Despite court rulings, Obamacare subsidies to continue in Illinois

By Jamey Dunn

Dueling court rulings handed down today put the future of a key piece of Obamacare into question, but for now, nothing will change about the way the law is implemented in Illinois.

A three judge panel in Washington D.C. ruled this morning that under the Patient Protection and Affordable Care Act, federal subsidies to bring down the cost of insurance should only be available to residents of states that operate their own online insurance exchange. Under the decisions, Illinois and 35 other states would lose the subsidies. Illinois partnered with the feds on Getcoveredillinois.gov, but the website still relies on the federal exchange to sign patients up for coverage.

Just hours after the U.S. Court of Appeals for the D.C. Circuit weighed in, The Fourth Circuit Court of Appeals in Virginia issued a diverging opinion on a similar case. That panel of judges said that the wording of the law was unclear, but the majority agreed that the law allows for the subsidies to be dispersed through the federal exchange.

In Illinois, 217,000 people obtained insurance through the exchange. More than three quarters of those qualified for a subsidy. Health officials in Illinois say that those approximately 168,000 will not lose their subsides as an immediate result of the rulings. “We are monitoring today’s appeals court decisions in which two courts have rendered differing rulings. The bottom line for now is that nothing has changed, and the subsidies created under the law to help people cover the cost of their health care remain in effect. Get Covered Illinois is focused on preparing for the enrollment period for year two that will start this fall,” Jennifer Koehler, executive director of Get Covered Illinois, said in a written statement.

President Barack Obama’s administration says it plans to ask the full panel of judges at the D.C. appeals court to consider the issue. That group is made up of seven judges appointed by Democrats and four appointed by Republicans. Two other judges, one appointed by a Democrat and one by a Republican, could sit in on the case. It is possible that the issue may end up before the U.S. Supreme Court. The court previously upheld the law, but allowed states to opt out of a massive Medicaid expansion called for by the Affordable Care Act. Illinois lawmakers approved and Gov. Pat Quinn signed into law the expansion in Illinois.

State online insurance exchanges 

Source: The Henry J. Kaiser Family Foundation, KFF State Health

Options for a pension reform Plan B may be limited

By Jamey Dunn

The Illinois Supreme court issued a ruling Thursday on state employee health care that bodes ill for supporters of the recently passed cuts to public employee retirement benefits.

The court ruled that health care benefits for retirees fall under the pension protection clause—the very sentence of the state’s Constitution that many supporters of pension reform had hoped the justices would be willing to overlook. The pension clause states: “Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

The ruling indicates that the justices are inclined to side with public employees and retirees. In the 6-1 opinion, Justice Charles Freeman wrote: “Under settled Illinois law, where there is any question as to legislative intent and the clarity of the language of a pension statute, it must be liberally construed in favor of the rights of the pensioner.” Justice Anne Burke wrote the dissenting opinion. In it, she did not question the protection of the pension clause, but she argued that retiree health care benefits did not fall under that protection.

Some lawmakers seem to see the ruling as writing on the wall for the pension reform law, which is still working its way through the legal system. “Today, the Illinois Supreme Court made it very clear that the Pension Clause means what it says,” Senate President John Cullerton said in a prepared statement. “The court cannot rewrite the Pension Clause to include restrictions and limitations that the drafters did not express and the citizens of Illinois did not approve. The clause was aimed at protecting the right of public employees and retirees to receive their promised benefits and insulate those benefits from diminishment or impairment by the General Assembly.” Cullerton added: “If the court’s decision is predictive, the challenge of reforming our pension systems will remain. As I have said from the beginning, I am committed to identifying solutions that adhere to the plain language of the constitution.”

Kent Redfield, an emeritus professor at the University of Illinois Springfield, said that while the ruling pertains to a different case, the language used is clear. “You could find some way to parse some of it, but it’s really, really difficult. There’s no logical way to get to upholding Senate Bill 1 (the pension reform legislation) based on the clear content of this ruling and the way they’ve construed the pensions clause.”

Others disagree that the ruling is a harbinger of the pension law’s death. Rep. Elaine Nekritz, who was key player in getting SB 1 passed, said that the justifications the law makes for reducing benefits were not part of the retiree health care case. She said that the court has yet to consider those points. The law lays out the dire fiscal situation that the state is in and claims that state elected officials need special powers to curtail the estimated $100 billion unfunded liability and save the state from a budget disaster. However, one line in today’s decision seems to blow a hole in that argument. “In light of the constitutional debates, we have concluded that the [pension] provision was aimed at protecting the right to receive the promised retirement benefits, not the adequacy of the funding to pay for them.” 

Supporters also claim that a reduction in the amount that employee would pay into the system represents a consideration they are being given for a change to the contract that is their membership in a pensions system. Nekritz said that the ruling is clear that benefits are protected, but she says it is unclear if that protection is absolute. “Does it really mean that we can do nothing, or are there some things that we can do based on the legal arguments that we make under Senate Bill 1?”

Those arguments aside, if the Illinois Supreme Court rejects the new pension law, what options do legislators have?

Cullerton had proposed offering employees a choice between receiving subsidized health care coverage or keeping their current pensions benefits. If they had chosen health care, they would have seen a reduction in their retirement income including a cut to the expensive compounded interest cost of living adjustments (COLAs) retirees currently receive. Cullerton said that this scheme could potentially fulfill a legal standard of giving employees consideration for a reduction in benefits. The Senate approved the plan, but it was never called for a vote in the House.

However, that plan was based on the idea that health benefits were not protected by the Constitution—a concept that runs counter to today’s ruling. “The concept of consideration is still viable. The court has not rejected it or defined what the limits are. It’s just hard to see what you can give up in exchange,” Redfield said. “It’s hard to see what other major carrot you can offer to people in terms of giving up their COLA.”

Skokie Democratic Rep. Lou Lang introduced legislation that would extend the current income tax rates, which are due to start rolling back on January 1, to pay down the unfunded liability.

But Lang’s plan also calls for larger contributions from employees and an increase in the retirement age. Both of these provisions could be seen as a reduction in benefits by the court. Much of the revenue from the temporary income tax increase has gone toward making the required annual pension payment after lawmakers voted to skip payments and short payments for several years in the past.

There have also been proposals to change the pension payment schedule to even out the cost of the annual payment. The state is currently on a system that resulted in large balloon payments, much like a subprime mortgage. Some such plans also call for funding the system at 80 percent as opposed to 95 percent or 100 percent. Redfield said that a proposal that changes the payment structures would need to be combined with changes to the state’s revenue structure, such as expanding the sales tax base to some services, budget cuts or both. “As a stand alone, then it looks like an excuse to keep doing what we’re doing,” he said.

Republican candidate for governor Bruce Rauner has advocated for moving employees’ future benefits to a system that looks more like a 401-K. That plan would go even further than SB1, so it is unlikely that it would be upheld if SB 1 were rejected. But it is possible that the court’s ruling might strengthen his case for offering a defined contribution plan to newly-hired employees. “It may embolden Rauner to say well we’ve got to get everybody going forward into a defined contribution [plan],” Redfield said. However, such a proposal would have no impact on the unfunded liability for current employee and retiree benefits. It also means the state would likely have to start contributing to Social Security benefits for positions that do not currently offer them.

Meanwhile Gov. Pat Quinn is emphatically sticking by his opinion that SB 1 is constitutional. “We believe the pension reform law is constitutional. This landmark law was urgently needed to resolve the state’s $100 billion pension crisis. It was also urgently needed to ensure that teachers, university employees and state workers who have faithfully contributed to the pension system have retirement security,” said a written statement from his office. “We’re confident the courts will uphold this critical law that stabilizes the state’s pension funds while squarely addressing the most pressing fiscal crisis of our time by eliminating the state's unfunded pension debt.”

Redfield said that there will likely be many suggestions for a Plan B on pension reform in the coming months. “I think people will be floating lots of ideas that probably aren’t feasible and really won’t address the short-term problems—between now and November,” he said. “There’s nothing politically to be gained by standing up and saying ‘you know, we really, really screwed up, and we have no options but to raise your taxes.’”

 But he said that new revenues and cuts to state services to cover the cost of the pension systems might be the only real option available to address the problem if the court rejects SB 1. If that happens, the state will almost certainly face another credit downgrade if it fails to act to address the liability. The current budget is based on $650 million in borrowing that has to be paid back. In Fiscal Year 2016, the tax rate will be lower for the entire fiscal year instead of just half of it. FY16 could turn out to be one doozy of a budget for lawmakers and whomever is the governor to sort out. “You want to be around for a historic session for the General Assembly? I think everybody has a front row seat,” Redfield says.

