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Governor Rauner Seeks to Cut Medicaid by $1.5 Billion

While programs like Medicare and Medicaid are largely funded through federal dollars from the Centers for Medicare and Medicaid Services at the United States Department of Health and Human Services, Medicare and Medicaid are actually administered through states. This is why states take a great interest in the expenditure of those funds, and states attorneys general have fraud units dedicated to investigating medical providers and individuals who fraudulently submit reimbursement claims for false treatments or unnecessary treatments or procedures. Thus state legislatures and governors have substantial authority over how these funds are spent, and how much of these funds are spent. Medicaid tends to be a substantial part of many states’ respective budgets, and Illinois is no different. This program specifically is meant to help the poor with health care (while Medicare traditionally helps the elderly).

Actual Proposals

During the last election cycle, Bruce Rauner, who is no stranger to owning entities related to nursing home businesses, won the governor’s seat over incumbent Pat Quinn. Governor Rauner, as part of his budget, has proposed to decrease Medicaid funding in Illinois by $1.5 billion. If the budget were instituted, it would reduce Medicaid spending to about $19 billion, covering about 3.6 million state residents. As Medicaid is a program that pays for all types of health care, this will affect Medicaid patients seeking care from doctors, hospitals, as well as nursing homes alike. This massive cut is actually a re-visit of cuts made temporarily in the state’s previous legislative session. Such budget cuts affected certain services like dental care and podiatry, as reported in the local news.

But the governor’s cuts go far beyond that to broader and traditional medical providers. While eligibility requirements will not change, and copays or premiums will not increase for individual patients, certain providers will pick up the slack. Hospitals will lose 13% of its budget down to $735 million and could lead to the loss of thousands of jobs at those hospitals, based on at least one estimate. As far as nursing homes, about $216 million would be removed from the Medicaid budget for expenses at those facilities. There would be an additional $40 million cut from pharmaceutical-related expenditures.

State’s Budget Woes

The state budget cuts here are an attempt to make up for Illinois’s immense $6.2 billion deficit. Yet while the state may save and work toward balancing its budget, it remains to be seen whether medical providers – largely hospitals and nursing home in this situation – will truly take a cut, or simply pass the cost on to private insurance, which could potentially result in eventual premium and/or copay amounts.

This also comes on the heels of the Patient Protection and Affordable Care Act, which among its many provisions included an expansion of Medicaid that would be funded by the federal government, but which states could also choose to opt out. While reports indicate Governor Rauner considered this option, it appears that for the moment it won’t and that Illinois will accept that money. The proposed budget also apparently presumes that many Illinois residents will take advantage of the health care exchange subsidized by the ACA, which will save the state money as well.

See Other Blog Posts:

Medicaid Backlog Continues to Plague Illinois Residents

Medicaid Fraud Units Also Target Abuse and Neglect