Illinois’ Medicaid Program is Expensive, but Spending Will Be Tough to Cut

In recent years, more than one out of every four dollars spent by the state of Illinois went to Medicaid and more than one out of five state residents got their healthcare through the program. The amount spent on the program and the number of people served have grown dramatically over the last several decades. A program of this size and breadth deserves tremendous attention and scrutiny, both because healthcare is a linchpin for people’s well-being and because the Medicaid program is tremendously important to Illinois’ economy and fiscal situation.In this paper, the authors focus on one facet of Medicaid—its financing and interaction with Illinois’ fiscal situation. they provide some comparative analyses that indicate the extent to which Illinois’ experience is typical of, or substantially different from, other states.Based upon this analysis, the authors are pessimistic about the existence of opportunities to substantially reduce Medicaid spending while maintaining care for vulnerable populations. Because of Illinois’ comparative frugality and the federal match rate system that funds most of the program, large reductions in enrollment would be necessary to significantly reduce the state’s budgetary challenges. Given Medicaid’s numerous benefits, such cuts would likely be socially harmful, and the authors advise that reforms outside of Medicaid be pursued to address Illinois’ financial difficulties.A brief version of this paper with key takeaways is available here.