Enrollment grows as Obamacare sign-up deadline approaches

By Jamey Dunn

According to enrollment numbers released by the federal government today, more than 313,000 Illinoisans have obtained health care coverage under “Obamacare.”

As of the end of February, 113,733 got insurance coverage through either Illinois’ insurance marketplace or the federal website. That number is up by 25,131 from January’s total. In addition to those who have chosen insurance plans, about 200,000 people have received coverage under the Medicaid expansion, which is a key component of the Affordable Care Act. “February was a busy and productive month, and we are working hard to build on it in the next three weeks. We want everyone who is not yet covered to know that the six-month enrollment window will be closing as of March 31,” Jennifer Koehler, executive director of Get Covered Illinois, said in a prepared statement. “To everyone who has been waiting on the sidelines, we are saying: ‘Don’t delay: Enroll today.’ Go to our website, GetCoveredIllinois.gov and find out what your options are. We are working closely with hundreds of community partners across Illinois to ensure that everyone who needs assistance can get it, and that no one misses out on the opportunity to enroll in a quality, affordable health plan this month.” Those seeking insurance coverage that begins on April 1 must unroll by this Saturday. Anyone who does not have coverage by the March 31 deadline would be subject to a penalty fee when they file their tax returns for 2014. However, there are exemptions for those who opt out of coverage for religious reasons or those who can show that they are not eligible for Medicaid and cannot afford coverage. The next open enrollment period is scheduled for November with coverage beginning in January 2015.

Of the Illinoisans that have purchased insurance, 77 percent are eligible for federal subsidies to help cover the cost. More than half of those getting coverage are women and 25 percent are between the ages of 18 and 34. This group, dubbed the young invincibles, are important to the program because their relatively low need for health care would offset the costs of insurer the older and those with pre-existing conditions. The rate of young enrollees in Illinois tracks with the federal numbers, but is lower than the number of them that are eligible for coverage. The Henry J. Kaiser Family Foundation, a nonprofit that focuses on health policy, estimates that about 40 percent of those eligible to purchase insurance on the exchange nationwide fall into the young invincibles category. Health care officials on the state and federal level are courting young people to sign up before the March 31 open enrollment deadline. Illinois partnered with the satirical news website The Onion to advertise coverage. President Barack Obama made on online splash today by pitching Obamacare on Between Two Ferns—a talk show hosted by Zach Galifianakis that airs on a website called Funny or Die.

For more on the state's online insurance exchange, see the current Illinois Issues. 

Obamacare enrollment numbers grow, but many in state still uninsured

By Jamey Dunn

Nearly 30,000 Illinoisans purchased private insurance through the Illinois' online marketplace last month.

The U.S. Department of Health and Human Services released enrollment numbers showing that 88,602 Illinois residents have purchased insurance in the four months that the jointly-run state and federal website, getcoveredillinois.gov, has been online. As of December, 61,111 Illinois residents had purchased coverage. More than 168,000 people in the state have signed up for Medicaid under an expansion of the program — which is also a key component of federal health care overhaul, known as Obamacare. Before the Patient Protection and Affordable Care Act went into effect, an estimated 1.7 million Illinois residents did not have health insurance.

While the pace of enrollments has improved in the last two months, according to the report from HHS, 115,000 in the state are eligible to buy insurance through the exchange but have yet to purchase coverage.   “These numbers show we are making good progress, but we still have much to accomplish in the next 47 days,” Jennifer Koehler, executive director of Get Covered Illinois, said in a prepared statement. “We are in the midst of a crucial push to enroll as many residents as possible for health coverage. We know that for many people, it requires multiple layers of exposure to information, including word-of-mouth and street-level contact with trusted community partners. We are working closely with hundreds of community partners across Illinois to ensure that everyone who needs health coverage obtains this quality, affordable insurance.”


Of those enrolled in insurance plans, 25 percent are between the ages of 18 to 34. This group, dubbed the young invincibles, are important to the program because their relatively low need for health care would offset the costs of insurer the older and those with preexisting conditions. The Henry J. Kaiser Family Foundation, a nonprofit that focuses on health policy, estimates that about 40 percent of those eligible to purchase insurance on the exchange nationwide fall into the young invincibles category. Get Covered Illinois has begun marketing the exchange with ads on satirical news website The Onion in an effort to target younger residents.

Obamacare deadline extended another day

By Jamey Dunn

While today is the official deadline to sign up for insurance coverage, which would kick in on January 1, under the Affordable Care Act, consumers have been given a little extra time.

President Barack Obama’s administration already delayed the cut off for purchasing insurance through online marketplaces, known as exchanges. The original deadline for coverage that starts with the new year was December 15. But after the federal exchange and many state exchanges experienced chronic technical problems, that deadline was bumped to December 23. However, the feds quietly pushed that deadline back as well. The federal exchange will now allow consumers to purchase policies, with coverage that begins on January 1, by midnight December 24.

The move was made without an official announcement, but the Washington Post broke the news earlier today. “Anticipating high demand and the fact that consumers may be enrolling from multiple time zones, we have taken steps to make sure that those who select a plan through tomorrow will get coverage for January 1,” Julie Bataille communications director for the U.S. Centers for Medicare and Medicaid Services, said in a written statement after word got out.

Those turning to the Illinois exchange, Getcoveredillinois.gov, to purchase insurance coverage will also get another day to buy plans that kick in on January 1. Mike Claffey, a health care spokesman for Gov. Pat Quinn, said Illinois residents will get the same options offered on the federal site because the state’s jointly run exchange links to the federal exchange. But he said Illinois officials are advising those in need of coverage not to wait until the last minute. “We are urging people not to wait and to go ahead and try to get it done today if you can.” Claffey said that technically, the deadline has been extended for people who have already started the process and created an account on the site. So he said at the very least, those interested in getting coverage by January 1 should start the process today. “If you haven’t started yet, it’s getting pretty late in the game.”

This is just one of many recent tweaks to the law, known as Obamacare. The president faced loud criticism from Republicans and some in his own party after insurance companies began canceling plans that did not meet the basic requirements set out in the law. Obama said on several occasion before the law went into effect that if Americans liked the insurance they had, they could keep it. But Obamacare requires insurance plans to offer a set base level of coverage in 10 “essential health” categories, such as prescription coverage, ambulatory care and preventative care.

Instead of upgrading their more bare-bones offerings, many companies opted to cancel the plans, resulting in millions of consumers receiving letters informing them that their policies would not be renewed. Last month, the Obama administration announced that these companies could renew such policies for one more year in states that would allow it. Illinois officials decided to let providers continue to offer such plans. Those who were covered by insurance providers that opted not to extend their plans could be eligible for a “temporary hardship” exemption, which would allow them the buy the catastrophic plan available through the exchange. That plan offers a low level of coverage for a cheaper price, but was originally only available to consumers under 30. To qualify for the exemption, consumers must be able to prove that their previous coverage was terminated.

They may also be eligible for federal subsides to help them purchase a plan that does meet the coverage requirements under the new law. People who pick a plan by tomorrow at midnight will be scheduled to have their coverage start in January. However, those who miss the cut off can still get insurance through the exchange. Open enrollment will continue through March 31.

Some Illinoisans may get to renew canceled insurance plans

By Jamey Dunn

After the rollout of Obamacare got off to a rocky start, some Illinoisans may be able to keep their insurance polices that do not meet the minimum requirements of the law.

The Illinois Department of Insurance announced today that it will allow insurance providers to renew for one year plans sold on the individual marketplace that do not meet the coverage levels required by the Patient Protection and Affordable Care Act. The new law requires that insurance plans offer a set base level of coverage in 10 “essential health” categories, such as prescription coverage, ambulatory care and preventative care.

President Barack Obama’s administration also announced today that it was extending one of the deadlines to purchase insurance through the online marketplace. Under the original plan, consumers who wanted their insurance to kick in by January 1 were required to make their purchase by December 15. The administration has moved that cutoff back to December 23. The change does not apply to other deadlines. The end of the enrollment period for 2014 is still set for March 2014, and those who are still uninsured at that point would potentially face penalty fees under the individual mandate.

Obama’s previous statements that Americans who like their insurance coverage could keep it after the law went into effect has come under harsh criticism after insurance companies began canceling polices that did not offer the basic coverage required. The Illinois Department of Insurance estimates that 185,340 Illinois residents have been notified that their coverage has been canceled.

In the face of the backlash, the administration has decided to allow companies to renew those plans. State insurance officials in each state must also approve the renewal of such plans. “DOI came to this decision based on the concerns raised by Illinois consumers and the guidance from the U.S. Department of Health and Human Services,” Andrew Boron, director of the Illinois Department of Insurance, said in a prepared statement. “Allowing companies to renew current plans gives consumers more time to evaluate their options and will provide a smoother transition into the health care coverage system envisioned by the ACA.

