Illinois Threatens to Halt All Health Insurance Payments

Unpaid bills in Illinois now stand at $8.5 billion. Some project the total will reach an all-time high of $10.5 billion by December. Total accumulated liabilities counting pensions are on the order of $163 billion.

Illinois is flat out broke, and without a budget cannot legally pay some bills. In what I see as a sideshow, Illinois has not been paying lotto winners.

Far more serious issues are on the horizon. For example, the State Journal-Register reports Gov. Rauner threatens to halt health insurance payments to providers for state workers.

As Illinois approaches its 11th week without a state budget, Gov. Bruce Rauner has threatened to take the unprecedented step of stopping all payments to doctors, hospitals and others providing health care to the almost 363,000 state workers, university employees, retirees and others covered by the state’s group insurance plan.

“All health care services will continue to be paid as long as possible,” said Meredith Krantz, spokeswoman for the Illinois Department of Central Management Services.

“However, in the near future, we will no longer have the legal authority to continue to pay health care vendors for their services,” she wrote in an email Friday to The State Journal-Register.

“All applicable fiscal 2015 funding has now been exhausted,” she said. “Without a budget in place, there is no appropriation or legal authority to continue to pay health care providers.”

Dental Payments Halted

In addition to the administration’s threatened shutoff of reimbursements to health care providers and health insurance companies, the state recently halted all payments to dentists for services to the 359,325 state workers, university employees, retirees and dependents with dental coverage.

The CMS notice says a few health care providers in the state’s self-insured plans — which include Delta Dental, Cigna, and the HealthLink and Coventry open access plans — have asked people insured through the state plan to pay cash at the time of service to cover the total cost.

Legislature Gets Paid

No matter whether the legislators do their job or not, they get paid. Their pay is guaranteed via a bill the legislature passed last year.

And in spite of the fact the legislature would not present a balanced budget for Rauner to sign, the legislature did pass a pay hike for themselves, in yet Another Insult to Taxpayers.

Legislators had a chance to rescind the pay raise, but a bill to do that was buried by, you guessed it, Madigan.

Gov. Bruce Rauner has been using the pay raise to tweak legislators, especially Madigan. Last week, he said accepting the pay raise without solving the state’s budget issues was “unfair to taxpayers and the people they represent. It is time to stop protecting the political class at the expense of the middle class.

Madigan’s response to Rauner’s taunt was, “I’m not going to spend a lot of time on that question.’’ Madigan has said the pay issue is a “diversion,’’ but in the Madigan dictionary, any issue that threatens the comfort of legislators or trial lawyers is a diversion.

Overpaid, Underworked

Illinois legislators are already among the highest paid in the United States, earning $68,000 to $95,000 per year for part-time service, plus per diem payments and mileage reimbursement,” said Rauner in an amendatory veto of the bill to hike lawmaker pay.

School Children Removed as Bargaining Chip

Budget for primary and secondary schools was not originally protected. However, in June, governor Rauner cleverly got the legislature to go along with school funding, effectively removing children as a bargaining chip.

Without that agreement, schools would now be closed, and pressure from parents for Rauner “to do something” would be intense.

Given House Speaker Mike Madigan will not deal with the governor on badly needed reforms, Rauner may have been forced to pass a tax hike.

Genuine Chance for Reform

Politically speaking, Madigan made a huge mistake. And Illinois stands to benefit if Rauner plays his cards correctly. 

With no pressure from parents about schools, Rauner now has the chance to hold out for reforms. Pressure will instead fall on the legislature, as they will have to pay healthcare expenditures out of their own pocket.

Rauner has stated he would not sign off on a tax increase for FY2016 unless lawmakers approved changes to the workers’ compensation laws and freeze property taxes.

Rauner should hold out for far more. Here is my list of ideas.

Reform Ideas

  1. Pass right to work legislation
  2. End prevailing wages
  3. Freeze property taxes
  4. Rewrite worker’s compensation legislation
  5. End collective bargaining of public unions
  6. End defined benefit pension plans for new employees

It is unlikely that Madigan would agree to all of those, but Ruaner should be able to get more than two. And the longer Rauner holds out, the more he can get. Pressure is now on the legislature, not the governor.

Apocalypse Illinois

For further details on Illinois’ enormous fiscal mess, please see Apocalypse Illinois: IOUs Projected to Hit $10.5 Billion, $163 Billion Total Accumulated Liabilities.

Mike “Mish” Shedlock