents get the peace of mind of knowing that a playground mishap or flu outbreak won’t drive the family deeper into debt. And we all get more value from every health dollar, by focusing on prevention instead of letting today’s minor problems become tomorrow’s costly burdens.

Among our leaders in Washington, Senators Durbin and Burris along with the entire Democratic Congressional delegation voted to keep Illinois kids healthy by keeping FMAP strong. Every late summer picnic, every high school football game, and every afternoon at the park – everywhere we see happy, healthy kids is a reminder to thank our leaders for standing up for families struggling through the recession and putting the health of Illinois children first.

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Throughout the debate on health care reform, the focus on changes for older Americans was largely prescription drugs and closing the drug coverage "doughnut hole." These changes are extremely important for many senior citizens who hit their drug coverage limit and are forced to pay high out-of-pocket costs. In fact, there is a $250 payment to seniors who reach the doughnut hole--a down payment until the eventual full elimination of the doughnut hole that will happen later this year.

However, the new law also includes several other provisions that will greatly assist older Americans, particularly low-income senior citizens, which the National Senior Citizens Law Center details in several recent reports.

• For older Americans who rely on long-term services, the new law will create financial incentives for states to shift Medicaid spending toward community-based services, including a six-percentage point increase in federal Medicaid reimbursement for community-based care initiatives.
• The law establishes several pilot programs to study and improve coordination of care for Americans who receive coverage through both Medicare and Medicaid, otherwise known as "dual eligibles."
• The law strengthens medical assistance programs to ensure beneficiaries promptly receive covered services.
  
• The law eliminated co-payments for prescription drugs for individuals receiving long-term care services in the home and in an institutional setting. Under current law, individuals living in an institutional setting do not have co-payments, while those receiving services in the home do have co-payments.
  
• For Americans who are too young to qualify for Medicare but who retire early, a temporary "reinsurance" program will reduce the cost burden on employers.
  

According to the National Senior Citizen Law Center, the most significant new provision in the new law is the extension of coverage for 32 million Americans, which includes millions of people aged 50-64, through a Medicaid expansion, new state-based Exchanges with subsidies for low- and middle-income Americans, and regulation of the worst practices of insurance companies. Finally, millions of low-income older Americans will have access to the care that they need, and important improvements will be made to programs that contribute to the health and well-being of older Americans.

Check out the NSCLC reports for details on how reform benefits older Americans!

Carrie Gilbert co-authored this post.

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On March 21, the House of Representatives passed historic health insurance reform legislation. The House passed the reform bill previously passed by the Senate, which now becomes law upon the President’s signature (expected as early as March 23).  The House also passed a package of changes to the Senate bill that have been negotiated with the Senate, and which the Senate is expected to pass very soon (using the “reconciliation” procedure that requires a simple majority vote).

The package of reforms is a major step forward to provide Americans more security, more choices, and better cost control for their health care.  See the impact in your legislative district.

This is the end of the worst practices of the insurance industry—no more denials due to pre-existing conditions or dropping coverage for people who get sick, or hidden ceilings on your coverage.

We will all get the same insurance choices that Members of Congress have. What is good for them will be good for everyone.

We have kept what is good in our health system and added oversight of insurance practices, control of insurance rate increases, choice of plan and doctor, more competition, and expanded prevention.

Medicare will be strengthened—reform will cut waste and fraud in Medicare, improve solvency and close the gap in prescription drug coverage for seniors.

There will be access to affordable health care for 3.6 million small businesses and 32 million Americans who have been left out – until now.

The first order of business is to thank your House member, if he or she voted “yes”.  Here is the roll call.  This is VERY important – these are leaders who deserve thanks and support.

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Medicaid is a vital safety net for Illinois residents who cannot afford increasingly expensive private health insurance and fills the gap in employer-provided insurance for the growing ranks of the unemployed and their families. But a recent report by Heather O’Donnell, of the Center for Tax and Budget Accountability (CTBA), Medicaid Plays a Critical Role in Illinois’ Economy, reveals the tremendous additional impact that Medicaid dollars have in bolstering our economy. The report shows that Medicaid not only provided health care coverage to 2.6 million Illinoisans (over half of whom were children) in 2008, it also supported “wages, employment, business income, consumer spending, state tax revenue, and overall economic output.”

The Medicaid program is financed by both the state and federal government. In fiscal year 2008, 53% of the total funding for Medicaid came from the federal government. Under the federal American Recovery and Reinvestment Act (ARRA), states receive increased federal funding through December 2010 to help during the recession. The CTBA report explains that, with this enhanced federal share, if Illinois cuts Medicaid spending by $10 million, it will actually lose $16.2 million in federal matching funds.  

But that would only be the beginning of the impact of such a cut. Medicaid spending reimburses health care providers, and then providers pay employees’ wages. The employees then purchase goods and services in the local economy. According to the CTBA report, Illinois’s 2009 state and federal Medicaid spending resulted in approximately $46 billion in additional business activity and supported about 385,742 jobs. This would mean that a cut of just $10 million in state Medicaid spending would result in an estimated loss of more than $80.4 million in business activity and $27.6 million in lost wages across Illinois.  

This positive ripple effect of Medicaid spending means cuts to Medicaid programs would hurt the Illinois economy, increase unemployment, and prolong the recession. Cuts to Medicaid would not only deprive people of health coverage and health care, but also exacerbate the financial strain felt by businesses and workers and cause Illinois’ economy to further deteriorate. 

 

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The Illinois General Assembly meets this week to attempt to resolve the budget.  Failure carries with it incalculable costs that prolong the recession and hit every legislative district. 

The impending cuts directly impact hundreds of thousands of children, seniors, people who are sick and hurt, the unemployed, and workers.  The costs to them are staggering, but there are other costs:

• The state will get sued repeatedly.  Some of the cuts would violate federal or state laws.  Some would violate existing court orders and consent decrees.  The Attorney General’s office must defend all these cases, but it has its own shrunken budget and would be swamped.
•  Proposed cuts violate the condition in the federal stimulus law that states not cut Medicaid.  This will cost us billions in federal stimulus funds.    
• The state would also lose massive sums of federal matching funds and block grant dollars across a range of programs.
• These lost federal funds come out of the Illinois economy – it is money not spent on goods and services in our state.
• The Department of Human Services estimates that the cuts to its budget would cause a loss of 170,000 jobs outside of state government.  These are entrepreneurs, independent caregivers, and employees of non-profit or for-profit businesses that provide or support the programs in various ways.
• Legislators have spent their careers building important programs that will be gutted or eliminated by this process.  Time, talent, and hard-won accomplishment would be wasted. 

The General Assembly’s budget would prolong the recession and hurt the state, not just those who need the programs.  We need to fund the government and not bring about all of the above incalculable costs.

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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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