House votes to restore Medicaid cuts, pay old bills and fund construction projects

By Jamey Dunn

The Illinois House voted Wednesday to restore several cuts to Medicaid and to tack more than $1 billion in spending onto the current fiscal year’s budget.

Senate Bill 741 would rollback several Medicaid program reductions that were cut under sweeping Medicaid reforms approved in 2012. The bill would restore podiatry services and preventative dental care for adults. It would lift the four-prescription limit for people with “severe mental illness.” It would also remove the limit on the number of physical therapy sessions patients can access. The bill allows for more funding for programs that care for children with extensive medical needs, such as those on ventilators. “We are restoring this simply because we have found out from experience that these cuts actually did not save us money. They cost the people of the state of Illinois more money, and they brought suffering and hardship to families. They brought overutilization to our emergency departments and interfered with the delivery of health care to other patients in need,” said Chicago Democratic Rep. Greg Harris, who sponsored the bill. The restorations would cost $221 million upfront. However, the spending would bring in federal matching funds, so Harris said the net cost would be about $125 million in general revenue funding.

Opponents questioned rolling back changes to Medicaid that were put in place to ensure that the system remained sustainable at a time when the state was pushing billions of Medicaid bills from one fiscal year into the next. The reforms now bar the state from shoveling Medicaid bills into future fiscal years. “How are we going to pay for that, and how are we going to sustain the system for the people who need it most?” Rep. Patricia Bellock asked on the House floor.

Those who have advocated to restore the cuts argue that they do not save the state money in the long run because Medicaid patients are forced to skip preventative care but later call on the system once their health deteriorates into an emergency situation. Chicago Democratic Rep. Mary Flowers said that a lack of dental care means missed wages when Medicaid patients stay home from work with tooth pain and missed opportunities when dental problems, such as missing teeth, keep them from making a good first impression at job interviews. “Access to dental services—like filling, cavities, root canals, dentures—means that the most vulnerable in our state will not need to suffer from unnecessary pain,” she said. 

Harris also sponsored House Bill 6060, which would add $1.8 billion in spending during the current fiscal year. Around $1 billion would go toward paying down old bills, and $600 million of that would go to Medicaid, triggering federal matching funds. The backlog stands at about $4.7 billion now. The money comes from new revenue that came in this year above projections for Fiscal Year 2014.

The House also reapproved ongoing capital construction projects for next fiscal year and tacked some new spending on, while they were at it. The new spending includes:

• $13 million for sewage treatment and water projects. 
• $10 million grant to the Uptown Theatre in Chicago. 
• $40 million for school construction projects outside of Chicago. 
• $35 million to Chicago Public Schools for school construction projects. 
• $50 million for back pay to state employees in the departments of Public Health, Human Services, Corrections, Juvenile Justice and Natural Resources. The money would cover about half the cost of deferred raises that the state owes employees. 
• $50 million for the Chicago teachers pension fund. 

 Chicago Democratic Rep. Barbara Flynn Currie, who sponsored HB 3793, said that the money for the additional spending would come from revised revenue estimates for Fiscal Year 2015 and funds left from the sale of the state’s 10th casino license.

 The measure did not have a standard committee hearing and came to the floor just hours after the amendment that contains the spending was filed. “We need to pass this bill if we want to make good on the commitments and promises we have earlier made,” Currie said of the spending that was part of the ongoing capital program. Republicans called the vote on the more than 1,000-page-bill rushed and argued that they did not have time to know what the legislation contained “We’re making a substantive vote with very little time to vet this vote,” said Downers Grove Republican Rep. Ron Sandack. “We seem to continue to do the wrong thing the wrong way, so I guess that’s consistency if nothing else.” 

House Speaker Mike Madigan also released his hold on the House budget bills approved yesterday, and they have been read into the record in the Senate. That means that the Senate could technically pass the budget and—as many in the Statehouse have been speculating—the spring session could adjourn a day early on Friday. However, such rumors always run rampant at this time of year. And so far, that possibility falls into the rumor category.

New Medicaid enrollments coming faster than expected

By Jamey Dunn

Illinoisans have signed up for Obamacare more quickly than the Illinois Department of Healthcare and Family Services expected, Director Julie Hamos says.

Hamos told a House budgeting committee today that her agency had predicted about 509,000 people would enroll in Medicaid under the Patient Protection and Affordable Care Act. She said today that about 430,000 of them could be enrolled by the end of the calendar year. “We are actually seeing stronger numbers, larger numbers, earlier than we ever really expected.” Based on the applications that the department has on hand, Hamos said an estimated 315,000 Illinoisans who are newly eligible for Medicaid have applied so far. “We thought that we were going to be at 200,000 this year.”

Under Obamacare, the federal government will pay for 100 percent of the cost of patients who are eligible under the expansion of the law for the first three years. But HFS has predicted that some residents who are already eligible for Medicaid but have not applied will apply now because of the outreach efforts associated with the launch of the Affordable Care Act. The state would only get the standard 50-50 federal match for those enrollees. Illinois has received 82,000 applications from the federal online insurance marketplace and is sifting through them. Hamos said that until that job is done, there is no way to know how many of the applicants would fall under the lower funding match level.

Hamos also told the committee that the savings targets established under the 2012 Medicaid reforms (also known as the SMART Act) will not be reached. The original savings estimate was $1.6 billion, but Hamos said today it has been revised to $1.1 billion, which she called “still very significant for a program like this.” Hamos said several factors led to the savings being less than expected, including procurement timelines, pending litigation and delays in federal approval of same changes. The federal government also denied some of the proposals in the law. Hamos said the savings estimates tied to the state’s efforts to purge Medicaid of the ineligible enrollees was too high.

While Republicans have accused Gov. Pat Quinn’s administration of not being aggressive enough in implementing the Medicaid changes geared toward cutting costs, some said today they were glad to hear that the savings are still significant. “To be able to look at the savings from the SMART Act, [it] shows us that we did do something in government,” said Hinsdale Republican Rep. Patricia Bellock.

Quinn strikes deal to transfer Medicaid verification from outside contractor to public employees

By Jamey Dunn

Under a deal struck between Gov. Pat Quinn’s administration and union officials today, public employees will begin taking over the work of an independent contractor that has been weeding out ineligible applicants for Medicaid benefits.

