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Hospitals, insurers back Ill. Medicaid expansion

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CHICAGO (AP) — Illinois lawmakers soon will face two critical decisions over how to fully carry out President Barack Obama's health care overhaul.

With attention turning in 2013 to how states will implement the health law, Gov. Pat Quinn is pushing legislation to establish a state-run health insurance exchange to help middle-class citizens and small businesses, along with a multi-billion-dollar expansion of Medicaid to cover the poor. While the state's Democratic leaders generally have supported the new health care law, neither proposal will be a slam dunk for passage.

Consumer groups and the insurance industry are warring over whether the state should be able to negotiate with insurers to get lower premiums for people participating in the health insurance exchange. It's not clear where the governor stands, but it would be difficult to pass a bill over the industry's objections.

Quinn is expected to get support from the hospital industry and major insurance companies for the Medicaid expansion, since it involves bringing billions of federal dollars to the state, but some legislators object in principle to such an expansion of government programs. States do not have to expand their Medicaid programs under a U.S. Supreme Court decision issued earlier this year.

The Medicaid issue could be addressed when the legislative session begins Jan. 2, before several dozen lame-duck lawmakers leave office.

With or without new legislation, the Quinn administration has signed up for an initial partnership with the federal government to run an insurance exchange — a sort of Travelocity for health insurance — for coverage starting in 2014. Illinois residents will be able to comparison shop for insurance plans starting Oct. 1.

Here's a look at the issues lawmakers will face as they consider their votes:

Q. Who would get insurance coverage under the Medicaid expansion?

A. Starting in 2014, an estimated 500,000 to 600,000 uninsured Illinois residents would be newly eligible for coverage by Medicaid, the government health program for the poor and disabled. Most of them would be low-income adults without children at home.

Hospitals and clinics would benefit, too, because they would get paid for care they now provide free or write off as bad debt.

Left out, however, would be illegal immigrants. People living in the United States without permission wouldn't be eligible for Medicaid or, for that matter, any other coverage offered in the new health insurance exchanges.

Health-care advocates hope to persuade Illinois lawmakers, district by district, of the personal impact of the Medicaid expansion. One group analyzed Census data to estimate the number of people who would benefit in each Illinois legislative district.

"What is clear is there are low-income, uninsured people in every district from Chicago to downstate Illinois," said Stephani Becker, of the Chicago-based Health and Disability Advocates.

Q. How much would the Medicaid expansion cost the state?

A. The federal government would pay the entire cost of expanding Medicaid to newly eligible Illinois residents for the first three years starting in 2014. The federal share falls to 90 percent by 2020, with the state paying the rest.

State costs would mount to more than $2 billion through 2022, according to a November report from the nonpartisan Kaiser Commission on Medicaid and the Uninsured, which estimates the expansion would bring another $22 billion in federal money to the state during that time.

The powerful Illinois Hospital Association says that extra money would create jobs.

"We're talking about billions of dollars coming into the state through federal Medicaid matching funds," said A.J. Wilhelmi, of the hospital association. "That results in a great deal of economic activity in communities across the state and literally tens of thousands of jobs."

Besides hospitals, the list of supporters of the Medicaid expansion includes AARP Illinois, Aetna, Blue Cross Blue Shield of Illinois, the Illinois Academy of Family Physicians and numerous community health centers and patient groups.

It's a powerful list. But some lawmakers are wary of increasing Medicaid costs to the state, said Rep. David Harris, an Arlington Heights Republican who serves on the board of Advocate Lutheran General Hospital in Park Ridge.

Medicaid is an expensive program for a financially struggling state, said Harris, who hasn't decided how he'll vote. "When we start big expansions of an expensive program, that's a big expense," he said.

Q. Who would benefit from Illinois running its own health insurance exchange?

A.  Whether run by the state or the federal government, the exchanges envisioned in the health law are intended to be consumer-friendly online marketplaces, one in every state, where people could comparison shop for health insurance plans, just as they now shop for airline tickets on the Web.

Most people buying insurance through the exchanges would get taxpayer-financed subsidies, and the exchanges will help people who qualify enroll in Medicaid. Participating insurance plans would have to take all applicants, regardless of pre-existing health problems. The exchanges would feature cost calculators to help consumers figure out how much they would pay.

An estimated 486,000 Illinois residents will get coverage from commercial insurers through the exchange in 2014, growing to 1 million customers by 2016. The health law requires exchanges to be self-sustaining by 2015. A report last year by the Wakely Consulting Group estimated annual operating costs for an Illinois-run exchange could reach $89 million, a cost that could be passed on to customers in their premiums.

The benefit of an Illinois-run exchange would be keeping state regulators — not Washington — clearly overseeing the system and the insurance industry. Insurance companies want that, said one lobbyist.

"Our preference is a state-run exchange. The way we see insurance markets is they should be regulated at the state level," said Elena Butkus, of Aetna Inc.

Consumer groups also want a state-run exchange, but for vastly different reasons. They see an opportunity to keep prices lower by allowing the state exchange, which could be a quasi-governmental entity with its own governing board, to negotiate insurance premium rates.

"The state already (negotiates rates) for state workers and state legislators' insurance coverage," said Jim Duffett, of the Campaign for Better Health Care. "This isn't something that's a new idea."

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The Medicaid expansion bill is HB6253.

Bill numbers haven't been assigned to insurance exchange legislation.

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Online:

Illinois General Assembly: http://www.ilga.gov/legislation/

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Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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