By Jamey Dunn
As lawmakers look to cut billions from the state’s Medicaid budget, one expert told them today that the task will be difficult and their options are limited.
Joy Johnson Wilson, health policy director for the National Conference of State Legislatures, addressed the Illinois Senate today about Medicaid trends across the country.
She indicated that Gov. Pat Quinn’s demand that lawmakers find a way to curb Medicaid growth by $2.7 billion next fiscal year is an ambitious goal. She said she was not aware of another state that was trying to cut costs as much as Illinois, and that states that had successfully trimmed Medicaid expenses had done it through multi-year plans. “It is very hard to get savings in the Medicaid program in real time. It just is.”
Wilson emphasized that under the Affordable Care Act, states cannot make changes to who is eligible for Medicaid until 2014. At that time, residents above a certain earning level may be deferred to an online insurance exchange, where they could buy low cost insurance with the help of government subsidies.
States can seek permission from the federal government to more rigorously check residents' eligibility status. After some delay, Illinois was granted permission to verify through state records whether applicants are residents. However, federal officials have not signed off on another piece of Medicaid reform passed in the state that would require applicants to provide multiple paychecks to prove their income level under eligibility requirements.
Wilson pointed out that the federal law leaves only a few areas to look for substantial savings. Lawmakers can reduce the rates paid to health care providers, limit how often patients can access some services, go after fraud and reduce services offered that are not required by the federal government.
“Optional programs in Medicaid are not like options on a car.” She said that options on a car are often considered luxury items, such as seat warmers or nice stereos, but they are not essential to making the car run. Wilson said many so-called optional Medicaid offerings, such as prescription drug coverage, are essential to the success of the program.
She cautioned lawmakers to look at the “downstream financial, legal and political impacts” of cuts and reductions to services.
“It’s very important that you make sure that you don’t make cuts that actually cost money,’ she said. Wilson said many states that eliminated adult dental services, something that is under consideration in Illinois, put the services back in place after they found that hospitalizations were going up. “So it actually cost them more when they eliminated them than what they were actually paying for them.”
She said some cuts can go too far and be met by public backlash. Arizona eliminated transplantation services but then put some back in place after a public outcry. “They have since restored some but not all of the transplantation services.
She noted that Illinois is considering cuts to in-home services and said such reductions could run counter to Quinn’s stated desire to move people out of institutional settings whenever possible. She said such cuts might also put the state in violation of court agreements, known as consent decrees. “If you are going to do something on the institutional side, then you’ve got to make sure that there’s some support for home and community based services.”
Wilson indicated that Quinn’s plans to transition people with developmental disabilities and mental health issues from institutional care to community care could be a crucial factor in the state’s efforts to find savings.
“The critical piece is the assessment piece. Who belongs in an institution and who doesn’t? If you get that wrong, you will lose money. So that’s critical,” she said. “Who can actually be taken care of and function in a community, and who needs institutional care?”
According to Wilson, states that were early adopters of HMO-style managed care systems saw savings of up to 20 percent, but she said Illinois would likely not see such savings from a managed care program now. Instead, the state might see upfront costs. “We’re not seeing that now. … I think that you’re not going to get those big savings up front. In fact, it may actually cost something to expand Medicaid [managed care] to get savings later on because you have to make sure that your [health care provider] networks are adequate and that you do all the education outreach activities that are necessary to get people in the system and teach them how to utilize managed care.”
She also said that managed care programs in the state’s rural areas would likely face challenges, but as the trend grows, more providers have become familiar with managed care.
Wilson also warned that ferreting out fraud involves upfront costs, such as hiring investigators. She said that eliminating fraud would not produce the desired savings on its own.
Sen. Heather Steans, who is a member of the working group looking to find the cuts Quinn has called for, said she found Wilson's presentation ‘a little disheartening.”
“There’s a lot of restriction being put on by the feds in terms of the flexibility the states have, so there’s only certain things we can really look at, and that makes it, I think, more challenging to achieve the kind of reductions in the short period of time in which we’re talking about.”
But she said the presentation reassured her that her group is looking at all possible options. “Everything she talked about we’re actually already looking at and considering here. So I do think we’re on the right track in terms of making sure we are looking across the breadth of things that are possible,” said Steans, a Chicago Democrat.
She said the Medicaid working group is meeting weekly to work on a plan to reduce the state’s Medicaid liability.
For more on the legislature’s efforts to cut billions from Medicaid, see the upcoming April edition of Illinois Issues.
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Thursday, March 22, 2012
Wednesday, December 08, 2010
House considers Medicaid reforms
By Jamey Dunn
In a move that parallels the Senate’s reform efforts, a House committee heard testimony in Chicago today on possible changes to Illinois’ Medicaid system.
A special Senate committee held a hearing on Medicaid last week. Both that hearing and today’s House hearing focused on cutting costs while giving patients more comprehensive treatment.
Much of the conversation was about potential savings that could be found in managed care programs. The state has a voluntary managed care program and is working on a mandatory managed care pilot program in the Chicago suburbs, which would provide care to elderly and disabled patients.
“Our approach towards managed care is one of using it as a means to an end, and the end that we’re trying to achieve is higher health status, better health care outcomes and the use of integrated care delivery systems to get us there,” said Michael Gelder, a health care policy adviser to Gov. Pat Quinn.
However, James Parker, deputy administrator of medical programs for the Illinois Department of Healthcare and Family Services, said the voluntary program is not producing big savings for the state. “Somebody enrolling in that program saves the state nothing. It actually costs us money.”
Chicago Democratic Rep. Barbara Flynn Currie suggested that requiring Medicaid patients to enroll in managed care might bring down costs. “If the provider doesn’t know what numbers that company is going to deal with, its very hard for them to figure what’s a rate that makes sense for them. … It maybe that you get a better rate bid from a provider if there is some mandatory enrollment because they have a better sense as to what the population is.”
Parker agreed. “We need a rate cut for that program to make sense. But if we did a mandatory program … and gave them enough [patients], it would make up for the rate cut that would be needed to save money.”
Parker added that because there are not many cases of people receiving unnecessary care, the best way to save money on Medicaid would be to try to keep patients healthier in general so they do not require as much treatment.
“Our rates don’t entice specialists to see our patients unless they really need to be seen. … We don’t have an overuse of expensive specialists, mainly because there’s no such thing as an expensive specialist in our Medicaid program because we don’t pay that much. … The only way to really get the costs down is to reduce the need for care.”
Parker said the state could also save by pushing for a reduction in the dispensing fees pharmacies charge for filling Medicaid prescriptions. Illinois currently pays $3.40 for each brand name prescription and $4.60 for each generic, in an attempt to encourage pharmacies to use generic drugs for Medicaid. That is compared with a $1.50 fee for any prescription for state employees.
He cautioned, that savings would not come in the form of cuts to a budget line. They are instead expressed in terms of savings compared with the estimates of what the state would spend in the future if no action were taken. “When anybody is talking about saving from any of these managed care programs, any one of them … whenever they talk about savings, they are never, never talking about spending less money this year than we spent last year or less money next year than we’re spending this year. It is all based on slowing the growth.”
The House committee is scheduled to meet again on December 13 and 14. Rep. Chapin Rose, a Mahomet Republican, said the committee would likely consider legislation on December 14. The Senate Medicaid Reform Committee is scheduled to make final recommendations to the full Senate on January 3.
In a move that parallels the Senate’s reform efforts, a House committee heard testimony in Chicago today on possible changes to Illinois’ Medicaid system.
A special Senate committee held a hearing on Medicaid last week. Both that hearing and today’s House hearing focused on cutting costs while giving patients more comprehensive treatment.
Much of the conversation was about potential savings that could be found in managed care programs. The state has a voluntary managed care program and is working on a mandatory managed care pilot program in the Chicago suburbs, which would provide care to elderly and disabled patients.
“Our approach towards managed care is one of using it as a means to an end, and the end that we’re trying to achieve is higher health status, better health care outcomes and the use of integrated care delivery systems to get us there,” said Michael Gelder, a health care policy adviser to Gov. Pat Quinn.
However, James Parker, deputy administrator of medical programs for the Illinois Department of Healthcare and Family Services, said the voluntary program is not producing big savings for the state. “Somebody enrolling in that program saves the state nothing. It actually costs us money.”
Chicago Democratic Rep. Barbara Flynn Currie suggested that requiring Medicaid patients to enroll in managed care might bring down costs. “If the provider doesn’t know what numbers that company is going to deal with, its very hard for them to figure what’s a rate that makes sense for them. … It maybe that you get a better rate bid from a provider if there is some mandatory enrollment because they have a better sense as to what the population is.”
Parker agreed. “We need a rate cut for that program to make sense. But if we did a mandatory program … and gave them enough [patients], it would make up for the rate cut that would be needed to save money.”
Parker added that because there are not many cases of people receiving unnecessary care, the best way to save money on Medicaid would be to try to keep patients healthier in general so they do not require as much treatment.
“Our rates don’t entice specialists to see our patients unless they really need to be seen. … We don’t have an overuse of expensive specialists, mainly because there’s no such thing as an expensive specialist in our Medicaid program because we don’t pay that much. … The only way to really get the costs down is to reduce the need for care.”
Parker said the state could also save by pushing for a reduction in the dispensing fees pharmacies charge for filling Medicaid prescriptions. Illinois currently pays $3.40 for each brand name prescription and $4.60 for each generic, in an attempt to encourage pharmacies to use generic drugs for Medicaid. That is compared with a $1.50 fee for any prescription for state employees.
He cautioned, that savings would not come in the form of cuts to a budget line. They are instead expressed in terms of savings compared with the estimates of what the state would spend in the future if no action were taken. “When anybody is talking about saving from any of these managed care programs, any one of them … whenever they talk about savings, they are never, never talking about spending less money this year than we spent last year or less money next year than we’re spending this year. It is all based on slowing the growth.”
The House committee is scheduled to meet again on December 13 and 14. Rep. Chapin Rose, a Mahomet Republican, said the committee would likely consider legislation on December 14. The Senate Medicaid Reform Committee is scheduled to make final recommendations to the full Senate on January 3.
Thursday, February 18, 2010
Legislators say slow down on managed care
By Rachel Wells
A proposed pilot program that would affect about 40,000 elderly and disabled Illinoisans could save the state $200 million over five years, but that’s not reason enough to rush into things, legislators said today.
The program in question is Gov. Pat Quinn’s Integrated Care Pilot Program, which outlines changes to some Medicaid fee-for-service plans for residents in DuPage, Kane, Kankakee, Lake and Will counties and suburban Cook County starting as early as October 2010. The program – focused on wellness and prevention – would offer incentives to medical providers based on patient health outcomes.
HB 5086, sponsored by Aurora Democrat Rep. Linda Chapa LaVia, would halt the program before it begins and create a task force to analyze its merits.
“The bill supports an inclusive and transparent planning process,” Chapa LaVia said. She said those affected by the pilot program were not asked for input early enough in the development process. “It could be a great program. Just allow us to sit at the table so we can help, so we can [share] our concerns, why we have concerns with what the [proposal] shows.”
Administrators at the Department of Healthcare and Family Services said affected citizens and advocacy groups have been a part of the process all along, but to address their concerns, the state must now choose the health maintenance organizations (HMOs) that would run the program.
“We have been aggressively pursuing input from groups since September, and in more recent months we’ve been [asking] them, ‘What are the outcomes you want to see?’” said Theresa Eagleson, Healthcare and Family Services administrator.
Eagleson said programs that seem to worry stakeholders the most – like long-term care – won’t start right away; advocacy groups and others will continue working with the selected HMOs as the Integrated Care Program gets under way.
But advocacy groups for the disabled say the managed care program would result in less consumer choice and a prioritization of cost savings instead of individuals’ health and well-being.
“The managed care system that the administration has proposed goes against our vision for Illinois. In fact, it takes us backward,” said Barbara Pritchard with Campaign for Real Choice in Illinois. “The managed care system is a medical model. Rather than seeing people with disabilities as individuals who have unique needs, managed care seeks to provide the least expensive services.”
Eagleson and fellow administrator Jim Parker said overall cost savings would be the result of best medical practices.
“The HMO is on the hook for the cost … so if people need a specialist, they’re going to get it because they don’t want to pay the cost of an exacerbation,” Parker said. “If you apply all the economic incentives in the right way, the system will behave in the way that’s best for the patient.”
Medical providers would receive incentives for fewer hospital readmissions, but that end is best met by sending the patient to a scheduled follow-up visit with his or her primary care physician who can intervene before an emergency arises, Parker explained.
The system would work better for patients, Parker and Eagleson said, because it can now include networking technologies that keep a patient’s multiple providers up-to-date on what each has done or encountered with a specific patient.
While fears also include fewer choices for patients, Parker said choice is already limited in the Medicaid system now covering the affected patients.
“We firmly believe that in some circumstances being in this integrated care network will give them better access to some services, not less,” Parker said.
A proposed pilot program that would affect about 40,000 elderly and disabled Illinoisans could save the state $200 million over five years, but that’s not reason enough to rush into things, legislators said today.
The program in question is Gov. Pat Quinn’s Integrated Care Pilot Program, which outlines changes to some Medicaid fee-for-service plans for residents in DuPage, Kane, Kankakee, Lake and Will counties and suburban Cook County starting as early as October 2010. The program – focused on wellness and prevention – would offer incentives to medical providers based on patient health outcomes.
HB 5086, sponsored by Aurora Democrat Rep. Linda Chapa LaVia, would halt the program before it begins and create a task force to analyze its merits.
“The bill supports an inclusive and transparent planning process,” Chapa LaVia said. She said those affected by the pilot program were not asked for input early enough in the development process. “It could be a great program. Just allow us to sit at the table so we can help, so we can [share] our concerns, why we have concerns with what the [proposal] shows.”
Administrators at the Department of Healthcare and Family Services said affected citizens and advocacy groups have been a part of the process all along, but to address their concerns, the state must now choose the health maintenance organizations (HMOs) that would run the program.
“We have been aggressively pursuing input from groups since September, and in more recent months we’ve been [asking] them, ‘What are the outcomes you want to see?’” said Theresa Eagleson, Healthcare and Family Services administrator.
Eagleson said programs that seem to worry stakeholders the most – like long-term care – won’t start right away; advocacy groups and others will continue working with the selected HMOs as the Integrated Care Program gets under way.
But advocacy groups for the disabled say the managed care program would result in less consumer choice and a prioritization of cost savings instead of individuals’ health and well-being.
“The managed care system that the administration has proposed goes against our vision for Illinois. In fact, it takes us backward,” said Barbara Pritchard with Campaign for Real Choice in Illinois. “The managed care system is a medical model. Rather than seeing people with disabilities as individuals who have unique needs, managed care seeks to provide the least expensive services.”
Eagleson and fellow administrator Jim Parker said overall cost savings would be the result of best medical practices.
“The HMO is on the hook for the cost … so if people need a specialist, they’re going to get it because they don’t want to pay the cost of an exacerbation,” Parker said. “If you apply all the economic incentives in the right way, the system will behave in the way that’s best for the patient.”
Medical providers would receive incentives for fewer hospital readmissions, but that end is best met by sending the patient to a scheduled follow-up visit with his or her primary care physician who can intervene before an emergency arises, Parker explained.
The system would work better for patients, Parker and Eagleson said, because it can now include networking technologies that keep a patient’s multiple providers up-to-date on what each has done or encountered with a specific patient.
While fears also include fewer choices for patients, Parker said choice is already limited in the Medicaid system now covering the affected patients.
“We firmly believe that in some circumstances being in this integrated care network will give them better access to some services, not less,” Parker said.
