Friday, December 11, 2009

Patti Bellock & Kristina Rasmussen: Expansion of Medicaid is Not the Health-Care Answer

From the State Journal-Register

Much of the debate over national health-care legislation has centered on flashpoints like higher taxes, abortion and immigration.

Yet one major aspect of the health-care plans being developed on Capitol Hill has received relatively scant attention. House and Senate Democrats are planning on significantly expanding Medicaid in an attempt to decrease the number of uninsured.

Medicaid was launched in 1965 as a joint federal-state safety net that would help cover health-care costs for the poorest of the poor. Congressional Democrats’ health-care plans would swell Medicaid far beyond the program’s core focus.

In particular, the federal government would require Illinois to vastly expand our Medicaid operations to cover hundreds of thousands of new enrollees. This could translate into an overwhelmed system for current care recipients and providers, higher costs for Illinois taxpayers, and less local control over our state’s government health programs.

Let’s consider where we’re at today in order to get a better understanding of what this would mean for our state. We spend more than $11 billion a year on Medicaid. More than 2.6 million Illinoisans are enrolled in the program. During the last 10 years, liabilities have grown at a rate of 6.9 percent a year, in part due to eligibility increases. Program administrators are projecting a 7 percent spending increase for 2010.

According to a June report from the Taxpayer Action Board, if recent spending rates remain constant, “Medicaid spending will reach approximately $22 billion in 2019, which could represent roughly 50 percent of the entire state budget and would begin to crowd out other State spending priorities, such as public safety and education.”

Illinois is already having a hard time paying for its current Medicaid obligations — the state’s well-publicized payment backlog is clear proof of this problem.

With this in mind, a Medicaid expansion — even one partially or temporarily funded by the federal government — would make the outlook for balancing Illinois’ budget much more bleak than it already is. This doesn’t bode well for taxpayers, existing Medicaid recipients or providers.

Ongoing negotiations in Congress will determine at what level benefits would be set, when they take effect, and how the federal government and the states will share the cost. In the meantime, it is possible to get a sense of what an expansion could mean for Illinois. The numbers are not comforting.

Were Illinois to extend Medicaid to every uninsured resident making up to 150 percent of the federal poverty level at regular reimbursement rates, it would cost the Medicaid program an additional $1.5 billion a year, not accounting for medical inflation. Even if Illinois only had to pay a tenth of the expansion costs, the impact would still be staggering for a state already billions in the red.

Moreover, if we have to increase our doctor reimbursement rates to ensure sufficient physician participation to meet higher demand, overall costs would also go up significantly each year.
Currently, about one in five Illinoisans receives health-care coverage from Medicaid. If eligibility were expanded according to the income guidelines from the House plan, 690,000 individuals could join Illinois’ Medicaid rolls. This figure does not even include those who will drop their private insurance for public coverage.

Low-income children, their parents and the disabled have traditionally been first in line to receive Medicaid. These populations may suffer from adding more able-bodied adults to the system.

To make matters worse, state legislators would have less local control over how Illinois’ Medicaid system is designed, instead having to follow more federal mandates and having virtually no flexibility to reduce or control future rising costs.

Medicaid is an important program, but a pricey expansion would have Illinois run the risk of not delivering on promised care to enrollees. Other less-than-desirable funding options would include continuing to delay payment to providers, reducing the resources available to other state programs, or sending the state’s tax rates sky high.

Illinois residents deserve a better health-care alternative from Congress that focuses on patient-centered reforms empowering the doctor and the patient to make effective and economical health policy choices.

Is Washington listening?

Patti Bellock is a Republican member of the Illinois House of Representatives from Westmont. Kristina Rasmussen is executive vice president of the Illinois Policy Institute.

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