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Medicaid managed care contract cost skyrockets more than 50 percent

Monday, Nov 27, 2017


Mere days after the state paid down roughly forty percent of its backlog of overdue bills, the Rauner administration finalized the largest vendor contract in state history.

The $63 billion contract is significantly larger than preliminary estimates, and is roughly fifty percent greater than the estimates the Rauner administration gave out earlier this week.

“These numbers are far, far higher than any previous number I have heard,” Rep. Greg Harris (D-Chicago) told WCIA on Wednesday. “This adds more questions to this unaccountable process done with no independent oversight.”

House Republican David McSweeney chimed in too. “I’m very concerned that the Rauner administration’s cost estimates keep increasing,” he said, adding, “There should be an immediate full review of the MCO contracts, including with public hearings, by the House Human Services Appropriations Committee.”

A public hearing is already scheduled for next Thursday, November 30th, in Chicago.

In May, Department of Healthcare and Family Services Director Felicia Norwood testified before the House Human Services Committee that the restructuring deal would cost between $30 billion and $40 billion dollars.

* The comptroller wants an investigation..

* Pritzker campaign…

“Bruce Rauner closed this historically massive deal under a shroud of secrecy and has now sent costs skyrocketing overnight,” said Pritzker communications director Galia Slayen. “This is money that will come from the same hardworking taxpayers that had no input on this deal. Bruce Rauner is either purposefully deceiving Illinois families or once again forcing this state to pay billions to cover the cost of his incompetence. Either way, Illinoisans deserve immediate answers from this failed governor.”

- Posted by Rich Miller        

  1. - Chris P. Bacon - Monday, Nov 27, 17 @ 10:20 am:

    I sense an enormous scandal brewing. #FollowThe Money

  2. - wordslinger - Monday, Nov 27, 17 @ 10:29 am:

    –…roughly fifty percent greater than the Rauner administration gave out earlier in the week.–

    Huh? Off fifty percent from a few days earlier? How is that possible?

    The explanation for that would range from gross incompetence to bald-faced lying to something more sinister on the order of “I can smell the meat-a-cookin’.”

  3. - Rolls - Monday, Nov 27, 17 @ 10:30 am:

    The $63 billion is a cost-estimate for six-years. Of course it’s a big number. Comparing it to one years state budget doesn’t make sense other than to make clickbait.

    The Medicaid M-C-O’s will cover 80% of all Medicaid people, so naturally it’s a big number over 6 years. If you want to be shocked at a number, do the math and figure out how much taxpayer dollars we’re spending on the Medicaid program all together. Talk about a huge part of our budget pressure. Massive spending overall, but nobody paid attention to it until this article?

  4. - My New Handle - Monday, Nov 27, 17 @ 10:31 am:

    This solicitation was exempt from the Procurement Code, so why do we expect oversight or efficient use of our taxes? Rauner has proven time and again his administration is at best irresponsible in the expenditure of taxes.

  5. - OkComputer - Monday, Nov 27, 17 @ 10:34 am:

    Hey Rolls —

    $63 billion over 6 years, compared to $40 billion over 6 years, is a difference of $23 billion over 6 years.

    That’s an additional almost $4 billion per year. That’s money nobody has.

    That’s a budget buster.

    In one contract, Bruce has forced a tax hike.

  6. - Sugar Corn - Monday, Nov 27, 17 @ 10:35 am:

    Cue the outrage from the Trib edit board…right? right guys?

  7. - Rolls - Monday, Nov 27, 17 @ 10:39 am:

    OkComputer - did you think that the M-C-O’s would cover 80% of the people for six years for $40 billion? Would you have supported that kind of cut in Medicaid spending? The 63 is a correction of numbers. What we should be worried about is the grandstanding Democrats believing that $40 billion was the right number. Would they have supported that massive of a cut to Medicaid? Just do the math. What do we spend on Medicaid now, the M-C-O contract will be a little less than 80% of that total spend per year.

  8. - Honeybear - Monday, Nov 27, 17 @ 10:44 am:

    Well well perfidy revealed.
    Why are people surprised?
    Ron how is this free market?
    This is back room dealing
    The purpose of the Rauner Admin
    Put in motion from the beginning.

  9. - City Zen - Monday, Nov 27, 17 @ 10:47 am:

    ==That’s an additional almost $4 billion per year. That’s money nobody has.==

    That didn’t stop us from passing the school funding bill either. No one in Springfield can balance a ledger. Bruce included.

  10. - Dome Gnome - Monday, Nov 27, 17 @ 10:47 am:

    This could have been avoided by listening to the advocacy groups which promoted the procurement bill (SB1446). That bill should have been signed. When it wasn’t signed, overriding the veto was a clear-headed choice. I watched that bill all year and cannot understand the missplaced trust in this governor. Fool me once; fool me twice . . .

