05/25/2012 06:25 pm ET Updated Jul 25, 2012

When Cutting Illinois' Medicaid Program, First, Do No Harm

The Illinois General Assembly is currently debating where to cut $2.7 billion dollars (roughly 18 percent of spending) from the state's health insurance program for certain low-income populations. The thinking is that these "savings" will band-aid the hemorrhaging state budget deficit and root out fraud. If the Medicaid program were a patient, it would be on the surgery table preparing for amputation of a few healthy limbs.

And while this might prevent some problems, it is much more likely to cause larger, more serious ones. Of course we need to manage Medicaid spending so that the program is working efficiently. But cutting almost 18 percent of the program in just one year is not the way to do it.

Why should you care that these low-income folks may be cut from the Medicaid program or have severely reduced access to medical services? Because every dollar Illinois cuts means a little more than a dollar in federal funding is lost from Illinois' economy, creating a negative ripple effect of economic harm. The proposed 18 percent cut to Medicaid would put 25,600 Illinois jobs at risk and reduce business activity by roughly $3.3 billion.

And you should care because medical needs and costs don't disappear when Medicaid is cut. For instance, one of the numerous service and eligibility cuts in the most recent Medicaid reform legislation pending in the General Assembly would eliminate eligibility for about 26,000 low-income parents who have household incomes between 133 percent and 185 percent of the federal poverty level, which is roughly between $30,656 and $42,642 for a family of four. These parents will still get sick and then are likely to forgo or delay necessary medical care, and eventually end up in the emergency room. And by that time, they are often more expensive to treat. For those who lose coverage, manageable health conditions, such as high blood pressure and diabetes, may deteriorate and lead to hospitalizations. And a portion of these costs go unpaid and are eventually passed on to all of us--consumers, employers, and businesses--in the form of higher insurance premiums.

Another potential cut in Medicaid services is to the Illinois Cares Rx program, which helps over 160,000 seniors and people with disabilities with their prescription medications. If this vital program is eliminated, this vulnerable population would see their deductibles increased from $0 to up to $320 and their co-payments for brand-name drugs raised from $15-20 up to $39-95. Eliminating Illinois Cares Rx could end up costing the state more in the long run because hospital and nursing home admissions will increase if seniors can no longer afford their health care.

Rather than employing such drastic and cuts on the Medicaid program, let's instead look at thoughtful alternatives to closing the budget gap. First, the state needs to raise revenue. The cigarette tax is an important and necessary step in that direction. Second, there are already processes in the works that promise to produce sustainable savings and improve care in the Medicaid program. For instance, let's allow the state's new Medicaid reform plan, which includes increased care innovation for high-cost enrollees, to take effect. And new care coordination entities, such as the Medical Home Network, show great promise for increased efficiencies for Medicaid enrollees.

Let's remember that quick fixes sound good but often have long-term negative impacts. And like an amputation, they can be both irreversible and regrettable.