Contact: Kevin Kavanaugh
Director of Public Affairs
(773) 478-6613
kkavanaugh@nursinghome.org


FOR IMMEDIATE RELEASE
MAY 15, 2002

Other States Provide Revenue Models to Illinois for Protecting Frail Elderly

(CHICAGO) -- Illinois isn't alone in facing a budget crunch. Yet, while other states have proposed creative solutions to addressing fiscal problems, Illinois has targeted health care programs for the poor and elderly for cuts. Part of Illinois' proposed solution includes a devastating 8.8 percent of Medicaid funding to nursing homes -- a total of $171 million. The Illinois Council on Long Term Care predicts that this draconian cut will lead to many nursing facilities going out of business, with resident care suffering at those facilities that manage to stay afloat.

Illinois nursing homes are extremely dependent on the Medicaid program for providing appropriate resident care. Medicaid finances two-thirds of the state's total nursing home population, more than 50,000 people, as opposed to less than 15 percent of expenses for hospital patients. On average, Illinois nursing facilities operate at an average $8.98 loss on every Medicaid resident they serve. Under the proposed budget, Illinois nursing homes will now lose an additional $8.25 per day for each resident on Medicaid. Many Illinois facilities won't be able to survive these cuts. Other facilities will be forced to let employees go, leading to thousands of Illinois citizens losing their jobs.

"Illinois lawmakers have the moral obligation to provide proper care to our state's frail elderly," said Terrence Sullivan, executive director of the Illinois Council on Long Term Care. "They must find alternative solutions to addressing the budget deficit rather than putting some our state's most vulnerable citizens at risk."

Additionally, a $171 million cut to Medicaid funding will lead to a loss of $85.5 million in federal matching funds. Illinois will end up losing 50 cents of money for every dollar reduced in Medicaid reimbursements.

Nearly every state in the nation is faced with a budget shortfall this year. According to a report prepared by Voices for Illinois Children, here's how some states have addressed their deficits:

· Alabama increased both corporate and cell phone taxes

· Connecticut hiked the cigarette tax by 61 cents and delayed the phase-out of the inheritance tax

· Maryland increased the cigarette tax by 34 cents

· Nebraska delayed a "minor" business tax credit, temporarily increased the state sales tax and the top income tax bracket, raised the cigarette tax for two years, expanded the sales tax to some services and de-coupled from the federal bonus depreciation law

· New York raised the cigarette tax by 39 cents

· North Carolina increased the sales tax, created a new upper-income tax bracket and closed corporate tax loopholes

· Oklahoma increased the personal income tax

According to this same report, Illinois ranks 46th in generating the general revenues that pay for education, public safety, human services and health care when measured against the personal income of the state's taxpayers. This means that the general fund that pays for the state's primary services and programs, but not its roads and other bricks-and-mortar projects, is poorer than all but four states. And although Illinois does have relatively high property taxes, our state still manages to rank 49th in the total state and local revenue that it generates, which includes property taxes and everything else, as a percent of the income of the state's taxpayers.

State government has a social responsibility to protect its most frail citizens, particularly during difficult times. Other states have shown that, even with recession budgets, necessary revenue to support the elderly can be generated through cigarette taxes, casino taxes, income taxes, and even borrowing against cigarette settlement money. One other solution to avoid devastating cuts to Medicaid would be to temporarily increase the provider license assessment. Increasing the provider license assessment costs the state nothing and will also prevent the loss of needed Medicaid matching funds. Whatever the solution, every effort must be responsibly taken to protect our state's 50,000 nursing home residents on Medicaid -- the proposed $171 million cut will put these Illinois citizens in peril.

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The Illinois Council on Long Term Care is an association of nursing home professionals representing more than 200 facilities employing 26,000 staff members who serve over 38,000 residents. More information on long-term care issues can be found at the Council's web site www.nursinghome.org.