While Illinois, Florida, North Carolina, Ohio, Kentucky, Kansas, Oregon, South Carolina, Colorado, Hawaii and Texas have approved the president's  proposal, officials in some states, such as New York, said they do not plan to.

Insurance providers will be able to renew plans, but it is up to the companies to decide whether they will offer renewals. They will also be required to notify customers that they are waiving protections afforded by the new law. The companies must also let customers know they can shop for alternative plans on the online health insurance exchange and may be eligible for federal subsidies to purchase insurance that does meet the coverage requirements.

The online exchange has been plagued with technical problems, and many consumers have been unable to create accounts, let alone find out what plans would cost or what subsidies they might be able to get. Officials from the U.S. Department of Health and Human Services say they plan to have the website fully operational for most users by the end of this month.

Check out this Stateline story for a good Q&A on the policy change and a breakdown of how other states are handling it.

Senate votes to restore Medicaid dental benefits

By Jamey Dunn

The Illinois Senate voted today to restore dental care benefits that were eliminated under recent cuts to the state’s Medicaid program.

Lawmakers approved Medicaid changes in 2012 aimed at cutting up to $1.6 billion in growth from the program. However, those savings have yet to be fully realized, and the state faces a lawsuit from unions over the use of an out-of-state contractor to verify Medicaid eligibility.

One of the most controversial pieces of that legislation, dubbed the SMART Act, was the elimination of dental care for adults except for in emergencies. The change meant that adult Medicaid recipients cannot get a check up or a filling, and basically all the state will cover is pulling a tooth if it gets infected. Supporters of House Bill 1516, which would restore benefits to the same levels as before the 2012 changes, said the cut went too far. “In this particular instance, it is believed that we overacted. And as is the power of this legislative body when we make those egregious mistakes that impacted so negatively on so many of our constituents, I think it’s incumbent upon us to correct them,” said Chicago Democratic Sen. Donne Trotter, the sponsor of the bill. “Not to just stick with the first thought that this is the only way to skin that cat — to become solvent again. But also let’s do it in a human way. ... The elimination of the adult dental programs certainly was more than just skinning the cat. It was beheading the cat.”

But opponents said lawmakers acted responsibly when they voted to get an unsustainable program under control. “We stepped up and said we’re going to change the program, and yes, that means to some extent we had to take some benefits away,” said Mattoon Republican Sen. Dale Righter. He said that doing that was difficult but necessary because the state was unable to reimburse providers on time. “It’s the reality. We had to spend less money. That means you have to giver fewer things away. You had to reduce the size of the program and reduce the services that were being afforded. Now we come back and we say, 'Well, except for this, and except for this and except for this.'” He added, “We’re either going to control the Medicaid program, or we’re not going to control the Medicaid program.”

Chicago Democratic Sen. Heather Steans, who sponsored the SMART Act, said she wishes the cuts to dental care were never included in the bill. She said that they cost more in the long run because those who cannot get preventative care end up in the emergency room or needing an oral surgeon. “It clearly was a mistake,” she said today. “It may be a cut in the short term to our budget. Long term, it clearly rises costs.”

 Trotter said the Illinois Department of Health and Family Services, which administers Medicaid, has the money in its budget to cover the cost of reinstating the program, which would be about $17 million for the reminder of the current fiscal year. “They are not new dollars that we are coming up with since July 1. It’s dollars that are already in their budget.” HB 1516 gives the department the authority to shift funds to the program. “Can we actually afford not to do this?” Trotter asked. “By not restoring these benefits to the program, we are devastating and decimating the viability of the people that we are sent down here to help.” The measure also would have to be approved in the House to reach Gov. Pat Quinn’s desk.

Insurance marketplace goes online despite federal shutdown

By Jamey Dunn

After the federal government shut down at midnight in a battle over Obamacare, the online health insurance marketplaces that are a cornerstone of the law rolled out across the country today.

Federal Government Shutdown
Some Republicans in Congress had been pushing to defund the Patient Protection and Affordable Care as a condition for their votes to approve a federal budget. Last night House Republicans approved a one-year delay in the Affordable Care Act’s requirement that all Americans have health insurance. The Senate rejected it, and the House refused to take up an extension of the federal budget previously approved by the Senate.

With no budget in place, all but what has been deemed “essential services” of the federal government have shut down. National parks and monuments are closed. Research labs have stopped their work. Many regulatory bodies will only maintain a bare bones staff. For instance, only 5 percent of the staff at the Environmental Protection Agency will work through the shutdown.

Social Security and federal entitlement programs, such as Medicare will continue to pay benefits. Mail service will also continue. So will services deemed necessary for safety or national security, such as the work done by the Federal Aviation Administration. However, most federal employees who report to work today will not be paid as long as there is no budget in place. Notably, members of Congress will continue to receive their checks, though some have vowed to forgo pay until the government is running again. The U.S. Constitution has a provision similar to the Illinois Constitution that prohibits any change in lawmakers’ pay during their terms. The 27th Amendment was intended to keep federal lawmakers from voting to increase their pay, but it will also keep their $174,000 annual salaries coming during the shutdown. Gov. Pat Quinn is currently trying to challenge that notion in Illinois after he vetoed the money for lawmaker’s salaries. Quinn says they should not be paid until the approve changes to the states troubled pension system. But a judge ruled last week that the move violated the state Constitution. Quinn is appealing to the Illinois Supreme Court.

Illinois officials say the federal shutdown would not halt state services in the short term.  State employees who are paid with federal funds will face temporary layoffs as soon as tomorrow. The timing of the layoffs could vary across agencies because some may have enough cash on hand to keep employees working longer. According to Quinn’s office, the agencies that could see layoffs include the Departments of Labor, Veterans’ Affairs, Military Affairs, Illinois Emergency Management Agency, Office of Health Information Technology and the Department of Human Services’ Bureau of Disability Determination, which evaluates applicants for disability benefits. When the federal government last shut down in 1995, the state laid off 1,200 employees.

If the shutdown drags on, federally funded programs could be in danger. Some states are already looking to tap into rainy day funds if Congress does not pass a budget soon. But Illinois, which cannot pay its bills on time under normal conditions, does not have that option. The biggest immediate impact on states will likely be an economic one as thousands of their residents are laid off. About 800,000 federal workers nationwide will be laid off until a federal budget is approved. According to the Pew Charitable Trust’s news service, Stateline, Illinois has 45,801 civilian federal employees, but some of them will continue to work. Retired federal employees will continue to receive their benefits. “Unfortunately, the possible consequences to state economies of a federal shutdown or not increasing the national debt limit are severe. States are partners with the federal government in implementing most federal programs. A lack of certainty at the federal level from a shutdown therefore translates directly into uncertainty and instability at the state level,” said a letter that the National Governor’s Association sent to President Barack Obama and congressional leadership. “That uncertainty can lead to the suspension of programs and services, increased borrowing costs or even layoffs — all actions that will weaken our economies and potentially stall the national recovery.”

Affordable Care Act Questions and Answers
While the political battle that held up approval of a federal budget was essentially over a push to defund the new health care law, the implementation of Obamacare will continue largely unscathed by the shutdown. The Affordable Care Act falls into a category of mandatory spending along with other federal programs such as Medicare. This spending actually makes up the majority — 57 percent — of the federal budget.

Do I have to buy insurance right away? No. The exchange is open for business. Any coverage you buy now will not kick in until January 2014. But you must buy your insurance before December 15 to ensure that your coverage will begin in January. If you wait longer, your coverage would begin later. The open enrollment period for 2014 ends on March 31, 2014. After that date, you can only sign up if you have a life event, such as a marriage or career change.

What kind of insurance coverage is available on the exchange? The plans offer a base level of coverage for 10 service categories, including ambulatory care and prescriptions. The plans have a metal ranking, with bronze being the lowest cost plans. Under such bronze plans, consumers would likely pay lower premiums but would have more out-of-pocket costs, such as copayments. Under the higher-premium gold and platinum plans, patients would likely pay less out of pocket. The rates in Illinois will vary across the state.

Does my employer have to help pay for my insurance? Starting in 2015, businesses with more than 50 employees will be required to offer coverage to full-time employees or face penalty fines. Small businesses can opt to use the exchange to buy coverage for their employees starting today, but they are not required to.

I already have insurance. Will I have to buy a different kind? Most likely no, especially if you get your coverage through your employer. Those with bare bones plans or catastrophic plans would have to get more coverage to meet the insurance mandate that is part of the Affordable Care Act.

Can I keep seeing my doctor? Yes, if you do a little research. Some plans sold on the exchange will only cover care within the provider network for that plan. You should check to see if your doctor is in the provider network of a plan before you buy. You should be able to find provider information for each plan on the exchange’s website. Here is more info from the federal website. 

