Illinois governor signs bills to save Medicaid "from collapse"

Thu Jun 14, 2012 11:54am EDT

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(Reuters) - Illinois Governor Pat Quinn signed into law on Thursday a package of bills aimed at curbing the state's Medicaid costs through program changes and revenue enhancements.

"One of our most important missions in Springfield this year was to save Medicaid from the brink of collapse," Quinn said in a statement, adding that the measures reach his goal of $2.7 billion in savings for the program.

The Democratic governor had pushed lawmakers during the spring legislative session to pass reforms to pensions and Medicaid, the joint federal-state healthcare program for the poor, to keep the two big budget items from consuming even more than their current 39 percent of state general fund spending.

While the Democrat-controlled General Assembly came through on Medicaid, a plan to tame Illinois' huge $83 billion unfunded pension liability fell apart as the session ended on May 31.

Among the Medicaid bills signed by Quinn, one cuts spending by $1.6 billion through reductions in eligibility and provider rates and program eliminations.

Another measure tackles a problem increasingly being faced by nonprofit hospitals in the state - the level of charity care they must provide to obtain property tax exemptions. The new law, which has the support of the Illinois Hospital Association, establishes standards the hospitals must meet to qualify for exemptions.

Illinois had stripped some hospitals of their exemptions, forcing them to eventually make millions of dollars in local property tax payments. Credit rating agencies have warned hospital ratings could fall as a result.

On the revenue side, Quinn signed a bill to increase federal matching dollars for Medicaid by hiking the state tax per pack of cigarettes by $1 to $1.98 and implementing a new assessment on hospitals.

The state will also phase out its long-time practice of balancing the budget by pushing Medicaid bills into the next fiscal year, under another bill signed by Quinn.

(Reporting By Karen Pierog; Editing by Diane Craft)

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