As part of sweeping Medicaid changes passed last year, the state hired Virginia-based Maximus Health Services to evaluate the eligibility of Medicaid patients. The company checked to see if Medicaid recipients met the income threshold and lived in the state. Maximus then passed on the results of its inquiries to the Illinois Department of Human Services, and the agency reviewed the information before terminating benefits. So far, an estimated 216,000 people have been removed from the program as a result of Maximus’ verification work.

Earlier this year, the American Federation of State, County and Municipal Employees Council 31 filed a grievance over the state’s contract with Maximus, claiming that it violated its own contract with the state. An arbitrator ruled in favor of AFSCME and ordered Illinois to end its deal with Maximus by December 31. Quinn’s administration appealed the ruling but also entered into negotiations with the AFSCME.

Today they reached a deal that calls for transitioning the work to state employees over the next several months. The plan calls for many of the services currently provided to by Maximus to be transferred to state employees by April 30. It calls for the hiring of 520 DHS employees and an unnamed number of employees at the Department of Health and Family Services. It allows the state to continue to use some Maximus services, such as its data-matching software, call center and mailroom, until 2015. “We want to really focus on making sure that those who are eligible for Medicaid get what they are entitled to by law, [and] those who are not eligible don’t receive what they’re not entitled to. That process will continue aggressively, but we’re going to do it in a way that complies with the arbitrator’s ruling,” Quinn told reporters in Chicago today. Quinn said he moved ahead with a deal instead of continuing to pursue the appeal because he wanted to “move forward as quickly as possible. We don’t want to be in court all next year.”

Republican lawmakers were critical of Quinn’s deal with AFSCME, saying that the governor is failing to defend the very reforms that he touted just a year a ago. “This isn’t a walk back; this is a turn around and sprinting away from the cornerstone of the reforms that were in the [law],” said Mattoon Sen. Dale Righter, who is a key Republican negotiator on Medicaid issues. Righter called Maximus’ work so far “a stunning success for the taxpayers.”

But members of Quinn’s administration said the same kind of work will continue. “This ruling provides the best and most efficient way forward for taxpayers at this time and continues our momentum in rooting out waste, fraud and abuse,” Julie Hamos, director of the Department of Healthcare and Family Services, said in a written statement. “It’s important to ensure full compliance with the [law], which this ruling does. We are committed to preserving the Illinois Medicaid program at a lower cost to the state while providing health care for our neediest low-income children and families.” A news release from the department said the number of ineligible enrollees will likely decrease in the future. “The cancellation rate is expected to come down because the reviews started with cases that had been flagged for having a discrepancy. The vast majority were canceled because the client did not respond to a request for verifying information about their income or residency.”

Hinsdale Republican Rep. Patti Bellock, who also worked on Medicaid legislation, said that if Quinn wants to tweak the law, he should have to get approval from lawmakers. “If it needs to be changed, then it should be brought back before the General Assembly.” Republicans are accusing Quinn of making a “backroom deal” with AFSCME that could reduce the overall savings that were projected when the law was passed. But AFSCME argued in its case to the arbitrator that the state could actually save money by using public employees for the work. “The arbitrator’s order is a victory for Illinois taxpayers,” AFSCME Council 31 Executive Director Henry Bayer said in a written statement. “Wasteful spending on a private contract will be eliminated, trained professional caseworkers will replace unqualified call centers, and state government will ensure that Medicaid is available to those who need it, and cut off from those who don’t.”

Quinn said today in response to his Republican detractors, “I respect everyone, but I don’t want to spend the rest of my life in court.”

Veto session is over, or is it?

By Jamey Dunn

Illinois lawmakers approved the spending to set up the state’s concealed carry of firearms permit today, but other issues such as pension reform, tax breaks for corporations and enhanced penalties for gun offenders will have to wait.

The House adjourned abruptly this morning after a procedural move blocked a bill to increase mandatory sentences for drug crimes. Senate Bill 1342 would increase the mandatory minimum sentence for felons or gang members caught carrying a gun without a Firearm Owners Identification (FOID) card to four years. The proposal would require those convicted of the crime to serve 85 percent of their sentence.

Sponsor Mike Zalewski, a Riverside Democrat, removed a provision that would have applied to first-time offenders and in doing so was able to get the support of the National Rifle Association. But members of the black legislative caucus opposed his bill. Chicago Democratic Rep. Kenneth Dunkin used a House rule to block the bill from being called for a vote because the budgetary impact of the measure was not made available to lawmakers through a formal process known as a note. “I filed the note on behalf of the Illinois legislative black caucus for those of us in the House and the Senate,” Dunkin said. We have expressed time and time again that we have some basic problems with this mandatory minimum — that it’s too all encompassing, it takes in way too many people unnecessarily. The collateral damage is going to be overwhelming, and it’s going to wrap up too many innocent citizens. All we simply wanted to do was to make sure that the bill went after the bad guys.”

After the notes were filed and the information was not immediately available, House Speaker Michael Madigan quickly adjourned the fall session. Harrisburg Democratic Rep. Brandon Phelps, who sponsored the state’s new concealed carry law, has been working on the bill with Zalewski. He said he was not exactly surprised that the bill did not move forward today because he said many Democrats told him they had reservations about it. “The speaker said that we’re not doing it today, more or less. ... We spent so many hours working on this and we had a deal. Now we’re not doing it today at all. So we’ve got to come back in December, hopefully we’ll call it then.” Several House members mentioned as they exited the chamber that they expect they might return in December to take up public pension legislation.

Zalewski, who has partnered with Chicago Mayor Rahm Emanuel to push for the proposal, blamed the Illinois Department of Corrections for not providing details of how the measure would affect its budget and prison population. The IDOC opposed the bill because officials said the department did not have the money or capacity to house the population in crease it would cause. “The Department of Corrections knows how much the bill costs. It’s their basis for their opposition of the bill. Yet they couldn’t walk down to the House clerk’s office and file it in time,” Zalewski said.

A spokesman for the department said the changes to the bill yesterday made it difficult for them to recalculate the impact quickly enough. “This is a very complex piece of legislation, and every time the sponsors file amendments changing provisions of the bill, there is substantial work and analysis that must be done to determine the impact of the changes,” Tom Shaer with IDOC said in an email. “Amendment 5 was just added to this bill yesterday afternoon. IDOC has had staff analyzing the impact of this amendment since that time. We have tremendous respect for everyone in this process and are obligated to furnish them with accurate information and thorough, well-researched projections.”