Tuesday, October 05, 2010
Delving deeper into budget cuts: Part 4
By Jamey Dunn
The Illinois Department of Healthcare and Family Services — which administers Medicaid, one of the biggest demands on the state funds — is trimming $216 million according to Gov. Quinn’s budget plan.
According to Quinn’s proposal, the department will be able to maintain the federal requirements for the state to get matching funds for the program. The following is a breakdown of Quinn’s proposals for the agency. (Italics are pulled directly from Quinn’s budget.)
Unified budgeting allows state agencies to work together to meet the long-term care needs of Illinois residents on Medicaid in the most appropriate, community-integrated setting and maximize federal matching funds.
Unified budgeting involves a multi-agency approach to long-term care, instead of each agency trying to tackle the issue independently. “The goal of this unified budgeting approach is to allow a more systemic view of available resources and planned expenditures, specifically as they relate to supporting the transition of individuals currently residing in nursing facilities or other institutional settings to the community.
The budget supports a pilot managed care program that will save the state $200 million over five years by providing 40,000 older adults and people with disabilities in Medicaid with care from integrated delivery systems.
The department chose managed care groups Aetna and Centene-IlliniCare to begin providing services in 2011 for seniors and people with disabilities in Cook, DuPage, Kane, Kankakee, Lake and Will counties. Participants sign on for the program, and some services will be phased in over several years.
Critics of the managed care pilot program have voiced concerns about making cost savings the priority over the care of two vulnerable populations. However, DHFS officials say improved communication among patients’ various health care providers will lead to better care. “The system will link primary, specialty and institutional services and will improve care for Illinois’ most vulnerable residents while saving taxpayer dollars,” Stacey Solano, a spokesperson for DHFS said in a written statement.
The budget allows implementation of recently passed, landmark reforms to ensure the safety of every nursing home resident in the state.
DHFS is working to determine appropriate reimbursement rates, so the money the state gives nursing homes for services would ensure that they provide adequate care and meet new staffing requirements.
The department is strengthening documentation requirements to ensure that only eligible individuals receive Medicaid benefits.
Solano said the department is doing a “full top-to-bottom review of eligibility and enrollment procedures.” The process is still in a preliminary stage, and no cost saving projections have been made.
• $207.8 million decrease in Medicaid lines and Group Insurance. The department plans to enact various quality and efficiency initiatives.
Solano said medical programs and group health insurance will get less money from the revenue fund, but there are no plans to cut programs or eligibility.
A total of $70 million in savings comes from renegotiating a deal with AFSCME on health benefits for state workers.
The state is participating in federal Early Retirement Reinsurance Program, which is part of the health care reform package passed in March. Employers that continue to cover early retirees under their insurance programs will be eligible for subsidies, and Illinois businesses could get between $42 million and $112 million. Solano said the program would help cushion the blow of some of the state cuts.
The department is also emphasizing preventative care to help people avoid serious and costly health problems. “Healthier people, mean fewer re-hospitalizations and services needed, which translates into cost savings for the state,” Solano said.
• $8.0 million in operations reductions
DHFS plans to reduce travel spending by 13 percent, equipment spending by 23 percent and telecommunications costs by 7 percent. With respect to equipment purchases, Solano said, “Purchases will be limited to only replacing equipment necessary for purposes of life safety, client service and continued agency operations.” The agency is not planning any layoffs, but 71 positions that are currently open will not be filled.
Solano added that because Quinn was counting on Congress extending the elevated Medicaid match that was set to expire in December, enough money was set aside to keep up the 30-day payment cycle the federal government requires on certain services for more matching funds.
(For information on cuts to the Department of Children and Family Services, Department of Agriculture and the Department of Natural Resources, see the first, second and third installments of "Delving deeper into the budget cuts" in earlier blog items.)
The Illinois Department of Healthcare and Family Services — which administers Medicaid, one of the biggest demands on the state funds — is trimming $216 million according to Gov. Quinn’s budget plan.
According to Quinn’s proposal, the department will be able to maintain the federal requirements for the state to get matching funds for the program. The following is a breakdown of Quinn’s proposals for the agency. (Italics are pulled directly from Quinn’s budget.)
Unified budgeting allows state agencies to work together to meet the long-term care needs of Illinois residents on Medicaid in the most appropriate, community-integrated setting and maximize federal matching funds.
Unified budgeting involves a multi-agency approach to long-term care, instead of each agency trying to tackle the issue independently. “The goal of this unified budgeting approach is to allow a more systemic view of available resources and planned expenditures, specifically as they relate to supporting the transition of individuals currently residing in nursing facilities or other institutional settings to the community.
The budget supports a pilot managed care program that will save the state $200 million over five years by providing 40,000 older adults and people with disabilities in Medicaid with care from integrated delivery systems.
The department chose managed care groups Aetna and Centene-IlliniCare to begin providing services in 2011 for seniors and people with disabilities in Cook, DuPage, Kane, Kankakee, Lake and Will counties. Participants sign on for the program, and some services will be phased in over several years.
Critics of the managed care pilot program have voiced concerns about making cost savings the priority over the care of two vulnerable populations. However, DHFS officials say improved communication among patients’ various health care providers will lead to better care. “The system will link primary, specialty and institutional services and will improve care for Illinois’ most vulnerable residents while saving taxpayer dollars,” Stacey Solano, a spokesperson for DHFS said in a written statement.
The budget allows implementation of recently passed, landmark reforms to ensure the safety of every nursing home resident in the state.
DHFS is working to determine appropriate reimbursement rates, so the money the state gives nursing homes for services would ensure that they provide adequate care and meet new staffing requirements.
The department is strengthening documentation requirements to ensure that only eligible individuals receive Medicaid benefits.
Solano said the department is doing a “full top-to-bottom review of eligibility and enrollment procedures.” The process is still in a preliminary stage, and no cost saving projections have been made.
• $207.8 million decrease in Medicaid lines and Group Insurance. The department plans to enact various quality and efficiency initiatives.
Solano said medical programs and group health insurance will get less money from the revenue fund, but there are no plans to cut programs or eligibility.
A total of $70 million in savings comes from renegotiating a deal with AFSCME on health benefits for state workers.
The state is participating in federal Early Retirement Reinsurance Program, which is part of the health care reform package passed in March. Employers that continue to cover early retirees under their insurance programs will be eligible for subsidies, and Illinois businesses could get between $42 million and $112 million. Solano said the program would help cushion the blow of some of the state cuts.
The department is also emphasizing preventative care to help people avoid serious and costly health problems. “Healthier people, mean fewer re-hospitalizations and services needed, which translates into cost savings for the state,” Solano said.
• $8.0 million in operations reductions
DHFS plans to reduce travel spending by 13 percent, equipment spending by 23 percent and telecommunications costs by 7 percent. With respect to equipment purchases, Solano said, “Purchases will be limited to only replacing equipment necessary for purposes of life safety, client service and continued agency operations.” The agency is not planning any layoffs, but 71 positions that are currently open will not be filled.
Solano added that because Quinn was counting on Congress extending the elevated Medicaid match that was set to expire in December, enough money was set aside to keep up the 30-day payment cycle the federal government requires on certain services for more matching funds.
(For information on cuts to the Department of Children and Family Services, Department of Agriculture and the Department of Natural Resources, see the first, second and third installments of "Delving deeper into the budget cuts" in earlier blog items.)
Tuesday, April 21, 2009
Health care scare
By Hilary Russell
State employees who want to decide which doctor they see or what hospital they are admitted to may have to re-think their health care options.
According to the legislative Commission on Government Forecasting and Accountability, state employees collectively would be on the hook for $200 million more for their health insurance plans. The commission met with medical providers today to determine whether existing contracts should be renewed for next fiscal year, which starts July 1.
Gov. Pat Quinn’s administration is seeking a health insurance policy that would charge state employees more in monthly premiums if they chose more flexible plans, as opposed to a managed care policy. For example, employees enrolled in the most flexible plans currently pay about $90 a month. Under the administration’s proposal, that premium would increase to nearly $310.
Retirees also would pay more, under Quinn’s proposed operating budget. If approved by the General Assembly, retirees who are not enrolled in Medicare would see the biggest increase. They currently pay about $13 a month for state health benefits. That would increase to about $583 a month.
“That’s a big change,” said Rep. Frank Mautino, a Spring Valley Democrat. “It’s a change from $13 a month, which is unrealistic, to $7,000 a year. People have worked under that and retired under the premise that the state would pay the predominant share of their insurance. Now the governor’s budget assumes that they will pick up about one third of the cost, and that will come as a big surprise.”
The increase in premiums is, in part, an effort to encourage employees to sign up for less expensive managed care plans. The flexible plans allow patients to see any doctor they prefer, while managed care plans limit patients to see doctors on a pre-approved list.
Rep. Elaine Nekritz, a Northbrook Democrat, said that with the increase comes the question of how to pay for it. “What one doesn’t pick up, the other has to. It’s not going to be easy to tell employees that their premiums just increased 5,000 percent. On the other hand, can we come up with another $200 million? Where does it come from? I don’t know. Ultimately, those are the questions we have to work through in the next six weeks.”
Collectively, the projection for Illinois’ State Employees’ Group Health Insurance Liability tops out at $2.1 billion for the next fiscal year, compared with $1.9 billion last year, according to the Commission on Government Forecasting and Accountability.
Hospital board chair steps down
By Jamey Dunn
Dr. Quentin Young withdrew himself today from consideration as the new chair of the Illinois Health Facilities Planning Board because of a possible conflict of interest.
Last Friday, Gov. Pat Quinn named Young, a health care advocate who previously served as Quinn’s physician, to head the board.
According to a statement from Quinn, Young withdrew his name when he realized that his former practice owns part of a property that rents space to a health care provider. Young still has a stake in the practice, and Illinois law bars the head of the hospital planning board from having financial ties to any institution licensed under the state’s hospital licensing act.
State employees who want to decide which doctor they see or what hospital they are admitted to may have to re-think their health care options.
According to the legislative Commission on Government Forecasting and Accountability, state employees collectively would be on the hook for $200 million more for their health insurance plans. The commission met with medical providers today to determine whether existing contracts should be renewed for next fiscal year, which starts July 1.
Gov. Pat Quinn’s administration is seeking a health insurance policy that would charge state employees more in monthly premiums if they chose more flexible plans, as opposed to a managed care policy. For example, employees enrolled in the most flexible plans currently pay about $90 a month. Under the administration’s proposal, that premium would increase to nearly $310.
Retirees also would pay more, under Quinn’s proposed operating budget. If approved by the General Assembly, retirees who are not enrolled in Medicare would see the biggest increase. They currently pay about $13 a month for state health benefits. That would increase to about $583 a month.
“That’s a big change,” said Rep. Frank Mautino, a Spring Valley Democrat. “It’s a change from $13 a month, which is unrealistic, to $7,000 a year. People have worked under that and retired under the premise that the state would pay the predominant share of their insurance. Now the governor’s budget assumes that they will pick up about one third of the cost, and that will come as a big surprise.”
The increase in premiums is, in part, an effort to encourage employees to sign up for less expensive managed care plans. The flexible plans allow patients to see any doctor they prefer, while managed care plans limit patients to see doctors on a pre-approved list.
Rep. Elaine Nekritz, a Northbrook Democrat, said that with the increase comes the question of how to pay for it. “What one doesn’t pick up, the other has to. It’s not going to be easy to tell employees that their premiums just increased 5,000 percent. On the other hand, can we come up with another $200 million? Where does it come from? I don’t know. Ultimately, those are the questions we have to work through in the next six weeks.”
Collectively, the projection for Illinois’ State Employees’ Group Health Insurance Liability tops out at $2.1 billion for the next fiscal year, compared with $1.9 billion last year, according to the Commission on Government Forecasting and Accountability.
Hospital board chair steps down
By Jamey Dunn
Dr. Quentin Young withdrew himself today from consideration as the new chair of the Illinois Health Facilities Planning Board because of a possible conflict of interest.
Last Friday, Gov. Pat Quinn named Young, a health care advocate who previously served as Quinn’s physician, to head the board.
According to a statement from Quinn, Young withdrew his name when he realized that his former practice owns part of a property that rents space to a health care provider. Young still has a stake in the practice, and Illinois law bars the head of the hospital planning board from having financial ties to any institution licensed under the state’s hospital licensing act.
Tuesday, December 14, 2010
Hamos to legislators: Back me up on Medicaid reform
By Jamey Dunn
If legislators want Medicaid reform, they are going to have to fight for it, says Julie Hamos, director of Illinois' Department of Healthcare and Family Services.
Hamos targeted a number of areas for potential savings during a Senate committee today, but she said she needs backing and, sometimes even pressure, from the General Assembly to spur negations with providers.
“It’s times like this, when we really have a budget crisis, that we should pushing the envelope and trying to see what we can really achieve in all of the budget items,” she said at the Chicago hearing.
Hamos hopes to save the state money on prescriptions. “We do believe that we should be making some adjustments in the pharmacy rates. It’s a very big part of our Medicaid budget and a place that we need to go to when we are talking about the kind of pressures we have right now to make budget reductions.”
Hamos said the state is paying too much for dispensing fees. Illinois pays $4.60 per Medicaid prescription for generic drugs and $3.40 for brand-name drugs. That compares to $1.36 for generics and $1.28 for brand-name drugs under the state’s employee health care plan.
However, David Vite, president of the Illinois Retail Merchants Association (IRMA), said there is little room to cut back on Medicaid prescription costs. “Pharmacy in the Medicaid program is about as low as it can go. We are in the mainstream of all 50 states in all Medicaid programs, and Medicaid pays less than the average prescription price.”
He said that Medicaid patients do not pay the co-payment on nearly half of the prescriptions that pharmacies fill. Hamos said she wants pharmacies to work harder to recoup those co-payments, but she conceded that she was not sure what steps they should take to collect the cash. “We have very small co-pays, but the co-pays we have are there for a purpose. I think that collecting them is a part of getting people to be more invested in their health care.”
She added that her agency is negotiating with IRMA and the Illinois Pharmacy Association, and she hopes to reach a deal by early January.
John Stephen—a partner with the Boston-based consulting firm The Lucas Group, who served on Gov. Pat Quinn’s taxpayer action board—said Illinois needs to be bold and take a long view on Medicaid changes, or legislators will “back every year looking at the same things.”
Stephen, who served as New Hampshire's Commissioner of Health and Human Services and testified on Medicaid reform in front of the Illinois Senate Deficit Reduction Committee last year, said: “I feel like I’m saying the same things I said to that committee.”
He said Illinois should target two areas—moving clients our of institutional settings when possible and utilizing more managed care programs.
“[In New Hampshire] we’ve saved all kinds of money with home- and community-based services. And we’ve done it the right way. But it takes a lot of effort.”
Illinois is building a managed care pilot program to treat elderly and disabled patients in some Chicago suburban counties.
However, Hamos voiced frustration over resistance to the program from legislators, stakeholders and even medical providers. “The same hospitals that we are investing in and putting a lot of Medicaid dollars into are not signing up to be part of our network. That’s a problem. So we are seeing push back as we develop managed care in Illinois. And we want you to recognize as you want us probably to expand that—something that we’re definitely interested in doing…the provider community, the stakeholders and the policymakers all need to be on our team as we move forward.”
Hamos said she also hopes to change the ways in which providers are paid, such as compensating based on results and trying to get the state better rates by bundling services. She also called for backing from the legislature on this issue.
“This whole question of payment reform is very much a theme of national health care. And we would like to really be very creative about how we roll that out. Again the providers are not necessarily going to like that. We want you to back us up in doing that. It’s going to be a challenge. Change is hard.”
