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Congressman Randy Hultgren

Representing the 14th District of ILLINOIS

Hultgren to Speaker Ryan: New Medicaid Formula will Hurt Illinois

Mar 22, 2017
Press Release
Urges Broader Medicaid Reforms that Ensure Fairness in Care for Recipients

Washington, DC — U.S. Representative Randy Hultgren (IL-14) sent a letter to Speaker Ryan yesterday urging House leadership to “seriously consider including provisions” to the American Health Care Act as the bill moves through the legislative process “that would put fairness and parity into the [Medicaid] formula that underpins funding to states. Additionally, as we move forward with health care reform, I am urging my colleagues to make broader structural reforms to Medicaid that are fair for recipients a top priority.”

The House is scheduled to vote Thursday on the first phase of the process of repealing and replacing the failing Affordable Care Act (ACA) health insurance system also known as Obamacare.

Text of the letter follows:

Dear Speaker Ryan,

As the House of Representatives finalizes its first step in the legislative overhaul of the Patient Protection and Affordable Care Act (ACA), I must express my concerns regarding the proposal’s new formula for federal spending on Medicaid and how it will codify a flawed formula into law that would adversely and unfairly affect the state of Illinois. I ask that those negotiating the bill, including Republican Leadership, House Ways and Means Committee, and the House Energy and Commerce Committee, seriously consider including provisions that would put fairness and parity into the formula that underpins funding to states. Additionally, as we move forward with health care reform, I am urging my colleagues to make broader structural reforms to Medicaid that are fair for recipients a top priority.

The 14th Congressional District is home to 76,836 Medicaid beneficiaries, only 14,099, or 18 percent, of which are new to the program through the ACA’s Medicaid expansion. This population accounts for only 6.8 percent of district inpatient hospital admissions and 9.2 percent of outpatient visits, relative to Medicare’s 49.3 percent and 31.7 percent, respectively. Most importantly, 52 percent of Medicaid beneficiaries in the 14th District are children. There are nearly 40,000 children in my district depending on the Medicaid program for their coverage and their care. 

Nationally, children make up a full two-fifths of Medicaid enrollees, but they incur less than one-fifth of the program’s costs.  From where I sit, the American Health Care Act (AHCA) as written would stop funding health care for thousands of children, only to obtain minuscule cost savings and trigger loss of coverage for kids who lack the resources and experience to get it elsewhere.

The outlook for these children is especially bleak in Illinois, because AHCA currently offers Medicaid beneficiaries a less robust but otherwise indistinguishable ACA one-size-fits all health insurance policy. The new Medicaid formula in AHCA has been touted as a per capita cap on federal funding to states, presumably based on the number of program enrollees in each state. However, this proposal would lock in federal funding at a state’s Medicaid expenditures in 2016. The federal government would technically be paying states per enrollee, but Illinois, a state that cannot afford to reach its own Medicaid spending cap, would be stuck permanently in last place for federal Medicaid spending. Illinois has a larger, more medically complex Medicaid population than its Midwest neighbors and many other states across the country, but its enrollees would be treated as if their health needs are less important just because of where they live.

In real numbers, this means that Ohio, a smaller state with a smaller Medicaid population, received $4.6 billion more in federal Medicaid funding than Illinois did in 2015.  The AHCA as written would only make these matching funds smaller and this state discrepancy larger.

I strongly support broader structural reforms to the Medicaid program. I believe Illinois’ proposal for an 1115 waiver and Governor Rauner’s plan to move more program enrollees into managed care are critically important steps forward to ensure lower costs and better care for Medicaid patients and the health care providers who treat them. The ACA nominally opened the door to coverage for 650,000 people in Illinois to get access to Medicaid coverage.  However, nearly 40 percent of health care providers in the state either are not accepting new Medicaid patients or are not accepting Medicaid patients at all.  The answer here is not a simple per capita cap with no structural reforms to a funding formula that pre-ACA was not serving the people who need it most. The answer is certainly not a permanent program formula that treats Illinois Medicaid beneficiaries as less than enrollees in any other state.

House Leadership has explained that the AHCA is only the first step in reforming our health care system and that budget reconciliation rules prevent necessary, broader structural changes in this legislation. I look forward to working with you in the crucial next step of this reform process to legislate fairness and parity in the Medicaid funding formula and ensure that all Americans who rely on this program as a last resort are treated equally regardless of their zip code.

I appreciate your timely attention to this concern and look forward to your response.