Washington, D.C. — Medicaid rule changes put in place by the Bush Administration will cost Illinois more than $2.5 billion in federal funds over the next five years. The cut in federal funding will, in fact, act like a giant anti-stimulus package. Those lost Medicaid funds will eliminate an estimated 10,800 jobs and an accompanying $418.8 million in wages, and, even worse, cost the state an estimated $1.2 billion in lost business activity.
Virtually all that economic pain comes in the first year of implementation, when Illinois would fail to receive approximately $487.7 million in Medicaid payments, says a report released today by Families USA, the national organization for health care consumers. Titled “Bad Medicine,” the report analyzed the economic impact of seven new Medicaid regulations that were issued in 2007.
“The devastation caused by the Administration’s cuts will affect millions of people who rely on Medicaid for their health lifeline. This will be tragic for their families,” Ron Pollack, Executive Director of Families USA, said today.
“Additionally, these cuts will harm state budgets at the worst possible time. These cuts in federal Medicaid payments will have a ripple effect through state economies that are already struggling during this economic downturn. This economic harm will increase the number of people who may need Medicaid, as thousands of Illinoisans see their paychecks being cut or their jobs being eliminated.
“This lost business activity in Illinois will hurt business and industry, and it will force governors and state legislators to make increasingly difficult choices about providing state services,” Pollack said. “The Bush Administration’s decision is ill-timed and ill-considered, and it should be reversed by Congress.”
“I'm proud that our work to expand access to healthcare for children and families in Illinois is serving as a model for other states around the country,” Illinois Governor Rod Blagojevich said today. “Unfortunately, the Bush administration wants to reverse course and weaken the federal government's commitment to Medicaid.
“If they succeed, the impact could be devastating as the burden shifts even more to states to make sure people can see a doctor and get the care they need,” Blagojevich said. “We will continue to work with our congressional delegation and others to make sure Washington keeps its end of the bargain on healthcare.”
“These proposed regulations could have a significant detrimental impact on Illinois. Hundreds of thousands of families and individuals depend on Medicaid services,” said Theresa Eagleson, director of the state's Medicaid program. “In order to make sure these individuals have access to medical care, we need to maintain funding at the federal level.
“We are currently working with our congressional delegation and others in our efforts to prevent these regulations from taking effect and otherwise to search for solutions,” Eagleson said.
The seven regulation changes issued by the Bush Administration in 2007—and imposed on states without congressional review or debate—restrict funding for a variety of Medicaid services, including rehabilitation services, school-based transportation, as well as Medicaid administrative services such as outreach, enrollment, and case management. The seven rule changes are now either under a congressional moratorium or awaiting implementation.
The Families USA “Bad Medicine” report for Illinois is based on the latest version of an economic modeling tool known as the Regional Input-Output Modeling System, or RIMS II. Developed by the U.S. Department of Commerce, RIMS II has been used extensively for a variety of major projects calling for economic projections, such as military base closures, hospital and airport expansions, and the impact of natural disasters on regional economies.
“There is a multiplier effect when dollars stop coming into a state like Illinois,” Pollack said, “and whether Illinois loses funding because a business has closed or because a federal agency has reduced funding for a state program, the impact is the same—there are fewer dollars on the move in the state,” Pollack said.
“As our analysis makes clear, allowing these regulations to be implemented would be bad for Illinois’s families, who will need the Medicaid safety net more than ever in the coming months,” he said. “It is also the wrong choice for Illinois’s economy, which will be dramatically weakened by these cuts.”
All 50 states are affected by the Medicaid rule changes, Pollack said.
