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Protect Health Care for Illinois Children by Rejecting the American Health Care Act

Written by Mayumi Grigsby

Given the impact it will have on the lives of more than 1.4 million children covered by Medicaid and the Children’s Health Insurance Program (CHIP)[1], members of the state’s congressional delegation need to reject the proposed legislation, to repeal the Affordable Care Act (ACA).Health care

The proposed America Health Care Act (AHCA) that passed the U.S. House and which the U.S. Senate is now considering, would cut federal Medicaid funding by $834 billion over ten years and make other damaging structural changes to the Medicaid program.  Although little is known about the Senate bill to repeal and replace the ACA as of this writing, reports indicate that the emerging bill differs little from the House bill.

These cuts would likely mean curtailment or loss of medical services for Illinois children and their families covered by the program.

Medicaid Populations in Illinois

Medicaid provides health care coverage for Illinois’ most vulnerable groups: low-income children and their families, pregnant women, persons who are disabled, and seniors.

  • More than three million Illinoisans are covered by Medicaid and that includes nearly half of the state’s children are covered by the program.
  • Sixty-one percent of Medicaid enrollees in Illinois are people of color, so changes and funding cuts to the program would have a disproportionate impact on children of color and their families.
  • Medicaid, CHIP, and other public health insurance programs cover nearly half (44%) of children with special health care needs.[2]

Changing the Affordable Care Act’s Medicaid Expansion

Prior to the ACA, Medicaid coverage was limited to low-income parents, children, cash assistance recipients, seniors, and people with disabilities. Medicaid eligibility prior to the Medicaid Expansion was about $8,870 a year for a family of three and childless adults were ineligible. The ACA allowed states to expand their Medicaid program to include all non-elderly non-disabled adults with incomes up to 138 percent of the poverty line. Illinois was one of 31 states (along with the District of Columbia) to do so.

Illinois MedicaidI

Source: Center on Budget and Policy Priorities

The AHCA would fundamentally change how the federal government funds Medicaid.  Currently, the federal government covers 90 percent of the cost of new enrollees under the Medicaid expansion. The AHCA would lower the matching rate for new enrollees qualifying for the expansion coverage.  Starting in 2020, rather than paying 90 percent of the cost of covering these enrollees as it would under current law, the federal government would only pay 50 percent of the cost.  This represents a huge cost shift to states; it is projected that in 2021, Illinois would have to pay an additional $864 million to maintain the Medicaid expansion.  More likely, the state would be forced to cut coverage for the 635,800 Illinoisans in the Medicaid expansion.

Shifting Costs to States

Medicaid enrollment CHIP

Source: Kaiser Family Foundation

The AHCA would further shift Medicaid costs from the federal government to the states by implementing a per capita cap. The federal government now contributes a fixed amount to a state’s Medicaid costs- in Illinois this is about 50 percent of total Medicaid costs. Under a per capita cap, the federal government would only pay up to a fixed amount per beneficiary. The state would then be responsible for additional and unanticipated costs, for example, an opioid crisis or a Zika outbreak. This per capita cap could lead states to cut benefits, cut enrollment, and cut payments to doctors and providers to lessen the state’s Medicaid costs. This could lower payment rates for pediatric providers and thereby threaten health care coverage for children.

The AHCA would also let states choose between a block grant for Medicaid, rather than a per capita cap. The “Flexible Block Grant Option for States” would give states the option to receive a portion of their federal Medicaid funding through a grant.[3] This amendment eliminates requirements that state Medicaid programs cover preventive child health care services for individuals under the age of 21, such as the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services. EPSDT services are required, preventative, health and developmental assessments and vision, dental and hearing services, as well as diagnostic and treatment services to improve physical and mental health conditions. Eliminating these requirements would impede all children’s opportunity for a healthy future.

Cuts to Medicaid Funding Would Mean Fewer People are Covered

For some children with special health care needs, access to Medicaid is based on the child’s need and not on the family’s income. This pathway makes it possible for children with special needs to access care while still living at home with family. States use waivers to receive federal matching funds to allow them provide long-term and supportive services to seniors and people with disabilities in their homes and communities. Illinois covers this population of children using a Medicaid home and community-based services waiver called the Medically Fragile/Technology Dependent Children waiver. Cuts proposed in the AHCA could force states to cut back on spending on Medicaid services, putting necessary Medicaid home and community-based services waiver programs at risk.

Special Education

Cuts to federal funding for Medicaid could also threaten funding for special education in schools. The Individuals with Disabilities Education Act (IDEA) ensures access to public education for children with disabilities. Under this law, the education needs of the child are outlined in an individualized education plan (IEP). Medicaid pays for some of these services, which tend to be perpetually underfunded in spite of a federal commitment, for children enrolled in Medicaid.

