Understanding Government

Here is what looks to be an unintended consequence of the federal health care reform law. The Chicago Sun-Times Abdon M. Pallasch reports that, “The federal government is refusing to allow a new process passed by bipartisan majorities in Illinois that requires medical patients here to show that they live in Illinois and earn little enough to qualify for Medicaid.” The federal Center for Medicare & Medicaid Services is saying no because (more…)

The Wisconsin state legislature did away with two major attempts by Gov. Scott Walker to privatize local administration of federally-funded social services. Jessica Vanegreen of the Madison Capital Times reports that Walker had wanted to use private workers to run Wisconsin’s food stamp program, Food Share, and also to run Medicaid. Walker’s idea was that residents would no longer apply in person for Food Share or Medicaid services, but instead use hotline numbers. The Obama administration threatened to remove federal funding if these proposals got enacted.

But even when Walker loses, he partly wins. The state legislature did agree to consolidate staff at centers that administer food stamp benefits.

When not searching the couch cushions and glove compartment for loose change, Illinois Gov. Pat Quinn tends to make controversial proposals to ensure his state pays overdue Medicaid bills — and therefore keeps getting millions in federal Medicaid funds. First, Quinn wanted the state to borrow $8.75 billion, but the state legislature was cool to the idea. Now, the Springfield State Journal Register’s Dean Olsen reports that Quinn wants the Illinois Finance Authority to borrow $750 million from private investors like banks and then repay the banks with interest.

Given the state’s massive short and long-term deficit, further borrowing sounds bad. But other alternative to make state payments are worse: like freezing state income tax money that goes to municipal governments (many of which, like Chicago, are doing just as badly as the state).

Gov. Pat Quinn wants Illinois to borrow $2 billion in order to pay for the state’s Medicaid program, reports Yvette Shields at Bond Buyer. At issue are two facts: A.) Illinois has a colossal, monstrous, record short-term deficit even with a major tax increase and B.) the federal reimbursement rate for Medicaid costs drops from 57 percent to 50 percent July 1st, when the stimulus bill extension expires.

Enrollment in Medicaid jumped during the Great Recession, but until now the increased federal reimbursement covered this cost. Absent this borrowing, it’s not clear what the state can do besides cut other programs or reduce Medicaid services. They can’t really reduce eligibility levels: A reduction would deny Illinois heavy federal Medicaid subsidies that start in 2014 under the national health care reform law.

Micah Maidenberg of Progress Illinois reports on implementation of an Illinois law to curb Medicaid costs. Maidenberg finds instances of waste and inefficiencies in the system, like the federal and state government paying an insurance company $243 million between 2000-2004 to participate in Medicaid. The insurance company then didn’t provide health care to pregnant women or unhealthy patients.

But the big picture problem is that, thanks to the recession, both more poor people in Illinois are Medicaid eligible and fewer federal and state dollars are available to provide health services. This dilemma will likely end in 2014 when, under the national health care reform law, the federal government will pay for the health care of every adult who lives at less than 133 percent above the poverty level.