Revised Illinois state revenue projections could jeopardize some of the proposed spending increases to healthcare and human services in Gov. JB Pritzker’s $49.6 billion general fund budget for FY 2024.
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The Governor’s Office of Management and Budget estimated base general fund revenues for FY 2024 to total $49.9 billion when the proposed budget, the highest in the state’s history and 11% higher than last year, was submitted in February.
The Illinois Commission on Government Forecasting and Accountability, however, announced last month that General Fund revenues for the current year fell by $1.8 billion (21%) in April compared to the same period last year, attributed to a decline in personal income taxes.
General Funds totaled $6.19 billion in April, well short of the historic monthly high of $8.04 billion from a year ago. The shortfall prompted the commission to adjust its base projection for FY 2023 general fund revenues from $51.14 billion, calculated in March, to $50.41 billion, a decrease of $728 million.
While the commission reported a slight increase of $37 million to the FY 2024 general fund revenue estimate of $50.4 billion due to the implementation of future tax disbursement, it noted the lower base for FY 2023 creates a similar downward pressure for 2024 revenues.
This fiscal uncertainty is causing lawmakers to reexamine proposals for increased spending.
Much of the enhanced spending in the budget has been designated to improve access to healthcare, behavioral health, housing, and other critical social services support, including measures to expand the Health Benefits for Immigrant Adults (HBIA) program.
A group of Illinois House Republican leaders is targeting undocumented immigrants, calling for an end to their healthcare benefits due to the higher than anticipated costs and fiscal unsustainability.
The Department of Healthcare and Family Services (HFS) estimates the program’s eligibility and enrollment numbers to grow by 202% and 94%, respectively, in FY 2024. That revised estimate has raised the appropriation for the program from $220 million to $1.1 billion.
HFS reported that between March 2022 and February 2023, the program paid $189 million more in claims for covered adults than projected.
Deputy House Republican Leader Rep. Ryan Spain (R – Peoria) has introduced a resolution that would institute a moratorium on the enrollment of new beneficiaries while the state conducts an audit of the program.
“The Medicaid program in the state of Illinois is our biggest area of spending,” Spain said during a press conference on April 21st after filing the resolution. “This billion dollar hole, which is just the beginning, requires the General Assembly to exercise fiscal responsibility in both the short-term and long-term to ensure state budget sustainability.”
While it remains to be seen what areas of the proposed healthcare spending will ultimately be impacted, Pritzker has prioritized children’s behavioral health as part of his Transformation Initiative with $22.8 million pledged in the FY 2024 budget to build out his plan.
The plan includes $1.5 million for the development of a Children’s Behavioral Health Portal, $10 million to establish Comprehensive Community Based Youth Services, and $2 million to help frontline pediatric care providers integrate mental health services and treatment with physical health.
Also under the introduced budget, HFS would receive $100 million for Medicaid reimbursement rate increases starting next year, and $450 million over the next several years to retain and promote the healthcare workforce.
The budget also requests an additional $709 million in general funds to compensate for the phase-out of enhanced federal matching funds and support other areas of the Medicaid program.
In an interview with State of Reform, Rep. William Hauter (R – Morton), an emergency physician and anesthesiologist in Illinois, said because the undocumented immigrant health program provides fee-for-service care outside of Illinois’s Medicaid managed care organizations, the cost control measures are limited.
“So many other fields and parts of the budget are automatically increased,” Hauter said. “Well, that’s not so in medicine. With significant inflation and the staffing crisis—the need to increase compensation to get any staff or to keep any staff—we have to have some increases in Medicaid rates and in hospital rates. It just has to happen. Well, that’s hurt by the [requirement to cover] undocumented aliens.”
Similar measures to cover undocumented immigrants are facing budgetary concerns in other Democrat-led states, such as Connecticut and Minnesota
Illinois became the first state in the country to provide public health insurance to low-income seniors ineligible for either marketplace coverage or Medicaid due to their immigration status when it launched the Health Benefits for Immigrant Seniors (HBIS) program in 2020, which covers undocumented adults aged 65 or older.
The program then expanded to adults aged 42 and older through HBIA in 2022.
In an interview with State of Reform, Stephanie Altman, director of healthcare justice at the Shriver Center on Poverty Law, said the higher-than-anticipated enrollment and utilization show that the program is working for the more than 50,000 individuals who have been covered.
“[These programs] have been studied a lot across the country and have shown actual changes—positive changes in health outcomes, as well as prevention, economic impact, [and] lower bankruptcies,” Altman said. “There’s a lot of studies on a new population getting healthcare coverage, but it took about 10 years to look at all that.
What we’ve seen in the last two and a half years of immigrants going into this program is definitely a tremendous amount of pent-up demand. You saw people getting their first colonoscopy, their first mammograms and prevention, which is obviously going to show some undiagnosed conditions that need to be treated.”
Altman said the state is already seeing the costs for beneficiaries 65 years and older leveling off.
Two measures introduced during the session, House Bill 1570 and Senate Bill 122, would further expand HBIA to cover low-income immigrants aged 19 to 41 with an additional cost of $380 million in the first year.
In an effort to protect the program and other areas of spending, state Democrats responded on Tuesday with a push for measures to tax billionaires and cap the annual sales tax discounts to large retailers, which would bring an estimated $670 million in revenues.
Another proposed measure, HB 579, would establish a state-based healthcare insurance exchange. The startup cost of building the exchange has been set at $10 million, but the projection for the overall implementation cost has yet to be determined.
The Pritzker administration views the establishment of a state-based exchange as protection against potential future changes to federal policy that may impact the marketplace.
Altman says a state-based exchange could help the state take advantage of flexibilities and waivers that may eventually fund coverage for immigrants and lower costs for the uninsured.
“We have a lot of confidence in our Medicaid agency and our Department of Insurance—that they’d be putting this together under the direction [of] a strong marketplace director and the advisory committee,” Altman said. “We’ve seen other states like New Jersey, Washington, Oregon, and California do really amazing things with their state marketplaces since 2014.
They’ve been able to do things like lower costs across the board for navigator programs—use some of those savings to cover uninsured populations or to make it more affordable. They’ve been able to have longer enrollment periods [and] just the ease of applying and moving between Medicaid and the marketplace with a single state enrollment site.”
With the spring session scheduled to adjourn on May 19th, lawmakers are required by statute to attach a fiscal note to any proposed budget amendments and legislation with revenue impacts before finalizing.
The finalized state budget must pass with a simple majority on or before May 31st for it take effect immediately. If the vote is delayed beyond that date, a three-fifths super majority would be required to enact the budget by the start of the upcoming fiscal year on July 1st.