Deep cuts loom as state tries to save Medicaid

The Chicago Tribune reports:

“The list of medicines Jason Carrington must take every day to treat his multiple sclerosis and related symptoms is long: Copaxone injections to prevent relapses, primidone to control tremors, Seroquel to stabilize his mood, lamotrigine and Cymbalta to treat depression and anxiety.

The drugs can cost thousands of dollars a day, an expense the state now picks up. But the 32-year-old Wicker Park resident soon could find himself forced to seek another way to pay for his prescriptions.

Scaling back such coverage is on the table as Illinois looks for ways to cut spending on its health care program for the poor. The state’s plan for drastically slashing Medicaid in order to save it is expected to come into sharper focus this week as a group of lawmakers and aides reports back to Gov. Pat Quinn.

The options could range from ending so-called extras such as dental and hospice care to raising cigarette taxes. Other possibilities: asking patients to pay more for services and narrowing eligibility requirements that could see thousands of children and adults lose health insurance.

The suggestions that surface, possibly as early as Wednesday, will set the stage for the final six weeks of budget talks in Springfield that seem likely to result in a series of tough decisions for lawmakers running for re-election this year.

“I think people need to understand what’s at stake here and how difficult it’s going to be to achieve the kind of cuts and economies we want,” said Rep. Greg Harris, a Chicago Democrat and a member of a legislative group charged with finding ways to reduce costs. “People do not go away because you cut their programs.”

The scramble has been on since Quinn said a couple of months ago that he wanted to come up with $2.7 billion in savings in a health care program that costs nearly $15 billion a year. The governor held out the prospect that the Medicaid system could collapse without significant changes.

Illinois finds itself in a large hole after years of expanding services and piling up unpaid bills. During that time, more people have sought coverage, and the state has failed to move to managed care as quickly as other states.

Last year, Quinn and lawmakers decided to delay payments to providers, leading to a $1.9 billion backlog in medical bills. At the same time, the strained program has seen an uptick in demand because of the shaky economy, with enrollment now topping 2.7 million.

Lawmakers passed some reforms last year, such as requiring stricter proof of income and eligibility. But federal regulations delayed carrying out some of the changes, so savings didn’t materialize as expected.

This time around, implementing cuts on such a large scale is a delicate balancing act that requires each move to be carefully weighed. That’s because cuts in one area could easily increase costs in another.

For instance, the state provides a number of so-called optional services that are not required by the federal government. They include pharmaceuticals for adults as well as dental care, podiatric care, physical therapy and hospice care. If all of these optional services were eliminated, the state would save $1.9 billion — still short of the governor’s $2.7 billion goal, according to documents provided to lawmakers by the administration.

But cutting some of those services, including preventive care like visits to a dentist or podiatrist, could ultimately cost the state more as problems fester and patients turn to hospital emergency rooms for care.

At any rate, officials say that if Medicaid spending is not trimmed by at least $2.7 billion in the budget year that starts July 1, the stack of unpaid bills will grow to nearly $5 billion next year — a figure so large that doctors, hospitals and pharmacies may cut off services because the state will no longer be able to pay for them.

While Republicans look at the situation as a chance to finally rein in runaway costs, Democrats are looking to offset the need for some cuts through a cigarette tax hike. Lawmakers say the idea was first floated last week by Julie Hamos, Quinn’s director of the Department of Healthcare and Family Services, which administers Medicaid.

It’s estimated the $1-a-pack increase would generate about $700 million for health care when federal matching dollars are added in, said Sen. Heather Steans, of Chicago, who is leading Medicaid negotiations for the Senate Democrats. The extra money would reduce the amount that needs to be cut to around $2 billion.

Steans acknowledged that raising taxes on cigarettes would be a difficult sell during an election year in which every House and Senate seat is on the November ballot. But she said the extra money might appeal to some lawmakers as an alternative to slashing reimbursement rates for doctors and hospitals that provide services, with many already waiting up to six months to be paid by the state.

“The question is which way do people want to go?” Steans said. “The reality is we’re going to have to do more provider cuts if we don’t come up with additional revenues. There’s only so many things that we can actually cut.”

Republican Sen. Dale Righter, of Mattoon, said the cigarette tax is a “bad idea,” arguing that it’s a way for Democrats to avoid tough decisions that are long overdue.

“More money means more spending,” said Righter, the Medicaid point person for Senate Republicans. “They’re going to use the new money to lessen the pressure to make cuts in the program and make the program more efficient.”

Righter said a higher tax on cigarettes will exacerbate a trend in which fewer cigarettes are being sold, a problem that would hurt Illinois in the long run because money to help pay Medicaid costs would come from a declining revenue source.

Republicans suggest that more needs to be done to reduce the number of Medicaid enrollees, casting doubt that the economy was solely to blame for the increase and noting that several expansions were made under ex-Gov. Rod Blagojevich. In particular, Righter said more needs to be done to determine how many people are getting benefits who no longer qualify.

Righter maintained the state relies on Medicaid recipients to notify it when they are no longer eligible for health care benefits, a process that is less aggressive than in other states that check income through tax returns.

“Only if the person on the Medicaid program calls and says, ‘Hey, I’m now making too much money to be on Medicaid,’ only if that happens, do they take them off the program,” Righter said.

Republican Rep. Patti Bellock, of Hinsdale, also was critical of the proposed tax increase, saying the state should take up suggestions from groups like pharmacists who have presented ways to save money through various efficiencies.

“I don’t like the idea of putting that tax on because I think there are more reforms in the system that could be done before we need that,” Bellock said.

Other cost-savings proposals include setting more uniform standards for care and accelerating the number of Medicaid patients that are enrolled in what’s called “coordinated care.” Under that system, one doctor oversees a patient’s care instead of several health providers, making it easier to track treatment and emphasize preventive care.

Under reforms passed last year, 50 percent of patients were to be enrolled in what amounts to managed care by 2015. But Steans said a new target is shifting 85 percent of patients into the program by June 2013. The move is expected to save billions of dollars in the long run, but it takes time to implement, and deep cuts must happen immediately.

That has left people like Cynthia Frazier worried about what type of care, if any, they will get. Frazier, a 63-year-old Hyde Park resident, sees a podiatrist once a month through Medicaid.

The doctor checks her feet for swelling and other complications related to her diabetes, and she worries what would happen if she no longer got regular checkups. Frazier frets that a cut might go unnoticed, leading to more serious treatment down the road.

“Sometimes I think that they don’t realize that they are dealing with real people,” said Frazier, a retired Caterpillar worker who relies on Social Security to get by. “It’s rather scary because I don’t know what’s going to happen.””