SPRINGFIELD – The final piece—and perhaps most critical piece—of the state’s Medicaid reform package was approved on May 31, effectively “cutting up the state’s Medicaid credit card,” according to State Senator Christine Radogno (R-Lemont), cosponsor of Senate Bill 3397.
The legislation was unanimously approved by Senate lawmakers, and will phase out the little known “Section 25”loophole in state law that has allowed Illinois governors to disguise the true annual cost of its Medicaid program. Under the provision, Illinois has been able to commit to more Medicaid services than it can pay for and then push the bills off into the next year. It has been a key objective of Radogno and the Senate Republican Caucus to enact reforms that will eliminate the Section 25 provision and force the state to live within its means.
“This bill has been aptly described as ‘cutting up Illinois’ Medicaid credit card,’” said Radogno. “This is a sensible, important change that will put an end to the long-time habit of pushing off Medicaid obligations from one year to the next, and force the state to live within its means.”
Given the extent of the state’s deficit spending, the Section 25 provision will be gradually phased out over the next two fiscal years. As a result, in Fiscal Year 2013 the state will be able to carry over no more than $700 million in Medicaid obligations; that cap is reduced to $100 million in Fiscal Year 2014, and completely phased out in Fiscal Year 2015.
While the state’s Medicaid backlog was high in the 1990s, the State never carried an end-of-year backlog of more than $1 billion in five consecutive years—as has been the case with the most recent Administrations.
Senate Bill 3397 is a significant component of a major Medicaid reform package that will reduce state Medicaid liabilities by $1.6 billion. The reforms were negotiated throughout the 2012 spring session after the Civic Federation and the Governor’s own budget office confirmed that within five years Illinois' Medicaid debt would reach $21 billion and consume most of the budget if the state did not get Medicaid spending under control.
Radogno said that massive deficits like those projected by the Civic Federation and the Governor's social service agency, jeopardize the healthcare safety net for those who truly need it—underscoring the need for Senate Bill 3397 and the $1.6 billion in reforms and reductions of Medicaid services and programs that were contained in Senate Bill 2840 and approved by the Senate on May 24.