Members of the black caucus say they want to address the violence in a more holistic way that includes investments in education and rehabilitation programs. “There is a way to do both of these things. To make sure that the people that need to go into prison go into prison but that we also deal with the 40 percent of people who are there for nonviolent offenses, who need to be in cheaper alternative programs that give them a better chance and a shot at life. While also making sure that the folks who need to be there, and that’s felons and gang bangers, actually end up in prison — in a prison that has room for them to be there,” said Chicago Democratic Rep. Christian Mitchell. “I think that the mayor and Rep. Zalewski are trying to do the right thing, but the how really matters.” Some caucus members added that they were concerned that some of the previous felonies that would make offenders eligible for the mandatory minimum sentence were nonviolent offenses, such as shoplifting. They also said they would like to see a time limit, so that a crime that occurred a decade ago would not make someone eligible for a mandatory minimum sentence.

Zalewski said he has been working to negotiate the bill and that some who are opposed will never support the concept of mandatory minimum sentences. “I’ve negotiated on this bill for six weeks. ‘No’ is always going to be the answer for some people. You saw it today. You saw an unwillingness to have a debate about public policy and public safety. And [opponents] resorted to tricks because the votes were there. That’s what happens in this building sometimes.” But members of the black caucus disagree that the bill would have passed if called for a vote.

Meanwhile the Illinois Senate approved a supplemental spending bill worth about $50 million. The largest chunk of that, almost $34 million, is for implementation of the concealed carry licensing system. Only about $500,000 of the spending in the bill comes out of the General Revenue Fund. House Bill 209 does not include the $112 million that would be needed to give state workers back pay. In 2011, lawmakers did not appropriate the money for contractual raises for state employees, but a judge ordered the state to pay the increases with interest. House Speaker Michael Madigan has said that state agencies should work within their current budgets to find the money for the pay. Sen. Mike Jacobs, a Democrat from East Moline, voted in favor of the bill, which received broad bipartisan support. But he said that lawmakers would eventually need to approve the money for workers. “I just think it’s important that the Senate knows that we owe this money and at some point in our career, in our lives, we ought to pay it.”

With the House adjourning after less than an hour spent in session today, many issues were left without resolution. Supporters of tax break plans for Archer Daniels Midland Co. and the newly formed Office Max Inc. saw no urgency to call those measures for a vote in the Senate when it became clear that the House would not vote on them today. ADM is looking to move its headquarters from Decatur and is considering Chicago, among other options. Office Depot Inc., the product of a merger between Office Depot and Office Max, is choosing between Naperville, Office Max’s current headquarters, and Boca Raton, Fla., where Office Depot is based.

The House also did not take up a bill that passed in the Senate yesterday to restore Medicaid dental benefits to adults. Chicago Democratic Rep. Monique Davis said that she thinks that the House will likely approve that bill early next year. “I think it’s going to pass. I think it’s going to get a lot of support. We’ll get it when we first come back in January. We’ll be able to do that because that will be one of the first few days we can do that.” If lawmakers wait until January on some issues, they will need fewer votes to achieve an immediate effective date on legislation. “Don’t think because we’re not on that House floor that people aren’t working. People are working,” Davis said. Some issues may not have to wait until January. House Speaker Michael Madigan has said that he hopes lawmakers will hold a session to vote on changes to the state’s public pension systems. Legislative leaders met on the issue last week and say they feel progress was made. They sent components of a plan to the pension systems to get cost savings estimates. Those projections usually take about 10 days to produce.

Having another potential shot at a legislative session soon may give those who could not get their bills passed during veto session another bite at the apple. However, knowing that they could be back at the Statehouse in the near future, lawmakers may have deflated some issues by taking urgency out of the situation. Why take the controversial vote today that can be pushed off for another month? Still, with the historic passage of same-sex marriage, approval of a supplemental appropriation bill, and both chambers passing changes to the pension system for Chicago Park District employees, this veto session was more eventful than many in recent memory.

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.

Quinn approves key piece of federal health care plan

By Jamey Dunn

Illinois took a major step today toward implementing federal health care reform law when Gov. Pat Quinn signed a substantial Medicaid expansion.

Senate Bill 26 will expand Medicaid coverage to individuals who earn up to 138 percent of the federal poverty line, which is $15,860 for adults and $21,408 for couples. This expansion of Medicaid benefits to childless adults, who were previously ineligible in Illinois, is a key piece of the Patient Protection and Affordable Care Act. Quinn said he wanted to be sure to sign the bill before President Barack Obama makes a visit to Illinois on Wednesday.

“So we can tell him we got the job done,” Quinn said in Chicago today. “This is essentially implementing the Affordable Care Act. Some call it Obamacare. I call it ‘I do care.’ And this is the way that we, the people of Illinois, are going to get more health insurance coverage for at least 342,000 of our neighbors. I think that’s really an important objective, that all of us have decent health care for everybody.” Quinn's administration estimates that 342,000 people will be covered under the expansion by 2017.

The new Illinois Medicaid population will be able to enroll in October, and their coverage will kick in on January 1, 2014.

The Affordable Care Act, as originally written, would have required all states to make the expansion or risk losing their federal reimbursements for Medicaid. But the United States Supreme Court viewed that as an overreach and ruled that states had the option to forgo the expansion without the penalty. Illinois is one of 24 states, including the District of Columbia, that moving is ahead with the expansion. Six states are still debating the issue, and 21 states have no immediate plans to expand. (For more on the Supreme Court ruling and the Medicaid expansion, see Illinois Issues September 2012.)

The federal government will cover the cost of the expansion for the first three years. Then the federal match is scheduled to taper down to 90 percent by 2020. Illinois officials estimate that the state will receive $12 billion in federal funds under the expansion by 2020. Chicago Democratic state Sen. Heather Steans, who sponsored SB 26 and serves on the Senate’s budgeting committees, said the federal money will cover some medical costs currently being covered by the state. “It replaces what the state is paying for now, what local governments are paying for right now and really all the uncompensated care that hospitals are having to do. So this is going to help every single hospital throughout the state of Illinois.” She said that more than $200 million in spending from the state’s general revenue fund would be replaced by the federal match. “This is in my view very strongly both fiscally and morally the right thing to be doing.”

Steans said that most of the people who will be able to get Medicaid coverage are employed. She said the expansion will make health care accessible for people all over Illinois. “Sixty percent of these folks have jobs ... but low-income jobs that don’t provide affordable health care,” Steans said. “It’s every single part of the state where we have people who are going to be newly eligible here. It’s critical for downstaters, for our suburbanites, for the city of Chicago. It’s everywhere.”