  11. - annonin' - Monday, Nov 27, 17 @ 10:48 am:

    Gessing the 3 hearings scheduled by the House Approp Human Services committee will give every time to talk…or not

  12. - illini - Monday, Nov 27, 17 @ 10:48 am:

    Am I mistaken or is this contract not with a company that former Comptroller Munger had been associated with? My memory gets fuzzy the older I get.

  13. - Sue - Monday, Nov 27, 17 @ 10:50 am:

    All of you are blaming the wrong guy. Thank Obama- this is all ACA Medicaid expansion. So much for Obama constraining healthcare costs

  14. - HangingOn - Monday, Nov 27, 17 @ 10:52 am:

    @ Mike Kaiser

    No. Just…no. We only had 1 word in our house considered obscene and that was it.

  15. - cdog - Monday, Nov 27, 17 @ 11:02 am:

    What’s up with the wealth transfer in this country to Big Insurance and Big Pharma?

    Both political parties are involved.

    (Btw, health outcomes are not improving despite the enormous amount of money this country spends.)

    Ives needs to add this to her list of hits on Rauner. This is more significant than the nuclear bailout.

  16. - 360 Degree TurnAround - Monday, Nov 27, 17 @ 11:02 am:

    I’d say this story has legs. Where did all the superstars go?

  17. - 47th Ward - Monday, Nov 27, 17 @ 11:03 am:

    Good timing Sue. The statute of limitations for blaming a former president runs out one year following his last day in office. You still have about 50 days to blame Obama for everything wrong with the world. Have fun.

    When you’re finished, then come on back and we can discuss real world issues and leave the blame game and make believe stuff to the children.

  18. - wordslinger - Monday, Nov 27, 17 @ 11:12 am:

    Sue, could you expand on how Obama’s to blame for Rauner being off 50% on the estimate just a few days ago?

    Did he get him drunk or something?

  19. - Anon - Monday, Nov 27, 17 @ 11:15 am:

    Just wanted to correct one thing, not sure why people are saying these are six year contracts…..they are four year from my reading…

  20. - Sue - Monday, Nov 27, 17 @ 11:16 am:

    47- the Medicaid expansion will harm Illinois for years. Just wait until the Stste is on the hook for it’s cost sharing. Then you can sing the Grest One’s praises

  21. - Truthteller - Monday, Nov 27, 17 @ 11:16 am:

    Now we know why Rauner was trying cut AFSCME members salaries and benefits. He wanted to transfer the money to Blue Cross and other needy insurance companies needed the money

  22. - Demoralized - Monday, Nov 27, 17 @ 11:23 am:

    Oh please Sue. Don’t be ridiculous.

  23. - Rich Miller - Monday, Nov 27, 17 @ 11:23 am:

    ===Just wait until the Stste is on the hook for it’s cost sharing===

    I think when the federal share drops below 90 percent the state expansion is repealed.

  24. - Sue - Monday, Nov 27, 17 @ 11:28 am:

    Rich- the fed is initially paying 100 percent. It goes 90//10 in a year. I don’t know where you are coming up with repeal. The Fed never dips below 90 absent the ACA going away which is not likely

  25. - Anon221 - Monday, Nov 27, 17 @ 11:28 am:

    illini- You’re not mistaken…

  26. - Anonymous - Monday, Nov 27, 17 @ 11:28 am:

    It’s quite rich to see the Rauner defenders saying, nothing to see here. Can you imagine if a Dem Governor pulled a $20B holiday switcheroo as part of a backroom agency deal with minimal oversight?

    Increasing the number of people in the system was supposed to drive per person health care costs down by streamlining the system. That was the promise. Per person costs will be going up. A lot. Riddle me that, please.

  27. - CrispyCritter - Monday, Nov 27, 17 @ 11:30 am:

    Somehow “But Madigan”

  28. - Blue dog dem - Monday, Nov 27, 17 @ 11:31 am:

    I have been asking the Dem candidates for Gov for months if they support the cadillac tax. No answers. The only way the ACA and expanded Medicaid had a chance to have a favorable CBO score.

  29. - Not It - Monday, Nov 27, 17 @ 11:33 am:

    It’s worth mentioning that the law that gave the Governor this authority was passed by the Democratic legislature when Quinn was Governor. If they want to repeal it that is fine, but they should be honest on why it was there to begin with.

  30. - David - Monday, Nov 27, 17 @ 11:34 am:

    We have an automatic repeal of it goes under 90 but that is not going to happen unless there is an ACA repeal. I hope this contract has a subject to appropriation provision.

  31. - wordslinger - Monday, Nov 27, 17 @ 11:35 am:

    Sue, how did Rauner miss the mark by 50% on his estimate a few days ago? Incompetence, lying, or something more sinister?

    Your “Because Obama” whining doesn’t explain that. In fact, it makes no sober sense at all .