I smoke or chew tobacco. Do I have to pay more for coverage on the exchange? Yes. Tobacco users will pay higher premiums for insurance. For instance a 40-year-old smoker in Cook County will pay $44 more per month for a basic bronze plan. The law allows insurance companies to charge smokers twice as much, but states can opt to keep the rates lower. Insurance plans offered on the exchange are also required to cover programs to help smokers quit. Here is more info.

I’m young, healthy and broke. Do I have to buy insurance? If your parents have insurance and are willing to let you stay on their plan, you can until you turn 26. If you are younger than 30, you may be eligible for catastrophic plans offered through the exchange. You also may be eligible for insurance subsidies or Medicaid.

How do I find out if I am eligible for subsidies or Medicaid? If you make between 138 percent and 400 percent of the federal poverty level — $15,856 to $45,960 for individuals — you will be eligible for federal subsidies that will cut your monthly premiums. If you make less than 138 percent of the poverty level, you could be eligible for Medicaid. You can use this subsidy calculator from the Henry J. Kaiser Family Foundation to assess your personal situation.

What happens if I am not covered? If you do not get coverage in 2014, you will likely face a penalty on your tax bill in 2015. The fee would be 1 percent of your household income, or $95 a person, whichever is more. Fees for having uninsured children would be $47.50 per child. That penalty is capped at $285. If insurance premiums are more than 8 percent of your household income, or you do not make enough to file federal income taxes, you are exempted from the individual insurance mandate. There are some other exemptions to the individual mandate, including a religious exemption. For more info on exemptions to the mandate, see this story in the Washington Post. 

How do I access the exchange? Go to www.healthcare.gov click the “apply now” button and then choose Illinois as your state. You can also go directly to the Illinois exchange, called Get Covered Illinois. Here is a checklist of the personal information you will need to purchase a plan. Note: As of this morning the federal site has a very slow load time, so you may be waiting a while. When I attempted to access the federal site, the system was down. It is likely overloaded by curious browsers and reporters like me trying to check it out on the first day. You may want to give it a little time before you try to use it to buy insurance. Or try out the direct state site. In the meantime, you can check out some of the information provided in this blog to do a little research.

I don’t have regular access to the Internet. How do I get signed up? I do have Internet access, but I find the marketplace confusing and could use a little help. Where can I find it? There is help available both in person and over the phone. You can find the numbers for a federal toll-free help line here. There are also local groups working to help people navigate the marketplace and get insurance. You can find one of these groups in your area by entering your ZIP code here. 

Here is more info from the state of Illinois, including a short video that explains some of the key components of the law.

Illinois' Obamacare rates to be lower than expected

By Jamey Dunn

A week before consumers can begin to purchase insurance through an online exchange, Gov. Pat Quinn’s administration released some information on the rates they will pay.

The rates are 25 percent lower than previous estimates from the U.S. Department of Health and Human Services and generally equal to or less than rates released by other states. “All health insurance plans offered through the Illinois Health Insurance Marketplace are designed to meet the needs of individuals, families and small business owners across the state,” Quinn said in a prepared statement. “I am happy to say that starting in October, Illinois residents will be able to select a plan that is affordable and meets the health care needs of their families. The number and quality of affordable health plans that will be offered through the Illinois Marketplace is impressive.”

The state’s online insurance marketplace is scheduled to become active on October 1. Residents and small business have until December 15 to purchase coverage that will kick in on January 1. The plans offer a base level of coverage for 10 service categories, including ambulatory care and prescriptions. The plans that will be offered are then giving a metal ranking, with bronze being the lowest cost plans. Under such bronze plans, consumers would likely pay lower premiums but would have more out-of-pocket costs, such as copayments. Under the higher-premium gold and platinum plans, patients would likely pay less out of pocket. The rates in Illinois will vary across the state. A 25-year-old non-smoker in Peoria would pay $128 a month for the basic bronze plan. That some plan would cost $120 in Chicago, $109 in Rock Island, $147 in Springfield and $173 in Carbondale. A Quinn spokesman said that population density plays a role in the rates. The same coverage would cost $146 in Denver and $167 in Seattle. Costs go up with age, and tobacco users will pay more. A 55-year-old smoker living in Carbondale that springs for silver level coverage could pay up to $652.

Americans who make between 138 percent and 400 percent of the federal poverty level — $15,856 to $45,960 for individuals — will be eligible for federal subsidies that will cut their monthly premiums. Illinois residents who fall below that income level for subsides will be eligible for Medicaid. Those residents can begin to enroll in Medicaid on October 1, and coverage will begin on January 1. “Today’s announcement by the State of Illinois confirms what many have been saying for years: Obamacare will lower health care costs for millions of families,” U.S. Sen. Dick Durbin said in a prepared statement. “Beginning on October 1, families across the state will be able to pick a health care plan that suits their needs. Dozens of plans will be available. Low-income and working families will be eligible for subsidies to help them cover the costs.” Durbin called on Illinois House Republicans to oppose efforts by their party to defund the Affordable Care Act.

While the rates are lower than expected, opponents argue that if consumers want less costly plans with more limited benefits than what will be offered in the exchange, they should be able to buy them. “The level of choice for the patient and for the consumer is really limited,” said Naomi Lopez-Bauman, director of health policy for the Illinois Policy Institute. She said that young people, who tend to need less medical care, especially should be able to stick with bare bones coverage that can currently cost them about $60 a month. She said that instead of using a “clunky” system such as Obamacare, the government could encourage citizens to purchase coverage by offering a tax subsidy. “You have a young man who could be spending $60 because that’s what he wants and that’s very affordable to him,” said Lopez-Bauman. “Why not just give him the money to go out and pick what best suits him? If you truly want to provide access and affordable health care for Americans, there are much better ways than what is being done right now.” People younger than 30 would still have the option of buying a so-called catastrophic plan under Obamacare, but Illinois has not released rate information on such plans.

Jim Duffett, executive director of the Campaign for Better Health Care, said that the basic plan offered in the exchange has coverage that people truly need, such as preventative care. “I think the essential health benefit package that’s out there isn’t whistles and bells.” He said that while there are few who will need care in all 10 categories, most people would need many of the services that fall under required coverage areas at some point in their lives. “Will a 32-year-old male that’s uninsured, will he need maternity care? No. Will he need something else? Yes.” Duffett’s group is one of many organizations being paid to get the word out about the insurance exchange and help consumers use it when it comes online.

Duffett added that a large portion of young people would be eligible for subsidies that would help to drive down their insurance costs. He said most young adults would probably find that they are paying less for their coverage than they pay for their current cell phone plan. He said that while there are still more details that consumers will need to know when they make their purchases on the exchange, the rates released today are far from the “rate shock” predicted by opponents a few months ago. “It definitely does show that the folks that will be eligible for the marketplace are going to be able to select a plan that is affordable and is going to meet their needs and their family’s needs.”

Senate approves fee increase for doctors

By Jamey Dunn

Illinois doctors would pay more for their licenses under legislation passed in the state Senate today. Supporters of the increase say the entity responsible for licensing and disciplining doctors in the state is dangerously underfunded.

Under Senate Bill 622, the license fees paid by doctors would increase from $300 every three years to $700 every three years. The last time the fee was increased was in 1987. According to the Illinois Department of Financial and Professional Regulation, the fund has been operating with a structural deficit in recent years. The department has cut staff responsible for administering licenses from 26 employees down to eight. “This measure will provide the Illinois Department of Financial and Professional Regulation medical disciplinary unit the necessary funding that it needs to be able to provide the consumers of the state of Illinois the protection to help maintain the integrity of the medical profession and also to allow the agency to process licensing as fast as we can.” James Tierney of the Illinois State Medical Society said that doctors are open to a fee increase to $500 every three years. But because part of the of the fund depletion can be traced to millions in fund sweeps under previous budgets, he said the money that was swept should be put back, and doctors should not have to pay for it. “The medical profession stands ready to pay a fee that is sufficient to fund the licensure and discipline process,” he said. “In our view, it is the sweeps that have caused the current depletion in the fund that demands ... immediate attention.”  For more on the issue and a broader look at fund sweeps, see Illinois Issues April 2012.

SB 622 calls for a $6 million transfer from the Local Government Tax Fund to the Illinois State Medical Disciplinary Fund, which is running low. Starting in 2014, the money would be paid back out of the licensing fund. When all the money is replaced in 2018, the fee would go down to $500 every three years. Senate President John Cullerton said that the transfer from the local government fund is not expected to cause a delay in revenue for municipalities.