Chicago Democratic Rep. Sara Feigenholtz, said the expansion will bring coverage to traditional underserved residents, such as those living with mental health issues. “From the perspective of a legislator trying to meet a need, trying find a medical home for our constituents, this legislation today is the game changer.” (For more on how the expansion could affect mental health care in the state, see Illinois Issues March 2013.)

Julie Hamos, director of the Illinois Department of Healthcare and Family Services, said the expansion is not just about getting more people coverage, it’s about making sure they have efficient and effective care that will make them healthier overall. “The Affordable Care Act and the promise of the Affordable Care Act is not just about putting a health insurance card in everybody’s pocket. It’s about redesigning the health care delivery system, and we are very hard at work doing that to create coordinated integrated delivery systems that will really serve the clients,” she said. “The promise of the Affordable Care Act is to get better health outcomes for all the people in Illinois and the country, that’s the most exciting part. That’s the work still ahead of us.”

But opponents of the expansion are concerned that it would further damage an already troubled system. Ted Dabrowski, vice president of policy for the Illinois Policy Institute, said such a large expansion would redefine the nature of the program. “Medicaid was supposed to be a safety net for the poor, but when you add 25 percent of the population onto Medicaid, then it is no longer a safety net. It’s become so bloated and so expensive to run that the poorest of the poor can’t get access.” Stagnant reimbursement rates have led to some health care providers opting to not serve Medicaid patients.

Dabrowski said there could be access problems after the expansion. He said that the problems with health care in the state should be solved through the insurance market instead of through a “top down” federal plan that grows state programs. “There are legitimate problems that need to be handled,” he said. “We should fix those problems and attack those problems directly but not totally turn upside down the private market in order to reach those problems.” He said that by deciding to implement the expansion, the state is taking on future responsibility for residents who could instead buy insurance in the online marketplace that also comes along with the Affordable Care Act. SB 26 would roll back the expansion if the federal matching rates decline. But Dabrowski said that once the benefits have been given out, it is unlikely that lawmakers would support reducing them. “Most state governments have a hard time taking away any benefits they have given.”

Supporters say that the state should not pass on a golden opportunity to offer health care to a group that currently has few options and often seeks costly treatment in emergency rooms. “One would wonder why we wouldn’t want $12 billion of health care that is 100 percent match[ed by federal funds],” Feigenholtz said.

 “That’s an important fundamental right that everyone has. It’s not a privilege to have decent health care, it’s a fundamental right,” Quinn said.

Governor to sign Medicaid expansion

By Jamey Dunn

Gov. Pat Quinn is expected to sign a massive Medicaid expansion, which is a key piece of federal health care changes, approved by the Senate today.

Senate Bill 26 would allow people who have a household income of 133 percent of the poverty level to qualify for Medicaid. The federal government will pick up the cost of the expansion until 2017, when the funding drops to 95 percent. In 2020, federal support will drop to 90 percent. The U.S. Supreme Court’s ruling on the Patient Protection and Affordable Care Act, sometimes dubbed “Obamacare” after President Barack Obama by its opponents, allowed states the option not to participate in the Medicaid expansion. (For more on the ruling and the expansion, see Illinois Issues September 2012.) The Department of Healthcare and Family Services estimates that an additional 342,000 residents would be eligible for Medicaid under the bill. About 140,000 more who are Medicaid-eligible but not enrolled will also likely sign up for Medicaid when the federal mandate that requires Americans to have health insurance kicks in 2014.

Republicans spoke out firmly against the bill, saying that it makes no sense to add more Medicaid patients after cutting the program by more than $1 billion last year. “Only in Springfield would we take a program that has been mismanaged and is unaffordable” and add more people to it, said Sen. Dale Righter, a Mattoon Republican. “We cannot afford this. Other states have rejected it. We should reject it, too,” said Hinsdale Republican Sen. Kirk Dillard

Chicago Democratic Sen. Heather Steans, sponsor of SB 26, acknowledged the state’s budget problems, but she said the expansion is an opportunity to offer health care to people who truly need it and have the federal government help pick up the tab for services that governments and hospitals are paying for now. She noted that several business groups in the state, including the Chamber of Commerce, support the measure.

Some Democrats spoke out against the bill, but not because of the Medicaid expansion. The House tacked changes to last year’s Medicaid reforms that will roll back some of the limits for various populations. However, some members of minority caucuses argued that the cuts should have been reduced even further. “We’re talking about the sickest here in this state and many who were born that way,” said Chicago Democratic Sen. Donne Trotter. “My opposition is because it doesn’t go far enough to protect them.” He said recent reductions to state programs for the mentally ill and those battling addiction have left many of Illinois’ poor with no options. Opponents also said that they wanted Medicaid dental care restored. The changes last year cut dental care to emergency services only.

Steans, who sponsored the legislation cutting Medicaid last year, said she did not celebrate the passage of that bill after months of negotiation. “I went into my office, closed the door and sobbed for a very long time.” She said that cutting Medicaid last year was difficult but necessary. She added that she is open to restoring more of those cuts in the future if the state’s budget situation improves. But Steans said that “today is a much happier day” because more people will get access to health care under the Affordable Care Act. Quinn supports the measure and issued a statement today saying he intends to sign it.

House approves Medicaid expansion

By Jamey Dunn

National politics played out on the Illinois House floor as lawmakers voted to approve a massive Medicaid expansion, which is a key component to federal health care reform.

Senate Bill 26 would allow people who have a household income of 133 percent of the poverty level to qualify for Medicaid. The federal government will pick up the cost of the expansion until 2017, when the funding drops to 95 percent. In 2020, federal support will drop to 90 percent. The U.S. Supreme Court’s ruling on the Patient Protection and Affordable Care Act, sometimes dubbed “Obamacare” after President Barack Obama by its opponents, allowed states the option not to participate in the Medicaid expansion. (For more on the ruling and the expansion, see Illinois Issues September 2012.)The Department of Health and Family Services estimates that an additional 342,000 residents would be eligible for Medicaid under the bill. About 140,000 more who are Medicaid-eligible but not enrolled will also likely sign up for Medicaid once the federal mandate that requires Americans to have health insurance kicks in 2014.

The expansion comes after lawmakers approved more than $1 billion in cuts to the Medicaid program last year and put a moratorium on future expansion. However, Rep. Sara Feigenholtz, sponsor of SB 26, said that when the moratorium passed, lawmakers assumed the expansion under the Affordable Care Act would happen because the Supreme Court had not given states the ability to opt out yet. The Medicaid changes made last year are known as the SMART Act. The Illinois House debated the expansion for more than two hours today. “These things don’t come easy. These are big, big measures. This is probably the biggest bill on health care that the Illinois General Assembly will have ever passed,” Feigenholtz said.