If legislators want Medicaid reform, they are going to have to fight for it, says Julie Hamos, director of Illinois' Department of Healthcare and Family Services.
Hamos targeted a number of areas for potential savings during a Senate committee today, but she said she needs backing and, sometimes even pressure, from the General Assembly to spur negations with providers.
“It’s times like this, when we really have a budget crisis, that we should pushing the envelope and trying to see what we can really achieve in all of the budget items,” she said at the Chicago hearing.
Hamos hopes to save the state money on prescriptions. “We do believe that we should be making some adjustments in the pharmacy rates. It’s a very big part of our Medicaid budget and a place that we need to go to when we are talking about the kind of pressures we have right now to make budget reductions.”
Hamos said the state is paying too much for dispensing fees. Illinois pays $4.60 per Medicaid prescription for generic drugs and $3.40 for brand-name drugs. That compares to $1.36 for generics and $1.28 for brand-name drugs under the state’s employee health care plan.
However, David Vite, president of the Illinois Retail Merchants Association (IRMA), said there is little room to cut back on Medicaid prescription costs. “Pharmacy in the Medicaid program is about as low as it can go. We are in the mainstream of all 50 states in all Medicaid programs, and Medicaid pays less than the average prescription price.”
He said that Medicaid patients do not pay the co-payment on nearly half of the prescriptions that pharmacies fill. Hamos said she wants pharmacies to work harder to recoup those co-payments, but she conceded that she was not sure what steps they should take to collect the cash. “We have very small co-pays, but the co-pays we have are there for a purpose. I think that collecting them is a part of getting people to be more invested in their health care.”
She added that her agency is negotiating with IRMA and the Illinois Pharmacy Association, and she hopes to reach a deal by early January.
John Stephen—a partner with the Boston-based consulting firm The Lucas Group, who served on Gov. Pat Quinn’s taxpayer action board—said Illinois needs to be bold and take a long view on Medicaid changes, or legislators will “back every year looking at the same things.”
Stephen, who served as New Hampshire's Commissioner of Health and Human Services and testified on Medicaid reform in front of the Illinois Senate Deficit Reduction Committee last year, said: “I feel like I’m saying the same things I said to that committee.”
He said Illinois should target two areas—moving clients our of institutional settings when possible and utilizing more managed care programs.
“[In New Hampshire] we’ve saved all kinds of money with home- and community-based services. And we’ve done it the right way. But it takes a lot of effort.”
Illinois is building a managed care pilot program to treat elderly and disabled patients in some Chicago suburban counties.
However, Hamos voiced frustration over resistance to the program from legislators, stakeholders and even medical providers. “The same hospitals that we are investing in and putting a lot of Medicaid dollars into are not signing up to be part of our network. That’s a problem. So we are seeing push back as we develop managed care in Illinois. And we want you to recognize as you want us probably to expand that—something that we’re definitely interested in doing…the provider community, the stakeholders and the policymakers all need to be on our team as we move forward.”
Hamos said she also hopes to change the ways in which providers are paid, such as compensating based on results and trying to get the state better rates by bundling services. She also called for backing from the legislature on this issue.
“This whole question of payment reform is very much a theme of national health care. And we would like to really be very creative about how we roll that out. Again the providers are not necessarily going to like that. We want you to back us up in doing that. It’s going to be a challenge. Change is hard.”
Wednesday, January 05, 2011
Senate approves Medicaid reform package
By Lauren Johnson with Jamey Dunn contributing
The Illinois Senate today passed a major reform package to the Medicaid system, which provides health care to low-income individuals in Illinois.
House Bill 5420 would require Medicaid patients to provide proof of Illinois state residency and a month’s income as part of a stepped-up verification system that would be implemented by Department of Health and Family Services.
At present, individuals who initially meet eligibility requirements are presumed eligible each year regardless of verification.
House Bill 5420 would also lower the eligibility ceiling for the AllKids program to at or below 300 percent of the federal poverty level, or an income of $66,000 for a household of four.
The legislation extends the program, which would’ have expired in July, to 2016. Julie Hamos, director of the Illinois Department of Health and Family Services, said capping the eligibility for AllKids was a difficult decision but a necessary one to keep the program viable.
“This will be more of a program for low-income and middle-income families,” Hamos said.
Under the measure, at least 50 percent of Medicaid enrollees must be part of a so-called coordinated care system, which is similar to managed care, by January 1, 2015. Much of the coordinated care — which focuses on preventative care and directing patients to a primary doctor for basic treatment — would be contracted to private companies.
“Now, we have 2.8 million people in the Medicaid program," said Sen. Heather Steans, a Chicago Democrat. "Out of that, there are 160,000 that are in managed care, so this is huge change, turning a very large ship in the state into some sort of reshaping kind of environment."
Also included in the package is a new way to combat Medicaid fraud by recovering state and federal payments for benefits received by ineligible individuals and charging them interest and penalties. Offenders would be subject to a civil penalty of $2,000 for Medicaid fraud.
Steans said the committee’s short timetable made it nearly impossible to address all areas of potential Medicaid reform in Illinois. “This is clearly a start,” she said.
Both Steans and Hamos characterized the changes as substantial and said they would take time and a coordinated effort among several state agencies to implement.
If the measure becomes law, the Department of Health and Family Services will come before the Senate Medicaid Reform Committee for an evaluation on the larger aspects of the bill, such as the shift to coordinated care, next spring.
Steans said the push for the measure has been a collaborative process, with bipartisan support from each chamber as well as Gov. Pat Quinn's office. Hamos said the bill could be up for a vote in the House as soon as tomorrow.
Internet sales tax
By Jamey Dunn
The Senate also approved a plan that would allow Illinois to collect sales tax on online purchases from companies that do not have a brick-and-mortar location in the state — one of the most well-known examples being Amazon.com.
When Illinois residents buy goods on the Internet, they are supposed to pay the state a sales tax if the company does not charge them. But few are even aware they owe the state. Senate President John Cullerton characterized House Bill 3659 as an attempt to bring in the money by making the vendor collect it.
Opponents to the bill said they agreed with the idea but were concerned about the potential for lawsuits, uneven execution — which may not treat all business equally — and possible complications with potential plans to pass a national solution. “[The U.S.] Congress has got to be responsible and act on this,” said Sen. Dave Syverson, a Rockford Republican.
He added that large companies such as Amazon.com would find ways around collecting the tax, and that the legislation might hurt sales at smaller businesses.
The Illinois Senate today passed a major reform package to the Medicaid system, which provides health care to low-income individuals in Illinois.
House Bill 5420 would require Medicaid patients to provide proof of Illinois state residency and a month’s income as part of a stepped-up verification system that would be implemented by Department of Health and Family Services.
At present, individuals who initially meet eligibility requirements are presumed eligible each year regardless of verification.
House Bill 5420 would also lower the eligibility ceiling for the AllKids program to at or below 300 percent of the federal poverty level, or an income of $66,000 for a household of four.
The legislation extends the program, which would’ have expired in July, to 2016. Julie Hamos, director of the Illinois Department of Health and Family Services, said capping the eligibility for AllKids was a difficult decision but a necessary one to keep the program viable.
“This will be more of a program for low-income and middle-income families,” Hamos said.
Under the measure, at least 50 percent of Medicaid enrollees must be part of a so-called coordinated care system, which is similar to managed care, by January 1, 2015. Much of the coordinated care — which focuses on preventative care and directing patients to a primary doctor for basic treatment — would be contracted to private companies.
“Now, we have 2.8 million people in the Medicaid program," said Sen. Heather Steans, a Chicago Democrat. "Out of that, there are 160,000 that are in managed care, so this is huge change, turning a very large ship in the state into some sort of reshaping kind of environment."
Also included in the package is a new way to combat Medicaid fraud by recovering state and federal payments for benefits received by ineligible individuals and charging them interest and penalties. Offenders would be subject to a civil penalty of $2,000 for Medicaid fraud.
Steans said the committee’s short timetable made it nearly impossible to address all areas of potential Medicaid reform in Illinois. “This is clearly a start,” she said.
Both Steans and Hamos characterized the changes as substantial and said they would take time and a coordinated effort among several state agencies to implement.
If the measure becomes law, the Department of Health and Family Services will come before the Senate Medicaid Reform Committee for an evaluation on the larger aspects of the bill, such as the shift to coordinated care, next spring.
Steans said the push for the measure has been a collaborative process, with bipartisan support from each chamber as well as Gov. Pat Quinn's office. Hamos said the bill could be up for a vote in the House as soon as tomorrow.
Internet sales tax
By Jamey Dunn
The Senate also approved a plan that would allow Illinois to collect sales tax on online purchases from companies that do not have a brick-and-mortar location in the state — one of the most well-known examples being Amazon.com.
When Illinois residents buy goods on the Internet, they are supposed to pay the state a sales tax if the company does not charge them. But few are even aware they owe the state. Senate President John Cullerton characterized House Bill 3659 as an attempt to bring in the money by making the vendor collect it.
Opponents to the bill said they agreed with the idea but were concerned about the potential for lawsuits, uneven execution — which may not treat all business equally — and possible complications with potential plans to pass a national solution. “[The U.S.] Congress has got to be responsible and act on this,” said Sen. Dave Syverson, a Rockford Republican.
He added that large companies such as Amazon.com would find ways around collecting the tax, and that the legislation might hurt sales at smaller businesses.
Tuesday, January 25, 2011
Quinn signs Medicaid reforms
By Lauren N. Johnson
Gov. Pat Quinn signed a bill today enacting comprehensive reforms to the Medicaid system in Illinois.
“It’s a very important day for health care in Illinois,” said Quinn, highlighting the measure’s passage during a challenging economic time for the state and the bipartisan effort put forth to approve the package in the last few weeks of session.
The governor said the measure is an “efficient” and “proper” response by lawmakers to remove waste and fraud from the state’s Medicaid system while saving taxpayers' money. He said the reforms also will help stabilize Illinois’ budget.
The legislation was sponsored in the Senate by Sen. Heather Steans, a Chicago Democrat, and Sen. Dale Righter a Mattoon Republican, and in the House by Rep. Barbara Flynn Currie, a Chicago Democrat, and Rep. Patricia Bellock, a Hinsdale Republican.
The state’s Medicaid system, which is administered by the Department of Healthcare and Family Services, provides health coverage to 2.8 million low-income individuals and families, people with disabilities and older adults. Of those, 160,000 are in the state’s voluntary managed-care program.
Under the new law, the department will expand so-called coordinated care – focused on wellness and prevention – to cover at least 50 percent of recipients eligible for Medicaid by 2015. That and other reforms are expected to achieve savings of more than $624 million during the next five years.
“We are reforming the [health care provider] service delivery system at the same time that we are reforming the payment system,” said Julie Hamos, director of the Department of Healthcare and Family Services, “and the combination of those two will produce the kind of incentives we need to keep people healthier and ultimately cheaper to provide health care for.”
As part of the coordinated care, said Michelle Saddler, secretary of the Department of Human Services, the department aims to put all Medicaid enrollees into “medical homes,” where they will consistently see primary care physicians.
The new law also will allow the state to save on prescription drug costs by increasing co-payments, promoting 90-day maintenance prescriptions and controlling utilization, and reducing prompt payment interest rates for pharmacy bills from 2 percent to 1 percent.
Beginning in July, the department will enhance the eligibility process – subject to federal approval – by requiring participants to prove Illinois residency annually and verify their incomes. The stepped-up process will require a month’s worth of income information instead of a single pay stub. Annual redetermination of eligibility will begin October 1.
Gov. Pat Quinn signed a bill today enacting comprehensive reforms to the Medicaid system in Illinois.
“It’s a very important day for health care in Illinois,” said Quinn, highlighting the measure’s passage during a challenging economic time for the state and the bipartisan effort put forth to approve the package in the last few weeks of session.
The governor said the measure is an “efficient” and “proper” response by lawmakers to remove waste and fraud from the state’s Medicaid system while saving taxpayers' money. He said the reforms also will help stabilize Illinois’ budget.
The legislation was sponsored in the Senate by Sen. Heather Steans, a Chicago Democrat, and Sen. Dale Righter a Mattoon Republican, and in the House by Rep. Barbara Flynn Currie, a Chicago Democrat, and Rep. Patricia Bellock, a Hinsdale Republican.
The state’s Medicaid system, which is administered by the Department of Healthcare and Family Services, provides health coverage to 2.8 million low-income individuals and families, people with disabilities and older adults. Of those, 160,000 are in the state’s voluntary managed-care program.
Under the new law, the department will expand so-called coordinated care – focused on wellness and prevention – to cover at least 50 percent of recipients eligible for Medicaid by 2015. That and other reforms are expected to achieve savings of more than $624 million during the next five years.
“We are reforming the [health care provider] service delivery system at the same time that we are reforming the payment system,” said Julie Hamos, director of the Department of Healthcare and Family Services, “and the combination of those two will produce the kind of incentives we need to keep people healthier and ultimately cheaper to provide health care for.”
As part of the coordinated care, said Michelle Saddler, secretary of the Department of Human Services, the department aims to put all Medicaid enrollees into “medical homes,” where they will consistently see primary care physicians.
The new law also will allow the state to save on prescription drug costs by increasing co-payments, promoting 90-day maintenance prescriptions and controlling utilization, and reducing prompt payment interest rates for pharmacy bills from 2 percent to 1 percent.
Beginning in July, the department will enhance the eligibility process – subject to federal approval – by requiring participants to prove Illinois residency annually and verify their incomes. The stepped-up process will require a month’s worth of income information instead of a single pay stub. Annual redetermination of eligibility will begin October 1.
Monday, December 13, 2010
Illinois may crack down on Medicaid eligiblity
By Jamey Dunn
In its ongoing quest to find savings in the state’s Medicaid system, a House committee today took up the issue of making sure those who receive benefits are eligible for them.
Legislators in both houses are looking for ways to trim the Medicaid budget and make the system more efficient. However, today’s hearing did not produce many options. The one change most agreed with was working to make records electronic and shareable between state agencies.
John Bouman, president of the Sargent Shriver National Center on Policy Law, said the state should take advantage of federal funding associated with the health care reform law. “For example, if we are going to save $200 million in managed care ideas, save $190 million, take $10 million and turn that it into $100 million pot for information technology upgrades, which adds that much money to the state budget to do tasks we should be doing anyhow.”
Legislators on the committee painted a grim picture of the administrative oversight and technological systems Medicaid operates under.
“Everything is still in paper files. Computer systems crash. The whole office is shut down. Nothing works and it’s not only undignified for recipients of our human …services but also ridiculous when it comes to being able to efficiently manage this,” said Rep. Sarah Feigenholtz, a Chicago Democrat.
“In my local office … each one of the case management people have 2,500 cases. ... This is what one of them told us: They’re just told not to answer the phone because they can’t handle it,” said Rep. Patricia Bellock, a Hinsdale Republican.
Bouman said if legislators want to crack down on verifying whether patients are eligible for Medicaid assistance, new technology is needed. He said a “staff-heavy, paper-heavy” verification system is slow, costly and has more potential for mistakes.
However, Bouman cautioned against kicking people off of Medicaid coverage — even if their eligibility lapses — if the committee’s overall goal is to provide preventative health care rather than expensive treatment for chronic medical problems. “This is not traditional cash welfare assistance where we have a stern gatekeeping function. This is health policy. And we have to pay attention to connection to care, and not interrupting care and getting the cheap sensible prevention going on and continuing.”
