The Human Cost: Medicaid Reform Has Left Many With Hard Choices

Oct 1, 2012

Under the new Medicaid eligibility requirements, Oliver Wellman’s parents make too much money to qualify for the 24-7 nursing care he needs because of his tracheostomy, but not enough to be able to afford to pay for the care themselves.
Credit WUIS/Illinois Issues
Maria, the mother in a family of four living in Willowbrook, doesn’t want her real name or that of her family made public. A private, proud woman, Maria would rather keep her problems to herself and solve them herself.

But Maria is in a Catch-22 that might force her to quit her job. Her daughter needs expensive medical care, and Maria and her husband don’t make enough money to cover the costs but make too much to get help. Out of frustration, she shares her story.

Maria and her husband both work full time, she in a grocery store and he as an independent contractor driving trucks. Six years ago, the couple bought a house with a yard for their daughters, now ages 13 and 7. The oldest, Amy, is deaf and Maria used to worry about her loud vocalizations bothering their neighbors. “We didn’t want to disturb anyone,” Maria says.

Because Amy was born with cystic fibrosis, a pre-existing condition that barred the family from getting traditional insurance, the couple has relied on Illinois’ All Kids Medicaid insurance program for all of her life. “Cystic fibrosis is a terrible, progressive disease,” Maria says. Amy also developed diabetes two years ago and is often sick, missing 45 days of school last year. She is on 10 medications when healthy and typically is hospitalized once a year.

In the past, if Maria wasn’t working her usual 48 hours a week, she was taking care of her sick daughter. But now, Maria likely won’t be working because it might be the best option for Amy to keep getting the health care she needs. 

As of July 1, Maria and her husband made too much money to qualify for the All Kids program. “If I was a millionaire, I wouldn’t need anything,” Maria says, her voice tight, exasperated. “How will Amy get medication and how is she going to live? It seems like we’re being punished for working.”

The family has few options in the wake of the General Assembly’s massive cuts to the state’s Medicaid program to fill a gaping $2.7 billion hole in the program’s $14 billion budget. Sixty-two spending reductions, utilization controls and provider rate cuts affecting thousands of the 2.7 million clients served by Medicaid in Illinois are being implemented to save $1.6 billion and to keep the program from the verge of collapse, says Mike Claffey, spokesman for the Illinois Department of Healthcare and Family Services (HFS). 

“We certainly understand the concerns that have been raised by advocates and health care providers about the package of cuts we had to implement,” he says. “We had to make a number of very difficult choices.” The Medicaid program changes include: the elimination of the Illinois Cares Rx program used to help seniors defray the cost of prescriptions; lowering the amount of income participants can make to qualify for some programs; requiring more co-pays for doctor visits, emergency room visits and prescriptions; requiring preauthorization of more than four medications for patients; eliminating chiropractic care for adults and group psychotherapy; capping physical, speech and occupational therapies to 20 sessions a year; and covering adult podiatry care only for diabetic patients, adult dental care only in the case of emergencies and adult eyeglasses every two years. “We had to bring the program in line with available funding and make it sustainable in the long term,” Claffey says.

The cuts were a last resort effort to keep Illinois’ Medicaid program solvent, says state Sen. Heather Steans, a Chicago Democrat. Some Medicaid providers in the state have gone out of business because of delayed state payments, and there was a risk of more doing the same or getting out of the business of serving Medicaid patients, she says. “We had to maintain the program,” Steans says. “We tried to do things that first and foremost would provide services more efficiently and minimize the cost to human beings,” she says. “But there is no doubt there is a human cost to this. We’re going to have to have an ongoing evaluation of the impact to see what the implications are and whether we need to make changes going forward.” 

Besides making cuts, the state legislature nearly doubled the cigarette tax to about $2 a pack to raise $350 million and will generate an additional $50 million in fees from hospitals to go to the state’s Medicaid program. Those funds will be matched by the federal government. “Raising revenue had to be a big piece of the solution as well,” Steans says.

Illinois lawmakers also have been working to change the system, says Patricia R. “Patti” Bellock, a Republican from Hinsdale. “What I was all about was trying to reform and restructure the system and not just make cuts,” she says. She explained that if lawmakers didn’t address eligibility requirements like setting new income thresholds to receive services, Medicaid still would have been overburdened. “We want to protect the most vulnerable people who need these services,” she says. Illinois also is implementing a medical home model for Medicaid patients in which primary care doctors will coordinate care. The model is particularly effective for people with chronic conditions like diabetes. “If we can get patients into a medical home and under an individual’s care, we can keep them out of emergency rooms and provide much better care,” Bellock says. While these are good steps, she sees much more work required on Medicaid. “When you have $1.6 billion in cuts, you know there will be a lot of ramifications,” she says. With so much at stake, Bellock says lawmakers have reached across party lines and have listened to individuals, advocacy groups, health care vendors and others who have wanted to weigh in on the changes. “It was an extremely difficult process,” she says. But if the state had done nothing, projections showed unpaid Medicaid bills would balloon to $21 billion. For some perspective, this year’s state budget, not including federal funds, is $33.7 billion.