Republicans called for lawmakers to skip the expansion because they say they are concerned that the federal funding may not come as promised. “A year ago, we voted to scrub individuals from the Medicaid rolls who no longer qualify because it was the only way to save the program,” said Rep. Jim Durkin, a Western Springs Republican. “Now the majority party wants to add another 500,000 people to Medicaid when we cannot afford those who are currently on Medicaid.” No Republicans voted in favor of the bill. Some urged delaying the vote until the budget picture on the federal level is clearer. “I ask you to defer this decision. We do not have to make this decision now. We can make this decision in veto session or we can make it in next spring session after the [federal deficit reduction] talks have taken place and we have more certainty as to what the figures are going to be and how they will affect the state of Illinois,” said Hinsdale Republican Patricia Bellock, who was a key player along with Feigenholtz in crafting the SMART Act.

Feigenholtz said that she thought that a lot of the reactions from Republicans are driven by the national partisan fight over the president’s signature health care law. The Republican-controlled U.S. House has voted 37 times to repeal the law, but the Democrat-controlled Senate just ignores the repeal bills when they are sent to that chamber. “I think that there has been for a long, long time a drum beat against Obamacare. I think it was a very political drumbeat,” Feigenholtz said. The Illinois Senate has already approved the expansion, but the House tacked on some changes to the SMART Act, so the bill will now go back to the Senate. “There are very minor tweaks in SB 26 when it comes to the SMART Act, the two most notable ones we were sued in court on, and these are ultimately where we feel the settlement will end up,” Feigenholtz said.

She said many lawmakers wanted to see further rollbacks to the SMART Act’s cuts but that she wanted to keep as much of the savings in place as possible. She said some legislators “whose communities were disproportionately affected by the SMART Act were still a little concerned about how it has affected their communities, but at the end of the day, I really believe that this bill, this measure, is really going to be the game changer” for health care in Illinois.

House approves additional funds for home health care for seniors

By Meredith Colias

The Illinois House approved a temporary fix in an attempt to solve a $173 million funding shortfall for a program that provides in-home services for the elderly.

The Community Care Program in the state Department of Aging administers services including adult day care and pays providers to help its elderly clients at home with everyday tasks such as errands, groceries and bathing. It is estimated the yearly costs to care for elderly in their homes are about one-fourth the cost of paying for someone living in a nursing home.

Pending the potential influx of money, Department of Aging Director John Holton confirmed that the agency does not have the funding in its budget to pay providers until next  fiscal year’s budget funds become available on July 1. To cover that shortfall, the House approved a supplemental appropriation that will keep the program operating through the remainder of this fiscal year.

Jacquie Algee, director of relations for Service Employees International Union health care, said the House vote was a positive development, since 85,000 people depend on services paid for by the state. “We’re really pleased that [they] did the right thing, in our opinion,” she said. If the measure passes the Senate and is signed into law, she said, providers dependent on payments from the state “should be in a good place.” A similar issue could also arise in Fiscal Year 2014 because the department is scheduled to use about $142 million of that year’s budget to pay off expenses from FY 2013.

 Rep. Patricia Bellock, a Hinsdale Republican, said dealing with unbudgeted expenses was less than ideal because the state was forced to divert money from a plan to pay past Medicaid bills that were matched by the federal government. “Those are all pressures above the line. How are you going to pay for that?”

 Because demand for the Community Care Program is expected to grow in the years to come as the elderly population grows, other lawmakers are looking for ways for the program to cut its future costs. House Bill 2275, sponsored by Rep. Sara Feigenholtz, a Chicago Democrat, hopes to avoid a similar situation in the future by prohibiting the department from pushing off bills onto the next year’s budget unless approved by the comptroller and governor.

The legislation would also restrict the amount of hours that employees are allowed to claim for tasks such as doing laundry and be subject to GPS tracking to make sure they are actually going to homes to take care of clients. “All of the levers in the bill need to be pulled in order for this to work,” she said of the efforts to cut costs. It is necessary to make sure the services can still be provided, she said. “If we don’t pay these bills, what is going to end up happening is the doors of community care providers around the state of Illinois are going to close, and seniors will have nowhere to go except for a nursing home,” she said.

New study drills down on state budget problems

By Jamey Dunn

A study released today takes a comprehensive look at Illinois’ fiscal situation and the events that led to the state’s current budget mess.

The study, which comes from the State Budget Crisis Task Force, is a follow-up to a report put out by the task force in July. The summer report focused on the budgets of California, Illinois, New Jersey, New York, Texas and Virginia. Richard Ravitch, the former lieutenant governor of New York, and Paul Volcker, the former chairman of the Federal Reserve, co-chair the task force, which seeks to parse state’s budget concerns in the wake of the national recession.

The report points to the usual suspects as cost drivers for the Illinois budget: growing pension and Medicaid costs. It also cites stagnant revenues, borrowing and shoddy accounting tactics as culprits in the state’s recent budget crisis. The report says that that tactic of selling bonds to cover pension costs — 2003, 2010 and 2011 — has been the primary contributor to Illinois having one of the highest debt rates per capita of any state.

The study says that the 2008 economic collapse was part of a perfect storm that sunk the state budget. Revenues tanked as demand for services spiked. “But unlike other states, Illinois was effectively insolvent. Illinois had no reserves and had used fiscal gimmicks and borrowing to balance the budget for the previous six or seven years.”

The authors attribute the problems leading up to 2008 to expansions of state programs and services without corresponding revenue increases under former Gov. Rod Blagojevich. The study said that the governor’s refusal to increase the state income tax and House Speaker Michael Madigan’s unwillingness to work with Blagojevich on alternative revenue sources left the state spending more than it could afford. “During Blagojevich’s two terms as governor, new programs were created and expanded, including health insurance coverage and preschool for Illinois children and free public transportation and prescription drugs for Illinois seniors. But with an existing structural deficit, and without new sources of revenue, the state did not have sufficient resources to meet all of its obligations,” the report said. “And while the recession took a toll on the state’s resources, Illinois’ government became essentially dysfunctional with the federal investigation of Governor Blagojevich and his removal from office.” The authors described the state’s budgeting tactics leading into the recession as such: “Illinois did all this without any sort of long-term financial plan to restore balance and without reserves. Illinois has been doing back flips on a high wire, without a net.”

