Government

Illinois court rejects plan for expanding health coverage

The decision comes as states explore ways to broaden existing programs to maximize use of federal dollars.

By Amy Lynn Sorrel — Posted Oct. 20, 2008

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An Illinois appeals court closed the door on a plan to preserve and expand health coverage for low-income parents, but the governor hopes to reopen it.

The ruling could jeopardize coverage for enrollees in the FamilyCare program, which offers insurance to parents whose children are eligible for the State Children's Health Insurance Program and who meet income requirements.

Federal funding reauthorization for extended SCHIP coverage came into question last year, and the Illinois waiver was set to expire last December. But the Illinois Dept. of Healthcare and Family Services, at the direction of Gov. Rod R. Blagojevich, issued a rule in November to preserve FamilyCare by enrolling participants in Medicaid. In addition, the order expanded eligibility to parents earning as much as 400% of the federal poverty level, up from 185%.

The state's Joint Committee on Administrative Rules, a legislative oversight committee, twice rejected the rule as "contrary to the public interest," court records show. But the health department went ahead with the plan anyway. The FamilyCare extension was part of a broader proposal from the governor last year to grow SCHIP as well as screening and prescription assistance programs for low-income and uninsured residents. Lawmakers rejected that plan, which was expected to cost an additional $463 million per year.

In response to a lawsuit brought on behalf of taxpayers, the 1st District Appellate Court of Illinois in a Sept. 26 opinion found the state did not have the authority to shift FamilyCare enrollees to Medicaid without legislative approval. The court issued an injunction putting the program on hold until the case is fully litigated. The governor is considering an appeal to the state Supreme Court.

The ruling comes as a number of states are looking to broaden access for the uninsured by expanding existing private and public programs. At least 10 states considered such proposals as part of comprehensive health reform efforts in 2008, according to the National Conference of State Legislatures. A handful enacted Medicaid and SCHIP expansions this year.

The Illinois decision is unlikely to dampen such efforts, said Kathleen Stoll, deputy executive director of the consumers group Families USA. "What is a damper to states expanding coverage is the need for strong federal partnership, and states are struggling right now for [financial] relief."

Such frustrations are playing out in another legal battle over a 2007 Dept. of Health and Human Services directive limiting eligibility for SCHIP programs. At least five states, including Illinois, sued last year, challenging the department's authority to make the move without public input. Enforcement of the directive has been put on hold, and lawsuits are pending in New York and New Jersey federal courts.

These disputes are being fought largely on procedural matters, Stoll said. Nevertheless, they demonstrate that health reform efforts require stakeholder and policymaker involvement to be successful.

"We recognize health care is an extremely important issue for a lot of people. The question is how are we going to deal with that in a better system than we currently have?" said Thomas F. Hecht, a plaintiff attorney in the Illinois case against the governor. "How we organize health care and health care insurance is clearly a legislative task."

The appeals court unanimously agreed.

Blagojevich and health department officials argued in court documents that they could fund the $43 million annual cost to expand FamilyCare under a Medicaid provision that allows temporary medical assistance for qualified "needy families" transitioning off welfare, regardless of their incomes.

But judges found the statutory measure "in no way" applied to the state's plan, and the department ignored eligibility requirements when it shifted FamilyCare enrollees into Medicaid. The state, if allowed to proceed with this tactic, could expand coverage to virtually anyone, wrote Judge James Fitzgerald Smith. "Such a decision is for the Legislature," he wrote.

The number of FamilyCare enrollees who could lose coverage after the decision remains unclear. The proposed expansion was expected to cover an additional 147,000 parents.

Gov. Blagojevich said in a statement that the state is reviewing the ruling to determine what implications it has for the program. "We will take whatever actions are necessary to protect working families' access to needed health care," he said.

Since the court injunction, the Dept. of Healthcare and Family Services stopped enrolling new applicants with incomes over 133% of the federal poverty level, spokeswoman Annie Thompson said. The department declined to provide any additional figures or further comments.

The Illinois State Medical Society did not take a position on the case or Blagojevich's plan. The medical society said it supports increasing access to care, provided adequate funding exists to cover the costs associated with delivering care.

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ADDITIONAL INFORMATION

Getting creative

Several states in recent years have sought to increase access to and affordability of individual health care coverage in a variety of ways, including Medicaid and SCHIP expansions. Here are a few that have raised their limits or have proposed doing so.

Maximum income as % of federal poverty level
Kids Parents Childless adults
Illinois
Medicaid/SCHIP No limit 400%* 100%*
Other state plan No limit No limit* No limit*
Premium subsidy 400%* 400%* 400%*
Maine
Medicaid/SCHIP 200% 150% 125%
Other state plan No limit No limit No limit
Premium subsidy 300% 300% 300%
Massachusetts
Medicaid/SCHIP 300% 200% 100%*
Other state plan No limit No limit No limit*
Premium subsidy n/a 300% 300%
Pennsylvania
Medicaid/SCHIP No limit 31%* Not eligible*
Other state plan No limit No limit* No limit*
Premium subsidy 300% 300%* 300%*
Vermont
Medicaid/SCHIP 300% 185% 150%
Other state plan No limit No limit No limit
Premium subsidy 300% 300% 300%
Wisconsin
Medicaid/SCHIP 185% 185% 185%
Other state plan No limit* 200%* n/a
Premium subsidy 300%* 200%* n/a

*Proposed or not yet in effect

Source: Families USA (link)

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