Increasing rolls pressures Medicaid budget

Chicago Health Care Daily reports:

The massive expansion of Medicaid upheld Thursday by the U.S. Supreme Court will likely add more than $1 billion over five years to the cost of Illinois’ struggling program, which can little afford any additional financial burdens.

According to various estimates, from 500,000 to more than 900,000 Illinois residents might qualify for Medicaid when the expansion takes effect in 2014. The federal government will pay the full cost of the expansion until 2016, when its contribution begins to taper down to 90 percent by 2020.

Even if the state’s portion is relatively small, the dollar amount adds up, eventually creating more budget pressure on a program that needed a big package of budget cuts and tax increases to fill a $2.7 billion shortfall in the fiscal year beginning July 1.

Because of the expansion, Illinois Medicaid spending is likely to increase by $1.2 billion to $2.4 billion over the five-year period starting in 2014, according to a report by the Washington-based Kaiser Commission on Medicaid and the Uninsured, published in 2010. The range depends upon how many people actually join the program.

State Comptroller Judy Baar Topinka on Thursday invoked the high end of that range when she warned that the Illinois General Assembly needs to plan now for the increased spending.

“There is no doubt that this will cost the state — the only question is, how much?” Ms. Topinka said in a statement. 

Some experts say the money would be well-spent.

2020 “is a long way off,” said Dr. Joel Shalowitz, a clinical professor of health industry management at Northwestern University’s Kellogg School of Management. “For right now, we should look at whether the administrative costs are doable, or if those administrative costs are prohibitive and the money could be used elsewhere. Frankly, I don’t see any downsides to it.”

A spokesman for the state Department of Healthcare and Family Services said the agency has been working to improve the financial stability of the state Medicaid program. Its 2012 budget was $14.3 billion.

To be sure, even though the expansion will cost states money in coming years, it will also lead to savings for state and local governments in reduced costs for uncompensated care, according to a March report by the Center on Budget and Policy Priorities.

The Supreme Court’s ruling opened the door for states to reject the expansion without jeopardizing their existing federal funding. In Illinois, for example, federal matching funds account for 50 percent of the program’s cost.

While some Republican governors have said they won’t accept the increased funding, Gov. Pat Quinn, a Democrat, on Thursday afternoon left no doubt what direction his administration would take. 

“We don’t intend to exercise the so-called option to not include expansion of Medicaid,” Mr. Quinn said, speaking at a press conference at Ann and Robert H. Lurie Children’s Hospital in Chicago. “This is a golden opportunity to bring into our health care system people who have been left out.”

In an interview, Sinai Health System CEO Alan Channing said Illinois would be penalizing itself by not taking advantage of the expansion. 

“If the state should choose not to, then basically Illinois is subsidizing other states that do choose to,” Mr. Channing said. “You and I are paying federal taxes, and as Illinoisans we would prefer that that money would come back to us in some way.”

About 10 percent of the West Side medical center’s uninsured patients would be newly eligible for Medicaid after Jan. 1, 2014, he estimates.