Illinois economic growth has also stalled when compared with the rest of the country. “By FY 2010, Illinois’ total personal income fell 2 percent more and employment fell 1 percent more than in the U.S. as a whole. The impact of the recession on Illinois’ tax collections was much, much larger. In FY 2010, total state taxes in the U.S. were 93 percent of the amount in FY 2007, but Illinois’ tax revenues had fallen to 85 percent of the FY 2007 amount,” said the study. Illinois is recovering from the recession, but it is doing it more slowly than it recovered from the last three recessions.

The report notes that progress has been made to get the state back on secure footing. An income tax increase brought in new revenues, and lawmakers agreed on spending caps, cuts and sweeping Medicaid reforms. The authors note that such cuts are not painless and could have long-term effects on the state’s priorities, such as education and infrastructure. “There is, of course, nothing ‘encouraging’ about cuts in education, medical care and human services from the point of view of recipients or advocates. One of the most controversial budget appropriations was $6.5 billion for K-12 education, which was a cut of 3 percent from FY 2012,” said the study. Despite cuts and new revenues, the authors say the state cannot continue on its current budget trajectory. “Illinois’ budget is not fiscally sustainable. Despite recent progress and difficult choices, it is still in a deep hole. It cannot simultaneously continue current services, keep taxes at current levels, provide all promised [public employee] benefits, and make needed investments in education and infrastructure.”

Gov. Pat Quinn’s new budget spokesperson, Abdon Pallasch, echoed the idea that the current budget is unsustainable when he spoke to the Daily Herald’s editorial board yesterday. Quinn is pushing for concessions from the state’s largest public employee union and pension reform as at least a partial solution. “The alternative is we, you know, close a few prisons or universities, I guess,” Pallasch told the Daily Herald. “I’m not threatening to close prisons or universities,” he said. “I’m just saying, let your imagination run wild with what we’d have to do.” Officials with the American Federation for State County and Municipal Employees say Quinn and lawmakers should repeal tax breaks given to corporate interests, such as a recent tax deal given the Sears and the CME group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade.

The study also looked to potential future concerns for Illinois, including cuts to federal funding as deficit reduction efforts continue, the need to invest in infrastructure upgrades and the state’s aging residents. “Illinois’ demographics show an aging population with a trend toward fewer workers and more retirees, which will pose daunting fiscal challenges in the years ahead.”

Advocates say they were left out of talks on nursing home staffing levels

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 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 two in a two-part series that looks at those components of the new law. (Part one is here.)

Advocates say they were cut out of the process to determine nursing home staffing level requirements after the issue was pulled into negotiations over the Medicaid legislation.

There was some debate over staffing requirements included in sweeping nursing home reform passed in 2010, and the Joint Committee on Administrative Rules (JCAR) took up the issue this spring.

The reforms were spurred by investigations by the Chicago Tribune and The Chicago Reporter, which revealed neglect in the state’s nursing homes. The Tribune focused on the violent results when younger mentally ill patients were housed with older residents and adequate supervision was not supplied. The Reporter focused on the disparity of care between nursing home that served predominantly black and Hispanic residents compared with those that housed mostly white residents.

When looking at both issues, lawmakers agreed that increasing staffing levels and more hands-on care would help to address some of the problems. So, requirements for how much direct care each patient must receive were increased under the 2010 legislation, but a disagreement broke out in the industry over who must provide such direct care — registered nurses or lesser-trained and generally less-expensive caregivers. It was left to JCAR to decide.

The law requires that patients receive 3.8 hours of direct care each day by 2014. Patient advocates were pushing for 20 percent of that care to be provided by RNs. But many in the industry argued that such requirements would be too costly for some nursing homes, and licensed practical nurses or certified nursing assistants would not provide any lower quality of care.

Negotiations stalled, and JCAR postponed voting on the issue. “We were going through what I thought we’re honest negations. Negotiating in good faith,” said Chicago Democratic Sen. Jacqueline Collins. She said the advocates were pushing for 20 percent of direct care to be provided by RNs, while the industry was pushing for 10 percent. She said if negotiations had continued, it was likely that the two groups might have met in the middle at 15 percent. However, they never got the chance to haggle it out because the decision was made at a different table, where the negotiations over Medicaid reforms were taking place. And the advocates were not invited to pull up a chair.

“When it came time to actually move on rule-making process, the rug was pulled from under those advocates who had believed that, in fact, we could have addressed the issue though rule making,” Collins said. Senate Bill 2840, which Gov. Pat Quinn signed into law, sets the requirement that 10 percent of the direct care be provided by a registered nurse. Under the new law, 25 percent of direct care must be provided by licensed nurse.

David Vinkler, associate state director for AARP Illinois, said that those involved in hashing out the nursing care requirements had decided to hold off and revisit the issue after the state budget was finished. But he said he and others were surprised when they found the Medicaid reform legislation contained a provision for staffing levels. "Then we found in the Medicaid bill a piece of language that decided this on its own,” he said. “In our mind, [it] really kind of violated the spirit of the negotiations that we had.”

He added, “We know there were no [nursing home] resident advocates in that decisions making process.”

Sen. Heather Steans, who sponsored both the nursing home reform legislation and SB2840, said that it is unlikely that JCAR would have approved the 20 percent requirement. Still, she said that advocates should not have been left out of the talks that produced the final product. “I think they should have been included.” s

Vinkler said that while the 10 percent staffing level is disappointing, it is the future that lies beyond it that troubles him most. After 2014, nursing homes will be reimbursed under a new system called RUGs, which takes into account the complexity of care needed by residents. Care for patients with greater needs would bring in more money in reimbursements. The new system was part of Medicaid reforms. Steans said the new system would “incentivize” nursing homes to care for more traditional elderly patients, instead of receiving the same funding to take on younger patients who might need less daily care. “Giving the same amount of money, regardless to the level of need of the patient. ... it’s just not sensible.”

However, after the new system goes into effect, staffing levels would also be tied to the level of care patients need, leaving no strict minimums across the board. Vinkler said this could result in a situation that is confusing for patients and their families. “Staffing is one of the biggest indicator of quality of care,” he said. “As a consumer, are you going to be able to figure out: ‘What [care] should I be getting?’ If you are not getting the minimum, how would you know?”

