Fiscal Fitness: How States Cope

How Illinois got 720,000 of its uninsured covered by making health care a top priority

Expanding coverage to more than 720,000 people who otherwise would not have coverage — this and other achievements were made possible because Illinois Gov. Rod R. Blagojevich made health care a top priority since he took office in 2003, according to Theresa Eagleson, the state's Medicaid director.

"Every state situation is a little different, but in this state we have been very lucky because the governor made health care a top priority. Since the day he walked in the door, it's been all about getting more people better health care," says Eagleson.

Faced with a slowing economy and shrinking revenues, many states are looking at cutting programs, not expanding them. But that's not the case in Illinois. "When we do initiatives, we find ways to pay for them," says Barry Maram, director of the Illinois Department of Healthcare and Family.

The same debate has been going on about health care costs for many years, says Mr. Maram, but one thing is different in 2008. "Somebody fell off the bus—the working middle class," he says. "It's been the same conversation decade to decade on a number of issues. But something has changed now. We are now seeing the loss of coverage for the middle class and working families."

The problem of the uninsured often was viewed as an "us and them" situation, says Mr. Maram, but more and more people are falling into this group. "Any one of us can be 18 months away from not having health care. The uninsured are all over—they are your relatives and your friends, and they may be you and me."

He also notes that 20% to 25% of employed people do not currently receive health coverage through their employer. "The people falling through the cracks are playing by the rules, paying taxes and going to work every day. They were living the American dream, but the No. 1 cause of personal bankruptcy, other than this mortgage mess that is going on currently, has always been health care," says Mr. Maram. "People are getting hit with $30,000 or $40,000 bills."

Getting 720,000 people covered was the result of these factors:

—In 2003, the eligibility requirement for children to be covered under the state's KidCare program was expanded to 200% of the federal poverty level.

—In 2005, Illinois became the first state in the nation to offer comprehensive health care coverage to all children through the AllKids program. "Over 400,000 more children now have health care coverage than when the governor took office," says Mr. Maram.

—Eligibility for the state's Family Care program was expanded three times, giving 265,000 more parents coverage.

Pay attention to costs

To expand programs while facing shrinking revenues, states have to pay close attention to quality improvement and cost containment, says Ms. Eagleson. "You have to be cost effective, but these programs are more important now than ever," she says. "We all know from experience that when the economy takes a downturn, we tend to see even more people come in our direction."

Getting people covered is certainly the right thing to do, but Maram says that this also makes economic sense. "These days, many people on Medicaid are working families. If they don't have health insurance, medical events will put many families in a situation where [they are] not going to be able to work," he says. "It is penny-wise and pound-foolish if one does not realize that covering working families is cost-effective, both for the state and for our society. If you empower families to be working and productive, that makes sense for economic growth."

Ms. Eagleson notes that only about 5% of people on Medicaid are getting traditional welfare payments. "States have really been the innovators on the health care side, where cash assistance rolls have dramatically reduced. This is one of the best things we can do to help people go back and stay at work."

Mr. Maram notes that despite expanding programs, the state has been below the national average in terms of cost. "At the same time we are expanding, we take our fiscal management very seriously," says Mr. Maram. A recent report from the Centers for Medicaid & Medicare Services report estimated that the 10-year projected average Medicaid growth for all states would be 7.9%. Illinois' program grew by 4.6% in 2007 and continues to contain growth under the national average of 5.2%.

"So at the same time we are enabling working families to stay healthy, we take fiscal responsibility so we can utilize the dollars wisely," says Mr. Maram. "We are utilizing a disease management program that is saving tens of millions of dollars."

Ms. Eagleson also points to the state's successful Supported Living Program, the Medicaid model of affordable assisted living in Illinois. "We get calls from states all the time asking how they can mimic it," she says.

Currently, Illinois is lobbying for a temporary increase in federal matching dollars. "We think it's all the more important that the partnership with the federal government remain," says Mr. Maram. "Right at the time when the state has the least ability to pay for it, we need them to jump in and shoulder part of this burden with us."

The state's primary care case management program is called Illinois Health Connect. "We are very proud of this program, and it has gone very well over [the] past year and a half," says Ms. Eagleson. About 1.7 million Illinoisans were enrolled in a "medical home," with children connected with a primary care provider to be sure that regular checkups and preventive care occur. Both the families and the physician are sent reminders for when the child is due for immunization. "These are sent electronically, so the doctor can log in and see when a patient is due for a Pap smear and whether a patient is filling their prescriptions," Ms. Eagleson says.

Program has physician capacity

The program has a surplus capacity statewide for physicians accepting patients in the program. About 220,000 of the beneficiaries have chronic conditions and are now in more targeted disease management programs to help them avoid episodes that bring them to the emergency department.

"We are decreasing ED admissions. We saw a 9% reduction in hospitalization costs for this population," says Ms. Eagleson. "We have a bunch of quality measures built into our disease management contract, and all of those are going in the right direction." For example, there was a 10% increase in seniors getting influenza and pneumococcal vaccines.

"The very first year with those two programs combined, our savings to the state was about $34 million. That more than paid for our expansion in AllKids in that same year," says Mr. Maram.

Another positive change was consolidating purchasing with the state's Department of Healthcare and Family Services. "In addition to working with the Medicaid program, we are also the health care purchasing agency for state employees. So we have a very strong expertise of dealing with health care in one place," says Mr. Maram. This gives a comprehensive view of health care costs across the various payers, for a strong picture of what works and doesn't work in various sectors.

"Illinois continues to be able to expand and at the same time, be well below the national average in costs," says Mr. Maram. "It's one thing to talk the talk, but we've actually been saving dollars while improving quality and coverage."

Contact: Ms. Eagleson at (217) 782-2570, and Mr. Maram at (217) 782-1200.