Federal health, nutrition programs cuts would have drastic effect on Illinois

The U.S. House’s Energy and Commerce Committee released its recommendations for budget reconciliation early last week. A preliminary review by the Congressional Budget Office projected that, if implemented, at least 8.6 million Americans would lose their Medicaid coverage during the coming decade.

That translates to well over 300,000 Illinoisans.

In addition, the Congressional Budget Office projected that 5.1 million more people would lose their health insurance because of the federal Centers for Medicare & Medicaid Services’ new rules regarding Affordable Care Act tax credits and restrictions on obtaining and retaining eligibility, including work requirements.

That would be roughly 190,000 more Illinoisans, for a total of somewhere around half a million people losing coverage here.

Another part of the U.S. House’s budget reconciliation proposal would reduce the federal Medicaid expansion match under the Affordable Care Act from 90% down to 80% for any state that used its Medicaid "infrastructure" to provide health insurance to undocumented residents.

Illinois’ All Kids program and its health insurance for undocumented senior citizens, as well as the adult insurance programs that Gov. JB Pritzker wants to cut off, all use the state’s Medicaid infrastructure to provide state funding for undocumented residents.

If that ultimately passes, the reduction to 80% would trigger a state law which halts all state funding for Medicaid expansion under the Affordable Care Act if the federal match falls below 90%.

So, either the state would have to give up funding health care for undocumented residents or continue to fund them with state dollars and then pay perhaps a billion dollars a year to make up for the 10-point reduction in the federal match.

No way the state could afford to step in and spend billions upon billions to cover all those folks.

The Congressional Budget Office also released cost estimates last week for the House Republican budget reconciliation plan, and it included even more eye-popping numbers about state Medicaid cuts and increased state costs.

The estimates cover the federal budget years of 2026 up to and including 2034 (apparently nine fiscal years). According to the non-partisan budget office estimates, changes to the Medicaid program would result in "$698 billion less in federal subsidies."

A back of the envelope calculation shows that would work out to about $24.4 billion in federal Medicaid cuts for Illinois, or about $2.7 billion a year on average, although the cuts are backloaded. A Kaiser Family Foundation report earlier this month showed Illinois received $21.1 billion in annual federal Medicaid funding out of $606.3 billion in total federal Medicaid funding, or 3.5%.

The Congressional Budget Office also estimates "$78 billion in additional state spending, on net, accounting for changes in state contributions to SNAP and Medicaid and for state tax and spending policies necessary to finance additional spending," during the same time period.

That would be about $2.73 billion in additional expenses for Illinois, or about $303 million per year on average.

Later in the week, Congressional Republican honchos proposed a "manager’s amendment" to their massive reconciliation bill.

One new item would prohibit private insurance companies in the Affordable Care Act exchange to pay for abortions unless "necessary to save the life of the mother or if the pregnancy is a result of an act of rape or incest."

Illinois currently requires companies in the ACA health insurance marketplace to cover abortion if they offer pregnancy-related benefits, according to the Department of Insurance.

So, if the congressional provision is enacted, Illinois would have to decide whether to pick up the tab itself or find another work-around.

The same could happen with the amendment’s language banning Medicaid coverage of gender-affirming care for adults. The proposed ban earlier applied only to children.

The amendment would also move up Medicaid work requirements from the original 2029 start date to 2026, which will undoubtedly result in more Illinoisans being kicked off, if Arkansas’ disastrous experience is repeated here.

The budget office claimed that household resources for those in the bottom 10% of earners would "decrease by an amount equal to about 2 percent of income" in 2027 and 4% in future years, due to Medicaid and Supplemental Nutrition Assistance Program cuts.

Household resources for those in the top 10% would "increase by an amount equal to 4 percent for households in the highest [ten percent] in 2027 and 2 percent in 2033, mainly because of reductions in the taxes they owe," the Congressional Budget Office reported.

We'll just have to wait and see what the U.S. Senate does now that the ball is in its court.

Rich Miller also publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.

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