Stating Medicaid's case

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John O'Connor, Editorial Director
John O'Connor, Editorial Director

Many providers with Medicaid-covered residents seem to be wringing their hands these days. To understand why, consider what's happening in my home state.

Currently, Illinois faces a $13 billion budget hole. The chasm includes a backlog of more than $6 billion in unpaid bills and a $4 billion lapse in state pension payments. Not surprisingly, many skilled providers here are waiting four months or longer for overdue Medicaid payments.

And the Land of Lincoln is hardly alone. States collectively face more than $140 billion in shortfalls in the coming fiscal year, according to the Center on Budget and Policy Priorities, a Washington research group.

Sometimes a disaster comes out of nowhere and can't be avoided. Certainly, an ongoing recession has not helped. But this fiscal mess is largely the making of our various state lawmakers. For years, they have failed to address funding shortages that threaten public schools, local governments and other publicly financed services—including long-term care. Nor should the general public be exonerated.

“What's missing right now is a general understanding by the public of where we are, of how bad it is, and what the fallout would be if we don't deal with it properly,” notes Dan Hynes, the outgoing comptroller in Illinois.

The new Illinois legislation hopes to raise about $6.8 billion a year by “temporarily” increasing the individual income tax rate to 5% from 3%. The state's corporate tax rate would jump to 7% from 4.8%.

Despite the new pain, Illinois residents will still have far lower state income taxes than their neighbors in nearby Wisconsin (7.75%) and Iowa (8.9%), as well as many others, including Hawaii (11%), California (10.3%) and New Jersey (8.97%).

Look, I hate paying taxes as much as the next guy. But given the mess we're in, states have only three viable options here: raise taxes, cut services or do both. These are the choices long-term care operators will have to deal with for the foreseeable future.

So if you think your Medicaid payments are slow now, just wait. That dark reality helps explain the hand-wringing. It's also a major reason why so many operators are gravitating toward Medicare-covered services.

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