Members of Gov. Pat Quinn’s administration were not receptive to the idea of knocking such people out of the program as undocumented children and people whose coverage is paid for solely by the state.
“We see the issue of serving undocumented children as a policy issue, one that we’re proud of and this governor supports. So we are not proposing changes in reducing eligibility for undocumented children,” said Julie Hamos, director of the Illinois Department of Healthcare and Family Services.
Hamos said the pool of single adults that Illinois covers with no help from the feds costs the state around $16.9 million. “This is a relatively small amount of money, relatively, but it’s still money … If we don’t provide for some kind of payment for these very low-income people either they’re going to get very sick and end up in emergency rooms, and then the hospitals will be eating the cost one way or another, or they won’t even get primary health care, and they’ll by default get sicker.”
Hamos said her agency would present plans for new technology and information sharing to the General Assembly in the spring. She also said she would support stricter enforcement of eligibility standards; however, the federal government may not allow such changes. To receive federal matching dollars, Illinois cannot change the standards used to determine who is eligible for Medicaid assistance. “We will try to make the best case for why verification is different than [changes in] eligibility. …But we don’t know how [the federal government] will react.”
The committee is scheduled to meet again tomorrow. A Senate committee is also taking up the issue of Medicaid reform.
In its ongoing quest to find savings in the state’s Medicaid system, a House committee today took up the issue of making sure those who receive benefits are eligible for them.
Legislators in both houses are looking for ways to trim the Medicaid budget and make the system more efficient. However, today’s hearing did not produce many options. The one change most agreed with was working to make records electronic and shareable between state agencies.
John Bouman, president of the Sargent Shriver National Center on Policy Law, said the state should take advantage of federal funding associated with the health care reform law. “For example, if we are going to save $200 million in managed care ideas, save $190 million, take $10 million and turn that it into $100 million pot for information technology upgrades, which adds that much money to the state budget to do tasks we should be doing anyhow.”
Legislators on the committee painted a grim picture of the administrative oversight and technological systems Medicaid operates under.
“Everything is still in paper files. Computer systems crash. The whole office is shut down. Nothing works and it’s not only undignified for recipients of our human …services but also ridiculous when it comes to being able to efficiently manage this,” said Rep. Sarah Feigenholtz, a Chicago Democrat.
“In my local office … each one of the case management people have 2,500 cases. ... This is what one of them told us: They’re just told not to answer the phone because they can’t handle it,” said Rep. Patricia Bellock, a Hinsdale Republican.
Bouman said if legislators want to crack down on verifying whether patients are eligible for Medicaid assistance, new technology is needed. He said a “staff-heavy, paper-heavy” verification system is slow, costly and has more potential for mistakes.
However, Bouman cautioned against kicking people off of Medicaid coverage — even if their eligibility lapses — if the committee’s overall goal is to provide preventative health care rather than expensive treatment for chronic medical problems. “This is not traditional cash welfare assistance where we have a stern gatekeeping function. This is health policy. And we have to pay attention to connection to care, and not interrupting care and getting the cheap sensible prevention going on and continuing.”
Members of Gov. Pat Quinn’s administration were not receptive to the idea of knocking such people out of the program as undocumented children and people whose coverage is paid for solely by the state.
“We see the issue of serving undocumented children as a policy issue, one that we’re proud of and this governor supports. So we are not proposing changes in reducing eligibility for undocumented children,” said Julie Hamos, director of the Illinois Department of Healthcare and Family Services.
Hamos said the pool of single adults that Illinois covers with no help from the feds costs the state around $16.9 million. “This is a relatively small amount of money, relatively, but it’s still money … If we don’t provide for some kind of payment for these very low-income people either they’re going to get very sick and end up in emergency rooms, and then the hospitals will be eating the cost one way or another, or they won’t even get primary health care, and they’ll by default get sicker.”
Hamos said her agency would present plans for new technology and information sharing to the General Assembly in the spring. She also said she would support stricter enforcement of eligibility standards; however, the federal government may not allow such changes. To receive federal matching dollars, Illinois cannot change the standards used to determine who is eligible for Medicaid assistance. “We will try to make the best case for why verification is different than [changes in] eligibility. …But we don’t know how [the federal government] will react.”
The committee is scheduled to meet again tomorrow. A Senate committee is also taking up the issue of Medicaid reform.
Tuesday, February 21, 2012
Aside from facility closings, Quinn's budget proposal is expected to be short on details
By Jamey Dunn
Gov. Pat Quinn’s budget proposal on Wednesday will call for the closure of more than a dozen state facilities, but will likely run short on specifics about reforming the state’s costly Medicaid and pension systems.
Top members of Quinn’s staff said in a budget briefing this evening that the governor plans to propose closing14 state facilities, including prisons, youth prisons, mental health centers, centers for the developmentally disabled and adult transition centers, which work to get newly released inmates back on their feet. The list includes:
Lawmakers and advocates alike balked at Quinn’s long list of proposed closures. “This is an absolute nightmare. I was afraid Governor Quinn’s budget would put the Murray Center in its sights. Does the administration have an idea what this will do to the patients, families and the city of Centralia? I have met with the administration officials and thought that they would have some legitimate long-term strategy on this issue – but they do not,” Sen. John Jones, a Mt. Vernon Republican, said in a prepared statement. “Since they initially floated this idea last year, the economy in Centralia has slumped. Well, now that these plans are at least laid out, it’s time to dig in, and I vow to oppose the closure plans.”
Quinn has said he plans to transition residents and patients in mental health and developmental care into community based setting that would be less costly and provide a better quality of care. A budget document from Quinn’s office said that his Fiscal Year 2013 budget will include money to transition people from institutions to community care.
The plan calls for moving about half of the fewer than 400 Tamms inmates to the maximum-security wing of the Pontiac Correctional Center. Tamms holds especially violent or disruptive prisoners who have been deemed too dangerous to house in the general prison population. According to budget documents from Quinn's office, the other half would be “relocated accordingly.” The about 1,000 inmates currently locked up at the Dwight prison, which is a women’s facility, would be moved to the Logan Correctional Center in Lincoln, which would be converted to an all female prison. Male prisoners from Logan would be moved to the Lincoln Correctional Center, which would be converted to an all male center.
Dwight is currently the state’s only level-one maximum security lockup for female prisoners. It is the processing center for female prisoners and also houses lower security inmates. “Dwight not a perfect place, but compared to other facilities in the DOC, there’s a lot going right with Dwight,” said John Maki, executive director of the prison watchdog group John Howard Association. Maki said that he does not envision any workable scenario for closing Dwight. “This would be impossible. This is not a serious proposal.”
Quinn’s budget staff said former inmates would still receive the services, such as vocational training and addiction treatment, provided by the adult transition centers. “Instead of doing that from these adult transition centers located all over the state…they’re going to do it on electronic detention,” said David Vaught, Quinn’s budget director.”
Quinn’s budget proposal will also call for elimination of 24 out of the 90 Department of Human Services offices through consolidation. The plan also calls for the elimination of four Department of Child and Family Services offices from which Vaught said employees would be transferred. “They’re not going to reduce employees. They’re not going to reduce services," Vaught said of the consolidations. The proposal calls for the elimination of one of the state’s two agriculture laboratories, as well. A lab in Centralia would close, and a lab in Galesburg would remain open. “Everybody in the state is going to be affected by this downsizing of state government and this closing of state facilities,” Vaught said.
Jack Lavin, Quinn’s chief of staff said, “Every year, we say, ‘This is the toughest budget,’ and I’m saying again this year, ‘This is the toughest budget we’ve ever faced.’”
However, Quinn also plans to call for some new spending. The governor wants a $20 million increase for early childhood education and a $50 million increase for the Monetary Award Program (MAP) grants for college students. Both areas have been cut in recent budget years. The governor also plans to revisit tax cut proposals pitched in his State of the State address as ways to spur economic growth in the state. Quinn also plans to propose new capital spending on schools, water systems and deferred maintenance at state facilities. His budget staff said that he does not have a specific estimate for how much new capital borrowing would be needed for such projects. They said new revenues would be needed to fund the projects but did not point to any one source. “We need to make sure that it’s not just about cutting. It’s about building and growing,” Lavin said of Quinn’s proposal.
What Quinn likely won’t give many details on are the two biggest budget issues he is looking to tackle this year: reforms to the Medicaid and public employee pension systems.
Quinn wants to hold Medicaid spending flat, which would mean staving off an estimated $2.7 billion in costs for FY 13. Stermer said that Quinn wants to work with legislators so see what changes can be made to state laws. He pointed to the list of services provided and said the governor wants to partner with legislators and reevaluate all services that are not required by the federal government. He said the state needs to step up implementation of managed care programs and focus on providing the consistent medical care people need to stay healthy. “We need to convert this whole thing to a wellness program,” he said. “We’re not just going to wait for people to go from provider to provider to provider and just pay the bills.” He called pushing Medicaid costs into future budget years — as lawmakers did with about $2 billion Medicaid bills that will carry over into next fiscal year — “a recipe for collapse of the Medicaid program.”
As for pension reform, Stermer said the working group he is heading is trying to tackle the issue, and any reforms they propose would be vetted by the standard legislative process. So it is unlikely Quinn will pitch anything too specific Wednesday. “We’re doing something very very akin to formal negotiations with stakeholders,” Stermer said.
Quinn is scheduled to present his budget Wednesday at noon.
Gov. Pat Quinn’s budget proposal on Wednesday will call for the closure of more than a dozen state facilities, but will likely run short on specifics about reforming the state’s costly Medicaid and pension systems.
Top members of Quinn’s staff said in a budget briefing this evening that the governor plans to propose closing14 state facilities, including prisons, youth prisons, mental health centers, centers for the developmentally disabled and adult transition centers, which work to get newly released inmates back on their feet. The list includes:
- Tamms "super-max" prison
- Dwight Correctional Center
- Singer Mental Health Center in Rockford
- Murray Developmental Center in Centralia
- Jacksonville Developmental Center
- Tinley Park Mental Health Center
- Joliet Juvenile Justice Center
- Murphysboro Juvenile Justice Center
Lawmakers and advocates alike balked at Quinn’s long list of proposed closures. “This is an absolute nightmare. I was afraid Governor Quinn’s budget would put the Murray Center in its sights. Does the administration have an idea what this will do to the patients, families and the city of Centralia? I have met with the administration officials and thought that they would have some legitimate long-term strategy on this issue – but they do not,” Sen. John Jones, a Mt. Vernon Republican, said in a prepared statement. “Since they initially floated this idea last year, the economy in Centralia has slumped. Well, now that these plans are at least laid out, it’s time to dig in, and I vow to oppose the closure plans.”
Quinn has said he plans to transition residents and patients in mental health and developmental care into community based setting that would be less costly and provide a better quality of care. A budget document from Quinn’s office said that his Fiscal Year 2013 budget will include money to transition people from institutions to community care.
The plan calls for moving about half of the fewer than 400 Tamms inmates to the maximum-security wing of the Pontiac Correctional Center. Tamms holds especially violent or disruptive prisoners who have been deemed too dangerous to house in the general prison population. According to budget documents from Quinn's office, the other half would be “relocated accordingly.” The about 1,000 inmates currently locked up at the Dwight prison, which is a women’s facility, would be moved to the Logan Correctional Center in Lincoln, which would be converted to an all female prison. Male prisoners from Logan would be moved to the Lincoln Correctional Center, which would be converted to an all male center.
Dwight is currently the state’s only level-one maximum security lockup for female prisoners. It is the processing center for female prisoners and also houses lower security inmates. “Dwight not a perfect place, but compared to other facilities in the DOC, there’s a lot going right with Dwight,” said John Maki, executive director of the prison watchdog group John Howard Association. Maki said that he does not envision any workable scenario for closing Dwight. “This would be impossible. This is not a serious proposal.”
Quinn’s budget staff said former inmates would still receive the services, such as vocational training and addiction treatment, provided by the adult transition centers. “Instead of doing that from these adult transition centers located all over the state…they’re going to do it on electronic detention,” said David Vaught, Quinn’s budget director.”
Quinn’s budget proposal will also call for elimination of 24 out of the 90 Department of Human Services offices through consolidation. The plan also calls for the elimination of four Department of Child and Family Services offices from which Vaught said employees would be transferred. “They’re not going to reduce employees. They’re not going to reduce services," Vaught said of the consolidations. The proposal calls for the elimination of one of the state’s two agriculture laboratories, as well. A lab in Centralia would close, and a lab in Galesburg would remain open. “Everybody in the state is going to be affected by this downsizing of state government and this closing of state facilities,” Vaught said.
Jack Lavin, Quinn’s chief of staff said, “Every year, we say, ‘This is the toughest budget,’ and I’m saying again this year, ‘This is the toughest budget we’ve ever faced.’”
However, Quinn also plans to call for some new spending. The governor wants a $20 million increase for early childhood education and a $50 million increase for the Monetary Award Program (MAP) grants for college students. Both areas have been cut in recent budget years. The governor also plans to revisit tax cut proposals pitched in his State of the State address as ways to spur economic growth in the state. Quinn also plans to propose new capital spending on schools, water systems and deferred maintenance at state facilities. His budget staff said that he does not have a specific estimate for how much new capital borrowing would be needed for such projects. They said new revenues would be needed to fund the projects but did not point to any one source. “We need to make sure that it’s not just about cutting. It’s about building and growing,” Lavin said of Quinn’s proposal.
What Quinn likely won’t give many details on are the two biggest budget issues he is looking to tackle this year: reforms to the Medicaid and public employee pension systems.
Quinn wants to hold Medicaid spending flat, which would mean staving off an estimated $2.7 billion in costs for FY 13. Stermer said that Quinn wants to work with legislators so see what changes can be made to state laws. He pointed to the list of services provided and said the governor wants to partner with legislators and reevaluate all services that are not required by the federal government. He said the state needs to step up implementation of managed care programs and focus on providing the consistent medical care people need to stay healthy. “We need to convert this whole thing to a wellness program,” he said. “We’re not just going to wait for people to go from provider to provider to provider and just pay the bills.” He called pushing Medicaid costs into future budget years — as lawmakers did with about $2 billion Medicaid bills that will carry over into next fiscal year — “a recipe for collapse of the Medicaid program.”
As for pension reform, Stermer said the working group he is heading is trying to tackle the issue, and any reforms they propose would be vetted by the standard legislative process. So it is unlikely Quinn will pitch anything too specific Wednesday. “We’re doing something very very akin to formal negotiations with stakeholders,” Stermer said.
Quinn is scheduled to present his budget Wednesday at noon.
Friday, April 09, 2010
Hamos to head DHFS and session preview
Gov. Pat Quinn named Rep. Julie Hamos, a Wilmette Democrat, to head the Department of Healthcare and Family Services.
Hamos will replace former director Barry Maram, appointed by former Gov. Rod Balgojevich in 2003, who resigned last week.
Hamos has served in the House since 1999, where she has focused on healthcare and social service issues. She lost her bid for Congress in the Democratic primary last February.
“I want to make sure we have a person in that department like Julie Hamos, who really cares for families, cares about healthcare understands it’s important that we work with Washington, the federal government, all the time,” Quinn said at a Chicago press conference.
Quinn added that communication with the feds will be even more important now that President Barack Obama signed national health care reform into law. Hamos said she is eager to implement the changes in Illinois.
“This is an exciting time in the nation's history when we have an opportunity to really make a difference in peoples' lives. With the national health care reform now the law of the land, we will showcase Illinois as the place where we will get it right, and I am excited about building the system from scratch,” Hamos said in Chicago.
