Opponents of the state’s recently signed Medicaid reform law say it will kick thousands of children off public health insurance and hinder the state’s ability to convince low-income families to apply for coverage in the All Kids program.
“It’s kind of Scrooge-like,” said Stephanie Altman, policy director of Chicago-based Health & Disability Advocates.
House Bill 5420, signed into law Jan. 25 by Gov. Pat Quinn, was praised by both sides as an effort to control the rising costs of Medicaid and improve management of the $7.6 billion-a-year program.
The bill’s estimated savings — between $624 million and $774 million over a five-year period beginning in 2012 — are relatively small. Between one-half and two-thirds of the savings would come from more extensive use of managed-care programs, which are required to cover at least half of the 2.8 million Illinois Medicaid recipients by 2015.
Advocates for children and families said they have some concerns about the move into more tightly controlled managed care, though they admit that this part of the law, if handled well, could save money and improve care.
They are most upset about the eventual removal of 3,000 to 4,000 children from All Kids, the end of universal income eligibility for children, and provisions that proponents say will prevent fraud and waste.
Family income limits
The law caps income eligibility at 300 percent of the federal poverty level. The change is expected to affect less than 1 percent of the 1.6 million Illinois children on Medicaid and save the state $7.5 million over five years, according to the Illinois Department of Healthcare and Family Services.
“It’s a very sad day when a Democratic General Assembly will make cuts on the backs of children,” said Anne Marie Murphy, a former Illinois Medicaid director who now is executive director of the Metropolitan Chicago Breast Cancer Task Force. “I don’t think the way to balance the budget is to make children uninsured.”
But state Sen. Heather Steans, D-Chicago, the sponsor of HB 5420, said children in the program won’t be cut off until July 2012 and, because of their family income, should be able to find coverage elsewhere, especially with a statewide health-insurance “exchange” scheduled to begin operating in 2014 as part of the federal health-care reform law.
Overall, the Medicaid reforms are needed to combat the state’s fiscal crisis, she said.
“We have to get our arms around the increases in Medicaid costs,” she said.
At the bill-signing ceremony, Quinn, a Chicago Democrat, called the new law part of his plan to stabilize the state budget. Several other high-ranking Democrats were standing alongside Republicans and smiling, including Julie Hamos, director of Healthcare and Family Services.
As a member of the Illinois House, Hamos, a Chicago Democrat, voted in 2005 to make any uninsured child in Illinois eligible for state-subsidized health insurance through Medicaid.
The expansion, former Gov. Rod Blagojevich’s signature initiative, renamed the Medicaid program for children “All Kids.” The legislation allowed families with incomes of more than 200 percent of the federal poverty level -- $44,700 annually for a family of four -- to insure their children for monthly premiums of $40 to $300 per child
Effective July 1, the new law’s 300 percent limit will cut off eligibility at an income of $67,050 for a family of four.
An unflattering audit of the All Kids program in 2010, and the fact that the program’s expansion was a pet project of an impeached governor, made All Kids “vulnerable to be a political whipping boy,” said Kent Redfield, professor emeritus of political science at the University of Illinois Springfield.
Managed care plans
Department of Healthcare and Family Services officials have said the All Kids expansion, which cost the state $70 million in fiscal 2009, was more than paid for by savings incurred through two forms of managed care set in motion by the 2005 legislation — primary care case management and disease management.
However, those programs, which serve 1.8 million and 220,000 people, respectively, don’t go far enough to satisfy the law.
To comply, HFS might expand case management beyond primary-care physicians to include specialists and more sharing of financial risk, according to Theresa Eagleson, the department’s director of medical programs.
The department also might contract with more companies to cover Medicaid recipients through health-maintenance organizations, Eagleson said. HMOs already are scheduled to begin covering 40,000 elderly and disabled Medicaid recipients this spring as part of a pilot project in the Chicago area.
The new law’s managed-care expansion will start to affect Medicaid clients in 2012, Eagleson said.
Dr. Michael Temporal, president-elect of the Illinois Academy of Family Physicians, said he worries that more stringent managed care will lead to denial of needed care to save money and the dismantling of existing managed-care programs that support a “comprehensive medical home.”
Steans said medical homes will be enhanced, not harmed, by the new law.
Sen. Dale Righter, R-Mattoon, a co-sponsor of HB 5420, believes additional managed care could save two to three times more than the Quinn administration has estimated.
“We need to incentivize the providers to make the Medicaid population healthier,” Righter said. “To me, this is about pay for performance.”
Income and eligibility
Altman said children shouldn’t be cut from Medicaid because they don’t cost the state much money.
A state audit indicated that the premiums paid by families of children to be cut from All Kids covered half of the cost of coverage.
Righter countered: “For any public assistance program, there has to be an income ceiling. At some point, a family makes too much money to receive taxpayer assistance.”
The new law also puts in place more stringent income verification requirements for applicants and people currently in the Medicaid program. But Altman said those requirements are largely unnecessary and could lead to poor people being unnecessarily disqualified from Medicaid.
Steans said there’s anecdotal evidence of Medicaid fraud that would be targeted by the legislation. Righter said the requirements will lead to better management of public resources, and the law won’t remove people who truly need Medicaid if they take more care to prove their eligibility.
Universal program ended
With an income cap, All Kids will be harder for needy families to understand, so fewer may sign up even though they may qualify, Murphy said.
The 2006 expansion made the program more attractive to families, regardless of their income level, she said.
Data from the state indicate that the number of children covered by Medicaid jumped by 415,000 between 2006 and 2010, which means more than 80 percent of the children added were in income categories that would have made them eligible even before the 2006 expansion.
Righter doesn’t think the reform law will lead to fewer families applying for coverage, however.
And James Parker, deputy director of medical programs at the Department of Healthcare and Family Services, said that question will become moot in 2014, when people looking for health insurance, no matter what their incomes, will fill out the same form through the state’s health-insurance exchange.
Immigrants the focus
The 2005 All Kids legislation also resulted in undocumented immigrant children qualifying for Medicaid coverage for the first time, a fact that wasn’t initially publicized by Blagojevich’s administration.
A 2010 audit revealed that 54,000 of the 71,600 children added to Medicaid as a direct result of the 2006 expansion were undocumented immigrants. They accounted for most of the expansion’s $70 million net cost to the state in 2009.
Righter wanted to remove undocumented immigrants from the program, but Democrats considered that provision a deal-breaker, he said. The federal government offers no federal match to help cover medical costs for undocumented immigrant children.
“I think most Illinoisans believe their taxes should go to people who are legally in the United States,” Righter said.
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