  32. - Juice - Monday, Nov 27, 17 @ 11:36 am:

    Sue, the current matching rate is 94%. Next year it goes down to 93% and in 2020 it goes down to 90%. If it went from 100% to 90%, that would have been quite a shock to the budget. I don’t think going from 93% to 90% will be much of one in the larger scheme of things.

  33. - Anon221 - Monday, Nov 27, 17 @ 11:41 am:

    “The federal reimbursement rate declined to 95% on January 1, 2017 and is scheduled to drop to 94% in 2018, 93% in 2019 and 90% thereafter. The Illinois portion of the cost for newly eligible individuals is estimated at about $60 million in FY2017.”

    “Under Illinois law, the Medicaid expansion must end three months after the federal reimbursement rate is reduced to less than 90%.”

    See page 421-

  34. - Perrid - Monday, Nov 27, 17 @ 11:42 am:

    @Sue, the Medicaid expansion population is something like 600k people, out of a total population of 3,200k Medicaid recipients. Not the majority of the spending. And also the feds are covering 90+% of the cost of those 600k people. The federal CMS office of the actuary says that on average nationwide the ACA population cost about $6,000 a year in 2015 and 2016, so we are talking $600 per person (about $360 million total for a year, or $2.16 billion for 6 years to compare timelines) for the state, assuming the state has to pay 10% (which it won’t for a few more years). Not negligible, but not a budget buster.

  35. - My thoughts - Monday, Nov 27, 17 @ 11:46 am:

    In 2016, Illinois spent (with Federal funding) 19.3 billion upon Medicaid. Over the next 6 years if nothing changes this amounts to 115.8 billion.

  36. - Arsenal - Monday, Nov 27, 17 @ 12:01 pm:

    ==did you think that the M-C-O’s would cover 80% of the people for six years for $40 billion?==

    You should probably direct that question to Bruce Rauner, since he’s the one who said it would.

  37. - RNUG - Monday, Nov 27, 17 @ 12:10 pm:

    Have to suspect this is deliberate budget busting that will starve everything else. Back door squeezing the unions and everyone else.

    This administration has Squeezy beat by a mile.

  38. - Thoughts Matter - Monday, Nov 27, 17 @ 12:18 pm:

    I’m not going to contest that Medicaid costs a lot or that it will increase over time.

    What I am going to contest is how the admin gave out an inaccurate estimate so close to the announcement of the contract. By the time they provided the estimate, the contract should have basically been waiting for a signature. They should have known the number to the penny.

  39. - Not True - Monday, Nov 27, 17 @ 12:18 pm:

    - Not It - Monday, Nov 27, 17 @ 11:33 am:

    It’s worth mentioning that the law that gave the Governor this authority was passed by the Democratic legislature when Quinn was Governor. If they want to repeal it that is fine, but they should be honest on why it was there to begin with.=

    That’s not accurate. The exemption for purchase of care contracts has existed for a long, long time because the state used to be entirely fee for service, which meant the State had to contract directly with providers.

  40. - Anonymous - Monday, Nov 27, 17 @ 12:36 pm:

    No waste, fraud or abuse, right? No Waste, Fraud, or Abuse, right?

  41. - Just Me - Monday, Nov 27, 17 @ 12:36 pm:

    Somewhat related - to those that argue the Medicaid expansion was a bad idea because it costs so much, just remember that because of the expansion Illinois was able to lower or in some cases eliminate a whole host of medical programs that were funded with GRF. I don’t have an analysis of how much was “saved” but it would be worth doing if anyone had the resources and knowledge of the state budget.

  42. - Perrid - Monday, Nov 27, 17 @ 12:54 pm:

    I think the $63 billion is just for the initial term, 4 years. I don’t know that but that would come out to about $15 billion a year, which sounds about right for 80% of the Medicaid population. So the contract could potentially cost double that, since it can be renewed for a total of up to 8 years.

  43. - Sonny - Monday, Nov 27, 17 @ 1:46 pm:

    Hearing some “good news” from the commenters and that’s all well and fine but crickets from the agency and governor? There’s that signature Rauner arrogance.

  44. - Anonymous - Monday, Nov 27, 17 @ 2:28 pm:

    50% above estimates, yet they’re already making cuts to medical equipment. Great work, everyone.

  45. - DeseDemDose - Monday, Nov 27, 17 @ 2:44 pm:

    Rauner and Wingman Munger are way worse at math than we ever imagined. Follow the money….

  46. - SouthernGirl - Monday, Nov 27, 17 @ 3:51 pm:

    Rich is correct. When the Medicaid expansion law was passed in Illinois the bill included language that if the federal reimbursement rate drops below 90% then the expansion stops in Illinois.

  47. - Michelle Flaherty - Monday, Nov 27, 17 @ 7:14 pm:

    See, it took 3 years but Rauner is learning how to budget.

    Let’s see, we think it will cost this much.
    Oh gee, it seems to have actually cost a lot more.
    Wow, somebody’s going to have to deal with that next year.

    Can’t wait to see his FY19 budget plan now that he’s figured it all out.

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