Saving Medicaid in Illinois was not pretty, but necessary

On June 14, Governor Quinn signed five pieces of legislation which collectively changed the landscape for Medicaid providers and recipients along with any 65+ adult who is developing an estate planning to protect assets and still secure Medicaid eligibility.

The new laws will result in $1.6 billion in Medicaid saving reductions, increase the price of cigarettes (triggering a dollar-for-dollar federal match) and at day’s end, will reach the governor’s goal of $2.7 billion in Medicaid savings.

“The Medicaid system was on the brink of collapse and was threatening financial health of our health care delivery system and state government as a whole...[N]ow that we have put the program on a sustainable financial path, we can focus on our ultimate goal of transforming the program from one which simply pays medical bills, to one that keeps its clients healthy by coordinating their care and making sure when they do get sick, they get care that is effective and results in better outcomes.” HFS Director Julie Hamos

The list of 62 budget actions (here)  is remarkable in its scope. I began my career in long-term care in 1988 and can attest that the deferral of Medicaid bills to future years for payment began over 20 years ago. Regardless of which political party was in control of the governor’s mansion or the general assembly, everyone was willing to continue programs based upon the assumption that future tax revenues would be sufficient to meet current obligations. Although that assumption became untenable in 2008, the federal stimulus money of $1.2 billion per year beginning that year and ending in 2011 softened the blow.

The Illinois Department of Healthcare and Family Services (HFS) published a thorough review of its position in its published Medicaid 101 and although it lays out a well crafted argument in support of the actions taken. Although the numbers add up and a barrage of criticism is being leveled at the legislature, but in general, these laws will address the Medicaid gap without resorting to an increase in general revenue funds: that is good election year politics.

Meanwhile, the reduction of the community spousal resource allowance and the virtual disallowal of the pool trust exemption for those who are over 65 years of age, will leave many eldercare lawyers scrambling for recommendations to future clients who wish to shield assets from HFS and avoid a Medicaid spend down. Perhaps the implementation of the CLASS Act would have delayed the implementation of these two significant revisions to Illinois law, but I rather doubt it. Pooled trusts for those 65+ remain as an estate planning option in very few states (I can only think of Florida) and the anticipated growth in Medicaid services due to the Affordable Care Act along with the growing numbers of older adults is striking fear in the hearts and minds of state budget directors around the nation. They want every dollar a citizen has available to pay for their care to be used for that purpose. What do you think?

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    Bruce Lederman has over 25 years experience in the senior care field as a direct care provider and thought leader. Bruce was CEO and president of his own firm that operated skilled nursing facilities in Illinois. He is a former nursing home administrator and has consulted to numerous elder care providers on planning for strategic growth as well as process improvement. Recently he served as board chair of CJE SeniorLife, a leading non-profit elder care provider in the Chicago area. Bruce is currently employed as chief strategy officer for a company providing skilled nursing services in communities throughout Illinois and Missouri.

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