Proposed Illinois 2012 budget deepens cuts to Social Services for Seniors and People with Disabilities - April 2011

Proposed Illinois budget deepens cuts to health care services
by Heather Perlberg

Illinois Gov. Pat Quinn’s proposed budget would slash reimbursement rates for Medicaid providers and eliminate programs that help seniors with prescription drug costs.

More than half of the governor’s 2012 budget cuts could come from the state Medicaid program that provides health care to Illinois’ poorest residents. Quinn proposed cutting Medicaid reimbursement by $552 million, which would strain hospitals and health care focused social service organizations. The 6 percent rate reduction would not affect physicians, home health providers or community health centers.

“On several levels we think these cuts are a bad idea,” said Danny Chun, spokesman for the Illinois Hospital Association. “It’s going to hurt health care and access for Medicaid patients.”

More than half of about 215 Illinois hospitals reported to the association that they would have to lay off staff and cut services if the proposed budget passes.

“We think these cuts could be devastating,” said Chun, noting that Medicaid reimbursement rates are already low, on average about 75 percent of the cost of services.

Medicaid takes up a large portion of the state budget. The program cost more than $14 billion in combined state and federal funds to operate in fiscal year 2010, according to the Illinois Department of Health and Family Services.

And because the U.S. government pays for about half of Medicaid costs, Illinois will see a great loss of federal aid by cutting program funds.

“Medicaid has a multiplier effect,” Chun said. “It brings in federal matching funds from outside of the state. If you cut state funding, you are literally throwing away the federal match.”

Along with hospitals, funding for many local organizations providing services to people with mental and physical disabilities could be cut.

In fiscal 2010, adults with disabilities made up only 10 percent of Medicaid enrollees, but shared nearly 30 percent of the total cost, according to the Department of Healthcare and Family Services. Children account for about the same percentage of cost as disabled adults but make up 60 percent of Medicaid enrollees, the largest category in the state.

Access Living, a group that works to enable people in Chicago with disabilities to live independently, is slated to lose about $100,000 in general funding from the state.

State funding used to help disabled veterans move out of nursing homes and other institutions to their own apartments will no longer be available, according to Gary Arnold, public relations coordinator for Access Living.

“Most of the people we help move are on Medicaid,” Arnold said. “People have no way to save money for first months rent or a security deposit.”

Medicaid checks go straight to nursing homes and others facilities rather than to the disabled residents in the institutions, who get a $30 monthly allowance, according to an employee of the Warren Barr Pavilion, a skilled nursing facility. For these residents who have little money to save, Access Living takes care of moving and initial expenses until the newly independent tenants begin to receive Medicaid checks directly.

The governor also proposed dropping Illinois Cares Rx, the prescription drug assistance program for low-income seniors started by former Gov. Rod Blagojevich. Eliminating the program would save the state more than $100 million a year. Illinois provides coverage to around 210,000 participants, according to the state health and family services department.

In January, Quinn signed a health care reform bill that will give half of the state’s Medicaid cases to managed care organizations by 2015, moving Illinois toward a coordinated care system.

Instead of paying care providers for each service, the state would develop contracts with providers for a set rate for each patient per year.

The state expects savings of more than $200 million from implementing reform measures, $100 million alone from freezing Medicaid payments for exceptionally expensive procedures at the current fiscal year level.

“Hospitals have already done their part to help the state with its finances,” Chun said, referring to the January veto session when the Illinois Hospital Association agreed to the freezes.

Inpatient Medicaid rates have been frozen since 1995, according to Chun. “About half the hospitals in Illinois lose money on patient care,” he said.

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