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How Illinois’ Medicaid reforms could affect you

Updated: September 24, 2012 6:25AM

Illinois’ new Medicaid reform law is expected to save the state an estimated $800 million over the next five years by tightening eligibility requirements for enrollment and providing more cost-effective care. Here’s a look at four key changes under the new legislation:

All Kids covers fewer kids

Beginning in July, eligibility for the All Kids insurance program will be capped at 300 percent of the federal poverty level, reversing an expansion of the program under then-Gov. Rod Blagojevich in 2006. The change will result in about 3,100 of the 1.6 million children enrolled in All Kids losing their insurance, though families will be given a year to find alternate coverage. Julie Hamos, director of the Illinois Department of Healthcare and Family Services, said many children dropped from All Kids will likely be helped by federal health reform, which prohibits insurance companies from denying coverage to kids because of pre-existing health conditions. As a result, Hamos said, “They already have access to private insurance that they didn’t have when All Kids was designed.” The creation of state-based insurance exchanges in 2014 under health reform should also allow families that no longer qualify for All Kids to shop around for affordable coverage, Hamos said.

More managed care

The new law requires half of the state’s 2.8 million Medicaid recipients to be enrolled in “coordinated care” by 2015. The state hasn’t settled on the particulars of how this system will work. Possible components include payment based on patient outcomes and the use of capitation, in which providers are paid a fixed amount each month for each patient, Hamos said. Whether this new form of managed care would actually improve patients’ health while cutting costs may be answered in part by a pilot program set to launch this spring, in which 40,000 elderly and disabled Medicaid recipients will be moved to health maintenance organizations. As the state moves forward with expanding managed care, there’s also likely to be fierce opposition from health-care providers whose reimbursements would be reduced in the new payment system.

More community-based housing

Illinois spends less per capita on community-based housing for people with disabilities and the mentally ill than most other states, instead relying heavily on institutional care — some of which isn’t eligible for matching Medicaid funds from the federal government. The Medicaid reform law calls for the state to remove barriers for people with disabilities and long-term illnesses to move out of nursing homes and other large residential facilities to less expensive community housing. But the legislation doesn’t specify how the state should accomplish that goal. Nor does it set a target for how many people should be transitioned to community-based housing. Hamos said recent court settlements requiring the state to relocate thousands of mentally ill and disabled adults who want to move out of institutional settings are “going to really push us to have answers to these questions.”

Better eligibility verification

By July 1, Medicaid applicants will have to provide proof of Illinois residency and documentation of at least one month’s income to show they qualify for the program. And re-enrollment in the program will no longer be automatic for people already receiving Medicaid. The state is required to notify Medicaid recipients within 60 days of the end of their eligibility. Those who don’t renew their application in time will be dropped from the rolls.

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