Business, Labor and Community Groups Unite Against Severe Medicaid Cuts

Coalition Urges Governor and Legislature to Work Together to Find Solution

CHICAGO, Dec. 20 /PRNewswire/ -- A coalition of business, labor, hospitals, religious and community organizations banned together today to rally against Governor Ryan's proposal to slash $250 million annually from Medicaid hospital payments.

This unprecedented coalition strongly urged the Governor to take a second look at the budget and asked the legislature to assume greater responsibility for the Medicaid problem.

Representatives of labor and businesses agreed that these cuts will not only impact hospitals, but could have devastating repercussions on Illinois' economy. Hospital layoffs and facility closings will have a ripple effect on businesses, unemployment rates and economic development

In addition, these cuts could lead to lower worker productivity and an increase in employer and worker health care premiums. Ultimately, providers will be forced to shift costs to make up for the Medicaid shortfall.

"Everyone seems to forget that hospitals are businesses, too. Perhaps because hospitals don't turn away patients, elected officials are quick to assume that they are immune to economic downturns, rising costs, labor issues and other expenses that face all industries," said Doug Whitley, CEO of the Illinois State Chamber of Commerce.

"For every Medicaid dollar cut, the State will lose a dollar in federal matching funds. At the same time Illinois will have more unemployed citizens and greater demand for unemployment compensation, welfare, food stamps, and Medicaid. This is a short-sighted business plan. We need an honest Medicaid budget," added Whitley.

Michael Carrigan, Secretary-Treasurer of the Illinois AFL-CIO noted, "Hospitals and health care organizations are the largest employers in many Illinois counties. The economic health of these enterprises is fundamental to the quality of life in our communities. Illinois hospitals employ more than 200,000 people, and we worry about what these cuts mean to their job security."

Carrigan continued, "A recession is precisely the time when you should NOT be cutting back on health care for those without resources to pay for it. Given the continuing surge of layoffs this year, there will be an inevitable increase in the number of people who will need Medicaid assistance."

In order to balance their own budgets, hospital executives acknowledged that they will be forced to reexamine their spending as well. Staff layoffs, cancellation of services, reduced hours and delayed improvements are realities that will impact the entire health care system. Rural hospitals, already fiscally fragile, risk closing their doors due to these draconian budget cuts.

"None of these institutions can take this kind of reduction without extensively reducing the services available to the most vulnerable in our state. We cannot continue with business as usual and if these budget cuts are enacted we will be forced to make difficult decisions about the future of Catholic healthcare in Illinois," said Bishop Edwin M. Conway, Health Care Liaison for the Archdiocese of Chicago.

The coalition was also disturbed about the timing of the Illinois Department of Public Aid's decision to schedule two public hearings during the holidays - December 21 and December 31.

"There simply is not the state of emergency that would justify staging public hearings about these cuts during the holiday season while people are rightly focused on their families and not on state budget issues," said Ken Robbins, CEO of the Illinois Hospital Association.

"Every year we find ourselves in this all-too-familiar position," continued Robbins. "Illinois' leaders continuously squeeze Medicaid funding to support spending in other areas and balance the budget. Illinois' hospitals have bridged the gap, continuing to provide quality care even though the Illinois' Medicaid program pays less and less each year. This cycle must stop," charged Robbins.

Shamefully, Illinois currently ranks 46th in the nation in Medicaid reimbursements to hospitals. The proposed cuts could put Illinois at the very bottom.

In a plea to the Governor and legislature, Robbins concluded, "We are asking the Governor to reexamine his budget and work with the legislature to recommend a responsible budget that is not balanced on the backs of Illinois' health care system. Medicaid cuts affect every constituent in Illinois, and every elected official should take responsibility and help find the solution."

State Representative Carolyn Krause (R-Mt. Prospect), Minority Spokesperson of the Health Care Availability & Access Committee, voiced her commitment to working with the legislature and Governor to see that the Medicaid problem is addressed in the Spring legislative session.

Governor Ryan's Proposal

The proposed cuts represent a 13% decrease, or $1 out of every $8 hospitals currently receive from the State. The cuts include:

-- Elimination of $125 million annually in outpatient payment improvements

that were intended to encourage the most cost-effective setting for


-- Elimination of $70 million annually in payments for highly advanced

care such as organ transplants, spinal cord injuries, and burn care.

-- $28 million in cuts in the Critical Hospital Adjustment Payment (CHAP)


-- A $26 million freeze in Medicaid "outlier" payments for patients who

require very costly treatment or have unusually long hospital stays.