IHA Urges Lawmakers to Reject $463M in Medicaid Cuts

Illinois state lawmakers are being urged to reject $463 million in proposed cuts to Medicaid payments that the Illinois Hospital Association says would cripple healthcare delivery and jeopardize patient access to care.

"These drastic cuts are wrong and unnecessary, and will only harm patients, hospitals, and the healthcare delivery system," IHA President Maryjane A. Wurth said in a media release. "Many hospitals across the state are already struggling to survive in the current economic downturn." The cuts are detailed in House Amendment #1 to House Bill 3717 – which was filed late Tuesday.

Late Wednesday the Illinois House Appropriations-Human Services voted 13 to 1 (and one present) to send its human services budget proposal, House Bill 3717, to the House floor. The proposal (which is a total of just under $12 billion) includes the Medicaid cuts.

Wurth pointed to a recent IHA survey that found that 90% of hospitals would be challenged to meet day-to-day operations, and nearly two-thirds would have to cut services and lay off staff if $300 million in Medicaid cuts were imposed under Governor Pat Quinn's budget plan. Quinn, elected in 2010, is a Democrat.

Illinois lawmakers are scrambling to fill a budget shortfall of between $1.5 billion and $2.4 billion by the end of May. A Senate budget bill calls for about $300 million in Medicaid cuts.

An IHA analysis this week found that the Medicaid cuts of $463 million, coupled with a $200 million cut to hospitals through proposed reductions to the workers' compensation medical fee schedule would increase by nearly 40% the number of hospitals operating in the red. That would mean nearly half of Illinois' 200 hospitals would be operating at a loss, IHA said.

The Medicaid cuts would be in addition to the $8 billion in federal Medicare reductions to Illinois hospitals that began last year under the healthcare reform law and that continue for another nine years, IHA said.

IHA also called on state lawmakers to use revenue projections provided by the nonpartisan Commission on Government Forecasting and Analysis in setting appropriate spending levels for the state budget.  The commission this spring issued a state revenue projection of $34.3 billion, more than $1 billion above the estimate now being used by the House.

"Using understated revenue projections will lead to unnecessary and harmful spending cuts that will hurt our state's most vulnerable populations, including the young, the elderly, the disabled, expectant mothers, and the newly employed," Wurth said.

Rather than relying on "blunt cuts," IHA said it has identified more than $100 million in targeted savings, including reductions in preventable readmissions and unnecessary utilization.

IHA also called for the use of interfund transfers that would allow the state to quickly obtain $90 million in new federal Medicaid funds by maximizing the state's temporarily higher matching rate under the economic stimulus law. The House unanimously approved a bill to authorize the transfers, and that bill is now pending in the Senate.