She also said that she is open to Republican suggestions for Medicaid reform, such as moving some patients to managed care programs.
Next Week
A Senate committee will take up several redistricting plans tomorrow evening. So check back for an update.
A hearing on a possible revamp of telecommunications regulation is scheduled for Tuesday.
Quinn said budget talks with legislators would begin next week. “It’s time to step on the gas pedal,” he said in regards to the budget.
Adjournment is scheduled for the relatively early date of May 2, and lawmakers will be motivated to hit the campaign trail for the November general election. So once the legislature returns from spring break next week, they should be moving bills and budget negotiations along at a pretty quick pace. Check here for updates and analysis.
Hamos will replace former director Barry Maram, appointed by former Gov. Rod Balgojevich in 2003, who resigned last week.
Hamos has served in the House since 1999, where she has focused on healthcare and social service issues. She lost her bid for Congress in the Democratic primary last February.
“I want to make sure we have a person in that department like Julie Hamos, who really cares for families, cares about healthcare understands it’s important that we work with Washington, the federal government, all the time,” Quinn said at a Chicago press conference.
Quinn added that communication with the feds will be even more important now that President Barack Obama signed national health care reform into law. Hamos said she is eager to implement the changes in Illinois.
“This is an exciting time in the nation's history when we have an opportunity to really make a difference in peoples' lives. With the national health care reform now the law of the land, we will showcase Illinois as the place where we will get it right, and I am excited about building the system from scratch,” Hamos said in Chicago.
She also said that she is open to Republican suggestions for Medicaid reform, such as moving some patients to managed care programs.
Next Week
A Senate committee will take up several redistricting plans tomorrow evening. So check back for an update.
A hearing on a possible revamp of telecommunications regulation is scheduled for Tuesday.
Quinn said budget talks with legislators would begin next week. “It’s time to step on the gas pedal,” he said in regards to the budget.
Adjournment is scheduled for the relatively early date of May 2, and lawmakers will be motivated to hit the campaign trail for the November general election. So once the legislature returns from spring break next week, they should be moving bills and budget negotiations along at a pretty quick pace. Check here for updates and analysis.
Thursday, April 11, 2013
DHS bogged down by big caseloads
By Jamey Dunn
The Illinois Department of Human Services is struggling to provide services as some workers face caseloads of more than a thousand people.
Michelle Saddler, the agency's director, said that the department is understaffed. “Many of you have probably heard DHS is behind or DHS has a backlog,” she told a House human services budget committee today. “We at DHS overall need more realistic staffing.” The department is asking for $3.6 billion for fiscal year 2014, the same amount proposed under Gov. Pat Quinn’s budget. DHS is expected to spend more than $3.2 billion this fiscal year. The department was cut by almost $150 million under the current fiscal year’s budget.
Linda Saterfield, director of the division of family and community services at DHS, said some of her caseworkers have caseloads as big as 2,600. “If you calculate that out, that leaves that worker less than 45 minutes over the course of a year to serve that family.” The average caseload in the division, which administers such core safety net programs as Temporary Assistance for Needy Families and the Supplemental Nutrition Assistance program, averages more than 900 cases per worker. That compares with the year 2000, when the average was just under 250 cases per worker. Saterfield said that one in four residents are served through one of the division’s programs. “Our caseload has grown dramatically, but our staffing levels have reduced so much that we are unable to adequately meet the needs for services,” she said.
Kevin Casey, director of the Division of Developmental Disabilities at DHS, said there are about 11,000 people with developmental disabilities waiting for services in Illinois. He said the wait time can be up to four years. “It really is a struggle to understand how they get from one day to another at times,” Casey told the committee. He said the department does have a plan to reduce the number of people on the wait list over the next few years. Casey told committee members that he would later calculate what it would cost to address the wait list immediately. “It’s a choker of a number. It would take a good deal of money to serve everyone on that waiting list.”
Theodora Binion, acting director of the Division of Mental Health at DHS, said that more than 80 percent of people in need of mental health services are not receiving them. “Eighty percent of the people who need mental health services aren’t getting them? Something fundamentally is wrong with that system,” said Rep. David Leitch, who serves on the committee. Leitch said that he thinks lawmakers should prioritize mental health funding over other requests the department might have. “To overlook this, to me, is quite a crisis. I think we should as a committee take a very hard look [at it] before we add a lot of new employees at DHS and do some of the other things.” Binion said steps are being taken to serve more people through managed care programs. “I think that there are plans afoot to increase the capacity.” (For more on the lack of funding for mental health care in the state, see Illinois Issues March 2013.
One factor in the department’s struggle to administer services to people in need is increased demand. “One in three people in Illinois are living in poverty or teetering on the edge of poverty,” said Samantha Tuttle, the director of policy for the Heartland Alliance for Human Needs and Human Rights. The alliance is an anti-poverty organization that tracks statistics across the state. Tuttle said the state is not doing enough to combat poverty growth. “Illinois has taken steps backwards in addressing poverty, and it shows.” She said recent cuts in virtually every area of human services have given the poor few places to turn. “Taken together, they’re really a dismantling of our safety net system that helps mitigate the experiences of people living in poverty and moves people out of poverty.”
While the DHS is asking for a funding increase, in part to pay for additional staffing, Saddler said she is aware that lawmakers are facing big budget issues. “We understand that we are all under the pressure of the large pension crisis and that that must be dealt with.” Saddler said the department is doing its best during a difficult time to care for Illinoisans. “If DHS cannot be run on a culture of caring, then who can? Every time that we find that we’ve done something that’s not caring, we pick ourselves up and try again.”
The Illinois Department of Human Services is struggling to provide services as some workers face caseloads of more than a thousand people.
Michelle Saddler, the agency's director, said that the department is understaffed. “Many of you have probably heard DHS is behind or DHS has a backlog,” she told a House human services budget committee today. “We at DHS overall need more realistic staffing.” The department is asking for $3.6 billion for fiscal year 2014, the same amount proposed under Gov. Pat Quinn’s budget. DHS is expected to spend more than $3.2 billion this fiscal year. The department was cut by almost $150 million under the current fiscal year’s budget.
Linda Saterfield, director of the division of family and community services at DHS, said some of her caseworkers have caseloads as big as 2,600. “If you calculate that out, that leaves that worker less than 45 minutes over the course of a year to serve that family.” The average caseload in the division, which administers such core safety net programs as Temporary Assistance for Needy Families and the Supplemental Nutrition Assistance program, averages more than 900 cases per worker. That compares with the year 2000, when the average was just under 250 cases per worker. Saterfield said that one in four residents are served through one of the division’s programs. “Our caseload has grown dramatically, but our staffing levels have reduced so much that we are unable to adequately meet the needs for services,” she said.
Kevin Casey, director of the Division of Developmental Disabilities at DHS, said there are about 11,000 people with developmental disabilities waiting for services in Illinois. He said the wait time can be up to four years. “It really is a struggle to understand how they get from one day to another at times,” Casey told the committee. He said the department does have a plan to reduce the number of people on the wait list over the next few years. Casey told committee members that he would later calculate what it would cost to address the wait list immediately. “It’s a choker of a number. It would take a good deal of money to serve everyone on that waiting list.”
Theodora Binion, acting director of the Division of Mental Health at DHS, said that more than 80 percent of people in need of mental health services are not receiving them. “Eighty percent of the people who need mental health services aren’t getting them? Something fundamentally is wrong with that system,” said Rep. David Leitch, who serves on the committee. Leitch said that he thinks lawmakers should prioritize mental health funding over other requests the department might have. “To overlook this, to me, is quite a crisis. I think we should as a committee take a very hard look [at it] before we add a lot of new employees at DHS and do some of the other things.” Binion said steps are being taken to serve more people through managed care programs. “I think that there are plans afoot to increase the capacity.” (For more on the lack of funding for mental health care in the state, see Illinois Issues March 2013.
One factor in the department’s struggle to administer services to people in need is increased demand. “One in three people in Illinois are living in poverty or teetering on the edge of poverty,” said Samantha Tuttle, the director of policy for the Heartland Alliance for Human Needs and Human Rights. The alliance is an anti-poverty organization that tracks statistics across the state. Tuttle said the state is not doing enough to combat poverty growth. “Illinois has taken steps backwards in addressing poverty, and it shows.” She said recent cuts in virtually every area of human services have given the poor few places to turn. “Taken together, they’re really a dismantling of our safety net system that helps mitigate the experiences of people living in poverty and moves people out of poverty.”
While the DHS is asking for a funding increase, in part to pay for additional staffing, Saddler said she is aware that lawmakers are facing big budget issues. “We understand that we are all under the pressure of the large pension crisis and that that must be dealt with.” Saddler said the department is doing its best during a difficult time to care for Illinoisans. “If DHS cannot be run on a culture of caring, then who can? Every time that we find that we’ve done something that’s not caring, we pick ourselves up and try again.”
Tuesday, March 09, 2010
"Don't count on that"
By Jamey Dunn
Budget numbers that Gov. Pat Quinn’s staff presented at a media briefing this evening do not assume an income tax increase.
“The General Assembly has not acted on a tax increase and has given symbols that they don’t want to act on a tax increase,” said Jerry Stermer, Quinn’s chief staff.
However, Quinn’s budget is based on the assumption that Congress will extend an elevated Medicaid match of 65 percent instead of the usual 50 percent that was part of the stimulus package and that the General Assembly will pass a controversial two-tiered pension system proposal.
The budget is built on five “pillars of recovery” to try to solve the state’s estimated $13 billion deficit. The pillars are cuts, job creation, federal assistance, “strategic” borrowing and revenue increases. However, the final pillar was conspicuously missing from the briefing, and Stermer acknowledged that the problem can’t be solved in the next fiscal year.
“No observer — no economist — assumes we’ll be able to solve this horrific puzzle in a single year,” Stermer said.
Cuts
Quinn is again proposing furlough days for state employees and reducing pension benefits for newly hired state workers. The total savings for next year is estimated at more than $500 million. The assumption is that money from a pension reform would come in the form of borrowing, since the savings would not be immediate.
Income tax revenues that are sent to local government would be cut from 10 percent to 7 percent, which would total $300 million.
Education funding would be cut by $1.3 billion from higher education and K-12, with the bulk coming from K-12.
Health care would be cut by $325 million, including slashing funding for a drug assistance program for seniors in half, and starting a Medicaid managed-care pilot program.
Human services would take a $276 million hit, which would come from in-home care for the elderly, childcare and community mental health services
Stermer said that Quinn’s administration sought cooperation from legislators to make more cuts that would require changes in the law and got nowhere. “Every meeting that we have with legislators, they say: ‘Oh we don’t think our members will vote for that. Don’t count on that. Don’t count on that. Don’t count on that,’” he said.
Job creation
A $2,500 tax credit would go to companies with fewer than 50 employees for each new job they create. This plan would be capped at a total of $50 million. Quinn estimates that would create 20,000 jobs.
Federal support
The budget is based on the hope that Congress will extend a 62 percent match on Medicaid funds, up from the regular 5o percent as part of the stimulus plan and due to expire at the end of December, through the next fiscal year.
Borrowing
Quinn’s plan calls for $4.7 billion in borrowing.
Quinn's budget director, David Vaught said borrowing makes people nervous because they compare it to their own borrowing on credit cards with double-digit interest. However, he said the last time the state borrowed money, it was at a rate of just over 1 percent. “Sovereign states don’t borrow on a credit card.”
Revenue increases
This evening’s presentation did not include any proposed revenue increase, and all the numbers presented, which Stermer said Quinn would present tomorrow, are based on no income tax increase.
“This budget that we are presenting shows the consequences of inaction last year. Had we raised taxes last year, as the governor called for, we wouldn’t be seeing deficits of this scope,” Vaught said.
As to whether Quinn would propose a specific revenue increase in his budget address, or divulge what he plans to do with the money that would come from one, no one in the room would answer that question.
“Quinn’s not included a tax increase in this budget, and that’s a conversation that has to happen,” Stermer said. When pressed on the issue, Stermer said, “The governor will talk about that tomorrow — noon sharp.”
So check back tomorrow for the details on Quinn’s budget address, set to take place before the General Assembly tomorrow — noon sharp.
Tuesday, March 20, 2007
Education and electricity
Two juicy debates
In downtown Springfield, the Illinois Commerce Commission heard Ameren Illinois president Scott Cisel defend his recent decision to end some of the utility’s electricity rate relief to downstate customers. In the Capitol, Gov. Rod Blagojevich said he’d veto any proposal that would increase income and sales taxes, as stated in a press release handed out during a House committee. House Speaker Michael Madigan, on the other hand, signaled he’s willing to let the so-called tax swap proposal see the light of day by sending his general counsel to moderate debate on an education funding reform proposal.
That legislation has nine lives, but supporters and opponents of the revised version agree on two things: 1) no one at the hearing likes the governor’s revenue idea to replace the corporate income tax with a new tax on business inputs; and 2) there’s lots of room to tweak the legislation. The House committee is expected to vote on the measure when it reconvenes, which could be soon.
In general, HB/SB 750 would reform the way the state funds education by increasing income taxes, expanding sales taxes to apply to services and offering property tax relief.
Supporters of the bill include Ralph Martire of the Center for Tax and Budget Accountability. In committee, he said no schools would lose, and businesses would be “net tax winners” under the legislation.
The opposition includes J. Thomas Johnson of the Taxpayers’ Federation of Illinois, who said the legislation puts “the cart before the horse” because it talks about distributing new revenue before it spells out how the money would improve education (and stipulates that it wouldn't be diverted to other state or local operations). He added that legislators needed to have a clear understanding of the actual property tax relief offered by a tax swap. “We’ll never meet the taxpayers’ expectations,” he said. “Rhetoric will come back to haunt us.”
Johnson, along with the Civic Committee of the Commercial Club of Chicago, said the state should consider at least three ways to save $1 billion before asking taxpayers to pay more. He said Illinois could save by reforming the state’s public employee retirement benefits, such as the retirement age and cost of living adjustments, as well as by using more managed care for state employees and Medicaid enrollees.
Electricity rates
The Illinois Commerce Commission cut off discussion that was leading to Ameren Illinois’ recent proposal to return to a regulated system, where the state sets electricity rates rather than the utilities buying power on the open market. The downstate utility used doom’s day rhetoric in Tuesday’s commission hearing to explain its recent decisions.
Ameren also recently decided to suspend programs that would provide rate relief to its customers. Commissioner Erin O’Connell-Diaz chastised the utility for “not keeping customers in the loop.” Ameren has yet to inform the 7,000 customers enrolled in a deferred payment plan that it has stopped the program.
The utility blamed its decision to halt these programs on the House, which approved a measure that would provide credits to customers and a three-year rate freeze. Soon after the House measure won approval, the company’s credit rating was downgraded to junk status.
According to the company's president and CEO, Scott Cisel, if the Senate approves a separate but similar measure, Ameren Illinois may be forced to lay off employees and contractors. Furthermore, unless the legislative leaders in both chambers ensured Ameren that the General Assembly wouldn’t attempt to refreeze electricity rates, the company would go into survival mode.
“This is a who-blinks-first game,” says Illinois Commerce Commission chairman Charles Box. “Both sides do not want to give up leverage, but whose suffering? It's the citizens that are suffering, especially the elderly and the people who have gigantic bills.”
In downtown Springfield, the Illinois Commerce Commission heard Ameren Illinois president Scott Cisel defend his recent decision to end some of the utility’s electricity rate relief to downstate customers. In the Capitol, Gov. Rod Blagojevich said he’d veto any proposal that would increase income and sales taxes, as stated in a press release handed out during a House committee. House Speaker Michael Madigan, on the other hand, signaled he’s willing to let the so-called tax swap proposal see the light of day by sending his general counsel to moderate debate on an education funding reform proposal.
