Illinois Medicaid Squeeze Could Hike Everyone’s Hospital Bills

Published April 12, 2012

The average Illinois household could be facing higher hospital bills under Democratic Gov. Pat Quinn’s $33.8 billion proposed budget, which decreases how much the state compensates providers treating patients on Medicaid.

Quinn’s office said under normal circumstances Medicaid spending should jump by $2.7 billion. But spending on the state’s human services budget, which includes Medicaid, is slated to grow by less than necessary for that, 2.7 percent, from $14.3 in fiscal 2012 to $14.7 billion. Quinn is calling for lawmakers to make up the difference by decreasing the amount health-care providers get paid for treating Medicaid patients.

Danny Chun, spokesman for the Illinois Hospital Association, says Quinn’s proposed Medicaid budget would cause trouble beyond just Medicaid patients. He notes one out of every three hospitals in the state is operating in the red, so decreasing what the state pays doctors for treating Medicaid patients will force hospitals to make up the difference elsewhere.

“Health-care costs will go up for non-Medicaid patients and for employers who pay for insurance and premiums,” Chun said. Any Medicaid cut “has a domino effect across the health-care system,” he explained.

Chun said the cuts could push hospitals, teetering on the edge of financial collapse, off the cliff. Hospitals “are that fragile,” he said.

Medicaid Bills Overdue

Illinois has already fallen behind in meeting its obligations to providers. Currently, the state has $1.9 billion in Medicaid bills from last year it intends to delay paying once again, according to Quinn’s office. Without changes to Medicaid, the amount of overdue, unpaid bills would jump to $4.6 billion next fiscal year, according to Rep. Chapin Rose (R-Mahomet).

“That’s the 800-pound gorilla … because everything else, whether it’s a  9 percent cut to this agency or a 2 percent cut to this agency, doesn’t matter because it’s all being cut” to cover Medicaid costs, Rose said.

Without change, the state will have $21 billion in unpaid, overdue Medicaid bills by fiscal 2017, according a report by the Civic Federation, a think tank that monitors the state’s finances.

Reforms, Tax Increases Considered

According to Jerry Stermer, the governor’s senior adviser, Quinn’s administration is implementing income and residency verification reforms to Medicaid, despite not yet receiving approval from the federal government.

“Everything is on the table,” said Stermer.

Currently, residency verification is not required unless something suspicious comes to the attention of the state. In that case, the person only has to present a single pay stub to prove he or she meets the income requirements to get Medicaid benefits.

The Illinois Hospital Association has proposed increasing taxes on behaviors such as smoking or drinking sugary beverages to help cover the increasing costs of Medicaid. According to Stermer, the Quinn administration has not come down on one side or the other on such tax increases, but he predicted Quinn would have to seek “dramatic” rate cuts if no other reforms are accomplished.

Andrew Thomason (andrew.thomason@illinoisstatehousenews) writes for Illinois Statehouse News.