Kirk Riva — vice president of public policy for Life Services Network, which represents non-profit nursing homes throughout the state — said nobody knows exactly what staffing requirements will look like under the new system, but his organization supports the changes to reimbursement. “Clearly, there are homes in the state that are not staffed at the levels they should be,” he said “Certainly, you’ve got to have some standards. There’s no questions about it.” But he said there is still time to work out the details. “I think it’s safe to say there’s going to still be a lot of negotiations going on.”

Pat Comstock — executive director of the Health Care Council of Illinois, which represents for-profit nursing homes — said that staffing levels will be determined by the needs of residents, which is all a part of the new system that focuses on individual care. “Over the next 18 months, we will be working with the Department of Healthcare and Family Services on structuring the new [reimbursement] program, and as that process goes forward, a part of that process will be determining the care needs of the resident, and the staffing needs will follow.”

Vinkler said he doubts the state’s ability to keep track of requirements that are not uniform across every facility."We have serious questions about whether the Department of Public Health will be able to do that," he said. “Especially in Illinois, where we have had a history of really poor care, you have to have a minimum.”

Comstock said there is no reason for concern because the new system will still set staffing requirements that would be tailored to each resident’s needs. “I don’t understand their worry because the RUGs program will make it pretty clear, based upon the condition of the resident, what kind of staffing requirements they need.” She noted that 22 other states have a RUGs program, and while there are small differences between them, they are all based on nationally recognized standards. “One of the reasons why there was a push to go to RUGs was so that Illinois became a part of what the other states are doing and part of a national standard.”

 But Vinkler said he thinks legislators and Quinn’s administration traded off on the staffing levels to get for-profit nursing homes to agree to the new reimbursement plan. “That was the give to get the nursing homes to switch to that payment method.”

Steans said it was all part of trying to negotiate changes that are sweeping and generally positive for health care in the state. “Two big things that had to happen are reforming the way that nursing homes and hospitals get reimbursed. Those are things that had to happen to enable other changes to occur,” she said. She said it would have been difficult to get the nursing homes to agree a new reimbursement system without the give and take of negotiations over the Medicaid legislation. “The nursing homes are a powerful lobbying group.”

Comstock said her organization was asked to present ideas to lawmakers as part of negotiations over Medicaid reform because it represents nursing homes that care for the “vast majority” of Medicaid patients. She said that lawmakers working on the legislation heard comments from hundreds of groups. “So anybody that wanted to voice their opinion about what should be done certainly had the opportunity to do so on many levels.”

Steans said, “Big picture, what happens to nursing homes is still a huge step forward.”

Comstock agreed that the changes in the bill could potentially be positive. But she said the most important factor in whether the transition to RUGs is successful would be funding levels. “It depends on whether the state is prepared to fund the care requirements that are established under RUGs.” Illinois currently has some of the lowest Medicaid reimbursement rates in the nations. "We’re providing the same care that folks do in other states for far less money," Comstock said.

Collins said she worries that the changes ahead will not solve the racial inequity of care that affects many people she represents. “I worry about the problem that has not been resolved, which is the staffing disparity. ... The patients at majority-white homes often had care from RNs, while those in black-only homes got care from [licensed practical nurses],” she said. “My intention is to revisit the issue because the problem I’m facing in my district has not been resolved.”

Steans said that once the new system is in place, nursing homes should be required to publish and post their staffing requirements so patients know if they are receiving the required care. She said she is going to try to find a way to work out such a provision in the rule-making process concerning the Medicaid changes. If not, she said she might try to push a bill with such transparency measures. “Those staff requirements should get published, and they should be posted, and they should be put online.”

Transparency aside, Vinkler said that the staffing requirements, which could be confusing and difficult to enforce, are not in the best interests of nursing home residents. “It’s very telling when a policy comes out that is the product of solely the industry and policy makers, as opposed to consumers of that service. It is probably not the best policy for consumers.”

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.”

Senate approves tobacco tax increase

By Ashley Griffin

The Senate approved some of the final components of a Medicaid reform package today, and now two key pieces of legislation are on their way to the governor.

The process was kicked off when the General Assembly approved Senate Bill 2840, which would make cuts to Medicaid services as well as the rates Medicaid providers are paid in an effort to cut $2.7 billion from the state’s Medicaid liability. That measure passed in both chambers last week. 

But on Tuesday, SB 2194, which includes an increase in taxes on tobacco products,  passed on the Senate floor, 31-27. Last week the measure passed the House, 60-52. The proposed legislation features a $1-a-pack cigarette tax and would increase taxes on other tobacco products, such as cigars and loose tobacco, to bring them in line with the taxes on cigarettes. According to the Senate sponsor of the bill, Sen. Jeffery Schoenberg, a Democrat from Evanston, the measure would bring in about $700 million, including federal Medicaid matching funds. The proposal would also make changes to the hospitals assessment program to bring in more federal matching funds, which could produce almost $100 million revenue for the state. The proposal would also set requirements for hospitals to gain charity care status, which allows them to receive a local property tax exemption.

“I would vote for [the cigarette tax] if it didn’t bring in a penny,” Senate President John Cullerton said in the floor debate. “I would vote for this tax if it didn’t bring in a penny because the idea that we will have 77,600 kids who won't start smoking just because you pushed the green button, or 59,000 adults who quit, or how about the 59,000 people will be saved from premature death because you pushed the green button.”

But not all lawmakers agree a tax should be implemented to help fix the state’s Medicaid crisis. “The problem I personally have is the continued approach of more revenue, more revenue,” Senate Minority Leader Christine Radogno said in a committee hearing. “I mean, I have to ask if $7 billion in new income tax wasn’t enough to solve the problem, what’s another $300 million?” “It's really more of a difference in philosophy and approach, just of continuing of trying to look for revenue in every way we possibly can, rather than looking for other ways to contract the budget or in this case, maybe reallocate from other places in the budget to get some money to get Medicaid matched.”

 Gov. Pat Quinn has  advocated for the cigarette tax increase since he rolled out his own framework for Medicaid reform in April. “Increasing the price of cigarettes will decrease smoking-related costs to Medicaid, which came to $1.5 billion last year. This legislation will help 60,000 people quit smoking, prevent 60,000 deaths from smoking-related conditions and keep 80,000 kids from taking up smoking in the first place,” Quinn said in a prepared statement. “By working together to pass these bills, strong progress has been made in our mission to restructure Medicaid, so that it serves as a health and wellness system instead of a provider-payment system. As a result, our Medicaid system will continue to serve the millions of Illinois residents who rely on it.”