“There’s a real crisis in the state of Illinois,” said A.J. Wilhelmi, senior vice president of government affairs with the Illinois Hospital Association. He said that medical students across the country must decide by Wednesday where they will go to complete their residency training. He said some are holding off on  choosing Illinois because they are worried about the state’s ability to license them.

Cullerton said he understands why the Medical Society is frustrated over the fund sweeps, but he said that their fund was not the only one hit under past budgets. “So we’re talking about ... a $200 difference for a three-year period, which is a relatively small amount of money each year, less than $70. That’s what we’re fighting over. It’s the principle. I get it.” But he said something must be done to ensure that the IDFPR can license doctors and take disciplinary action when there is wrongdoing. He called the bill “a reasonable compromise.”

The House is considering House Bill 193, which would increase fees to $750 for three years. A House committee approved the plan last week, but Cullerton said the issue cannot wait. “I have no idea what’s going to happen over in the House, but in the meantime, we can’t just sit by here in the Senate and not do anything.”

Rep. Barbara Flynn Currie, sponsor of HB 193, said she is willing to negotiate, but she is concerned that the increases in Cullerton’s bill may not be enough to ensure that the IDFPR can properly license and monitor doctors. “I think it’s going to leave the department without the ability to do the job we have asked it to do.”

The Senate today also quietly approved HB 156, which allows Gov. Pat Quinn to present his budget address on March 6 instead of February 20, when the Senate will not be in session. The legislation passed with no floor debate and only two votes in opposition. The House passed the bill last week, and Quinn is expected to sign it.

House panel approves new spending for current fiscal year

Jamey Dunn

Layoffs at the Department of Children and Family Services and cuts to mental health providers would be avoided if a measure approved by a House committee today makes it to the governor’s desk.

House Bill 190 would spend about $53 million in general revenue funds during the current fiscal year. The money would come from Gov. Pat Quinn’s budget vetoes and revenues that exceeded estimates used to plan the budget lawmakers passed in the spring. “There may be as much as $58 million [in additional funds],” said Chicago Democratic Rep. Barbara Flynn Currie, who sponsors the bill.

The proposal contains $25 million for the Department of Children and Family Services. The money would help take the sting out of a $90 million cut that lawmakers approved in the spring and would allow DCFS to avoid laying off thousands of workers. When Gov. Pat Quinn vetoed money for correctional facilities that his administration has since closed or is in the process of closing, he called on lawmakers to redirect the money into DCFS. Quinn supports HB 190. The measure also contains $12 million for mental health care providers. Legislators who worked on the human services budget in the spring say they intended for providers to get the money, but the funds were not available because of a budgeting error. “We’re strongly committed to this appropriation amount,” said Rep. Sara Feigenholtz, the former chair of the human services budgeting committee in the House.

HB 190 also includes $675 million for capital construction projects. Illinois Department of Transportation Secretary Ann Schneider said the state got more federal money than expected, and revenues were higher than IDOT projected when planning its budget. “We normally put that financial plan for our highway program together about 18 months in advance, and so revenues in Fiscal Year '12 came in higher than what we programmed on.” Rep. Louis Arroyo, chairman of the public safety budgeting committee in the House, said he was unhappy that money would be pulled from the road fund. “When we sit down in my committee, nobody wants to touch the road fund, nobody wants to talk about the road fund. It’s like a sacred cow. ... So now you’re saying there’s extra money there. I didn’t know there was extra money there. There a lot of avenues that I would like to spend that road fund money on or move it over to different avenues rather than take it for this project.” He said he was uncertain about the “last minute ... funding resources that are popping up somewhere” to support the supplemental appropriation.

The measure also contains $620 million for the group health program for state employees. Currie said that in the spring, lawmakers had only appropriated for half of the cost of the program because they hoped Quinn’s administration could achieve savings through negotiations with union leaders over a new contract for state workers. But an agreement has not been reached on a contract, and Currie said it is time to put the rest of the money into health care coverage so payments to providers are not further delayed. She said that health care providers are currently waiting up to a year to be paid for treating state workers. “That really is about half of what we expected to spend. We held it back because we were hopeful that there might be savings in the group health program. They haven’t materialized. We think it’s important to go ahead and pay the bill.”

 

Advocates concerned about lack of direction from feds on health care reform

By Jamey Dunn

Health care advocates are generally pleased with the benchmark benefits for individual and small group health plans that Gov. Pat Quinn’s administration chose to comply with the Affordable Care and Patient Protection Act. However, they worry about the lack of details coming from the federal government on how states should carry out those and other changes that came with federal health care reform.

The United States Department of Health and Human Services (HHS) gave states the task of choosing the basic level of benefits that plans for individuals and many small businesses will offer under the new law. “HHS decided to punt the ball to the states at least for 2014 and 2015,” said Lydia Mitts, a health policy analyst for Families USA, a health consumer advocate group based in Washington, D.C. In 2016, the federal government plans to revisit the benchmarks set by states. “But for now, it’s the states’ responsibility,” Mitts said. States picked existing plans to base the so-called essential benefits on.

Illinois had the option to choose among existing plans for federal and state workers, as well as several private options. Quinn’s advisory council opted for the Blue Cross Blue Shield's Blue Advantage plan. The council focused on finding a plan that included all of the state’s numerous insurance mandates. The one they chose does cover them all, but if they had picked one that did not, the state would have had to pay for any mandates that weren't included. Members also tried to find a balance between benefits and price. “One the big issues for the work group [was] balancing the cost of the coverage with the actual comprehensiveness of the care,” said Coleen Burns, special counsel for health policy for the Illinois Department of Insurance.

The plan will set the level of care covered in 10 benefits categories, such as emergency services and prescription drugs. Small group insurance providers will not have to offer plans with identical benefits to the Blue Cross Blue Shield plan, but they will have to offer benefits under those 10 categories that are equal to the benefits offered in the benchmark plan. “It will set a minimum that consumers will be guaranteed,” Mitts said.

But deciding which benefits are equal to those offered in the benchmark plan is a complicated task. Advocates say they need to be vigilant to ensure that other plans offer truly equal benefits. Burns said that the Department of Insurance will provide oversight and the federal government will provide actuarial analysis to ensure that benefits offered live up to the minimum requirements.

HHS still has to approve Illinois' choice of the Blue Cross Blue Shield plan. The department will accept  public comments, and Burns said HHS has not yet issued a deadline for when it will sign off on states’ choices. HHS is still working on many of the regulations for the plan, as well as on other areas of the Affordable Care Act, which states must implement by 2014. The uncertainty leaves many of those working to put the law into action on the state level unable to answer key questions until guidance comes down from the federal government. It also makes many advocates nervous.

“They didn’t really outline the clear chain of command and accountability,” Mitts said. “HHS is in the process of working on proposed regulation for this. Things might slip through the cracks, and people might find themselves in plans with coverage that doesn’t really meet their needs.”

Sara Moscato Howe, chief executive officer of the Illinois Alcoholism and Drug Dependence Association, agreed that things are uncertain. “Nothing is very clear in terms of how comprehensive or how robust the mental health or substance abuse coverage is.” She said that definitions of basic services, such as residential care for addiction or mental illness, differ across different plans, which could result in disparities in benefits. “Key definitions and terms need to be the same across the board.”

Brigid Leahy, director of legislative affairs for Illinois Planned Parenthood, said many advocates would have preferred the option to build a benchmark from the ground up instead of choosing from existing plans, but that wasn’t an alternative. “We feel given the parameters that were set under the Affordable Care Act ... given what we had to choose from, we were satisfied with the choice.”

Burns said most consumers who have small group or individual plans probably won’t notice much difference in their coverage “Most of the plans in the small group market covered all the 10 essential benefits. They just covered them at different levels,” she said. “It’ s unlikely that they are going to see a great difference in their benefits.” However, she noted that there are plans that do not cover some of the essential benefits, such as maternity care, and in 2014 they will be required to.

State council considers required insurance benefits

By Jamey Dunn 

Illinois officials are weighing choices that could determine the future of the insurance market in the state for the near future.

As part of the Affordable Care and Patient Protection Act, Gov. Pat Quinn’s Health Care Reform Implementation Council is working to determine a benchmark for benefits that insurance companies must offer to individuals and small businesses in Illinois. “The benchmark will have an impact on insurance that’s sold both on and off the [online insurance] exchange,” Coleen Burns, special council for health policy for the Illinois Department of Insurance, said at a meeting of the council today.

The council will recommend one plan that will set the standard for benefits offered in 10 service categories, such as prescription drugs, maternity care and laboratory services. These basic required offerings are known as essential health benefits.

