Illinois was one of the first states in the nation to accept ObamaCare’s Medicaid expansion. But since its launch, the program has spiraled out of control, blowing through enrollment projections and putting Illinois’ most vulnerable residents at risk.
In fact, the very same day the General Assembly voted to implement ObamaCare’s Medicaid expansion two years early in Cook County, lawmakers also voted to implement cuts to traditional Medicaid, costing Jake Chalkey of Streator, Ill., access to critical seizure medication.
As enrollment continues to climb, these cuts may be a sign of what’s to come.
ObamaCare’s Medicaid expansion created a new Medicaid eligibility group – able-bodied adults ages 19-64 years old, with incomes below 138 percent of the federal poverty level. As long as applicants meet these qualifications, they can enroll in the program, where they face no work requirements or time limits.
According to pre-expansion projections from the Illinois Department of Healthcare and Family Services, enrollment in the program was never supposed to exceed 342,000 adults. (Only 380,000 Illinoisans were ever supposed to be eligible, much less enroll.)
But enrollment skyrocketed past the supposed maximum in the first year of the program. By the end of 2014, the state had enrolled 540,877 able-bodied adults – nearly 200,000 more adults than the state said would ever sign up.
The latest data from the state show enrollment continues to climb. As of May, more than 648,000 adults are enrolled in Illinois’ Medicaid expansion, nearly twice as many adults as expected.
But Illinois’ truly vulnerable can’t qualify for this new welfare program. Instead, they wait. Right now, over 18,000 Illinoisans with intellectual and developmental disabilities are on the state’s Medicaid waiting list. Many of them will die before they ever get the care they need. And if that weren’t enough, more cuts for the most vulnerable may be on the horizon.
ObamaCare’s perverse funding formula gives state policymakers an incentive to cut from the vulnerable first. For example, if the state cuts $1 in total expansion spending in 2017, they would free up just 5 cents in the state budget. On the other hand, if the state cuts $1 in spending from the traditional Medicaid program, which serves the truly needy, they would save roughly 50 cents in state spending. Hopefully policymakers will resist the urge to make these cuts to services for the most vulnerable, but they will face a massive financial incentive to do just that.
Aside from the significant moral concerns, Illinois’ enrollment explosion has also created new fiscal and economic challenges. Federal taxpayers are now paying for nearly twice as many able-bodied adults to receive Medicaid benefits as anticipated and, in just a few months, a large percentage of those costs will be shifted onto the state.
Skyrocketing enrollment also means an even larger drag on an already anemic state economy. According to the Congressional Budget Office, or CBO, ObamaCare’s Medicaid expansion shrinks the economy and discourages work by virtue of the program’s new welfare cliff.
In a December 2015 report, the CBO referred to this cliff as a “tax.” If Illinoisans climb the economic ladder and increase their earnings beyond what Medicaid expansion allows, they will lose thousands of dollars in benefits; this essentially taxes people for trying to improve their lives.
Researchers from Texas A&M University, Georgetown University and the University of Illinois have found that Medicaid expansion could reduce the likelihood of work by up to 10 percent among the eligible population. In Illinois, this would mean over 103,000 adults leaving the labor force entirely, reducing revenue to the state, and landing another blow on the local economy.
Medicaid expansion is a bad deal for taxpayers, the state’s economy and the state’s neediest residents. But there is good news: If Illinois reverses course, taxpayers will find relief, limited resources will be freed up for the most vulnerable, and enrollees will go back to work, providing a much-needed economic boost.
This article originally ran at the Illinois Policy Institute on November 1, 2016.