Cutting some Medicaid services may not create savings

By Ashley Griffin 

As lawmakers look to cut or reduce optional services in the Medicaid budget, some experts and advocates believe the proposed cuts could cost the state more in the long run.

Julie Hamos, director of the Department of Healthcare and Family Services, said that the department is looking into reducing or cutting up to 24 services that are not required by the federal government. The department is also considering limiting the amount of prescription drugs someone could receive, but for now, no child services are on the chopping block.

“They are actually called optional services by the federal government. We don’t consider them optional, like drugs. Are drugs an optional service? How do you keep people healthier without drugs? And drugs are $800 million of the optional services group,” Hamos said. The state could instead limit how often Medicaid patients could use some services. she said. “We can impose some utilization controls. That’s what other states have done.”

But with the number of Medicaid recipients increasing after many Illinoisans lost their jobs and health benefits during the recession, Hamos said that the state must address growing Medicaid costs before the system reaches the brink of collapsing. “I’m only talking about one year from now, in the next fiscal year. If we don’t make these very serious and painful reductions, we will have $4.7 billion of bills on hand, and we will not be able to pay our Medicaid providers for almost a year. That is not appropriate,” Hamos said.

 Lawmakers are considering some reductions to services that seem like low-hanging fruit. For example, members of Gov. Pat Quinn’s administration have often cited reducing the number of pairs of eyeglasses patients can receive. Currently there is no limit. But experts say some potentially controversial cuts, such as reductions to hospice care and eliminating adult dental care, could end up costing the state more in the end.

“This is not a population that will get well. They are going to need health care regardless if hospice is existing or not, or available to them or not, and they will end up in higher cost components of the health care system if the hospice benefit is eliminated,” said Carolyn Handler, a representative from the Illinois Hospice Palliative Care Organization.

In a presentation last week to the Illinois Senate, Joy Johnson Wilson, health policy director for the National Conference of State Legislatures, made it clear that the state’s choices for cutting Medicaid are limited, but she said lawmakers must be careful when picking which optional services to cut. She said eliminating services could create larger costs elsewhere in the system. According to Wilson, some states that have eliminated adult dental care saw their hospitalization rates go up. Wilson said many of those states have since returned to covering dental care because the additional hospitalizations cost more than dental care.

“Basically, an optional program in Medicaid is an option simple because it wasn’t mandatory in 1965 when the program was enacted,” Wilson said. “Since 1965, we have added a number of benefits, including prescription drug coverage, which are optional in that the state does not have to have them. But many of the optional services are very critical to health care as we know it today.”

For more on the legislature’s efforts to cut more then $2 billion in Medicaid growth, see the current Illinois Issues.