The council can choose between several existing plans, such as the three largest state employee health plans or the three largest group plans in the state. Once the council picks one plan to use as a model, other insurers must offer benefits under the 10 categories that are equal to the value of benefits offered in the plan. Illinois must pick a plan as is and cannot add on or subtract benefits. The standards set by the council will kick in in 2014 and last until 2016, when the federal government plans to reassess the required essential benefits.

 Burns said the choice will set a floor for required benefits, but insurance companies can offer more generous plans. “A[n insurance] carrier is at liberty to sell a bronze plan, a silver plan and a platinum plan, but all three plans must meet the benchmark.”

The council is taking public comment and suggestions through September 19, and Quinn must make a recommendation to the federal government by September 30. If the state does not choose a benchmark plan, the feds will choose one for it.

Council members have to weigh several areas of interest when considering what essential benefit requirement to recommend. Members of the committee said they hope to ensure that there are strong benefit levels for mental health and substance abuse treatment, which are two areas they say are often inadequately covered by insurance. “It truly signals that there is greater acceptance and understanding that the treatment of mental health disorders and substance abuse must be a priority,” said Lorrie Rickman Jones, director of the Department of Human Services' Division of Mental Health.

Russell Welcherd from Quincy asked that the council pay close attention to the benefits related to treating chronic disease. Welcherd has a genetic disorder that causes emphysema. He receives weekly treatments for his illness. “If a health insurance policy that discourages the proper treatment is imposed, people like me will ultimately suffer.” Welcherd said that without his treatment he would have to make frequent emergency room visits and be placed on oxygen therapy.

Larry Barry, president of the Illinois life Insurance Council, warned Quinn's council members that requiring plans to have overly generous benefits could make the insurance too pricey for many individuals and small businesses. “Now you’ve got a wonderful product, but it’s one that no one can afford.” He also asked state officials to make their decisions in a timely manner and let insurers know what is expected of them, so they can change their offerings accordingly. “We, as the sellers of this product, aren’t going to be able to wait until the last minute.”

For more on the state’s implementation of the Affordable Care Act, see the current Illinois Issues.

To submit a comment to the implementation council, go to http://www2.illinois.gov/gov/healthcarereform/Pages/default.aspx

More children living in poverty in Illinois and nationwide

By Jamey Dunn

While the number of children living in poverty in Illinois has increased in recent years, the state saw improvements in education and health care, according to a new study that seeks to measure the quality of life of children across the country.

The 2012 KIDS COUNT Data Book from the Annie E. Casey Foundation looked at four categories: health, education, economic well-being and family and community factors. Overall, Illinois ranked 21st out of 50 states, which is an improvement over the state's 27th ranking in 2011. According to the study, Illinois generally followed national trends, which showed improvement in some areas of education and health while economic security and positive factors at home and in the community slipped. According to the study, the number of children living in poverty in America has increased from 12.2 million in 2000 to more than 15.7 million in 2010. “Unlike the domains of education and health, where children are benefiting from long-term progress overall, the economic well-being of children and families has plummeted because of the recession,” the report said.

Of the more than 15.7 million kids living in poverty in 2010, 600,000 were in Illinois, and the state ranked 27th in the category for economic well-being. In 2010, 19 percent of Illinois children were living in poverty, this is an increase from 16 percent in 2005 but below the national average for 2010, which is 22 percent. Job security for families also appeared to be slipping in the state, with 32 percent of children living with parents who lacked job security. That has increased from 26 percent in 2005.

Illinois ranked fourth among the states in health insurance coverage for children in 2010. Only 4 percent of children in the state went without coverage, compared with 8 percent nationally. However, that still meant that 140,000 Illinois children were without health insurance in 2010. Illinois ranked 14th in overall child health and has improved since 2005 in all health related areas measured by the study.

But Illinois child advocates worry that recent cuts to the Medicaid program may cause a backslide in the state’s progress. Larry Joseph, director of the Fiscal Policy Center at Voices for Illinois Children, said that none of the Medicaid changes would directly effect children's eligibility on a "broad scale." However, he said there is concern that new focus on verifying eligibility for the program through information contained in databases could lead to children losing coverage when they are actually still eligible for it. “One of the concerns that we have is that in any database there’s a certain error rate. So how this is implemented is going to be very important. We don’t want kids—or anyone else for that matter—to be removed from Medicaid enrollment because there was a data error somewhere. So it’s important that there be safeguards,” he said. “Let’s say there’s a 2 percent error rate, well that could be thousands of kids who are wrongly removed from the rolls.” He also said that new limits on prescription drugs may make it difficult for some children to get needed medication. “The kids that have multiple medications are usually kids with special health care needs.” 

According to the report, Illinois also made some gains in education. Fewer children missed out on preschool. Between 2005 and 2007, half of Illinois children at preschool age were not in school. Between 2008 and 2010, 48 percent of Illinois kids at preschool age, or 153,000, did not attend preschool. Nationally, 53 percent of children did not go to preschool over the same time period. However, Joseph said that if the study had looked at more recent data, which reflects cuts to state funded preschool, Illinois would have received a lower ranking. "Illinois had become a leader in early childhood education,” said Gaylord Gieseke, president of Voices for Illinois Children. “It’s unfortunate that progress has been eroding, especially since we know that children who receive support early have a greater chance of success in school, at work, and throughout their lives. Investing in kids makes sense from both social and fiscal perspectives."

While some areas of education, such as reading and math proficiency, showed improvement in the report, the number of Illinois kids who do not graduate from high school on time is up by 10 percent from the 2005 to 2006 school year.

Illinois was ranked 28th on family and community factors. In 2010, 989,000 children were living in single-parent households, which is a 10 percent increase from 2005. The number of children living in areas that have high poverty rates was 304,000, an increase of 25 percent since 2000. “We know that children who grow up in concentrated poverty, regardless of their family's income, are more likely to experience harmful levels of stress, more likely to struggle in school, and less likely to achieve economic success as adults,” Gieseke said. 

Patrick McCarthy, president and chief operating officer of the Annie E. Casey Foundation, described in the report what he thinks kids need to succeed. “We know what it takes for children to thrive and to become successful adults. We have reams of research and data identifying the best predictors of success: getting a healthy start at birth and maintaining healthy development in the early years; being raised by two married parents; having adequate family income; doing well in school, graduating high school and completing post-secondary education or training; avoiding teen pregnancy and substance abuse; staying out of trouble; and becoming connected to work and opportunity.”

He also warned that many children are not getting those resources. “Millions of American children are growing up with risk factors that predict that they will not succeed in the world they will inherit. And if they don’t succeed, this country will become increasingly less able to compete and thrive in the global economy, thereby affecting the standard of living and the strength of our nation for all of us.”

Medicaid reform seeks to put to restthe debate over hospital charity care

By Jamey Dunn

Changes to the state’s Medicaid program, which Gov. Pat Quinn recently signed into law, were heralded as historic reform and are expected to shave billions off of the state’s liability under the program. But the sweeping plan also attempts to resolve some longstanding disputes over health care policy in Illinois. This is part one in a two-part series that looks at those components of the new law.

The reform package, which contained five separate bills, will make a number of changes. It will reduce some services offered through Medicaid, increase taxes on cigarettes and other tobacco products and give coverage to thousands of uninsured residents of Cook County.

The plan also aims to resolve the longstanding issue of what hospitals must do to be considered charitable organizations eligible for local property tax exemptions. 

Under the new law, hospitals must provide charity care and other services that are equal to the tax liability that they would have incurred without the exemption. If they do not meet the threshold, they can make donations to other charitable health care providers. For-profit hospitals will also be able to earn tax credits for charitable care that they provide.

In the past, hospitals have argued that there were no clear standards for what they must do to receive the exemption. A 2010 Illinois Supreme Court ruling found that Provena Covenant Medical Center in Champaign County did not qualify for the tax exemption. The court said the hospital was not offering truly charitable care but instead, it was writing off bad debt, much like a for-profit hospital would. The ruling went on to spell out parameters for measuring what is or isn’t charity care, but it did not set a specific threshold that hospitals must meet.

Following the ruling, the Illinois Department of Revenue pulled exempt status from Northwestern Memorial Hospital's Prentice Women's Hospital in Chicago, Edward Hospital in Naperville and Decatur Memorial Hospital. The department said it used characteristics defined in the Provena decision to determine the later rulings.

However, Democratic Supreme Court Justices Anne Burke and Charles Freeman disagreed with part of the ruling, saying the court does not have the power to set the standards for defining charity. “This can only cause confusion, speculation and uncertainty for everyone: institutions, taxing bodies and the courts. Because the [Illinois Supreme Court] imposes such a standard, without the authority to do so, I cannot agree with it,” Burke wrote in her dissent.