The Senate also passed SB 3261 on Tuesday, which would require hospitals to provide free care to low-income people if the treatment is medically necessary. Hospitals in urban areas would have to provide such care for people with incomes up to 200 percent of the federal poverty level, and rural hospitals would have to provide such care for those with incomes of 125 percent of the federal poverty level. So far, eight states have similar laws.

While the Illinois Hospital Association supports the bill as part of an overall Medicaid plan, Republicans voiced opposition on the Senate floor. They argued that the bill could a lead to more people dropping their health insurance and using an emergency room as their primary source of health care. “Once you tell someone they have access to this hospital, that emergency room without limits, it's been our experience that the emergency room becomes their doctor's office,” Sen. Dale Righter, a Republican from Mattoon, said  during a committee hearing. “Doesn't this take us a step backwards?”

There is still one more piece of the Medicaid reform plan yet to be approved, SB3397, which would prevent the state from rolling over Medicaid bills from one fiscal year into the next fiscal year.

What's been done? What's yet to come?

By Jamey Dunn

The Illinois General Assembly approved historic changes to the state’s Medicaid system this week. But with six days left until the spring legislative session is scheduled to adjourn, lawmakers still have plenty to do.

Medicaid 
Both chambers approved Senate Bill 2840 on Thursday. The measure contains reductions to Medicaid services. While lawmakers said they tried to avoid ending programs altogether, the plan would eliminate the Illinois Cares Rx program, which helps low-income seniors pay for medicine, and dental care for adults, except for in emergency situations. The legislation also includes cuts to the rates some hospitals and health care professionals are paid for providing Medicaid services.

Both chambers signed off on House Bill 5007, which will allow Cook County to put more people on its Medicaid rolls. The expansion would come at no cost to downstate taxpayers and would allow the county to recoup federal matching dollars for thousands of patients who are currently being treated at county hospitals.

The House today approved a cigarette tax that is a key piece of the overall Medicaid reform plan. The Senate has yet to take up the bill.

Neither chamber has taken a vote on SB 3397, which would prevent the state from pushing Medicaid bills off into future fiscal years.

Budget 
The Senate Democrats approved a budget plan without Republican support in their chamber. But some predict that it will likely be ignored by the House, much like the Democrats budget was last year. “It’s … a chamber squabble for you folks. It’s to beat the House of Representatives. And here’s what’s going to happen: You’re going to go through all this turmoil over here and all this grief,” Sen. Dale Righter, a Republican from Mattoon, said during floor debate of the bills. “And what’s going to happen is, these budget bills are going to zoom over to the House of Representatives, and they will meet exactly the same demise as your budget did last year.”

The Senate Democrats’ bills are all currently scheduled for a hearing in the House Executive committee on May 31, the last day of the scheduled session.

Some pieces of the House’s budget have emerged, and they contain cuts that are sure to be unpopular. Senate Bill 2413, which was discussed in a House budgeting committee this morning, would cut $25 million from early education programs and reduce funding for children’s mental health programs from $1.6 million  to $300,000.

Ireta Gasner, senior policy associate for the Ounce Of Prevention Fund, estimated that the proposed early childhood cut would mean that more than 25, 000 children would lose the chance to go to preschool. She said that under the cut, early childhood programs would have been cut by a total of $80 million over the last four years. She said cuts to early childhood programs lead to greater spending elsewhere in future budgets because children who do not receive preschool are more likely to need other state services down the road. “We have to be clear that any savings we think we’re realizing from this $80 million in cuts is only going to come back in real costs to children and to our taxpayers in the near future and in the long term.”

Senate Democrats say their plan would not cut spending or K-12 education. Chicago Democratic Rep. Deborah Mell, who serves on the House’s K-12 budgeting committee, said that she hopes the House will consider some aspects of the Senate Democrats’ proposal.

SB 2443, which a House budgeting committee approved Friday evening, would cut higher education by just over 6 percent. The Senate plan would cut higher education by between 3 percent and 4 percent.

Gov. Pat Quinn's budget proposal called for no cuts to higher education or K-12. In fact, he pitched a $20 million increase for early childhood education and a $50 million increase for Monetary Award Program (MAP) grants for college students.

Pensions
A proposal to reduce retirement benefits for state workers may emerge in the coming days. House Speaker Michael Madigan has hinted on what that plan could look like. He told the Illinois Channel yesterday that the bill would likely eliminate compounding interest cost-of-living adjustments and replace them with an adjustment of 3 percent or half the rate of inflation, whichever is less. Madigan said the plan would not require workers to pay more for their retirement or wait longer to be eligible for full benefits. Quinn's proposal included both an increase in employee contributions and the retirement age.

“We’ve made good progress. We’re concerned with the fiscal security of the pension systems, and we’ve determined that the biggest cost driver that leads to fiscal instability in the pension systems is the automatic compounded [cost-of-living adjustment],” Madigan said. “So our view is that should be adjusted. … There are other elements to the program. But we’re not going to call on employees to make additional contributions. We’re not going to change the retirement age. But we do feel that local school districts and community colleges and universities ought to assume the responsibility to make the pension payments for their employees.” Madigan said the cost shift would be done gradually. He said that he thinks lawmakers can send a plan to Quinn before adjournment.

“I don’t know. He may have an agreement with the unions by the end of the day,” House Minority Leader Tom Cross said this afternoon. Cross said that he has not been in on negotiations with unions. He said he plans to meet with Madigan on Saturday to discuss the issue. “This thing, I think, is still evolving. …We certainly will have a little better approach to it after tomorrow, a little better feel for it.”

Republicans have voiced opposition to the idea of shifting costs to school districts, universities and community colleges. “I’ve never been a big fan of the cost shift,” Cross said. But he would not say if he would oppose such a shift, saying that he wanted to see the whole proposal before ruling out any one idea.

Cross said that the current compounded cost-of-living increases are “not sustainable” and that they are a good place to look for cutting costs. “The key is, how do you find the most significant savings that’s constitutional. Whatever you do in this exercise, you’re going to make somebody very, very mad. But [when] we go back to the bottom line, we’ve got an $85 billion unfunded liability,” Cross said.


Gaming
The House approved a gaming expansion bill, and the Senate will probably take a floor vote on it before adjournment. Sponsors say they think it would pass in the Senate. However, Quinn is opposed to the bill, so supporters would likely be seeking support to override a veto sometime down the road.

The House is scheduled for session Saturday morning, but not Sunday. The Senate is taking the weekend off. Both chambers are scheduled to be back in session on Monday.