In 2015, the federal government contributed more than half – $144,391,000 out of $286,388,260 – of Medicaid spending in Illinois schools. These cost-shifting changes to Medicaid and cuts in federal spending proposed in the AHCA would pose a significant burden on Illinois as the state would have to find ways to meet the increased financial burden.

Waiving Pre-Existing Condition Prohibition

Additional harm could come to children and their families due to the AHCA allowing states to:

  • Charge higher premiums for pre-existing coverage if they create “high risk pools”
  • Do away with “essential health benefits” requirements. In Illinois, essential health benefits include pediatric oral and vision coverage and newborn care.  Curtailment of these services could negatively impact important services required to ensure healthy development in children.

Since maternity services were not commonly covered pre-ACA and reports suggest that waivers would be easily attainable by states under the AHCA, these changes could lead states to weaken requirements ensuring coverage for maternity care.

People residing in states modifying the essential health benefits’ requirements would see “substantial increases in out-of-pocket spending on health care” and services likely to be excluded include “maternity care, mental health and substance abuse benefits, rehabilitative and habilitative services, and pediatric dental benefits.”

House GOP Health Bill

Increasing the Number of Uninsured

According to the nonpartisan Congressional Budget Office (CBO), if the AHCA passes, there will be 23 million more uninsured people under age 65 by 2026 than would have been uninsured under the ACA.

Benefits of Medicaid

Studies show children with Medicaid coverage are healthier teenagers. These children perform better academically and are less likely to drop out of high school and more likely to graduate from college. They are also more likely to surpass their families’ economic status and are less reliant on the government. Medicaid expansion also gives coverage for maternal depression, particularly for low-income women and women of color. Maternal depression is known to stymie healthy development in children. Curtailing access to Medicaid and CHIP for children – particularly low income, children of color – denies them access to a better future.

Action is needed now

As of this writing, the state comptroller shows the state has a backlog of bills topping $15 billion. The AHCA would lead the state to lose $40 billion over 10 years and would also shift $24 billion in Medicaid costs over ten years to the state of Illinois.

The AHCA proposes changes that would lead to a loss of coverage for children. The bill would make it particularly difficult for children with special health care needs to continue to access the care they need to remain healthy and succeed in life.

Illinois’ U.S Senators have signaled their opposition to the AHCA.  The Governor, members of the legislature, and citizens across the state need to join them in opposing the measure and fighting for continued and quality health care coverage for Illinois children.

[1] Medicaid covers children age 0 to 6 with family incomes of up to 133% of the federal poverty level (FPL); and for children, age 6 to 19 with family incomes of up to 100% FPL. The Children’s Health Insurance Program (CHIP) is available for children, age 0 to 19, with family incomes too high for Medicaid. (http://southeastgenetics.org/aca/medicaid-chip-infographic.pdf) In Illinois, the program providing coverage for children is called “All Kids.” All Kids includes the state’s Medicaid and State Children’s Health Insurance Program (SCHIP) programs. Coverage is offered to all uninsured children, regardless of income, health status or citizenship. (https://kaiserfamilyfoundation.files.wordpress.com/2013/01/7677.pdf)

[2] http://www.kff.org/medicaid/issue-brief/medicaid-and-children-with-special-health-care-needs/

[3] http://avalere.com/expertise/managed-care/insights/per-capita-caps-could-reduce-funding-for-children-covered-by-medicaid

State Budget Crisis Shuts Down Federal WIC Program

Illinois’ budget crisis is about to claim another victim: low-income women and their children who rely on nutrition assistance from the federal Women, Infants, and Children (WIC) program.

Without a state budget, WIC funding from the federal government hasn’t been flowing to the Community Economic Development Association (CEDA). As a result, CEDA said it will have to close this week, suspending services to 50,000 women and children.

For more, watch the news segment from ABC-7.

Congress Must Preserve Health Care Coverage for Children

The Children’s Health Insurance Program (CHIP) is a highly successful program that, together with Medicaid, has steadily decreased the proportion of children without health insurance. This progress continued even during the Great Recession, when many families were losing employer-sponsored health insurance.

Unfortunately, the future of CHIP is very uncertain. Congress is currently considering legislation to renew CHIP funding, which is scheduled to expire at the end of September. Failure to extend funding would have harmful consequences for children in Illinois, as well as for the state budget.