That legislation has nine lives, but supporters and opponents of the revised version agree on two things: 1) no one at the hearing likes the governor’s revenue idea to replace the corporate income tax with a new tax on business inputs; and 2) there’s lots of room to tweak the legislation. The House committee is expected to vote on the measure when it reconvenes, which could be soon.
In general, HB/SB 750 would reform the way the state funds education by increasing income taxes, expanding sales taxes to apply to services and offering property tax relief.
Supporters of the bill include Ralph Martire of the Center for Tax and Budget Accountability. In committee, he said no schools would lose, and businesses would be “net tax winners” under the legislation.
The opposition includes J. Thomas Johnson of the Taxpayers’ Federation of Illinois, who said the legislation puts “the cart before the horse” because it talks about distributing new revenue before it spells out how the money would improve education (and stipulates that it wouldn't be diverted to other state or local operations). He added that legislators needed to have a clear understanding of the actual property tax relief offered by a tax swap. “We’ll never meet the taxpayers’ expectations,” he said. “Rhetoric will come back to haunt us.”
Johnson, along with the Civic Committee of the Commercial Club of Chicago, said the state should consider at least three ways to save $1 billion before asking taxpayers to pay more. He said Illinois could save by reforming the state’s public employee retirement benefits, such as the retirement age and cost of living adjustments, as well as by using more managed care for state employees and Medicaid enrollees.
Electricity rates
The Illinois Commerce Commission cut off discussion that was leading to Ameren Illinois’ recent proposal to return to a regulated system, where the state sets electricity rates rather than the utilities buying power on the open market. The downstate utility used doom’s day rhetoric in Tuesday’s commission hearing to explain its recent decisions.
Ameren also recently decided to suspend programs that would provide rate relief to its customers. Commissioner Erin O’Connell-Diaz chastised the utility for “not keeping customers in the loop.” Ameren has yet to inform the 7,000 customers enrolled in a deferred payment plan that it has stopped the program.
The utility blamed its decision to halt these programs on the House, which approved a measure that would provide credits to customers and a three-year rate freeze. Soon after the House measure won approval, the company’s credit rating was downgraded to junk status.
According to the company's president and CEO, Scott Cisel, if the Senate approves a separate but similar measure, Ameren Illinois may be forced to lay off employees and contractors. Furthermore, unless the legislative leaders in both chambers ensured Ameren that the General Assembly wouldn’t attempt to refreeze electricity rates, the company would go into survival mode.
“This is a who-blinks-first game,” says Illinois Commerce Commission chairman Charles Box. “Both sides do not want to give up leverage, but whose suffering? It's the citizens that are suffering, especially the elderly and the people who have gigantic bills.”
Wednesday, April 01, 2009
GOP ideas to trim budget
By Hilary Russell
Republican lawmakers still believe there’s more than one way to skin a deficit, and it’s not by raising taxes.
Read more about the Deficit Reduction Committee here. The GOP committee members, including Sens. Matt Murphy and Carole Pankau, released a report today that offered ways to save money, saving the most cutting and consolidating various programs within Medicaid. (Full report here; summary here.)
“There’s a public expectation out there that we get serious about tightening government’s belt — like they’re having to do it at home — and to do it without raising their taxes,” Murphy said in a Statehouse news conference. “And we’re here to say we heard the public in that regard.”
According to the report, the most significant Medicaid cut could come from applying for a federal waiver for Medicaid-eligible programs to capture as much as $435 million more in federal matching funds. Another suggestion is the creation of a private-public partnership, which would transfer decisions regarding benefit eligibility to private partners. That, in turn, would help to decrease the opportunity for fraudulent claims. And, while all of the savings weren’t specified, the report suggests that a new way to manage pharmaceutical benefits and higher co-pays could save $110 million in one year and $730 million over five years.
Murphy said the Republican committee members found areas in the state’s finances that could be reduced or eliminated, saving a total of more than $3 billion annually and more than $20 billion throughout the next five years.
“This is a meaningful deficit reduction without raising taxes, and it’s a serious answer to those who are asking for alternatives to the governor’s record-setting tax hike,” Murphy added.
Last week ended the series of four bipartisan Deficit Reduction Committee meetings in which members heard from various budget experts about ways to fix the state’s deficit. Despite hours of testimony, members were no closer to solving the state’s financial crisis than when they started.
Without assigning a dollar amount to the savings, the report also listed trimming pension benefits for new state employees, requiring more managed care health benefits for existing and new employees and allowing more charter schools to open as additional cost-cutting measures.
Republican lawmakers still believe there’s more than one way to skin a deficit, and it’s not by raising taxes.
Read more about the Deficit Reduction Committee here. The GOP committee members, including Sens. Matt Murphy and Carole Pankau, released a report today that offered ways to save money, saving the most cutting and consolidating various programs within Medicaid. (Full report here; summary here.)
“There’s a public expectation out there that we get serious about tightening government’s belt — like they’re having to do it at home — and to do it without raising their taxes,” Murphy said in a Statehouse news conference. “And we’re here to say we heard the public in that regard.”
According to the report, the most significant Medicaid cut could come from applying for a federal waiver for Medicaid-eligible programs to capture as much as $435 million more in federal matching funds. Another suggestion is the creation of a private-public partnership, which would transfer decisions regarding benefit eligibility to private partners. That, in turn, would help to decrease the opportunity for fraudulent claims. And, while all of the savings weren’t specified, the report suggests that a new way to manage pharmaceutical benefits and higher co-pays could save $110 million in one year and $730 million over five years.
Murphy said the Republican committee members found areas in the state’s finances that could be reduced or eliminated, saving a total of more than $3 billion annually and more than $20 billion throughout the next five years.
“This is a meaningful deficit reduction without raising taxes, and it’s a serious answer to those who are asking for alternatives to the governor’s record-setting tax hike,” Murphy added.
Last week ended the series of four bipartisan Deficit Reduction Committee meetings in which members heard from various budget experts about ways to fix the state’s deficit. Despite hours of testimony, members were no closer to solving the state’s financial crisis than when they started.
Without assigning a dollar amount to the savings, the report also listed trimming pension benefits for new state employees, requiring more managed care health benefits for existing and new employees and allowing more charter schools to open as additional cost-cutting measures.
Tuesday, June 09, 2009
First cuts, then taxes
by Jamey Dunn
The top four legislative leaders and Gov. Pat Quinn agreed that they will have to cut spending from a budget that is severely out of whack before resorting to tax hikes to plug the deficit. But how soon those cuts could be made and when lawmakers will agree on a budget is far from clear.
Leaders of both political parties met again with Quinn in his Chicago office today to continue budget talks after failing to agree on a bare bones budget approved along party lines May 31.
Quinn is not backing off of the need to approve a state income tax increase. He said after the meeting that his office would send out notices this week to human service providers letting them know that their funding could be slashed in half if the budget that legislators passed were enacted.
The governor said he and leaders discussed about $1 billion in cuts and cost-saving ideas in today’s meeting. However, he said that even if those cuts were achieved, an income tax increase would still be necessary. “We have to do this. Otherwise, … we won’t recognize our state,” he said.
Republicans continued to demand cuts and reform before considering tax increases, and they said they now sense some cooperation from Democrats. “I am encouraged that there does seem a willingness to consider some real changes to the way we do business in Illinois,” Senate Minority Leader Christine Radogno said.
Quinn said he could support pension reform, including a two-tiered system that would offer lesser benefits to newly hired state employees and teachers, as well as switching to a managed-care style for Medicaid programs. (His proposal for a two-tiered pension system stalled in the legislature last month.)
House Speaker Michael Madigan said he agrees that pension and Medicaid reforms are necessary and that they should be addressed regardless of the need to approve a budget. But he would not indicate whether making budget cuts and cost-saving reforms this summer would improve the chances of his chamber approving a tax increase. He said he thought that voter opinion, especially opposition from unemployed or under-employed constituents, played a large hand in legislators' rejection of a temporary income tax increase at the end of May.
“I think that lawmakers that do not wish to vote for the income tax increase are reflecting people in their districts,” Madigan said. “Seldom do Americans welcome tax increases.”
While Quinn emphasized the need to produce a “balanced budget” before the new fiscal year starts July 1, House Minority Leader Tom Cross said he doesn't think there's enough time to make the level of changes he thinks are necessary before his caucus would consider a tax increase.
“I think the worst thing we do as a state is to just come along and say that we’re going to raise taxes in this economy,” Cross said, “ and hand it over to a system that’s going to put us in the same situation in another two or three or four or five years without fundamentally changing how we handle things.”
Cross said that Quinn’s staff will sit down with Democrats and Republicans of both chambers to go through the budget line by line to look for places to cut. In addition, Quinn said he will issue executive orders to create a Taxpayer Action Commission to implement the Tax Payer Action Board’s cost-cutting recommendations as quickly as possible, and he said he'd form an Economic Recovery Commission intended to stimulate job growth and economic development.
Senate President John Cullerton said that he thinks a tax increase ultimately will be needed but that cutting the budget is the first priority. “It’s inevitable, I believe, after we do this cutting, …eventually we’re going to have to have some new revenues to help avoid the draconian cuts that the governor was talking about. So, hopefully, we’ll do that. But, first, we have to focus on those cuts.”
The next leaders’ meeting is tentatively scheduled for next Tuesday.
The top four legislative leaders and Gov. Pat Quinn agreed that they will have to cut spending from a budget that is severely out of whack before resorting to tax hikes to plug the deficit. But how soon those cuts could be made and when lawmakers will agree on a budget is far from clear.
Leaders of both political parties met again with Quinn in his Chicago office today to continue budget talks after failing to agree on a bare bones budget approved along party lines May 31.
Quinn is not backing off of the need to approve a state income tax increase. He said after the meeting that his office would send out notices this week to human service providers letting them know that their funding could be slashed in half if the budget that legislators passed were enacted.
The governor said he and leaders discussed about $1 billion in cuts and cost-saving ideas in today’s meeting. However, he said that even if those cuts were achieved, an income tax increase would still be necessary. “We have to do this. Otherwise, … we won’t recognize our state,” he said.
Republicans continued to demand cuts and reform before considering tax increases, and they said they now sense some cooperation from Democrats. “I am encouraged that there does seem a willingness to consider some real changes to the way we do business in Illinois,” Senate Minority Leader Christine Radogno said.
Quinn said he could support pension reform, including a two-tiered system that would offer lesser benefits to newly hired state employees and teachers, as well as switching to a managed-care style for Medicaid programs. (His proposal for a two-tiered pension system stalled in the legislature last month.)
House Speaker Michael Madigan said he agrees that pension and Medicaid reforms are necessary and that they should be addressed regardless of the need to approve a budget. But he would not indicate whether making budget cuts and cost-saving reforms this summer would improve the chances of his chamber approving a tax increase. He said he thought that voter opinion, especially opposition from unemployed or under-employed constituents, played a large hand in legislators' rejection of a temporary income tax increase at the end of May.
“I think that lawmakers that do not wish to vote for the income tax increase are reflecting people in their districts,” Madigan said. “Seldom do Americans welcome tax increases.”
While Quinn emphasized the need to produce a “balanced budget” before the new fiscal year starts July 1, House Minority Leader Tom Cross said he doesn't think there's enough time to make the level of changes he thinks are necessary before his caucus would consider a tax increase.
“I think the worst thing we do as a state is to just come along and say that we’re going to raise taxes in this economy,” Cross said, “ and hand it over to a system that’s going to put us in the same situation in another two or three or four or five years without fundamentally changing how we handle things.”
Cross said that Quinn’s staff will sit down with Democrats and Republicans of both chambers to go through the budget line by line to look for places to cut. In addition, Quinn said he will issue executive orders to create a Taxpayer Action Commission to implement the Tax Payer Action Board’s cost-cutting recommendations as quickly as possible, and he said he'd form an Economic Recovery Commission intended to stimulate job growth and economic development.
Senate President John Cullerton said that he thinks a tax increase ultimately will be needed but that cutting the budget is the first priority. “It’s inevitable, I believe, after we do this cutting, …eventually we’re going to have to have some new revenues to help avoid the draconian cuts that the governor was talking about. So, hopefully, we’ll do that. But, first, we have to focus on those cuts.”
The next leaders’ meeting is tentatively scheduled for next Tuesday.
Tuesday, July 07, 2009
Layoff notices go out
By Bethany Jaeger
Gov. Pat Quinn said about 2,600 layoffs are needed to help reduce state spending by $1 billion. At the same time he outlined the cuts in Chicago Tuesday, Quinn also vetoed another portion of the state budget. He said the General Assembly sent him a spending plan that “just spends too much money.”
“I think the best way to operate with the budget that I was given by the General Assembly a week ago is to veto it in its entirety because it doesn't cut spending as it should,” he said in a Chicago news conference. He later added: “We're not playing tennis here. We're playing with people's lives.”
Quinn vetoed House Bill 2145, which authorized $3.8 billion in spending on state operations, because it didn't follow the principle of shared sacrifice, he said. “There were too many instances of entities getting the same budget they did the year before or a very modest reduction, where others are taking very painful cuts. I don't believe that that's fair, and I don't think the people, the taxpayers of Illinois think that's fair.”
Of his $1 billion in cuts, he proposed 12 furlough days, or unpaid days off, for all state employees, including unionized workers and those in the executive and legislative branches. The 2,600 layoffs would spread across all state agencies. He said the furlough days would save about $108 million. Without them, he would seek an additional 2,500 layoffs.
The list of cuts proposed by the governor also would include:
“We're all in this together,” Quinn said. “So whether you're the governor of Illinois or a member of the legislature or somewhere in the state bureaucracy, we have to cut costs, cut costs, cut costs.”
But a large chunk of the governor's cuts would require negotiations with public employee unions, which would mean reopening active labor contracts to implement furlough days and to reconsider pay raises scheduled for this year. Quinn said those raises account for about $125 million.
Anders Lindall, spokesman for the American Federation of State, County and Municipal Employees Council 31, said yesterday, “We have a duty to listen to anything that the administration proposes, and we've indicated a willingness to do that.” However, he added, furloughs have the same effect of service cuts, and layoffs could result in more expensive overtime pay.
Furloughs are the “least painful way of going,” Quinn said. “We want to limit layoffs wherever possible. That's why the use of the furlough can help preserve jobs on the state.” Despite furloughs, he added the state would still have to lay off about 2,600 workers and that Illinois only has as many employees today as it did in 1973. The roughly 58,000 workers is one of the nation's lowest ratios of state employees per state resident. “But having said that," Quinn said, "we still have to do these very difficult cuts because we simply don't have the money.”
The dramatic cuts are nothing new to many legislators. The governor has been making similar warnings since the spring legislative session. However, some Republican lawmakers said they're still waiting for the governor to act on other types of reforms before they'll consider a tax increase, which Quinn maintains is the other major way to avoid such deep budget cuts.
For instance, Rep. Franco Coladipietro, a Blooomingdale Republican, said the governor and the General Assembly need to address initiatives that affect not just this year's budget, but budgets several years down the road. He cited job growth, as well as more significant ethics and public employee pension reforms. “Passing a tax increase right now with making no changes to the structural budget process in Illinois only puts us in a position where we'll be in the same exact position three years from now,” he said. “And it doesn't change anything.”
Coladipietro was one suburban Chicago legislator at a closed-door meeting with the governor yesterday. Quinn also previously met with female legislators. He said he plans to meet with downstate legislators in Springfield later this week, and he's scheduled to meet Monday with legislative leaders in the Executive Mansion.