Illinois is not alone, says Matt Salo, executive director of the National Association of Medicaid Directors. “Illinois is symptomatic of the problem throughout the country,” he says. “The great recession hit the economy hard and the states harder. The big picture is that Illinois is going through what other states are going through and making tough decisions.” Many states are raising taxes, cutting spending or doing both, he says. Some states, like Alabama, are in a more dire position than Illinois, which traditionally has offered participants coverage and programs that have been more generous than the federal government requires. In contrast, Alabama is at risk of not having enough money to comply with federal Medicaid requirements next year. “The 50 states are so different that it is hard to make generalizations, but Illinois tends to be more generous in terms of benefits than other states on average,” Salo says. “If Illinois is making cuts or rolling back benefits, then they are rolling them back to a level where other states are aspiring to be.”

Still, advocates for the disabled, mentally ill and low income adults and children served by Illinois’ Medicaid program say the cuts are painful and in some cases seem penny wise and pound foolish. “Folks don’t stop needing health care,” says Kathy Chan, director of policy and advocacy for the Illinois Maternal and Child Health Coalition. “They will seek help elsewhere or delay care and then be tougher to treat. We haven’t yet seen the extent of the unintended consequences contained within this massive Medicaid reform bill.”

Consider Maria’s options. The family can drop its annual income to below $69,000 to once again qualify for the All Kids program. Or for the next six months, the couple can try to cover Amy’s health care costs, including an estimated $5,000 a month for her medication. After that time, they would qualify for a Pre-existing Condition Insurance Plan, a national program serving as a bridge until 2014, when the Affordable Care Act will prohibit discrimination of coverage for pre-existing conditions. The family will lose its house under either option because it will become unaffordable, Maria says. She is losing sleep and has been to the emergency room a few times recently for anxiety. “My daughter is suffering because of her illness, and now she has to suffer by being poor,” Maria says. She describes Amy as a typical teen. “Her smile just lights up the whole room,” Maria says. “She’s a beautiful girl. She’s my life. It’s very frustrating. We did not choose this.”

Illinois lawmakers should have been more thoughtful when deciding what cuts to make, says Barbara Otto, chief executive officer of Health & Disability Advocates. “It seems when you are looking to make cuts in the Medicaid budget, the places not to cut are the places where you will see a boomerang down the road,” she says. “That’s the problem in Illinois. This state legislature is not looking at the long-term impact. The legislature only cares about this budget cycle.” Otto says a goal should be to keep people out of hospitals and other institutionalized care settings. “We have federal courts mandating that we move people out of facilities, yet we take away things that will help people to live healthier and independently,” she says. “If we don’t invest in kids and in programs like Illinois Cares Rx, people will either fall into poverty and be more of a Medicaid problem or get so sick that they end up in a facility.”

Meanwhile, the cuts have put some families in an unimaginable position. Some parents of the 1,050 medically fragile and technology-dependent children who receive funds from a state program to pay for in-home nursing care are facing the real possibility that they might have to give up custody of their children to get the health care they need, says attorney Robert Hugh Farley Jr., who filed a federal class action lawsuit on their behalf. In late November, the state will be able to use family income to determine eligibility for the program. Families also will be required to pay up to 5 percent of their gross income in co-pays. Also at issue is a possible change of coverage from a hospital-grade level of care to a lower nursing facility level of care, which Farley says goes against the Americans with Disabilities Act. 

“Obviously, there is a lot of stress,” Farley says. Some parents are faced with options such as moving to a state with no income cap and better benefits, quitting their jobs because they make too much money, divorcing or giving up custody of their children to the state or to someone making less money who would qualify for care. “You think about the emotional toll these families have had to go through, the decision that weighs upon them,” Chan says. “Are we going to have to spend down every single asset that we own or give up custody of our child? It’s an impossible place to be.”

Giving up custody isn’t an option Amy Wellman is willing to consider for her son Oliver, a surviving twin born at 26 weeks. The ventilator that saved Oliver’s life damaged his airway and required doctors to perform a tracheostomy. When Oliver is five years old, he’ll be eligible for reconstructive surgery. But until then, the 21-month-old relies on the tracheostomy tube to live and needs someone around who knows how to put it back in. “I can’t leave him with a nanny or my mom or a babysitter,” Wellman says. Oliver’s care is a matter of life and death. He turns blue in seconds without the tube, which is changed every week. “We’ve had a couple of scary moments where we have trouble getting the next one in,” Wellman says. Amy and her husband live in Chicago’s Lincoln Park neighborhood and make a good living. They have private insurance that covers all of Oliver’s medical needs except for the in-home nursing care, which they use five days and nights a week. They handle the weekends themselves. The care costs $12,000 a month, an unaffordable amount, Wellman says. “I’m not sure what the state is expecting families like us to do,” she says. “I don’t expect anyone to feel sorry for me or anything. If I could pay for this, I would. I’ve been paying state taxes for years, and this is the only state program I’ve ever needed. I know it is expensive, but I can’t imagine Oliver living in an institution. He would not do well. I want to keep him here, at home.” 