The Importance of CHIP in Illinois

As of June 2014, more than 200,000 Illinois children, as well as 12,000 pregnant women, were covered through CHIP. The income eligibility limit for children is currently 318 percent of poverty level (about $64,000 for a family of three), although most CHIP children are below 200 percent of poverty level. Families with incomes above 160 percent of poverty level are responsible for monthly premiums and co-payments on a sliding scale.

CHIP, which was established by Congress in 1997, has played a key role in improving access to health care for Illinois children. The program’s impact has gone beyond the expansion of eligibility for medical assistance. The implementa­tion of CHIP also generated efforts to enroll eligible children through outreach activities and stream­lined application procedures. As a result, CHIP has had important spillover effects by facilitating enrollment of eligible children in Medicaid.

When CHIP was reauthorized in 2009, Congress instituted performance bo­nus payments to states for increasing Medicaid enrollment. From 2009 to 2013, Illinois was awarded more than $50 million in performance bonuses. Illinois was one of only nine states to receive bonus payments for five consecutive years.

The success of CHIP has contributed significantly to the state’s remarkable progress in health care coverage for children. Between 1998 and 2011, the number of low-income children without health insurance in Illinois declined by more than half. In 2013, only six states had lower uninsured rates for all children.

The Imperative of Renewed Federal Funding

The elimination of federal CHIP funding would have a severe impact in Illinois. Some CHIP children would still be covered by Medicaid, but the state would lose about $75 million in funding because the federal match would drop from the enhanced CHIP rate (about 66%) to the regular Medicaid rate (about 51%).

Another important budgetary consideration is that the federal matching rate for CHIP in Illinois is scheduled to increase to more than 88 percent for a four-year period beginning in October 2015. Additional funding for the state would be about $115 million per year.

Among those children who would lose coverage, some would not be eligible for federal subsi­dies through the Health Insurance Marketplace. This is because of the “family glitch” in Affordable Care Act (ACA) — families can­not receive subsidies if they are offered “affordable” employment-based coverage for an individual employee, even if family coverage is not affordable.

Other children who lose CHIP coverage might be eligible for subsidies through the Marketplace — assuming that it isn’t undermined by the U.S. Supreme Court. But these children would likely receive less comprehensive benefits under the ACA benchmark health plans than under CHIP. Moreover, their families would be responsible for larger monthly premiums and co-payments for services. Families who have children with special health care needs would face major financial risk because caps on out-pocket costs will be much higher under benchmark plans than under CHIP.

When CHIP was enacted in 1997, it had broad bipartisan support. The National Governors’ Association has called for the timely extension of CHIP funding. Last year, the American Academy of Pediatrics issued a strong policy statement on the role of CHIP in expanding access to care, improving health outcomes for low-income children, reducing racial-ethnic disparities, and meeting the needs of children with chronic health conditions.

It is imperative that Congress move quickly to extend CHIP funding for at least four years. Illinois has a great deal at stake here. If CHIP funding disappears, the state’s gains in expanding access to health care for children would be in serious jeopardy.

For more information on Medicaid and CHIP in Illinois, see the recent report from the Fiscal Policy Center.

CHIP Funding Set to Expire Unless Congress Acts

Voices joined with hundreds of national, state, and local organizations last week in signing a letter to Congressional leaders asking them to extend funding for the Children’s Health Insurance Program (CHIP) by the end of this year. If Congress doesn’t act by then, states’ CHIP programs could be substantially disrupted, and millions of children could lose health insurance nationwide. About 250,000 kids in Illinois receive health insurance through CHIP.

As the letter points out, CHIP has always been a bipartisan program that provides states flexibility to shape their programs to local needs. Although current funding lasts through next September, Illinois and other states will soon have to begin planning their fiscal year 2016 budgets, which for Illinois begins July 1, 2015. Without the guarantee of federal funding, states will have to budget against large funding shortfalls that could result in children losing coverage, benefits being reduced, or providers receiving lower reimbursement.

CHIP still has a vital role to play. The Affordable Care Act was never meant to replace CHIP or Medicaid. In fact, the ACA extended CHIP eligibility standards through 2019. Now Congress just needs to take the common-sense step of extending funding through 2019 as well.

Here is the letter signed by an impressive array of organizations:

Download (PDF, 151KB)

Congress Must Act to Stop Corporate Inversions

A number of high-profile U.S. corporations have, or are reportedly considering, corporate “inversions,” where they move their “headquarters” overseas to avoid paying U.S. corporate income taxes. Unless Congress acts, federal and state governments are set to lose, at minimum, tens of billions in revenue to support urgent priorities such as schools, roads and bridges, and public safety.

