 Illinois state-worker pension costs get well-deserved attention for crowding out
spending for much of the state’s other services. With pension costs now
consuming more than 25 percent of the budget, they compromise spending on
everything from social service providers to in-state college scholarships for
low-income students.
But there’s another budget item that deserves similar attention for the squeeze
it’s putting on other government services: Medicaid. Health care costs largely
made up of Medicaid expenses consume 25 percent of Illinois’ general fund
budget. Without serious Medicaid reforms, spending will continue to compromise
other programs that help the needy.
Medicaid, a state-federal partnership originally meant to be the health care
safety net for the poor and disadvantaged, has ballooned to cover more than a
quarter of Illinois’ population. It’s no longer just a safety net.
In 2000, just 1.37 million, or 11 percent, of all Illinoisans were enrolled in
Medicaid. Today, enrollment has swelled to 3.22 million – a 135 percent
increase.
As the number of Medicaid enrollees has increased, costs have increased as well.
Since 2000, total Medicaid costs have increased by $7 billion. That increase
alone is nearly what Illinois state government appropriates for K-12 education
each year.
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 When compared with spending in 2000, Medicaid expenditures have
grown by 141 percent – far more than the growth in tax revenues and
spending on other core services.
By contrast, state spending on human services is up just 10 percent
over the same period. Spending on K-12 education is up just 35
percent. Higher education spending is down by 8 percent.
The bottom line is, unless Springfield reforms its core spending
drivers, the costs will swallow up more and more of Illinois’
general budget.
And contrary to many politicians’ assertions, tax hikes are not the
solution. Revenues have never been a problem in Illinois: It is
costs that are growing too fast. State per capita tax revenues have
grown 70 percent more than inflation over the last 33 years. Any tax
increases will put additional pressure on overburdened taxpayers –
encouraging them to seek opportunities in other states.
The state’s financial crisis will cease only when politicians are
brave enough to say no to the status quo – and that means
structurally overhauling Illinois’ budget by passing comprehensive
spending and economic reforms.
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