This fall, HFS officials are asking Illinois lawmakers to raise the current income cap from 500 percent above the poverty limit to 800 percent, so they can help more families. Previously, there was no income limit for the aid. Even if the cap is raised to an annual income of $152,000 for a family of three, Wellman says both she and her husband would have to quit their jobs. If they give up their jobs, more of Oliver’s care would have to be covered by the state, costing more than the current $12,000 a month. “It’s not good for anyone,” Wellman says.

Cutting so many programs and making so many changes hasn’t given those affected much time to react, says Jon Lavin, CEO of Age Options. He worries about the 165,000 seniors and people with disabilities who had help paying for their medical prescriptions under the Illinois Cares Rx program, which was terminated. “The coverage for them was severely reduced without alternatives forthcoming,” Lavin says. MaryTherese Ring, 79, of Des Plaines plans to dip into funds from her reverse mortgage to pay for the nine medications she takes daily for a range of issues from high blood pressure to incontinence. She estimates her medication costs will go up from less than $100 a month to more than $200. “I know there are people out there much worse than I am,” Ring says. “I adjust what I’m doing and live the way I can. I’m lucky to have the reverse mortgage.” 

Her cousin, Roberta McGahan of Des Plaines, is in worse shape. She, 74, and her husband, Patrick, 76, live on Social Security and have cut way back on their food budget to pay for their medications that treat diabetes, high blood pressure and cholesterol for her and dementia and high blood pressure for him. “If we don’t have the money to get them refilled, we just won’t do it,” Roberta McGahan says. She estimates they now have about $50 to $75 a month for food and make it work by buying less meat. 

The McGahans’ situation is no surprise to David Vinkler, associate state director of advocacy and outreach for the AARP. Seniors like them will be at risk of being hospitalized or entering a nursing home before they really need to, he says. “Throughout this process, we’ve been saying that this is not a budget saver,” says Vinkler, who hopes funding for the program can be restored. “A lot of seniors strive to stay off large-scale government assistance, but when this is the only option of getting the prescription drugs they need to survive, that may be what they have to do. That doesn’t fix our budget.” The Illinois Cares Rx program was a difficult one to cut, but it was not required under federal Medicaid rules and was fully funded by the state, says Claffey of HFS. “Given that not many states offer that program at all, it was something we had to look at,” he says. Also, state officials estimate about one-third of seniors who took advantage of the state program can apply for a federal prescription drug program called Extra Help.

The addition of copays and elimination of programs such as dental care also likely will put more people in institutionalized care and could lead to lawsuits by those who wouldn’t need that level of care if alternatives were available, Lavin says. “It’s almost an incentive for litigation,” he says. “This is a lot of changes and demands on a system that has not always been able to provide the alternatives and supports that make the difference of someone going into a facility or not.”

Advocacy groups for those on Medicaid, particularly those with mental illness, also are opposed to the new requirement of preauthorization for more than four prescriptions. They feel it is a barrier to care. “Even the most clear-headed of us put off medical appointments,” says Steve Weinstein, medical director at Thresholds, which cares for 6,000 severely mentally ill clients in the Chicago area. Because there is such a problem with getting their patients to manage their own care, Thresholds delivers medications to clients, sometimes on a daily basis. “We do that because their reasoning and motivation isn’t focused on their health,” Weinstein says. Otherwise, Thresholds’ patients could end up institutionalized or homeless. “Our clients are a population that needs really strong care coordination and good quality mental and physical health care,” says Heather O’Donnell, vice president of advocacy and public policy for the organization. At intake, 90 percent are unemployed, 50 percent are substance abusers, 48 percent have criminal backgrounds and 45 percent are without a high school diploma. “These are people hanging by a thread who can live normal, productive lives with medication and supports,” O’Donnell says. 

Put in place a barrier such as requiring the preauthorization of a prescription, and a mentally ill patient may just forgo that prescription, says Mark Heyrman, a clinical law professor at the University of Chicago, facilitator for the Mental Health Summit and chair of public policy for Mental Health America. “This is going to be horrible for people with mental illnesses,” he says, noting the severely mentally ill are often on more than one psychotropic medication, may be on medications to reduce side effects and also get sick. “They will have to make sure their doctor has the time and staff to fight with Medicaid,” Heyrman says. 

The Illinois Department of Healthcare and Family Services hopes to minimize problems by starting the preauthorization program with people who need 10 prescriptions, about 80,000 out of 2.7 million people. “We’ll slowly phase in the four prescription limit,” Claffey says. “We are implementing a Web-based system and want it to be responsive.” The goal of the program is to root out abuse and to make sure patients need the prescribed medication and that the drugs are safe to take together.

There is no question that changes to Medicaid programs are painful to the people they help, but change is necessary across the nation as states grapple with rising costs and limited budgets, says Salo of the National Association of Medicaid Directors. “What really drives Medicaid to be the size that it is, is the U.S. health care system,” he says. “It is inefficient and expensive.” States such as Illinois are examining cost drivers, figuring out how to coordinate care among providers and leading reform. “Nothing will change a system like a perceived crisis,” Salo says. “Medicaid is going insolvent right now, and that is the urgency now.” 

Kristy Kennedy is a Naperville-based free-lance writer.

Illinois Issues, October 2012