After the Provena decision, lawmakers voiced concerns that such uncertainty would encourage cash-strapped municipalities to target nonprofit hospitals in search of revenue. “I have a concern now that we are going to see a rush of local governments trying to go after other health facilities. Thinking that this is a way to get some quick revenue from property taxes … the government may get a few extra dollars in property taxes, but then government is going to have to start providing all those services that those health care facilities used to provide,” Rockford Republican Sen. Dave Syverson, the minority spokesperson of the Senate Public Health Committee, said after the ruling.

“Some legislative response is probably going to have to be made to protect those health care facilities,” he added.

Quinn put a hold on any new rulings from the Department of Revenue and tried to work out a separate deal with hospitals. But the March 1, 2012, deadline he set for reaching an agreement came and went with no results.
Instead, the solution came in May at the end of the spring legislative session, slipping somewhat under the radar as just one component of a proposal to reduce the state’s Medicaid liability by $2.7 billion.

While the new law could mark the end of the debate, some say there are likely to be few changes in the way that hospitals operate as a result. “I’m not sure, to tell you the truth, that a whole lot will change,” said John Colombo, a tax law professor at the University of Illinois. “My sense is that this isn’t going to affect the behavior of hospitals in any major way.” Colombo, whose research primarily focuses on tax-exempt organizations, said the standard is set up in a way that hospitals will likely be able to meet it with what they are already doing. “Even those hospitals [that don’t reach the threshold] at the end of the day, all they have to do is total up what they were missing the mark by and then cut a check."

He added, “Think about it, right, this bill was favored and pushed by the Illinois Hospital Association.”

Previously Colombo said that hospitals argued that any community outreach was charitable. But he said that would change under the law. “You don’t get to count every single dollar that you put into health fairs.” He said that the new law does make an important distinction. It requires hospitals to show that whatever they classify as charitable care for the exemption has to be targeted at those who cannot afford health care. “At least the bill seems to concede that when it comes to assessing charitableness of hospitals, it’s all about services that help the poor. It’s all about services that help some underserved population.”

Colombo said his concern with setting a black and white threshold for qualifying for the exemption may discourage hospitals from going beyond what is required of them and could prompt some to scale back on charity care. “Five years from now, are we going to find that all hospitals have magically converged on this single number?” Colombo asked. “When there is a numerical target, pressures will combine to structure operations so that you hit the target, maybe exceed it just a little bit so you have some cushion. But there’s no real reason to do anything but that target. If you hit your target, why would you do anything more?”

He advocates instead weighing what charity-care hospitals provide that for-profit hospitals are less willing to offer, such as services that are unlikely to turn a profit. He lists trauma centers and emergency psychiatric care as examples. “Why is it that the Chicago Symphony orchestra is a tax-exempt charitable organization? Because it can’t exist in the private market. Same with the Field Museum. Same with the Shedd Aquarium,” Colombo said. “What is it that nonprofit hospitals do, if anything, that for-profit hospitals do not do? That ought to be our inquiry.”

Danny Chun, vice president of corporate communications and marketing for the Illinois Hospital Association, said the association did not lobby specifically for the standards that define charity care in Senate Bill 3261. “I don’t want people to be left with the impression that we proposed it, that we supported it and that we pushed for it.” He said his organization backed the plan as a whole. While he said there were some pieces that the group liked and some it did not, Medicaid reform would not have happened without every component that was passed. “In order for all those bills to move, they had to be part of a package.” Chun said the Medicaid reform package should really be viewed as an overhaul of health care in the state. “At the end of the day ... those five bills were all health-care related. ... Several of the measures had nothing to do with Medicaid in a direct way.”

However, Chun said the hospital association is “very pleased” that a specific threshold that is “clear and transparent to everyone” has been set for hospitals seeking the tax exemption. “It’s not a free pass because it does hold hospitals accountable. It sets very clear parameters of what hospitals need to do.”

Sen. Heather Steans, who worked on the Medicaid reform package, agreed that the tax exemption issue may not have been resolved without being rolled into a larger proposal. “That has been out there languishing for decades.”

She said it was easier to get agreements on the charity care issue and Medicaid reform if providers could consider them all at once and have an idea of what the lay of the land would be going forward. “So everything is known, and you know how you can and can’t survive. You sort of have to solve it all at once.”

Indeed, Fitch Rating agency praised the provision for creating a consistent standard. "Fitch believes the legislation provides long-overdue clarity as to what constitutes charity care and should not negatively affect the Illinois hospitals we rate,” said a written statement from the agency.

Steans said the give and take of negotiation allowed controversial topics to be put on the table. Hospitals have resisted attaching a dollar amount of charity that must be given to get the exemption. Attorney General Lisa Madigan pushed without success in 2006 to require that hospitals spend 8 percent of revenue on charity for the exemption. “It’s really hard sometimes to win stuff against these lobbying groups, unfortunately,” Steans, a Chicago Democrat, said. “It’s one or the other on this one. It’s not all good, not all bad.”

"The Medicaid legislation was the result of hard work and negotiations between our administration, members of the General Assembly and various stakeholders. Bills on the same topic are frequently packaged by the legislature," said a written statement from Quinn's office. "It was decided that introducing a package of bills would help ensure that these important reforms reached the Governor’s desk. Decisions such as including charity care were made after discussions and work with all parties, including the Illinois Hospital Association. It is not unusual to have healthcare bills considered alongside one another."

Madigan also supports the charity-care provisions in the new law. “Providing access to quality health care has been a consistent priority for Attorney General Madigan. We are pleased that Illinois will now have a standard by which hospitals must provide free health care for people who cannot afford it. Our office engaged in discussions throughout the spring session with our primary goal being to ensure that people and families in need can access health care when they need it the most,” said a prepared statement from her office.

Colombo agreed. “It’s messy; it’s sausage. This is just the way the process works. ... You go through legislative compromise, and you end up with a product that often doesn’t satisfy everybody.” Colombo said it is possible that the Illinois Supreme Court might take issue with some of the provisions in the bill, such as allowing hospitals to count as charity care the shortfalls between Medicaid reimbursements and the actual cost of services they provide —a direct contradiction to the Supreme Court ruing. “The opinion says Medicaid shortfalls don’t count. The bill says they do. .. .It’s going to be interesting if it ever ends up before the Illinois Supreme Court.” However, he said it is unlikely that the law would end up before the court. “Maybe it could get challenged by a local school district or somebody who has a stake in local tax revenue.”

Overall, Colombo acknowledged that the standards for charity care and the threshold for the exemption are likely a “win” for the hospitals. But he said that not even the standards set in the Provena decision were necessarily here to stay. “There would have been more litigation. We wouldn’t have had this settled for years. ... It’s not a slam dunk that the Provena version of this would have survived another round of litigation."

Chun said that as federal health care reform goes into effect, the number of so-called charity care patients, who cannot afford care and are not covered by insurance or a safety net program, would shrink significantly. Many will obtain federally subsidized insurance or be added to the Medicaid program. He said that hospitals would need flexibility in what can be dubbed as charitable. “There are all kinds of other things that hospitals do to serve the uninsured and the under-insured and low-income that are not strictly classified as charity care.” Chun points to community clinics, preventative care and screening and vaccination programs offered by hospitals. And yes, even participation in the Medicaid program. “Hospitals have stepped up by partnering with the state to help support the Medicaid program.” Which means “low rates, low pay and slow pay.” He said some hospitals are waiting up to six months for reimbursements. “That’s why you can’t just look at charity care anymore. ... The numbers are going to change. The needs are going to change. How we serve people and where we serve them is going to change,” he said. “Looking at health care through an old snapshot and old framework pre-[federal] health reform just doesn’t make sense these days.”

Colombo also said that there is a need to modernize thinking about hospitals and charity care. But he is looking a little further back in time.

 “The real issue is, are hospitals really charities at all?” he said. “Hospitals got labeled as charitable in the 1800s and early 1900s, when hospitals were places where poor people went to die. ... The thing that we call a hospital today did not exist.” He added: “Maybe we need to let go of the past, and we need to just recognize that an industry that is labeled as charitable because of what they did 100 years ago isn’t charitable anymore. They’re running a business.”

 Colombo argued that it does not make sense to try to tackle health care problems with tax policy. “When we have poor people who are starving, do we say to the local Kroger’s, ‘You could be tax exempt if you gave food to poor people?’ We don’t do that. We have food stamps,” he said. “Why don’t we just treat [hospitals] like grocery stores? ‘You sell your product, and we will deal with access to your product for the poor through other government programs.”

U.S. Supreme Court ruling on health care law lets states opt out of Medicaid expansion

By Jamey Dunn

The U.S. Supreme Court upheld most of the key pieces of the federal Patient Protection and Affordable Care Act but left the door open for states to opt out of the law's massive expansion of the Medicaid program.

