Quinn wants Medicaid cuts, $1 cigarette tax hike

SPRINGFIELD -- A $1 per pack increase in Illinois' cigarette tax, combined with extensive program cuts and a major reduction in Medicaid payments to medical providers, anchor Gov. Pat Quinn's plan to close a $2.7 billion gap in the program.

Quinn outlined his proposal Thursday, after a working group of state lawmakers failed to come up with a plan that covers the entire $2.7 billion.

"This is our moment with respect to the health care system," Quinn said. "In order to save the system, we had to make some fundamental changes."

Quinn's plan would cut nearly $1.4 billion from Medicaid programs themselves. About 215,000 people would lose benefits entirely, including 180,000 seniors who participate in Illinois Cares Rx, a prescription drug assistance program for low-income elderly.

Another estimated 100,000 people who are no longer eligible for Medicaid because of income levels or because they don't live in the state also would be tossed off the rolls.

Medicaid now provides benefits for 2.7 million Illinois residents. More than half of all births in the state are covered by Medicaid.

Cigarette tax

Quinn wants to raise the state cigarette tax by $1 per pack. Coupled with federal matching funds, that would produce $675 million for Medicaid.

Quinn also wants to cut rates paid to hospitals and other providers who treat Medicaid patients to save another $675 million. Administration officials said the cuts amount to between 8 and 9 percent.

The plan ran into immediate opposition from Republicans and the Illinois Hospital Association. Senate Minority Leader Christine Radogno, R-Lemont, and House Minority Leader Tom Cross, R-Oswego, issued a joint statement opposing the cigarette tax hike.

"Governor Quinn put out a proposal that includes a tax increase," the statement said. "We stand with our members on the Medicaid working group against any tax increases to solve our Medicaid crisis."

The two said Quinn called for cutting Medicaid spending by the full $2.7 billion.

"We agreed with him and will hold him to his words," the statement said.

Quinn said the state's 96-cents-per-pack tax on cigarettes is 32nd in the country. Raising the tax, he said, will encourage people either to quit smoking or not start.

"I think the folks who are saying no to that ought to rethink their position," Quinn said.

Hospitals: 'Too drastic'

The Illinois Hospital Association said it is "deeply concerned" about the proposed rate reductions.

"The proposal is still too drastic and too rash to impose on the state's already fragile health care system," the IHA said in a statement.

The administration compiled a list of 58 proposed cuts in Medicaid services, ranging from outright elimination of some programs to restrictions on others. Adult dental services would be eliminated, along with adult chiropractic services and group psychotherapy for nursing home residents.

Adults could get only one pair of eyeglasses every two years, adult podiatry services would be limited to diabetics, and adult prescriptions would be limited to five per month.

The list includes a number of cost-sharing items, like charging co-payments for generic drugs and imposing a $10 co-payment for non-emergency use of a hospital emergency room.

GOP: More cuts, no tax hike

Republicans on the working group said more cuts should be made.

Rep. Patricia Bellock, R-Hinsdale, said a number of cost-savings reforms passed by lawmakers last year still haven't been implemented.

"We feel if we can get all of these reforms done and continue on a few major ones, we can get to $2.7 billion without increasing a tax on anybody," Bellock said. "If we have a couple of more weeks to work on this, we think we can get to the $2.7 billion."

Sen. Dale Righter, R-Mattoon, said he doesn't think the cigarette tax hike will pass the General Assembly.

"The governor is waving the white flag and saying we're really not going to change the system much and we're going to go ahead and raise taxes," Righter said.

If the $2.7 billion hole isn't plugged one way or another, Quinn said, the difference will have to come out of other state spending, like schools or public safety.

"Members of the General Assembly may not be wildly excited about this plan, but it is necessary," he said.

Doug Finke can be reached at (217) 788-1527.

Key components of Gov. Pat Quinn's Medicaid plan

*Eliminations, reductions and better management of various Medicaid services to save $1.35 billion. That is roughly 50 percent of the total $2.7 billion goal.

*Cut reimbursements paid to medical providers for treating Medicaid patients. Savings projected at $675 million, 25 percent of the goal.

*Raise the Illinois cigarette tax from its current 98 cents to $1.98 per pack. Revenue estimated at $337 million. The federal government would match that amount giving the state a total of $675 million, or 25 percent of the goal.