1. Medicaid: $2.4 Billion Ticking Time BOMB Medicaid: $2.4 Billion Ticking Time BOMB 1

2. What is Medicaid? In 1965, this healthcare program was created to be a safety net for individuals, families and the disabled. Not to be confused with Medicare which is a federally funded program for those over 65 years of age. Medicaid is jointly funded by the federal and state governments, but is managed by states. Today Medicaid has grown to be the largest health insurer in Illinois – covering 2.8 million people and costing Illinois taxpayers close to $15 billion. Today in 2012, the cost nationally to the federal government is $400 billion, and is projected to more than double to $840 billion in 2017. 2

3. Federally Mandated Medicaid Services Hospital care (inpatient and outpatient) Skilled nursing facility long term care Physician services Lab and x-ray services Home health care Family planning Roughly 60% of Illinois Medicaid budget 3 Includes:

4. Optional Services – Not Federally Mandated Prescription drugs Hospice Podiatric, Optometric, Dental, Chiropractic Speech, hearing and language therapy Prosthetic devices Roughly 40% of Illinois Medicaid budget 4 Includes:

5. Medicaid Liability 5

6. Medicaid Expansions Since 2004 6 FY2004 KidCare eligibility expanded from 185% Federal Poverty Level (FPL) to 200% FPL. This expansion added 65,000 children to the number eligible for KidCare coverage, at a cost of $11 million gross/$4 million net. FamilyCare expanded from 49% FPL to 90% FPL. This expansion extended eligibility to 65,000 parents of KidCare children at a cost of $63 million gross/$22 million net. Healthy Women Program allows women to continue to receive some benefits, such as reproductive health, even when income exceeds eligibility. FY2005 FamilyCare was expanded from 90% FPL to 133% FPL. This expansion cost $63 million gross/$22 million net. Presumptive eligibility for KidCare.

7. Medicaid Expansions Since 2004 7 FY2006 FamilyCare expanded from 133% FPL to 185% FPL. An estimated 74,000 additional parents were eligible for coverage with 56,000 new parents expected to enroll. This increase went into effective January 1, 2006, with a FY 2006 cost of roughly $7 million net to the State, but the expansion annualized to a cost of $63 million gross/$22 net in future years. FY2007 All Kids program (former KidCare coverage) expansion for all uninsured children regardless of income level. No income cap, but higher income families pay a higher premium. $45 million first year costs. FY2009 Governor proposes FamilyCare expansion to 400% FPL. Program is expanded despite lack of General Assembly approval. Subsequent litigation blocks expansion, but those already enrolled are grandfathered into coverage. FY2010 Medicaid coverage expanded for adult preventive dental services.

8. Medicaid Payment Backlog 8

9. Medicaid Payment Cycle 9

10. Medicaid Covers 2.8 Million Illinoisans One of every Five Illinoisans is now covered by Medicaid 10

11. Medicaid Covers… One of Every Two Births 11

12. Medicaid Covers… Two of Every Three Nursing Home Residents 12

13. Medicaid Covers… One of Every Three Kids 13

14. Illinois’ Current Coverage Limits Generally able-bodied adults with no children are the only population not currently covered. Family of 4 All Kids 300% FPL $69,150 FamilyCare Parents 191% FPL $44,025 14 Family of 2 Aid to the Aged, Blind, and Disabled 100% FPL $15,130

15. Illinois Compared to Border States Current Coverage Limits FAMILY of FOUR PARENTS KIDS ELDERLY COUPLE IL IN IA KY MO WI $44,025 $8,298 $19,131 $14,291 $5,762 $46,100 $69,150 $46,100 $30,657 $42,642 $69,150 $15,130 $11,347 $12,860 $12,709 IL IN IA KY MO WI IL IN IA KY MO WI Average: $18,716.4 $46,238.2 $11,922 15

16. Bi-Partisan Reforms Passed into Law 2 year expansion moratorium – HFS seeking loophole through waiver Cost avoidance Cap All Kids at 300% FPL – capped on July 1, 2011 but current enrollees grandfathered for 12 months $0 in FY12; $7.5 million over 5 years Increased cost sharing for Illinois Cares Rx and eligibility caps $58 million Pharmaceutical utilization controls Conflicting estimates range from $60 million to $110 million Reduced prompt payment interest $178 million Reduced hospital outlier payments $90 million Implemented 16

17. Bi-Partisan Reforms Passed into Law Cap Familycare at 133% Federal Poverty Level by 1/2014 $50 million annually Integrated Coordinated Care enroll 50% of enrollees by 2015 $500 million over the first five years of implementation Report on cost sharing for waiver programs Not yet implemented; due by future deadline 17

18. Bi-Partisan Reforms Passed into Law High risk moms and babies data matching Income/residency verification Eliminate passive redeterminations Durable medical card Payment recapture audits Medicaid transparency portal Civil remedies for fraud Recipient restriction program for fraudulent abuse $10 copayment for unauthorized emergency room use Increased copayment for pharmaceuticals Long term care rebalancing Data sharing/third party liability Specialty drug program Not Implemented 18 $1.5 billion *In total the reforms would save over $1.5 billion when fully implemented.

19. But not in Illinois 19

20. Republican Letter Sent to Super Committee 20

21. Introduced Resolution Urging Super Committee of 12 to Recommend Relaxing the Maintenance of Effort Illinois Democrats refused a vote on the House floor. *Maintenance Of Effort – Prohibits Medicaid eligibility from being reduced or procedures from being tightened in a way that would reduce eligibility. 21

22. Illinois Needs This Flexibility Reduce General State Aid from $4.44 billion to $3.84 billion. This would prorate the foundation level to roughly $5,499 – the lowest level since FY07. Eliminate the Department of Aging Community Care Program ($625 million). Completely eliminate GRF funding for the Department of Public Health ($132 million), the Illinois State Police ($271 million), the Department of Revenue ($109 million), the Department of Veterans Affairs ($63 million) and the Department of Agriculture ($29 million). Without reforms, Medicaid will grow at least $600 million in FY13. For example, to cut $600 million dollars, the state would need to… 22

23. Goals Offset $600 Million Natural Liability Increases. Pay off FY12 Backlogs of $1.8 Billion. Cut: $2.4 Billion 23

24. Options to Consider as we Move Forward Implement previously enacted reforms Re-examine eligibility levels and optional populations Curb Utilization Coordinate Care Review optional services Re-evaluate provider reimbursements 24

25. QUESTIONS? 25