Quinn delivers

Strong medicine to rescue Medicaid

Friday, April 20, 2012

In February, a somber Gov. Pat Quinn told lawmakers that the state's Medicaid program needs radical surgery to survive. He called for $2.7 billion in cuts to an annual Medicaid budget of nearly $15 billion. "Our rendezvous with reality has arrived," Quinn told the General Assembly, alluding to runaway Medicaid and pension costs. "This is not something you can blithely delay for another year."

That's what he said. But would he follow through on that lofty goal or ... blithely delay?

On Thursday, Quinn delivered what he had promised: He gave legislators his proposal to reduce Medicaid's pressure on the budget by, yes, $2.7 billion. On Friday, he's expected to offer his companion plan to repair the pension system. "This is 'epic week' in Illinois," he said during a news conference Thursday afternoon. "We want to have epic reforms."

The governor's Medicaid proposal involves wide, deep and difficult cuts — $1.35 billion in all — to help reach that $2.7 billion goal. He also recommends a $1-a-pack cigarette tax increase (to $1.98) in order to generate about $675 million, when federal matching dollars are included. And he proposes a $675 million rate cut for Medicaid providers. Total: the $2.7 billion.

Credit Quinn for a sound proposal that does, in fact, rendezvous with reality: Illinois' Medicaid system cannot survive without a major downsizing. It would cause genuine problems for some recipients and the people who deliver their care. Whom to blame? For many years, Illinois lawmakers irresponsibly have allowed Medicaid coverage to expand beyond levels that taxpayers realistically can support.

Because of that indefensible mismatch between costs and resources, Illinois expects to have $1.9 billion in unpaid Medicaid bills on hand by June 30, the end of fiscal 2012. Without a fix, the Civic Federation of Chicago credibly estimates, that backlog will balloon to $21 billion in five years. Providers, who aren't getting paid for about four months already, could see that delay grow to a full year. At that point, who would be left to care for the 2.7 million people — 1 of every 5 Illinoisans — who depend on Medicaid?

To rescue Medicaid, Quinn proposes 58 cuts, reductions and efficiencies:

•Medicaid would save $120 million in the fiscal year that starts July 1 by removing from the rolls 100,000 people who don't belong on them. Some recipients don't even live in the state. Some make too much money to get health care designated for the poor. That purging is long overdue.

•Tens of thousands more Medicaid recipients would get fewer services. The proposal eliminates adult dental treatment ($51 million saved), cuts chiropractic treatment for adults ($884,000), limits bariatric surgery ($3 million), cuts podiatric services for everyone except diabetics ($5.2 million) and zeros out group psychotherapy for nursing home residents ($14 million).

•Medicaid recipients would be limited to five prescriptions a month (there are virtually no limits now), saving $136 million. Several states have done this. The expectation is that a limit would force doctors to better coordinate recipients' prescription drug care; some patients now consume several drugs prescribed by several physicians.

•Quinn's proposal would end Illinois Cares Rex, a supplemental drug program for seniors that doesn't draw federal reimbursement. Savings: $72 million.

•Moving Illinois patients into managed care will deliver modest savings — $16 million — next year. But that should rapidly increase in years to come, as the state finally moves much of its Medicaid population into more coordinated, cost-effective treatment. Quinn proposes to accelerate that transition.

All of this is necessary, but doesn't reach $2.7 billion. Enter the $1-a-pack cigarette tax, which would generate an estimated $337.5 million. Because Washington matches each state dollar spent on Medicaid, the state's gain would double, to $675 million. We support this hike for two reasons: Medicaid, which provides care for smoking-induced illnesses, needs the money; the American Cancer Society estimates that tobacco cost Illinois $1.5 billion in Medicaid spending last year. And making cigarettes costlier means many people will quit or never start.

Also baked into the proposal is a $675 million rate cut for health care providers — roughly 8 percent if these cuts fall equally on hospitals, doctors and all other Medicaid providers. Will they?

That's not just a financial issue, but a policy question. How would legislators apportion $675 million in cuts, and would Quinn agree with them? Example: Should Illinois exempt from cuts the safety-net hospitals that treat a disproportionate share of Medicaid patients?

We'll see. The bottom line here is that Quinn has given lawmakers a template to do what he repeatedly has told them needs to be done. He's given them plenty of time to debate this, to adjust, to add their own proposals before this legislative session's scheduled conclusion May 31. All good.

The rendezvous with reality starts now. The Legislature is notorious for pushing off tough decisions to another day, another year, another decade. That can't happen this time. "If we don't make those changes, we won't have a system at all," Quinn said Thursday. He's right.

So let's get to it. Lawmakers, if you don't like the governor's solutions, let's hear yours. Only one thing can't change: The number is $2.7 billion.