Friday, 06 08, 2012
Illinois lawmakers wrapped up the 2012 legislative session May 31, making significant progress on Medicaid reforms that could result in billions in long-term savings, according to Senator Sam McCann.
Senate Bill 2840 reduces Medicaid liabilities by more than $1.6 billion. The bill reflects numerous reforms that Senate GOP lawmakers have sought for many years, including many of the changes strongly advocated for in their 2011 Reality Check fiscal reform plan. Reforms target eligibility verification, utilization controls, optional services, and rate adjustments, among other changes.
Senate Bill 3397 changes the “Section 25” provision in state law that has allowed administrations to buy Medicaid services in one fiscal year, but not pay for those services until the next fiscal year. Beginning with the fiscal year that starts in July, the state cannot roll over more than $700 million in Medicaid bills. The following year and every year thereafter, the state’s credit limit will be held to $100 million.
Senate Bill 770 (PA 97-0683) targets the state’s use of “presumptive eligibility,” wherein applicants for aid in Illinois are automatically assumed to be eligible before the state has determined if they are truly eligible. The bill establishes that applicants cannot be reimbursed for the first 30 days of the Temporary Assistance for Needy Families (TANF) application process. The bill gives the state 45 days to process a TANF application.
On June 6, the four legislative leaders met with Governor Pat Quinn to continue negotiations on pension reform. Illinois has $83 billion in unfunded pension liabilities, and in recent years the state’s retirement system has consistently been ranked the most underfunded in the nation.
Senator McCann says the pension burden is overwhelming and poses a threat to the state’s fiscal stability, but notes that the fiscal irresponsibility of past General Assemblies is being shoved off onto state employees and retirees who met their contractual obligations and expect the state to do the same.
Other notable bills sent to Governor Quinn for consideration include:
Adult Entertainment Tax (HB 1645): Creates the Live Adult Entertainment Facility Tax and would require either a $3 entry into a club, or require club owners to pay an annual $5,000 - $25,000 surcharge. Facilities could choose which tax they pay. The proceeds will largely go to the Sexual Assault Prevention Fund.
Caylee’s Law (SB 2537): Increases penalties for failure to report the disappearance of a child age 13 or younger within 24 hours (one hour if younger than 2). Increases penalties for failure to report within 12 hours the death of a child age 17 or younger. Expands the obstruction of justice definition to parents, guardians or caretakers of a child younger than 13 who provide false information to law enforcement or other authorities investigating the child’s disappearance or death. The bill is a response to the death of 2-year-old Caylee Anthony, which received nationwide media coverage.
Cook County Medicaid (HB 5007): Allows Cook County to apply for a Medicaid waiver to receive additional federal Medicaid funds. Proponents claim the expansion plan would be self-funding, while opponents say it is wrong to add between 100,000 to 250,000 new Medicaid recipients at a time when the system is near collapse.
Day Care Funding (SB 2450/PA 97-0684): Gives the Governor the ability to reallocate existing dollars in the current budget to cover a shortfall in child care assistance for the working poor. Does not increase overall state spending for the year.
Enterprise Zones (SB 3616): Extends enterprise zones, which are valued economic development incentives for municipal and county governments. The bill allows the zones to apply for a 15-year extension or creation, and if they continue to meet certain criteria they can receive an additional 10-year extension. Establishes specified criteria for enterprise zone applicants, and a point system that will be judged by the Department of Commerce and Economic Opportunity. Creates an Enterprise Zone board that will review applications and either confirm or deny them. Creates a new sales tax exemption process for zones and high-impact businesses. Establishes new accounting procedures to ensure compliance and to review effectiveness of zones. Folds the Rivers Edge program into the enterprise zone program when they begin expiring (resulting in five additional zones).
Financial Reporting (SB 3794): Creates an independent body to assist the State in improving the timeliness, quality, and processing of financial reporting. Audits of the State’s financial statements have repeatedly concluded that Illinois doesn’t have adequate controls to ensure that information reported by agencies is fairly stated and compliant with generally accepted accounting principles (GAAP). The State’s financial reporting system is comprised of more than 250 disparate financial reporting systems that are antiquated and costly to operate. More than 80% of those systems are not compliant with GAAP.