 The court upheld the provision known as the personal mandate — geared at getting everyone in the country who can afford health insurance to buy it. The ruling said the mandate is constitutionally protected because the penalty for not complying with the law is actually a tax. In its main argument for the law, the Obama administration had put forth that the law is protected under the Commerce Clause of the U.S. Constitution, but the court rejected that contention.


The court ruled that the government does not have the power to force citizens to buy health insurance under the Commerce Clause. President Barack Obama’s administration had argued that the mandate fell under the federal government’s power to regulate interstate commerce. The court found that giving Congress the power to regulate inactivity — in this case not purchasing insurance — was a step too far. “The individual mandate, however, does not regulate existing commercial activity. It instead compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce. Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority. Every day, individuals do not do an infinite number of things. In some cases they decide not to do something; in others they simply fail to do it. Allowing Congress to justify federal regulation by pointing to the effect of inaction on commerce would bring countless decisions an individual could potentially make within the scope of federal regulation, and — under the government’s theory — empower Congress to make those decisions for him,” wrote U.S. Supreme Court Chief Justice Roberts in the majority opinion.

Roberts wrote that just because the administration argued that buying insurance would have a positive outcome on commerce by potentially decreasing costs for everyone in the marketplace doesn’t give Congress the power to compel people to do it. “People, for reasons of their own, often fail to do things that would be good for them or good for society. Those failures — joined with the similar failures of others — can readily have a substantial effect on interstate commerce. Under the government’s logic, that authorizes Congress to use its commerce power to compel citizens to act as the government would have them act.”

However, the ruling said that the law presents uninsured American a choice: Get health insurance or pay a tax. “Under that theory, the mandate is not a legal command to buy insurance. Rather, it makes going without insurance just another thing the government taxes, like buying gasoline or earning income. And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’ constitutional power to tax.” Roberts conceded that the tax is intended to compel action from consumers, but he wrote that such a move has been a component of taxation throughout the nation’s history. “None of this is to say that the payment is not intended to affect individual conduct. Although the payment will raise considerable revenue, it is plainly designed to expand health insurance coverage. But taxes that seek to influence conduct are nothing new. Some of our earliest federal taxes sought to deter the purchase of imported manufactured goods in order to foster the growth of domestic industry.”

The ruling limited the federal government’s power to push states to accept the large Medicaid expansion that is part of the law. Under the Affordable Care Act, states are required to expand Medicaid coverage to all people under age 65 with incomes below 133 percent of the federal poverty line in 2014. Currently, states are only required to cover certain populations, such as children, parents, the elderly and the disabled. The federal government would cover 100 percent of expansion costs for two years and then gradually step down some of its support.

As written, the law required that states take on this expansion or lose all federal matching funds. The court struck down that provision, saying it offered states a false choice. “As for the Medicaid expansion, that portion of the Affordable Care Act violates the Constitution by threatening existing Medicaid funding. Congress has no authority to order the states to regulate according to its instructions. Congress may offer the states grants and require the states to comply with accompanying conditions, but the states must have a genuine choice whether to accept the offer. The states are given no such choice in this case: They must either accept a basic change in the nature of Medicaid or risk losing all Medicaid funding.” Roberts wrote that now states have the option to decline the expansion. “States may now choose to reject the expansion; that is the whole point. But that does not mean all or even any will. Some states may indeed decline to participate, either because they are unsure they will be able to afford their share of the new funding obligations, or because they are unwilling to commit the administrative resources necessary to support the expansion. Other states, however, may voluntarily sign up, finding the idea of expanding Medicaid coverage attractive, particularly given the level of federal funding the act offers at the outset.”

Robert Rich, director of the University of Illinois' Institute of Government and Public Affairs, said he is not surprised the court curtailed the federal government’s reach on this issue. “This ruling says carrots are OK; sticks are not,” he said. “I think it’s consistent with where the Supreme Court has come down on federalism in the past.”

Rep. Sara Feigenholtz, a Chicago Democrat, is optimistic that many states, including Illinois, will agree to the expansion. “I think that it’s going to be a rare case when a state says no,” she said. Feigenholtz, who spearheaded recent efforts to cut the state’s Medicaid liability by $2.7 billion, acknowledged that the law has become a political hot potato on both the state and federal level. “Yes, it is a states' rights issue, but I would hope that at the end of the day cooler heads prevail.”

Roberts distanced opinion from any commentary on the merits of the law. “We do not consider whether the act embodies sound policies. That judgment is entrusted to the nation’s elected leaders. We ask only whether Congress has the power under the Constitution to enact the challenged provisions.” But the political fight over the federal health care reform law seems far from over.

Squabbling between the two parties has led to Illinois putting the creation of its online insurance marketplace, also part of the affordable care act, on hold until after today’s decision. Rep. Frank Mautino, a Spring Valley Democrat, told the Associated Press this week that the state will likely not meet the deadline to create its own insurance exchange and would instead have to partner with the feds on an exchange. Mautino chairs the committee that was established to create the state’s exchange.

Republicans on the state and federal level stepped up after today's ruling to blast the law, dubbed “Obamacare,” and call for its repeal. “While I respect the court’s decision, the health care law threatens our economic recovery by raising taxes, imposing new regulations and creating a drag on the economy,” Illinois Republican Sen. Mark Kirk, said in a written statement. “Congress should repeal the health care law and replace it with common sense, centrist reforms that give Americans the right to buy insurance across state lines and expand coverage without raising taxes, while blocking the government from coming between patients and their doctors.”

Illinois House Minority Leader Tom Cross, who pushed back against efforts to implement the law on the state level, said in a written statement: “We have made tremendous efforts this year in Illinois to reduce our state-run health care program because we could no longer afford to provide the services that were once promised. Today’s Supreme Court decision affirms a federal law that has the potential to pile billions of dollars of additional expenses into our state budget that we cannot afford. We are encouraging Congress to repeal Obamacare at the federal level as soon as possible, and provide Illinois the ability to administer an efficient Medicaid program."

Comptroller Judy Baar Topinka warned that the ruling will cost Illinois when residents who are eligible for Medicaid but never signed up rush to the program to avoid paying the penalty for not being insured. “There is no doubt that this will cost the state; the only question is how much?” Topinka said. “We have thousands of residents around the state that are eligible for Medicaid but have never enrolled for one reason or another. We expect they will increasingly come forward, and I urge lawmakers to start saving now for those added costs.”

Topinka estimated that the growth in Medicaid costs could total $2.4 billion over the next six years. “Illinois is a textbook example of what can happen if financial challenges are not proactively addressed,” Topinka said. “The state needs to learn from experience and take steps today to address the increased Medicaid costs that will occur in coming months and years.”

Health care advocates heralded the ruling as a victory and pushed for Illinois to implement the law. “Today’s Supreme Court decision helps to strengthen our nation’s tattered social fabric and provides hope that constitutional law and democracy matters,” Jim Duffett, executive director of the Campaign for Better Health Care, said in a written statement. “It is time for the obstructionists in the Republican Party in Congress and in Springfield, and a handful of insurance-industry backed Democrats in Springfield, to stop their crusade against Obamacare. It is time to put America and Illinois first, act like adults, and do something positive for a change that will help small businesses and hard-working Americans by implementing Obamacare. Meanwhile, we are urging Gov. [Pat] Quinn to immediately sign an executive order and begin implementing the new insurance marketplace so Illinois' hard-working families and small businesses will continue to enjoy the benefits of access to affordable, quality health care.”

Quinn today continued to call on state lawmakers to approve legislation to begin the creation of an exchange. However, he said that Illinois would likely partner with the federal government to create its exchange instead of doing it independently. “What we learned today is, the legal cloud has been eliminated. The U.S. Supreme Court, the highest court in our land, has said the Affordable Care Act is the law of the land, and we in Illinois plan to carry it out and make sure that people who need health care coverage, health insurance, are covered. That’s our goal.”

Quinn said he wants the state to adopt the Medicaid expansion in the law. “The state of Illinois is going forward with the president of our country, President Barack Obama, to expand using Medicaid [to offer health care to] those who would be covered under the Affordable Care Act. That is the law. We’re not backing down. We want to go forward. This is fully funded by the federal government beginning in 2014 and ultimately 90 percent funded." He said he hopes the state will "insure as many people as we can in Illinois who have fallen through the cracks.”  

Despite the heated rhetoric, Feigenholtz said she thinks the state can successfully implement the law, which she says will make life better for many. “I think millions of people across the state and people across this country will have greater access to affordable high quality health care.” She added: “I am frankly a little disappointed that we haven’t moved forward on this. But I think that today brings new hope. ... I think we can work through this. Hopefully tomorrow is designed to be better than yesterday.”