Why It’s So Hard to Control Medicaid Spending

September 3, 2011
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This is Avik Roy, writing at Forbes about the Medicaid program in President Obama’s home state:

This is Avik Roy, writing at Forbes about the Medicaid program in President Obama’s home state:

Illinois has one of the most expansive Medicaid programs in the country, with annual state and federal spending of $15 billion. That compares to a state budget of $33 billion. In the Land of Lincoln, you can qualify for Medicaid if your income is under 200 percent of the federal poverty level—$44,700 for a family of four. Children qualify at 300 percent of FPL. One out of every five Illinoisans is on Medicaid, including one-third of all Illinois kids.

But in order to prove that you’re eligible for Medicaid in Illinois, all you have to do is provide a single pay stub. If that pay stub happens to be artificially low, suggesting a lower income than you actually have, it still counts as “proof” of Medicaid eligibility. As to proving Illinois residency? The nice people of Illinois merely ask that you write down your address. As a result, people earning more than the Medicaid threshold, and people who don’t even live in Illinois, are collecting Illinois Medicaid funds.

 

So in January, the State of Illinois, under a Democratic House, a Democratic Senate, and a Democratic Governor, passed a landmark Medicaid reform bill aimed at fixing this and other problems with the program. The new law required the state’s Medicaid recipients to provide a month’s worth of pay stubs, instead of just one, in order to provide evidence of residency and income. Not a big deal, you might think.

You’d be wrong. In July, the federal Centers for Medicare and Medicaid Services informed Illinois that the seemingly innocuous reform violated federal law, because Obamacare doesn’t allow states to restrict Medicaid eligibility, and this reform, they decided, was an eligibility restriction.