Such a drastic cut will also block Illinois from receiving federal dollars. A $171 million cut will lead to a loss of $85.5 million in federal matching funds. Illinois will end up losing 50 cents of federal money for every dollar reduced in nursing home Medicaid reimbursements.

In the year 2000, 12 Illinois nursing homes went out of business as a result of inadequate funding. In 2001, 18 facilities closed. Many facilities that have shut down or are in danger of closing are in smaller communities that already lack enough nursing homes to properly care for their areas' residents.

Although average costs at Illinois nursing homes have increased 61 percent from 1994 to 2002, Medicaid rates paid to care for the residents at these facilities have increased only by 37 percent. Currently, the state of Illinois ranks 44^th nationally in the average rate paid to nursing homes. This proposed cut to Medicaid will lead to our national ranking dropping even further.

Many facilities operate at an average $8.98 per day loss on every Medicaid resident they serve. Under the proposed budget, Illinois nursing homes will now lose an additional $8.25 per day, on average, for each resident on Medicaid. Many facilities will keep their heads above water by raising rates to residents and families who pay for their care out-of-pocket.

In total, 79 percent of a nursing facility's total expenditures go to payroll. With the proposed cuts to Medicaid, nursing homes may have little choice other than to cut staffing levels, which will have a detrimental effect on the quality of resident care. Additionally, in today's competitive labor market, nursing homes are finding it increasingly difficult to offer wages and benefit packages that will attract quality staff. The proposed cuts will make attracting high caliber staff even more difficult.

The moral compass of a society can be measured by how it takes care of its children and elders. What does it say about Illinois if we cut $171 million of Medicaid funding to nursing homes? More than 50,000 Illinois nursing home residents depend on Medicaid. The state has a moral obligation to make good on its promise to help take care of these individuals. If these cuts go through, the state would be turning its back on its most frail and vulnerable residents.

The Illinois Council recommends that, with a recession budget, the best solution to avoiding devastating cuts to Medicaid is to temporarily increase the provider license assessment. By raising money through a provider license assessment, all monies raised will be matched by the federal government. Increasing the provider license assessment will cost the state nothing and will also prevent the loss of needed Medicaid matching funds. Rather than lose federal funds, an increased license assessment brings more federal funds to Illinois to help solve the state’s budget problems. Increasing the provider license assessment is the most practical solution to maintaining the safety net of long term care for our state’s frail and elderly citizens.

Terrence Sullivan, MS

Executive Director