Illinois Promised Billions in Federal Tax Dollars in Return for Medicaid Expansion

Published March 15, 2013

The federal government is promising billions if Illinois expands its Medicaid program under President Obama’s health law, but some lawmakers are wary about the fine print.

Illinois Health Care and Family Services Director Julie Hamos told a statehouse committee in January Illinois could receive more than $1 billion a year in reimbursements from the federal government by expanding Medicaid to cover childless adults who make about $15,000 or less a year. The money, Hamos said, “will go right back out to the [health-care] providers and local governments who have been providing care for low-income adults.”

Of the one million people in Illinois who don’t have health insurance, Hamos estimates 520,000 would become eligible for Medicaid under an expansion, and the rest would have to purchase health insurance through the state’s yet-to-be-created insurance exchange.

The federal government is promising to pay 100 percent of the costs for anyone covered by a Medicaid expansion from 2014 to 2017, and no less than 90 percent of the costs from 2017 until 2020. But state Rep. Patti Bellock, R-Westmont, pointed out there is no guarantee Illinois will see all of those promised dollars once President Obama leaves office.

“What happens in the out years?” Bellock said. “Will that be changed to maybe a 65 percent rate? I don’t know what will happen those years.”

Enrollees Could Cost the State

Bellock also has questions about Illinois’ expectations that only a half million people will enroll in an expanded Medicaid program. Although newly eligible enrollees will be covered under the initially generous federal matching rate, previously eligible enrollees will cost the state significantly more money.

The Kaiser Family Foundation has released a report that suggests as many as one million people would enroll and 600,000 would be “newly eligible” under a Medicaid expansion. But if the federal government eventually reduces Medicaid reimbursement rates, Illinois will be stuck with billions of dollars in health-care costs it can’t afford, Bellock notes.

Illinois first approved a moratorium on Medicaid expansion in 2011, and then again in 2012. Hamos’ requested expansion would end that moratorium.

“This is going to take a while to get right,” Hamos said “So we need this expansion now.”

The Illinois legislature will take up the issue later this year.

Benjamin Yount ([email protected]) writes for Illinois Watchdog.