North Chicago-based AbbVie, a pharmaceutical company, is a prime example of how this works. AbbVie recently merged with Shire, a much smaller corporation, and can now move its headquarters to Britain on paper. AbbVie could avoid as much as $8 billion in taxes over the next 15 years, according to research group GlobalData.

Deerfield-based Walgreens is considering a similar move, potentially buying the European drug store chain Alliance Boots as a way to avoid billions in U.S. taxes.

A primary reason that companies are changing the corporate address on their letterhead is to strip earnings out of the U.S. They artificially reduce their U.S. profits by shifting corporate expenses from overseas to their U.S. operations.

The fact that these companies usually change little about their U.S. operations, including overall staffing levels at their former “headquarters” in the U.S., illustrates just how artificial these schemes are.

Though these moves are clearly driven by a desire to avoid paying corporate taxes to the federal government, they will also likely have a significant effect on states, including Illinois. This is because Illinois corporate income tax is tied to corporations’ federal net income. Like many other states, Illinois calculates the percentage of a company’s U.S. sales that occur within the state and multiplies that percentage by U.S. profits to determine corporate income that is taxable in Illinois.

Thus, when companies artificially shift their U.S. profits overseas, states’ taxable income shrinks, resulting in less tax revenue in Illinois, even though little has actually changed.

One important note: While several prominent Illinois corporations are in the headlines, the revenue loss to Illinois has nothing to do with whether the company is based her or in another state. Any corporation with sales in Illinois — regardless of where their offices or other facilities are — that artificially lowers their U.S. profits will also avoid Illinois corporate taxes.

Though, it is impossible to have accurate estimates of how much revenue Illinois will lose due to this tactic, it may be quite significant, particularly as the rush to invert continues.

As Matt Gardner, the President of the Institute on Taxation and Economic Policy (ITEP), makes clear, the stakes are high:

Corporate inversions are a brazen effort by large multinationals to avoid paying U.S. taxes. At a time when the nation finds itself with no ability to pay for vital transportation infrastructure, it should be obvious that the billions in tax revenue these companies refuse to pay are billions that must be made up by working families not to mention millions of small businesses that don’t have the luxury of creating a paper headquarters in Ireland.

In 2004, Congress passed rules on a bipartisan basis that, up until now, largely stopped corporate inversions. Now that corporations have found ways around the existing rules, it’s time for Congress to act once again. Otherwise, everyone else will have to pay more.

Posted to Blog, Federal, Revenue, Taxes

Shriver Center: Congress Not Doing Enough to Fight Poverty

Shriver Center Poverty Scorecard

Yesterday, the Sargent Shriver National Center on Poverty Law released its Poverty Scorecard 2013, which grades members of Congress based on their 2013 voting record on key pieces of poverty-related legislation. According to the Shriver Center, “on the whole, Congress failed to help the 46.5 million people living in poverty, including the new poor still trying to recover from the recession.”

As I pointed out in an interview with Progress Illinois, the Scorecard is

a very important report and hopefully will generate more momentum behind really addressing the very high poverty rate and the millions of Americans who are living in poverty, even several years after the recession has ended.

The Scorecard does show several areas of progress, including the reauthorization of the Violence Against Women Act and the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps). Furthermore, while too many bills and amendments that would have hurt people living in poverty gained traction, most were ultimately defeated. These included attacks on SNAP and efforts to repeal the Affordable Care Act, which Shriver rightly calls “the most significant anti-poverty legislation to have passed since the War on Poverty.”

Despite assertions to the contrary, the War on Poverty, which was launched 50 years ago, was an enormous success, resulting in a 35 percent decline in the nation’s poverty rate within 10 years. After this initial success, Congressional support for anti-poverty programs waned and progress stalled.

The Scorecard calls on Congress to “engage in meaningful dialogue rather than rhetoric-filled fight” and remembers a time “in the not too-distant Congressional past, despite strong debate about anti-poverty programs, at the end of the day reasonable compromises were reached and progress was made.”

Opportunity for 1,855 More Illinois Schools to Become Hunger Free

A new tool—the Community Eligibility Provision (CEP)—ensures that more Illinois children in high-poverty neighborhoods will have access to school meals.

Forty-two percent of all children in Illinois live in households that struggle to afford the food necessary to provide three healthy meals a day. While the National School Lunch (NSLP) and the School Breakfast Program (SBP) help children from low-income families to access low-cost or free meals each school day, participation in these programs has historically required families to complete individual household applications, which schools have to collect, approve, and verify.
School Lunch

Community eligibility, in contrast, allows eligible schools or districts to offer meals to all students at no charge without collecting meal applications. School districts can adopt community eligibility for some or all of their schools if more than 40 percent of their students are “Identified Students”—approved for free meals based on data from other programs that serve low-income children, such as the Supplemental Nutrition Assistance Program (SNAP). 

