More Medicaid costs a problem
"Free" money can be awfully expensive, as in the case of the expansion of Medicaid.
The fallout from last year's decision affirming the constitutionality of Obamacare is spreading across the country, last week landing in the Illinois Senate.
The high court upheld the core of the legislation — the mandate requiring all Americans to buy insurance or pay a fine for not doing so — but it said that individual states were free to decide whether to participate in the legislation's vast expansion of Medicaid.
The Illinois Senate last week voted 40-19 to participate in the expansion. When the Illinois House follows suit, as it surely will, the legislation will be signed into law by Gov. Pat Quinn.
That's too bad. There are so many question marks about the impact of the proposed Medicaid expansion that it would be more prudent for our state to wait and see what happens elsewhere.
Right now, all 50 states are in the process of either signing up for the Medicaid expansion or not. Each state has its own reasons for acting as it does. For many, the lure of what is being described as "free money" promised by the federal government is irresistible.
Of course, the federal government doesn't have the money that is being described as free. It will borrow the necessary funds through the credit markets, substantially increasing the federal budget deficit and national debt.
The cost of the program to Illinois also will not be free, even though it is advertised as such. Critics say that the planned expansion will cost Illinois taxpayers roughly $2 billion between now and 2020. For a state already deeply in debt, that's not chump change.
Majority Democrats, who control the levers of power in this state, are undeterred by the extra costs. They characterize the Medicaid expansion as a moral imperative and ignore the price tag.
Here's the plan for Illinois.
Under Obamacare, participating states will expand Medicaid eligibility to low-income adults who have no children at home. Previously, it was limited to low-income families and the disabled.
Roughly 350,000 uninsured Illinois residents will be newly eligible under guidelines that allow enrollment for those with incomes of up to 138 percent of the federal poverty line ($15,400 for an individual and $31,800 for a family of four).
But the state also expects people currently eligible but not enrolled in Medicaid to be drawn into the program. That number is estimated to be roughly 170,000.
The federal government will pay 100 percent of the costs of the newly eligible enrollees for three years. After that, the federal government will pick up at least 90 percent of the cost for the newly eligible.
The federal government will pay 50 percent of the cost of newly enrolled people who were eligible under the old rules. That's where most of the extra cost to the state comes in.
Gov. Quinn called for the expansion, describing health coverage as a "fundamental right." He also has foolishly characterized it as a stimulus to the economy, maintaining that the expansion will create thousands of jobs.
So on the strength of this argument, Illinois once again is going to spend hundreds of millions of dollars it doesn't have. That's the same approach that has led Illinois to effective bankruptcy.
There is another problem that is not being discussed. Medicaid in Illinois is infamous both for not paying its bills on time and not reimbursing medical providers at sufficient amounts. That has prompted many medical providers not to accept Medicaid patients or not to accept additional Medicaid patients.
Illinois is about to drop an estimated 500,000-plus new Medicaid patients on the system. Will there be sufficient providers to care for them?
Despite all the talk about the dramatic Medicaid expansion, the fact is that no one can say with certainty how this will work out. Given all the questions surrounding the impact of this program, Gov. Quinn and state legislators are taking an unacceptable risk with state finances.