University of Illinois at Chicago
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Options for Health Care Policy

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posted on 2021-08-06, 17:29 authored by Anthony LoSassoAnthony LoSasso
The state of Illinois spends roughly $6.7 billion on health care, nearly all of which is accounted for by the Medicaid program: $5.8 billion is on medical assistance and $875 million is for long-term care. Comparatively tiny amounts are spent on public health and other initiatives. For the medical assistance program, the Affordable Care Act (ACA) will lead to increases in state spending in the immediate term. Specifically, efforts to enroll the uninsured in health plans will increase Medicaid enrollment and private enrollment via the health insurance exchange (known in Illinois as the Get Covered Illinois Health Marketplace). Newly eligible Medicaid enrollees will cost the state virtually nothing for several years. However, enrollees who were previously eligible but not enrolled, perhaps because they had private insurance, will cost the state the usual 50 percent of total expenditures.

Notably, Medicaid is a state-federal partnership program with significant federal oversight that leaves relatively few options available to the state to craft and implement creative solutions to reduce spending (such as altering benefits and cost sharing for different eligibility groups). In this jointly administered program, each dollar the state spends is matched by a dollar of federal contribution (at the current Federal Medical Assistance Percentage or FMAP for Illinois). This federal subsidy has long been recognized as a source of weakened incentives to improve the efficiency of the program at the state level.

Medicaid dominates Illinois’ health care spending budget, and the state has already made substantial cuts to optional services in Medicaid in 2012. The state is looking towards aggressively pushing “care coordination” to the Medicaid program in the near term, but skepticism about the potential for cost savings is warranted. It is possible that meaningful reform of the Medicaid program needs to be initiated at the federal level.


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