Gov. Pat Quinn
plans to call for major Medicaid
cuts during his annual budget address Wednesday and issue a warning that immediate changes must be made or the state’s health care system for the poor could collapse.A Quinn spokeswoman said the speech will serve as a “reality check” for lawmakers who also will be asked to approve 9 percent cuts for most state agencies and further reforms to the costly state worker pension system.
Aides say Quinn will suggest trimming projected Medicaid spending by $2.7 billion in the budget year that starts July 1. If they don’t, aides warn, a backlog of unpaid bills that already stands at $1.9 billion will grow so large that doctors, hospitals and pharmacies may cut off services because the state can’t pay for them.
“This is not something that we can blithely delay for another year,” said Michael Gelder, Quinn’s senior health care policy adviser. “We really fear the collapse of the program if that accounts payable balance grows by another penny.”
On the table is cutting payment rates for doctors, pharmacies and hospitals. Also under consideration is setting more uniform standards of care, such as allowing patients to receive one new set of eyeglasses each year instead of more frequently. The administration also wants to look at curtailing some services — weight loss surgery is one example — and reduce how much the state pays for others. For instance, a doctor is paid more for performing aC-sectionthan a regular birth.
Quinn also wants to examine the hospital assessment rate, which sets reimbursement fees for hospitals regardless of how many Medicaid patients they actually treat. The governor also wants to explore consolidating Medicaid waivers, which the state uses to pay for a variety of health care needs, including seniors who need care at home and children who use ventilators.
The idea is to find a common ground to make the cuts a reality instead of dictating to lawmakers what Quinn wants, said Jerry Stermer, a senior adviser to the governor. Stermer said the administration realizes it won’t be easy to pass changes, noting the strong opposition to cutting reimbursement rates it faced last year. But he said something must be done to ensure the state can continue to care for its most vulnerable citizens.
“We don’t think this is the administration on one side of the table and everybody else on the other side,” Stermer said. “These are our partners that provide the services. These are 2.7 million Illinoisans that we care deeply about. … We just have limited resources and we have to manage them.”
The Medicaid system has long been one of the most costly portions of the state budget, but it has come under extra scrutiny after lawmakers and Quinn delayed payments last year, leading to a $1.9 billion backlog of bills. Increased demand for health care and inflation means that number will only increase unless lawmakers work to make deep cuts in the next few months, Gelder said.
Even if lawmakers agree to Quinn’s cuts, much of the backlog will still roll over into the next budget year, Gelder said. The state finds itself in this “untenable” position because the demand for health care has skyrocketed due to the recession, he added. Since 2007, the number of people enrolled in Medicaid has jumped from 2.1 million to 2.7 million, eating up about $15 billion, or roughly one-fourth of the state’s overall budget.
While the demand for care usually grows during tough economic times, the state was able to offset the increase in costs over the past several years through federal stimulus funds. That money has since dried up, leaving the state to pick up the tab.
Lawmakers passed some Medicaid reforms last year, including requiring stricter proof of income and eligibility. But federal regulations have delayed implementation of some of the changes, so savings didn’t happen as expected.
Quinn hopes the backlog can be whittled away through other changes put in place last year, such as moving Medicaid patients into a managed care system that focuses on prevention to catch problems early and stop more expensive care. The goal is to have half of Medicaid patients enrolled in managed care by 2015.