Senate Week in Review: Medicaid reform package signed into law

Springfield, Ill. –  Years after Senate Republican lawmakers began pushing for major reforms to the state’s health care program for the poor, State Sen. Ron Sandack (R-Downers Grove) is pleased to report that on June 14 Gov. Pat Quinn signed a sweeping reform package into law that will reduce state Medicaid liabilities by $1.6 billion. Earlier this week, Quinn also signed into law a measure that will assist law enforcement officials in targeting and reducing gang crime in Illinois.

A bipartisan team of lawmakers worked with the Dept. of Healthcare and Family Services for months to negotiate the Medicaid reform package, which could put the program on the path to permanent solvency if properly implemented by the Quinn administration. Many of the Medicaid spending reforms simply bring Illinois' program into line with practices followed in other states and by private insurance carriers.

Significant reductions were contained in Senate Bill 2840/PA 97-0689, which included $1.36 billion in benefit cuts and $240 million in provider rate reductions. The measure also targets eligibility verification as a way to produce significant cost savings, including turning over the verification of continued eligibility (redetermination) to a private entity, which is expected to save the state $350 million. Many of the spending reforms included in the package were first outlined in the Senate Republicans' 2011 “Reality Check” fiscal reform proposal.

Cutting up the Governor's "Medicaid Credit Card" was another key reform long-sought by Senate Republican lawmakers. The reform, contained in Senate Bill 3397/PA 97-0691, would significantly reduce the ability of Governors to hand out Medicaid services in one fiscal year, and push the bills off into the next year. Absent this reform, the non-partisan Civic Federation estimated that Illinois' Medicaid debt would reach $21 billion within five years.

Though Illinois Democrats and Gov. Quinn initially rejected the Senate GOP’s Medicaid reforms contained in the Reality Check plan, faced with the projected $21 billion Medicaid shortfall it became obvious that major reforms to the Medicaid program were needed to ensure the sustainability of the program.

Included in the Medicaid package was a major increase in state tobacco taxes (Senate Bill 2194/PA 97-0688). Majority Democrats pushed the $360 million tax hike as a way to avoid added cuts to Medicaid spending. The bill increased cigarette taxes by $1 per pack and doubled the tax on other tobacco products from 18% to 36%.

Senate Republicans voted against the cigarette tax, noting that a $7 billion tax hike in 2011 had not fixed the state's financial problems. They argued Illinois should look to reductions and reforms instead of a regressive tobacco tax where low-income taxpayers contribute to a disproportionately larger share of the revenues. 

Senate Bill 2194 also spells out requirements that not-for-profit hospitals must meet in order to qualify for property tax exemptions, as well as requirements for investor-owned hospitals to meet to receive an income tax credit.

Another measure signed by Quinn on June 14 includes SB 3261/PA 97-0690, which requires hospitals to provide free care to low-income patients in order to qualify for property tax-exempt status as a not-for-profit institution.  Most hospitals will be required to provide the services to persons at 200% or less of the federal poverty level ($46,100 for a family of four). Rural hospitals and hospitals under 25 beds will be required to provide the free care to patients at 125% or less of the federal poverty level ($28,813 for a family of four).

Opponents raised concerns that this new mandate directly contradicts the aims of Medicaid reform because it will encourage patients to utilize hospital emergency rooms instead of participating in a coordinated care system. Opponents also pointed out that the care is not "free," but rather the costs will be shifted to working class families who will end up paying more for insurance coverage.

Another controversial measure, HB 5007/PA 97-0687, allows Cook County to apply for a Medicaid Waiver to receive additional federal Medicaid funds. Proponents claim the expansion plan would be self-funding, while opponents say it is wrong to add between 100,000 to 250,000 new Medicaid recipients at a time when the system is near collapse. 

One important Medicaid reform measure that was previously signed into law, Senate Bill 770/PA 97-0683, targets the state’s use of “presumptive eligibility” in re-determining eligibility for Medicaid applicants.  This law will put an end to the current practice of automatically assuming that an enrollee is eligible without proper verification.

Though the signing of critical Medicaid reforms may have been the highlight of the week, Quinn also signed into law an important measure to assist law enforcement officials in prosecuting street gang leaders.

House Bill 1907/PA 97-0686 is known as the "Mini" RICO (Racketeer Influenced and Corrupt Organizations) Act, and it creates enhanced penalties for an extensive list of offenses if they are committed in furtherance of a criminal enterprise. The law will allow prosecutors to connect different crimes that have been committed by the gang as a way to pursue the whole organization including gang leaders, instead of pursuing gang crimes as though they were isolated incidents.

The bill was an initiative of Cook County State's Attorney Anita Alvarez, who is pursuing street gangs who make huge profits as a result of engaging in drug trafficking and other criminal activity. The Chicago Police Department reports that Chicago has the largest gang population in the country, and a total of 75 to 80 percent of the city’s homicides are gang-related.

Under the law, gang members could face more than 30 years in prison for criminal conspiracy. The asset forfeiture provisions included in the bill allow law enforcement officials to go after gang leaders by taking away their wealth and other assets, such as vehicles and real estate.

The bill was modeled after the federal RICO law, which was initially designed to go after organized crime. However, over the years the federal law has been used against other groups, organizations and individuals; opponents have criticized the state’s measure because of the potential it could be used to target groups other than gangs or organized crime.