“Free” Hospital Care (SB 3261): Requires hospitals to provide free care to low-income patients to qualify for property tax-exempt status as a not-for-profit institution. Most hospitals would be required to provide the services to persons at 200% or less of the federal poverty level ($46,100 for a family of four). Rural hospitals and hospitals with fewer than 25 beds would be required to provide the free care to patients at 125% or less of the federal poverty level ($28,813 for a family of four). Opponents raised concerns that this new mandate directly contradicts the aims of Medicaid reform because it will encourage patients to utilize hospital emergency rooms instead of participating in a coordinated care system. Opponents also pointed out that the care is not “free,” as the costs will be shifted to working-class families who will end up paying more for insurance coverage.
GA Scholarship Elimination (HB 3810): Eliminates the General Assembly Scholarship program; no scholarship may be awarded after September 1, 2012. Creates a Tuition and Fee Waiver Task Force that will review tuition/fee waiver programs at the state’s public universities.
Gambling Expansion (SB 1849): Advances a major gambling expansion measure that includes a 4,000-position Chicago Casino to be operated by a Chicago Casino Development Authority to be appointed by the Mayor. Casino revenues would go to Chicago. Also includes four new riverboat licenses for Rockford, Park City (next to Waukegan), Danville and the South Suburbs of Cook County as well as gaming at the state’s six horse racing tracks. The Commission on Government Forecasting and Accountability estimates more than $1 billion in one-time revenues, but not for at least four years after new facilities are operational. Recurring revenue estimates are $334 million a year, most which will not be realized until FY 2016.
Infrastructure Investment (HB 4568): Authorizes $1.6 billion in bonds to finance state infrastructure repairs and improvements. Half would be used for state and local roads and half would be used for rail and mass transit statewide. These bonds are part of the remaining bond authorization approved in the 2009 capital program, and are estimated to create 27,000 jobs.
Legislative Furloughs/COLAs (HB 3188): Requires every legislator to forfeit 12 days of compensation during FY2013. Prohibits FY2013 cost-of-living adjustments for General Assembly members, state’s attorneys, and elected constitutional officers. Savings from furlough days amounts to savings of approximately $674,000. A .9 percent COLA would have amounted to about $285,000.
Purchasing/Workers’ Compensation (SB 2958): Draws clear lines of authority governing state procurement. The omnibus Procurement Code reform bill also contains a provision that would outsource the state’s Workers’ Compensation Program to a third-party vendor. Requires the Department of Central Management Services to relinquish responsibility to the vendor on January 1, 2013. State government has been hit hard not only by skyrocketing workers’ compensation costs, but also by scandals highlighting mismanagement of the program.
Racketeering (HB 1907): Creates enhanced penalties for an extensive list of offenses when committed in furtherance of a criminal enterprise. Known as the “Mini” RICO (Racketeer Influenced and Corrupt Organizations) Act, it targets street gangs who make huge profits as a result of engaging in drug trafficking and other criminal activity. The asset forfeiture provisions can go after gangs by taking away their wealth and other assets such as vehicles and real estate.
Regional Superintendant Reduction (SB 2706): Reduces the number of regional superintendents. Establishes that each educational service area must contain at least 61,000 (instead of 43,000) inhabitants. The number of regions is reduced from 45 to 35 as well.
Retiree Health Insurance (SB 1313): Repeals the state’s health insurance subsidy of up to 100% (for retired employees with 20 years+ of service). Directs the Department of Central Management Services to issue a retiree health insurance premium payment plan (annually) for annuitants of the five state pension systems, subject to approval by the Joint Committee on Administrative Rules.
Tobacco Tax Hike (SB 2194): Increases cigarette taxes by $1 per pack and doubles the tax on other tobacco products from 18% to 36%. Opponents say relying on a shrinking revenue source for growing Medicaid expenses is shortsighted. It was also noted that tobacco taxes are among the most regressive taxes in the state, with low-income taxpayers paying a disproportionate share of tobacco taxes. The funds would go toward Medicaid and would be matched by federal funds. The measure also spells out requirements that hospitals must meet in order to qualify for property tax exemptions as not-for-profits and imposes charity care requirements on for-profit hospitals.
A full list of all bills passed by Senate and House lawmakers can be found at the Senate Republican Web site.