OBAMA ADMINISTRATION WORKING TO UNDO REFORMS?
Lawmakers and state officials began exploring available options after the Obama Administration moved to undo key anti-fraud provisions of a bipartisan Medicaid Reform package approved in January.
Obama Administration officials are receiving backlash for attempting to block two key provisions included in Illinois’ Medicaid reform law (HB 5420), which passed in January with strong bipartisan support. Federal and state lawmakers say that by blocking implementation of the reforms, the federal government is overreaching its authority and undermining efforts to curb Medicaid fraud.
Senate Republican lawmakers have been longtime proponents of Medicaid reform. For years, Senate GOP legislators introduced and advocated for measures that would bring accountability and common sense to the Medicaid program. Much of the January reform package was based on proposals long pushed for by Senate Republicans.
The reforms the Obama Administration wants to block are intended to prevent persons ineligible for Medicaid from fraudulently receiving services. The law requires that Medicaid applicants prove they live in Illinois and that they meet income eligibility requirements to qualify for the program. Supporters of the Illinois law point out that the Medicaid reforms in question do not change or curb eligibility—they simply advance greater oversight of the program to ensure Medicaid recipients are eligible. State lawmakers from both parties advanced the reforms to target inefficiencies and fraud within the system.
The Obama Administration’s Centers for Medicare and Medicaid Services claim the anti-fraud provisions of the new law do not comply with the federal health-care reform law, because federal law restricts states from changing eligibility in the Medicaid program. Federal officials contend that Illinois’ reforms violate the federal law by limiting Medicaid eligibility, even though the Act does not affect persons legitimately eligible for Medicaid.
Although the eligibility verifications are the only portion of the law challenged so far by the federal government, in a letter to the State Department of Healthcare and Family Services, Obama Administration official Cindy Mann left open the possibility that they may attempt to undo other provisions of the Medicaid reform law, saying that since there is an Oct. 1 date for those provisions to go into effect, “we will respond to those issues separately.”
COMPTROLLER REVEALS FISCAL ANALYSIS
On July 21, Comptroller Judy Baar Topinka released the Illinois Comprehensive Annual Financial Report (CAFR) for the 2010 Fiscal Year.
The Comptroller’s report states that in FY 2010, Illinois confronted billions of dollars in increasing deficits and outstanding liabilities, and almost 11 percent of the state’s nearly 13 million people were out of work. Even with the almost $4 billion in federal funding the state treasury received from the American Recovery and Reinvestment Act, in a single year Illinois’ deficit increased $1.8 billion, from $7.4 billion to $9.2 billion.
The report noted that “The state has shown an inability to generate sufficient cash from its current revenue structure to pay operating expenditures on a timely basis.” In fact, FY 2010 was the eighth consecutive year Illinois engaged in short-term borrowing to pay for state expenses, yet Illinois ended FY 2010 with $1.521 billion in deferred liabilities, primarily Medicaid-related expenses. The CAFR noted that the state’s continued reliance on deferring yearly obligations creates an additional cash management strain at the beginning of each new fiscal year, particularly in the first and second quarters.
The FY 2010 deficit persisted despite the more than $275 million that was drained from the State’s Budget Stabilization Fund. The Fund was created in 2000 to assist the state in meeting cash flow deficits as needed. As of June 30, 2010, there was a balance of $0 in the Budget Stabilization Fund.
Bonding and pension debt continued to be the state’s largest liabilities in FY 2010. The state’s total bonded indebtedness came to $27.4 billion, and in the 2010 fiscal year the state paid more than $1 billion in interest on the obligations. Pension obligations comprised the second largest liability in Illinois, and increased by almost $1.3 billion in FY 2010 alone. Though the targeted funding percentage for Illinois’ five state-funded retirement systems is 90 percent, as of June 30, 2010 the pension systems were a dismal 45.4 percent funded.
The report noted, “Budgetary challenges and economic uncertainties along with the accumulated deficit in the General Fund, continued growth in unfunded actuarial postemployment benefit costs, and the recent ratings downgrades on debt issuances of the state may impact the state’s ability to access credit markets for the continued short-term borrowings being issued to pay operational expenditures more timely and may increase interest costs of those borrowings.”
In recent years, Illinois has consistently seen its credit ratings downgraded based on the state’s continuing budget deficit and chronic failure to address Illinois’ ongoing fiscal issues. Despite arguments from state Democrats that the national recession is the primary cause of the budget deficit, recent downgrades are mostly unique to Illinois and California. These independent “report cards” of the state’s finances are indicative of serious financial problems, and will likely lead to hundreds of millions of dollars in higher interest costs over future years.
LAWSUIT FILED AGAINST NEW MAP
Seeking a redraw of the state’s General Assembly redistricting map that violates the United States Constitution, the Illinois Constitution and the Federal Voting Rights Act of 1965, Republican leaders and concerned citizens filed a federal lawsuit July 20 to invalidate the 2011 legislative boundaries.
Senate Republican Leader Christine Radogno, House Republican Leader Tom Cross and concerned citizens filed a federal lawsuit in the Northern District of Illinois to force a redraw of legislative districts.
The lawsuit has been filed against the State Board of Elections, arguing the state’s General Assembly redistricting maps represent a direct violation of the Federal Voting Rights Act and some of voters’ most basic rights under the Illinois and U.S. constitutions. The suit makes the following allegations against the map passed by Democratic majorities and signed by the Governor:
• The map violates the federal Voting Rights Act of 1965 because African Americans and Latinos have not been provided a “fair opportunity” to participate in the political process.
• The process by which the map was approved violates the Illinois Constitution because the map was not made available to the public or the Legislature for a sufficient amount of time for review.
• The map violates the 1st Amendment to the U.S. Constitution because it dilutes the voting power of Republican voters throughout the state.
• The map violates the compactness requirement of the Illinois Constitution and is less compact than the previous map and the Fair Map put forward as an alternative.
The lawsuit will be considered in the coming months. If the plaintiffs are successful, the court could direct the General Assembly to redraw the district boundaries of all or parts of the state. The court could also direct a “Special Master” to redraw the lines, or it could direct a Legislative Redistricting Commission, as provided by the Illinois Constitution, to draw the boundaries with equal appointments made by the four legislative leaders. If the Commission cannot agree, a tiebreaker’s name would be drawn from a hat.
Though good government groups, the public and Republican lawmakers advocated for a more open redistricting process that would give the responsibility of drawing the maps to an independent body instead of politicians, Democrats denied voters that opportunity. While the public was able to weigh-in on the redistricting process prior to the release of the maps, little time was given for voters and community organizations to review or react to the final proposals. In fact, the legislative maps that were ultimately passed were made public for only a few hours before being pushed through the General Assembly by state Democrats.