Illinois Gov. Pat Quinn is suggesting deep cuts on what the state pays to hospitals, clinics and nursing homes in benefits and payments, while trying to eliminate fraud and waste, and a new $1-a-pack tax on cigarettes as an overall package to fix the state’s Medicaid system and cut expenditures by $2.7 billion.

“I said we had to work night and day in order to restructure the program. Last year, the expenditures of Medicaid were $1.9 billion more than the revenues for Medicaid,” Quinn said in a Thursday afternoon press conference in his Statehouse office in Springfield. “We could not continue at this pace.”

Medicaid provides healthcare to 2.7 million people in Illinois.

The Civic Federation of Chicago, a non-partisan government research organization, projects $21 billion in unpaid Medicaid bills in five years if the state doesn’t’ restructure the system.

“In order to save the system, to rescue the system, to have a system of healthcare for our most vulnerable residents all across Illinois, we have to make some fundamental changes. These are difficult changes but if we don’t make these changes we won’t have a system at all,” Quinn said.

To reach $2.7 billion dollars in reduced Medicaid liabilities, Quinn proposes the following:

• Cuts and reductions to 58 separate items totally $1.35 billion
• Rate reduction to providers totaling $675 million.
• Additional $337.5 million from a $1-a-pack-tax on cigarettes, with a 100 percent matching fund from the federal government.

Quinn said the state plans to crack down on Medicaid fraud and purge the system of those who are no eligible for the program, like those from out of state.

“We don’t want anybody in the Medicaid system that isn’t eligible for the Medicaid system,” Quinn said. “If someone is not eligible, they don’t belong in the Medicaid system and will be taken out.”

Quinn said the cigarette tax will cause some folks to quit smoking, thus reducing healthcare costs but also to raise funds with the federal government kicking in matching grants. 

“In order to prevent young people from smoking, price of cigarettes is a key issue,” Quinn said.  “This is a balanced approach. … If we don’t deal with this problem right now, it will just get worse.”

But Quinn’s announcement came before the bipartisan group of lawmakers were finished coming up with its own plan to fix Medicaid.

“The Governor asked us to come up with $2.7 billion in cuts and we agreed that this program needs to be sustained, we need to protect the integrity of the program and the program is out of control,” State Rep. Patti Bellock, R-Westmont, who is with the working group, said. “If we had a couple of more weeks to work on this, we think we can get to the $2.7 billion and actually have a better system, a reformed system, a redesigned system and a system that will be more accountable to the taxpayers of Illinois.”

Bellock and State Sen. Dale Righter, R-Mattoon, both take issue with the $1-a-pack-tax on cigarettes.

Righter said Quinn seems to be giving up on coming up with ways to reduce Medicaid spending.

“While we’re still six weeks out from the end of session, the governor is waving the white flag and saying we’re not really going to change the system that much and we’re going to go ahead and raise taxes,” Righter said. “I would like to see the Governor and his people take the plan that he announced today and put it in bill form and vote on it next week … up or down… and then we’ll see if the working group’s work is done.”

Quinn said taxes on cigarettes were proposed and passed by Republican governors Jim Thompson, Jim Edgar and George Ryan.

But Righter said just because it was done in the past, doesn’t mean it needs to be done now.

Although the Illinois Senate has supported a $1 tax on cigarettes, the Illinois House has balked on it.

“This governor championed and signed after his allies in the General Assembly passed a $7 billion tax increase a little over a year ago and they told us then that would solve the problem. That we would pay our old bills with this and close the deficit,” Righter said. “Look we’re we are at today. The problems in the Medicaid program are worse. … Just raising taxes isn’t working.”

The General Assembly will still need to pass the governor’s proposal.

Chicago Democrat Heather Steans, who sits on the Medicaid committee, said their work is not over.

“We did all agree that (Quinn) putting this out was appropriate and a good next step to keep moving the ball down the field here,” Steans said. “We’re meeting again next week and we’ll continue to do so and hopefully get to an agreement.”