Gov. Pat Quinn said about 2,600 layoffs are needed to help reduce state spending by $1 billion. At the same time he outlined the cuts in Chicago Tuesday, Quinn also vetoed another portion of the state budget. He said the General Assembly sent him a spending plan that “just spends too much money.”
“I think the best way to operate with the budget that I was given by the General Assembly a week ago is to veto it in its entirety because it doesn't cut spending as it should,” he said in a Chicago news conference. He later added: “We're not playing tennis here. We're playing with people's lives.”
Quinn vetoed House Bill 2145, which authorized $3.8 billion in spending on state operations, because it didn't follow the principle of shared sacrifice, he said. “There were too many instances of entities getting the same budget they did the year before or a very modest reduction, where others are taking very painful cuts. I don't believe that that's fair, and I don't think the people, the taxpayers of Illinois think that's fair.”
Of his $1 billion in cuts, he proposed 12 furlough days, or unpaid days off, for all state employees, including unionized workers and those in the executive and legislative branches. The 2,600 layoffs would spread across all state agencies. He said the furlough days would save about $108 million. Without them, he would seek an additional 2,500 layoffs.
The list of cuts proposed by the governor also would include:
- $150 million - Moving Medicaid patients to managed care health plans so they have medical "homes" and reducing IllinoisCares Rx, a prescription drug program started by former Gov. Rod Blagojevich.
- $250 million - Reducing grants to local agencies, local governments and programs by 10 percent across most state agencies, except the Department of Veterans' Affairs.
- $175 million - Maintaining last year's funding levels for education, while preserving the investment needed to secure all federal stimulus dollars.
- $125 million - Laying off about 1,000 Department of Corrections employees and possibly closing some prisons (he previously mentioned letting non-violent criminal offenders out of jail early).
- $100 million - Requiring all state agencies to reserve some spending for an even rainier day.
- $25 million - Reducing spending in other state offices and departments not under the governor's control.
“We're all in this together,” Quinn said. “So whether you're the governor of Illinois or a member of the legislature or somewhere in the state bureaucracy, we have to cut costs, cut costs, cut costs.”
But a large chunk of the governor's cuts would require negotiations with public employee unions, which would mean reopening active labor contracts to implement furlough days and to reconsider pay raises scheduled for this year. Quinn said those raises account for about $125 million.
Anders Lindall, spokesman for the American Federation of State, County and Municipal Employees Council 31, said yesterday, “We have a duty to listen to anything that the administration proposes, and we've indicated a willingness to do that.” However, he added, furloughs have the same effect of service cuts, and layoffs could result in more expensive overtime pay.
Furloughs are the “least painful way of going,” Quinn said. “We want to limit layoffs wherever possible. That's why the use of the furlough can help preserve jobs on the state.” Despite furloughs, he added the state would still have to lay off about 2,600 workers and that Illinois only has as many employees today as it did in 1973. The roughly 58,000 workers is one of the nation's lowest ratios of state employees per state resident. “But having said that," Quinn said, "we still have to do these very difficult cuts because we simply don't have the money.”
The dramatic cuts are nothing new to many legislators. The governor has been making similar warnings since the spring legislative session. However, some Republican lawmakers said they're still waiting for the governor to act on other types of reforms before they'll consider a tax increase, which Quinn maintains is the other major way to avoid such deep budget cuts.
For instance, Rep. Franco Coladipietro, a Blooomingdale Republican, said the governor and the General Assembly need to address initiatives that affect not just this year's budget, but budgets several years down the road. He cited job growth, as well as more significant ethics and public employee pension reforms. “Passing a tax increase right now with making no changes to the structural budget process in Illinois only puts us in a position where we'll be in the same exact position three years from now,” he said. “And it doesn't change anything.”
Coladipietro was one suburban Chicago legislator at a closed-door meeting with the governor yesterday. Quinn also previously met with female legislators. He said he plans to meet with downstate legislators in Springfield later this week, and he's scheduled to meet Monday with legislative leaders in the Executive Mansion.
Tuesday, May 26, 2009
Prepare for revenue vs. spending showdown
By Bethany Jaeger
The General Assembly has five days until the constitutional deadline of May 31 to approve a state operating budget, and there are only three days until Senate President John Cullerton wanted to adjourn so everyone could go home by this weekend.
Things are still pretty fluid in the Capitol, with lots of options being discussed but few commitments being made to any of them.
“There’s Plan A, Plan B, Plan C, and, so far, we have not seen B nor C,” said Sen. Donne Trotter, budget negotiator for Senate Democrats.
Plan A includes funding basic portions of the budget to keep the lights on and to secure federal stimulus funds regardless of whether the legislature approves an income tax increase. And that plan, approved by the House last week, wouldn’t fulfill spending obligations for state programs and public employee pensions. House and Senate Democrats are circulating lists of programs that would not be funded under the core budget plan, forcing members to rank programs that could be cut or not.
Those lists are leading up to the plea for a state income tax increase, but for that to happen, Democrats need Republican support. Senate President John Cullerton said he doesn’t believe his caucus has 30 votes necessary to approve an income tax increase, leading him to turn to Republicans. The GOP, however, doesn’t want to approve an income tax increase unless the General Assembly first tries to trim spending and make existing programs more efficient, including instituting managed care policies and other Medicaid reforms.
Sen. Dale Righter, a deputy Republican leader from Mattoon, said, “To say that there isn’t any waste in state government is to say, ‘I agree with the last six years of Rod Blagojevich’s budgets,’ and I don’t think any of them want to say that.” He added that constituents want comprehensive reforms that affect every dollar the state spends, not just a percentage of it. He said enacting a half-year budget would unlikely include any reforms.
“Once you support that and put that into law, then you’ve locked that in place. And you’ve said, ‘OK, there’s nothing we can do about that spending.’ And I don’t think that’s the message we want to send.”
As Democrats and Republicans consider their options behind closed doors tonight, consider this breakdown of general revenue versus spending and the large gap between the two, according to Democrats.
Spending side
Revenue side
The General Assembly has five days until the constitutional deadline of May 31 to approve a state operating budget, and there are only three days until Senate President John Cullerton wanted to adjourn so everyone could go home by this weekend.
Things are still pretty fluid in the Capitol, with lots of options being discussed but few commitments being made to any of them.
“There’s Plan A, Plan B, Plan C, and, so far, we have not seen B nor C,” said Sen. Donne Trotter, budget negotiator for Senate Democrats.
Plan A includes funding basic portions of the budget to keep the lights on and to secure federal stimulus funds regardless of whether the legislature approves an income tax increase. And that plan, approved by the House last week, wouldn’t fulfill spending obligations for state programs and public employee pensions. House and Senate Democrats are circulating lists of programs that would not be funded under the core budget plan, forcing members to rank programs that could be cut or not.
Those lists are leading up to the plea for a state income tax increase, but for that to happen, Democrats need Republican support. Senate President John Cullerton said he doesn’t believe his caucus has 30 votes necessary to approve an income tax increase, leading him to turn to Republicans. The GOP, however, doesn’t want to approve an income tax increase unless the General Assembly first tries to trim spending and make existing programs more efficient, including instituting managed care policies and other Medicaid reforms.
Sen. Dale Righter, a deputy Republican leader from Mattoon, said, “To say that there isn’t any waste in state government is to say, ‘I agree with the last six years of Rod Blagojevich’s budgets,’ and I don’t think any of them want to say that.” He added that constituents want comprehensive reforms that affect every dollar the state spends, not just a percentage of it. He said enacting a half-year budget would unlikely include any reforms.
“Once you support that and put that into law, then you’ve locked that in place. And you’ve said, ‘OK, there’s nothing we can do about that spending.’ And I don’t think that’s the message we want to send.”
As Democrats and Republicans consider their options behind closed doors tonight, consider this breakdown of general revenue versus spending and the large gap between the two, according to Democrats.
Spending side
- Legislators are working with about $23.8 billion to dole out, including federal stimulus funds.
- The House last week approved $16.9 billion to keep the lights on and to secure federal stimulus funds, leaving about $6.9 billion to split among state programs.
Revenue side
- According to Senate Democrats, the state would need an additional $4 billion just to get to last year’s funding levels (a.k.a. a zero-based budget).
- And then it would need between $2 billion and $4 billion to pay the state’s full share into the public employee pension systems.
- That means, according to Trotter, that budget negotiators anticipate needing up to an additional $8 billion to get up to last year’s funding levels and to fully fund the pensions.
- Shorting the pension payments is always on the table. Making a minimal payment, however, would not pay down the compounding liabilities.
- So is approving a temporary budget that would distribute the money on hand but would not be enough to get through the year. Cullerton said he opposes the idea of a half-year budget.
- Gov. Pat Quinn also has proposed a two-tiered pension system so that newly hired teachers and state employees would earn less generous retirement benefits. While the administration suggests long-term savings would result, teachers’ unions strongly disagree and point to a report by the legislative Commission on Government Forecasting and Accountability.
Friday, February 09, 2007
Moneymakers
Pressure is mounting for Illinois to milk the cow this year. Lawmakers need a long-term plan to pay for education, transportation, health care and public employee pensions, but there’s disagreement about which cash cow to milk.
HB/SB 750 tax reform
Sen. James Meeks reintroduced a so-called tax swap plan to raise income taxes, lower property taxes and expand the sales tax as a way to fairly fund education and significantly pay down the state’s pension obligations.
Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability, says the bottom 60 percent of income earners would not pay more in income taxes than they are now. And the money they saved in property taxes would be intended to offset the cost of sales taxes on consumer services, such as auto repair labor and haircuts.
Martire adds that the property tax relief would total $2.7 billion statewide. “No school district loses a penny,” he says.
He says the drafters of the legislation tried to “depoliticize” the distribution of the money. Of the state’s $5 billion net revenue, $720 million would go to downstate schools, $420 million to Chicago schools, $400 million to suburban Chicago schools, and $300 million for higher education.
Depoliticize is a bold word, considering this year's budget debate is expected to be a doozy. Gov. Rod Blagojevich has repeatedly said he would veto an increase in state taxes. Senate President Emil Jones Jr. also said on Inauguration Day that he definitely opposes expansion of the sales tax to consumer services. But he did leave the door open to other revenue ideas. “We do not have a spending problem. We have a revenue problem,” Jones said.
Good or bad, he'll have plenty of “creative” revenue ideas to consider.
Privatizing the lottery and the tollway
The governor is still considering selling the Illinois Lottery to fund a $6 billion plan to pump more money into education, school buildings, teacher quality and books. But the plan doesn't address pensions.
Sen. Jeff Schoenberg, an Evanston Democrat, is still considering privatizing the Illinois Tollway (scroll down to the August 29, 2006, blog) as a way to raise lots of money to pay the state’s unfunded pension liabilities and transportation costs. However, he said on Inauguration Day that he is convinced the state should not sell the tollway, but maintain majority ownership. He said the next step is to work with the Illinois attorney general’s office to get insight on the legal dimensions of such a lease.
Sen. Bill Brady’s solution to the pension liability problem is giving current state employees an option to participate in a self-managing plan (like a 401-k) that mirrors the private sector retirement options. New state employees would have to participate in the self-managed plan. The board of trustees of each of the five retirement systems would select up to seven companies where state employees could choose to invest their money as they wished. Brady, a Bloomington Republican, says it would save taxpayer money, reduce political influence on state investment decisions and prevent the state from raiding the five pension systems to pay for general state costs.
More to come
There’s also more creative — read politically risky — revenue ideas to come, potentially targeting businesses as one way to pay for the governor’s promised plan of universal health care. He gives his combined State of the State address and his budget address March 7.
Deanese Williams-Harris contributed to this post.
HB/SB 750 tax reform
Sen. James Meeks reintroduced a so-called tax swap plan to raise income taxes, lower property taxes and expand the sales tax as a way to fairly fund education and significantly pay down the state’s pension obligations.
Ralph Martire, executive director of the Chicago-based Center for Tax and Budget Accountability, says the bottom 60 percent of income earners would not pay more in income taxes than they are now. And the money they saved in property taxes would be intended to offset the cost of sales taxes on consumer services, such as auto repair labor and haircuts.
Martire adds that the property tax relief would total $2.7 billion statewide. “No school district loses a penny,” he says.
He says the drafters of the legislation tried to “depoliticize” the distribution of the money. Of the state’s $5 billion net revenue, $720 million would go to downstate schools, $420 million to Chicago schools, $400 million to suburban Chicago schools, and $300 million for higher education.
Depoliticize is a bold word, considering this year's budget debate is expected to be a doozy. Gov. Rod Blagojevich has repeatedly said he would veto an increase in state taxes. Senate President Emil Jones Jr. also said on Inauguration Day that he definitely opposes expansion of the sales tax to consumer services. But he did leave the door open to other revenue ideas. “We do not have a spending problem. We have a revenue problem,” Jones said.
Good or bad, he'll have plenty of “creative” revenue ideas to consider.
Privatizing the lottery and the tollway
The governor is still considering selling the Illinois Lottery to fund a $6 billion plan to pump more money into education, school buildings, teacher quality and books. But the plan doesn't address pensions.
Sen. Jeff Schoenberg, an Evanston Democrat, is still considering privatizing the Illinois Tollway (scroll down to the August 29, 2006, blog) as a way to raise lots of money to pay the state’s unfunded pension liabilities and transportation costs. However, he said on Inauguration Day that he is convinced the state should not sell the tollway, but maintain majority ownership. He said the next step is to work with the Illinois attorney general’s office to get insight on the legal dimensions of such a lease.
Sen. Bill Brady’s solution to the pension liability problem is giving current state employees an option to participate in a self-managing plan (like a 401-k) that mirrors the private sector retirement options. New state employees would have to participate in the self-managed plan. The board of trustees of each of the five retirement systems would select up to seven companies where state employees could choose to invest their money as they wished. Brady, a Bloomington Republican, says it would save taxpayer money, reduce political influence on state investment decisions and prevent the state from raiding the five pension systems to pay for general state costs.
More to come
There’s also more creative — read politically risky — revenue ideas to come, potentially targeting businesses as one way to pay for the governor’s promised plan of universal health care. He gives his combined State of the State address and his budget address March 7.
Deanese Williams-Harris contributed to this post.
Wednesday, May 25, 2011
Legislators start final push on big issues
By Jamey Dunn and Lauren N. Johnson
With less than a week before their adjournment deadline, Illinois lawmakers are making final attempts to get several large proposals passed in the last days of regular session.
Pension benefits
House Minority Tom Cross submitted his proposal today to reduce future retirement benefits for current state employees. According to Cross' spokesperson, Sara Wojcicki, he plans to present his amendment to Senate Bill 512 in a House committee tomorrow morning. Under the proposal, current employees would be able to keep the benefits they have already earned. But starting July 1, 2012, they would have to pick one of three plans that call for larger contributions or reduced benefits. Employees could stay in their current defined benefits plan, but their contributions would increase:
Under Cross' amendment, employees could also opt to move down to “tier two” of the system — which was passed by legislators in one day during last year’s legislative session — and applies to all employees hired after January 1 of this year. Or they could choose to participate in a self-managed plan, similar to a 401K. Under the self-managed plan, employees who would collect Social Security would contribute 6 percent of their salary, and those who would not would contribute about 4 percent. The state would match those contributions
Employees who chose the old benefits could opt to switch when the rates they must pay are refigured every three years. If they left the so-called tier one plan, they could not return to it but would keep all the benefits they earned under it.
