Did Illinois push so hard to enroll children in KidCare that it broke the Medicaid budget?
Medicaid expenditures ran $60 million over budget last fiscal year, and were headed for nearly triple that amount this fiscal year if the Illinois Department of Public Aid hadn't applied the brakes.
Gov. George Ryan and outgoing public aid Director Ann Patia worked out a package of cuts that hit pharmacies and hospitals that treat Medicaid patients.
Did KidCare cause the shortfall?
No, it didn't, Patia says emphatically.
"Caseload growth played a role in the liability increase, but it was not the major factor in the increase."
In fact, though KidCare expenditures ran roughly $7.8 million over projections last fiscal year, they accounted for only one-tenth of 1 percent of the overall Medicaid budget, and just over 13 percent of the shortfall, says agency spokeswoman Jo Warfield.
"What happened was we expected to recruit more children than pregnant women," she adds. "What we got was more pregnant women than we projected and slightly fewer children. And each of those pregnant women gave birth, with all the costs attached to that."
KidCare was introduced as part of a package of benefits designed to help the working poor, including people who were getting off welfare ? and thus off Medicaid.
The program, begun in late 1998 by then-Gov. Jim Edgar, aimed to enroll as many as 200,000 children and pregnant women. Yet by April 1999, public aid had signed up only about 32,000.
Gov. George Ryan and Patia devised a plan to boost KidCare numbers. They simplified the application form, enlisted private agencies to sign people up and promoted KidCare in advertisements.
It worked. KidCare enrollments jumped from 32,000 to roughly 142,000 over a year and a half.
But a number of other factors caused the state to blow through its Medicaid budget last fiscal year, Patia says. Medicaid costs were $509 million higher than they were the year before and $60 million more than the state had anticipated.
"Our [cost] projections for Medicaid were about 1 percent off."
Indeed, the agency had sweetened payments to doctors for office visits by Medicaid patients, increasing the fee from $18 in fiscal year 1999 to $30 per visit last fiscal year. During the same period, public aid more than doubled the amount it pays for Medicaid patients treated in hospital emergency rooms, increasing the fee from $115 per visit to $246.
The vast majority of the Medicaid cost overrun was due to doctors who were ordering more care for Medicaid patients, according to the agency. The other big culprit in the budget shortfall was double-digit increases in the cost of prescription drugs for Medicaid patients.
According to agency figures, the number of days Medicaid patients remained in hospitals jumped 12 percent in the last fiscal year, after staying stable over the prior three years. The public aid department had projected a 5 percent increase. In addition, Medicaid patients of all types used 10 percent more services at hospitals, doctors' offices and pharmacies in fiscal year 2000 than they had in the previous fiscal year.
Prescription drugs, however, constituted the biggest cost increases. Medicaid spending on prescription drugs surged 22 percent in fiscal year 2000, Patia says. In prior years, by contrast, increases in the prices of prescription drugs for the state's Medicaid population had held to around 14 percent per year.
The amount spent for new drugs almost doubled, according to agency figures, climbing from $47 million in fiscal year 1999 to $81 million last fiscal year.
The majority of that increase was due to older Medicaid patients. "Children don't take many prescription drugs," Patia says.
Medical advances have helped drive up costs, too. New drugs play an important role in medical treatment, and may actually reduce the need for expensive hospital stays for Medicaid patients. But new drugs are expensive.
Patia chose to cut pharmacy reimbursements and delay a projected increase for hospitals that provide high-tech care.
"Our biggest challenge," she says, "was how could we control Medicaid spending without hurting Medicaid patients?"
Tony Cappasso is the medical writer for The State Journal-Register of Springfield.