Community eligibility has been phased in over the last three years across the nation, including in Illinois, and now all eligible schools and districts have the opportunity to participate.

Here are some of the impacts of adopting community eligibility:

  • More children eat breakfast and lunch each school day
  • Improved student achievement, diets, and behavior
  • Improved attendance
  • Streamlined program operations, freeing up staff time and resources
  • Reduced administrative burden for schools, districts, and families
  • Reduced stigma associated with eating school meals, especially among teens

701 Illinois schools already offer community eligibility, and another approximately 1,855 schools have been identified as possibly eligible or close to eligible. Schools and districts wanting to participate in the CEP during the 2014-2015 school year have until August 31, 2014 to submit applications to the Illinois State Board of Education.

For more information on CEP eligibility and the application process, visit http://www.isbe.net/nutrition/htmls/nslp-hhfka-ceo.htm.

Why Double the Illinois Earned Income Tax Credit (EITC)?

A new issue brief by the Fiscal Policy Center (FPC) highlights the impact and importance of raising Illinois’s Earned Income Tax Credit (EITC) from 10 to 20 percent of the federal EITC:

  • Doubling Illinois’ EITC puts an additional $300 back in the pockets of hard-working individuals and families who qualify, helping ensure that people who work are able to make ends meet and avoid poverty.
  • Doubling the state EITC could yield an estimated $322 million in additional local economic activity across the state, boosting local business and economies.Go to EITCWorks.org to see the breakdown of this economic impact by Illinois House Legislative District.
  • Doubling Illinois’ EITC improves children’s chances of success as adults.
  • Doubling Illinois’s EITC is an important step towards addressing upside-down Illinois taxes.

For fifteen years, Illinois lawmakers on both sides of the aisle have recognized that the state EITC is smart policy: past efforts to enact, strengthen, and expand the EITC have been marked by bipartisan support.

Building on those efforts to lift working families and boost local economies, lawmakers should take immediate steps to double Illinois’ EITC to 20 percent of the federal credit.

By doing so, people who work for low or modest wages will be better able to make ends meet; local businesses will see more economic activity; children of EITC recipients will have improved chances of success as adults; and Illinois taxes will be fairer.

Doubling the state EITC is smart policy, and it’s the right thing to do.

Download (PDF, 796KB)

Why is Illinois rewarding businesses for investing outside our state?

Did you know that corporations are given Illinois tax breaks to invest OUTSIDE the state? A corporate loophole called the ‘Domestic Production Deduction’ rewards corporations for investing in other states by allowing them to deduct profits from a wide array of out-of-state production.

That loophole cost Illinois about $100 million in FY 2014 alone.

What’s worse, Illinois lawmakers didn’t even sign us up for this — it happens automatically when corporations file their federal tax returns.

The good news is that Illinois lawmakers can stop giving corporations incentives to invest outside of our state by changing one sentence in the Illinois tax code, and they can do it right now in Springfield.

Check out our latest fact sheet.

Download (PDF, 771KB)

Let’s Talk About the Earned Income Tax Credit

FPC policy analyst Lisa Christensen Gee recently joined Bob Gilligan on the radio show “Catholic Conference Hour” to discuss the Earned Income Tax Credit—its history, benefits, and opportunities for expansion in Illinois. The relevant segment is from 22:47-41:20.

The Earned Income Tax Credit (EITC) is a targeted tax credit for low-income working households that encourages and rewards work by allowing these households to keep more of what they earn. The primary beneficiaries of the EITC are working families with children. 

The federal EITC was adopted in 1975, and the Illinois state EITC was adopted in 2000. The state EITC is designed to supplement the federal credit, and it is currently valued at 10 percent of the federal EITC. Governor Quinn recently proposed expanding the state EITC to 20 percent over the next five years. Of the twenty-six states that have EITCs, eleven of them are equal to at least 20 percent of the federal EITC.

The EITC is good social policy for many reasons, including its anti-poverty effects. For example, from 2010-2012, the EITC alone was responsible for keeping 294,000 Illinoisans out of poverty, 146,000 which were children. The EITC also stimulates local economic activity, helps offset the unfairly high tax responsibilities of lower-income families in Illinois, and increases the likelihood of better educational attainment and future earnings for the children of recipients.

You can also listen to the full interview online at the Archdiocese of Chicago’s radio website.