Senate President John Cullerton has said he believes changes to current employee benefits would be unconstitutional. However, he has vowed to call the bill for a floor vote in the Senate if it passes in the House.
Borrowing
A Senate committee today approved a plan to borrow about $6 billion spread out through four proposals to pay down the state’s unpaid bills to vendors, schools, hospitals and local municipalities. “In some instances, those bills are months and months old; in some cases they are over a year old. So, a tremendous backlog of unpaid bills,” said Sen. John Sullivan, a Rushville Democrat who is backing the legislative package.
Sullivan sponsored four Senate bills that make up the plan and total $6.17 billion:
Although, the plan differs from an earlier borrowing proposal by Gov. Pat Quinn that called for borrowing $8.7 billion to be repaid over 14 years, Kelly Kraft, spokeswoman for the governor’s office, said Quinn has remained flexible with his proposal and supports Sullivan’s plan. “Overall, when you’re dealing the budget, it’s a negotiation process, so there’s give and take throughout. So this is something that we do talk about with legislators, as well as the budget,” Kraft said. “We just want to come up with the best plan for everyone.”
However, the plan will need Republican support in each chamber to get the required super majority needed for the state to borrow. Senate Republicans, who have opposed additional borrowing, agree that individuals and businesses owed by the state should be paid in a timely matter but suggest that there are other ways to address the backlog. Sen. David Luechtefeld, an Okawville Republican, remarked: “Yes, you want your money, but it’s not going to be too long before those bills are going to go right back up because there’s no way to pay them anymore. We’ve borrowed too much.” Cullerton said Senate Democrats are looking for the Republican backing needed to pass the borrowing plan. “That will take some time,” he said.
Energy
House members are supporting a new version of a controversial proposal that would allow utility companies to raise rates while also requiring them to invest in infrastructure, as well as a proposal to build a coal plant that would utilize carbon emission reducing technology.
SB1652 would allow Commonwealth Edison and Ameren, the state's largest electric utilities, to increase customers’ rates by up to 2.5 percent annually and would require both companies to invest a combined $3.2 billion in infrastructure to upgrade the existing electric gird and add so-called smart grid technology. Unlike in previous incarnations of the plan contained in House Bill 14, the Illinois Commerce Commission, which currently has to sign off on rate hikes, would decide on the increases.
The measure would also require utilities to meet benchmarks for customer service and reliability. The ICC would monitor the progress, and the utilities would face fines if they failed to meet the goals. The ICC would also review rates in 2014, and the entire bill would sunset in 2017, meaning lawmakers would have to approve it again.
David Kolota, executive director of the Citizens Utility Board, said the changes to the proposal are encouraging, but he said the customer-service benchmarks may be set too low.
On the policy front, on smart grid policy, it’s definitely a significant step forward,” said Kolota, whose consumer advocacy group opposed the original plan. “All [the previous plan] said was, ‘We’re going to do smart grid.’ It was like one sentence.” He said he is concerned that the rate cap is only in place until 2014. “We certainly wouldn’t want to see a situation where consumers are soaked and suddenly get hit with a significant rate increase.”
Orland Park Democratic Rep. Kevin McCarthy, a sponsor of the bill, acknowledged that the changes will not be enough to please all stakeholders. “I don’t pretend that these changes are everything some of our colleagues wanted.”
Sen. Mike Jacobs, an East Moline Democrat who sponsors the bill in his chamber, said the benefits that customers will see in future savings, as well as in more reliable power, are worth the up-front investment of higher rates,which sponsors estimate will average about $3 per household each month. “You can’t base this off price. That’s kind of silly. We’re dealing with hundred-year-old technology, and if consumers want something to work, they’ve go to pay for it. And the fact is, it costs money, and you know there’s nothing for free. My cable bill went up $10 a month last month nobody even asked me if they could raise it,” Jacobs said.
The changes were not enough to win the support of one vocal opponent, Attorney General Lisa Madigan. “A day after winning a $156 million rate increase, ComEd just can’t help itself. Today, their legion of lobbyists continue to push legislation that will require consumers to fund billions more in guaranteed profits. This new proposal is just more of the same — a plan that hits consumers where it hurts the most — their wallets,” Madigan said in a written statement. The ICC approved a ComEd Rate increase yesterday. Gov. Pat Quinn, who vowed to veto the earlier version of the plan, declined to weigh in on today’s proposal.
“If you want to vote in this General Assembly, run for the office,” Jacobs said in response the Madigan’s opposition.
Meanwhile, the attorney general did throw her support behind an attempt to resurrect a plan to help Tenaska Energy build a “clean-coal” plant near Taylorville. Paul Gaynor, chief of the Public Interest Division of the attorney general’s office, said that the Tenaska plant is a better investment for Illinois utility customers, calling the plan rate neutral. Energy generated by the plant would initially come at a greater cost, but supporters say that a provision giving the Illinois Power Authority more flexibility in purchasing power would result in savings that could negate any substantial rate increase.
Northbrook Democratic Rep. Elaine Nekritz, one of the House sponsors of SB 1653, said she hopes to get the plan through both chambers before the end of the regular session on Thursday.
Budget
Senate President John Cullerton said that the House and Senate are working to bring their proposed budget numbers in line and that a vote could come over the weekend. He said the Senate will likely come down to the House’s revenue estimate, which is $1 billion less than the estimate contained in the budget proposal passed by the Senate. Echoing House Speaker Michael Madigan, Cullerton said revenue that comes in beyond the estimate could be used to pay off overdue bills.
Workers' compensation
A House committee approved SB1933, which would repeal the current worker’s compensation system. House Democrats, including Speaker Madigan, have threatened to destroy the current system if stakeholders cannot agree on a reform package. The legislation would force any worker's compensation claims into the courts. The bill is sponsored by Marion Democratic John Bradley, who has been working on negotiations. Bradley said that the passage of the bill was not a indication that talks had fallen apart, but said he wanted to keep all options open. Cullerton said, “I think we’re really close to an agreement on workers’ comp — an agreement on workers’ comp among a number of the stakeholders.”
Redistricting
Cullerton also said he expects some changes to the Senate Democrats’ proposed legislative map to surface tomorrow and that the proposed map of congressional districts would come sometime after that.
Tomorrow is expected to be a busy day for the legislature. Check back for updates.
With less than a week before their adjournment deadline, Illinois lawmakers are making final attempts to get several large proposals passed in the last days of regular session.
Pension benefits
House Minority Tom Cross submitted his proposal today to reduce future retirement benefits for current state employees. According to Cross' spokesperson, Sara Wojcicki, he plans to present his amendment to Senate Bill 512 in a House committee tomorrow morning. Under the proposal, current employees would be able to keep the benefits they have already earned. But starting July 1, 2012, they would have to pick one of three plans that call for larger contributions or reduced benefits. Employees could stay in their current defined benefits plan, but their contributions would increase:
- State Employees’ Retirement System (SERS) State employees who will also receive Social Security benefits currently contribute 4 percent of their salaries. Under the proposal, they would have to pay 9.29 percent. Members of SERS who do pay into Social Security now contribute 12.5 percent of their pay. They would have to kick in 18.91 percent under the proposal.State Employees’ Retirement System Alternative Plan Members of the alternative SERS system, which includes workers with potentially dangerous jobs, such as prison guards, and who also have an earlier retirement age, contribute 8.5 percent of their salaries now, if they also pay into the Social Security system. Under Cross’ plan, they would have to chip in 16.65 percent of their pay. Those who will not get Social Security pay 12.5 percent of their salary now and would have to pay 18.91 percent.
- Teachers’ Retirement System (TRS) Illinois teachers, except Chicago teachers, currently pay 9.4 percent of their salary and will not receive Social Security benefits. Under the bill, they would have to contribute 13.77 percent. Chicago teachers would see their contributions increase from 9 percent of their pay to 12.75 percent.
- State University Retirement System (SURS) University employees currently contribute 8 percent of their pay. Under the proposed change, they would pay to 15.31 percent.
- General Assembly Retirement System (GARS) Legislators currently contribute 11.5 percent of their income to retirement benefits. They would pay 24.89 percent under the proposed legislation.
- Judges Retirement System (JRS) Judges kick 11 percent of their pay into their retirement. Under Cross’ plan, they would pay 34.04 percent. Lawmakers reportedly considered leaving judges out of the plan, but according to Wojcicki , they will be included in Cross’ proposal.
Under Cross' amendment, employees could also opt to move down to “tier two” of the system — which was passed by legislators in one day during last year’s legislative session — and applies to all employees hired after January 1 of this year. Or they could choose to participate in a self-managed plan, similar to a 401K. Under the self-managed plan, employees who would collect Social Security would contribute 6 percent of their salary, and those who would not would contribute about 4 percent. The state would match those contributions
Employees who chose the old benefits could opt to switch when the rates they must pay are refigured every three years. If they left the so-called tier one plan, they could not return to it but would keep all the benefits they earned under it.
Senate President John Cullerton has said he believes changes to current employee benefits would be unconstitutional. However, he has vowed to call the bill for a floor vote in the Senate if it passes in the House.
Borrowing
A Senate committee today approved a plan to borrow about $6 billion spread out through four proposals to pay down the state’s unpaid bills to vendors, schools, hospitals and local municipalities. “In some instances, those bills are months and months old; in some cases they are over a year old. So, a tremendous backlog of unpaid bills,” said Sen. John Sullivan, a Rushville Democrat who is backing the legislative package.
Sullivan sponsored four Senate bills that make up the plan and total $6.17 billion:
- SB 342 would pay $1.5 billion owed to state vendors, non-governmental entities and private businesses. Sullivan said vendors have had to take out lines of credit, cut jobs and reduce their services as result of late payments or nonpayment.
- SB 343 would address payments owed amounting in $1.1 billion for health care providers whom the state contracts with for its group health insurance programs.
- SB 344 would restructure debt for private businesses waiting to be paid their corporate tax refunds by paying $800 million to the sector.
- SB 345 would provide the largest amount of money from the state to school districts, universities, community colleges and local units of government, amounting in $2.7 billion. Schools say that have had to make layoffs and cut programs as result of unpaid bills from the state.
Although, the plan differs from an earlier borrowing proposal by Gov. Pat Quinn that called for borrowing $8.7 billion to be repaid over 14 years, Kelly Kraft, spokeswoman for the governor’s office, said Quinn has remained flexible with his proposal and supports Sullivan’s plan. “Overall, when you’re dealing the budget, it’s a negotiation process, so there’s give and take throughout. So this is something that we do talk about with legislators, as well as the budget,” Kraft said. “We just want to come up with the best plan for everyone.”
However, the plan will need Republican support in each chamber to get the required super majority needed for the state to borrow. Senate Republicans, who have opposed additional borrowing, agree that individuals and businesses owed by the state should be paid in a timely matter but suggest that there are other ways to address the backlog. Sen. David Luechtefeld, an Okawville Republican, remarked: “Yes, you want your money, but it’s not going to be too long before those bills are going to go right back up because there’s no way to pay them anymore. We’ve borrowed too much.” Cullerton said Senate Democrats are looking for the Republican backing needed to pass the borrowing plan. “That will take some time,” he said.
Energy
House members are supporting a new version of a controversial proposal that would allow utility companies to raise rates while also requiring them to invest in infrastructure, as well as a proposal to build a coal plant that would utilize carbon emission reducing technology.
SB1652 would allow Commonwealth Edison and Ameren, the state's largest electric utilities, to increase customers’ rates by up to 2.5 percent annually and would require both companies to invest a combined $3.2 billion in infrastructure to upgrade the existing electric gird and add so-called smart grid technology. Unlike in previous incarnations of the plan contained in House Bill 14, the Illinois Commerce Commission, which currently has to sign off on rate hikes, would decide on the increases.
The measure would also require utilities to meet benchmarks for customer service and reliability. The ICC would monitor the progress, and the utilities would face fines if they failed to meet the goals. The ICC would also review rates in 2014, and the entire bill would sunset in 2017, meaning lawmakers would have to approve it again.
David Kolota, executive director of the Citizens Utility Board, said the changes to the proposal are encouraging, but he said the customer-service benchmarks may be set too low.
On the policy front, on smart grid policy, it’s definitely a significant step forward,” said Kolota, whose consumer advocacy group opposed the original plan. “All [the previous plan] said was, ‘We’re going to do smart grid.’ It was like one sentence.” He said he is concerned that the rate cap is only in place until 2014. “We certainly wouldn’t want to see a situation where consumers are soaked and suddenly get hit with a significant rate increase.”
Orland Park Democratic Rep. Kevin McCarthy, a sponsor of the bill, acknowledged that the changes will not be enough to please all stakeholders. “I don’t pretend that these changes are everything some of our colleagues wanted.”
Sen. Mike Jacobs, an East Moline Democrat who sponsors the bill in his chamber, said the benefits that customers will see in future savings, as well as in more reliable power, are worth the up-front investment of higher rates,which sponsors estimate will average about $3 per household each month. “You can’t base this off price. That’s kind of silly. We’re dealing with hundred-year-old technology, and if consumers want something to work, they’ve go to pay for it. And the fact is, it costs money, and you know there’s nothing for free. My cable bill went up $10 a month last month nobody even asked me if they could raise it,” Jacobs said.
The changes were not enough to win the support of one vocal opponent, Attorney General Lisa Madigan. “A day after winning a $156 million rate increase, ComEd just can’t help itself. Today, their legion of lobbyists continue to push legislation that will require consumers to fund billions more in guaranteed profits. This new proposal is just more of the same — a plan that hits consumers where it hurts the most — their wallets,” Madigan said in a written statement. The ICC approved a ComEd Rate increase yesterday. Gov. Pat Quinn, who vowed to veto the earlier version of the plan, declined to weigh in on today’s proposal.
“If you want to vote in this General Assembly, run for the office,” Jacobs said in response the Madigan’s opposition.
Meanwhile, the attorney general did throw her support behind an attempt to resurrect a plan to help Tenaska Energy build a “clean-coal” plant near Taylorville. Paul Gaynor, chief of the Public Interest Division of the attorney general’s office, said that the Tenaska plant is a better investment for Illinois utility customers, calling the plan rate neutral. Energy generated by the plant would initially come at a greater cost, but supporters say that a provision giving the Illinois Power Authority more flexibility in purchasing power would result in savings that could negate any substantial rate increase.
Northbrook Democratic Rep. Elaine Nekritz, one of the House sponsors of SB 1653, said she hopes to get the plan through both chambers before the end of the regular session on Thursday.
Budget
Senate President John Cullerton said that the House and Senate are working to bring their proposed budget numbers in line and that a vote could come over the weekend. He said the Senate will likely come down to the House’s revenue estimate, which is $1 billion less than the estimate contained in the budget proposal passed by the Senate. Echoing House Speaker Michael Madigan, Cullerton said revenue that comes in beyond the estimate could be used to pay off overdue bills.
Workers' compensation
A House committee approved SB1933, which would repeal the current worker’s compensation system. House Democrats, including Speaker Madigan, have threatened to destroy the current system if stakeholders cannot agree on a reform package. The legislation would force any worker's compensation claims into the courts. The bill is sponsored by Marion Democratic John Bradley, who has been working on negotiations. Bradley said that the passage of the bill was not a indication that talks had fallen apart, but said he wanted to keep all options open. Cullerton said, “I think we’re really close to an agreement on workers’ comp — an agreement on workers’ comp among a number of the stakeholders.”
Redistricting
Cullerton also said he expects some changes to the Senate Democrats’ proposed legislative map to surface tomorrow and that the proposed map of congressional districts would come sometime after that.
Tomorrow is expected to be a busy day for the legislature. Check back for updates.
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