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The Illinois legislature this week passed a measure that will cut Medicaid by $1.6 billion.  This move could eliminate hundreds of thousands of people from the State’s health care program for the poor.  For those who remain in the program they will get less coverage.  The doctors and hospitals will receive lower fees for providing services.

Medicaid was enacted in 1965 as a combined State and Federal program to provide health care services for the poor.  The federal government provides matching funds.  The amount varies by State.  The law has some requirements but as long as the State meets those requirements the Federal funds are provided.

Now when the Patient Protection Affordable Care Act ( PPACA) , aka. Obamacare, passed in March of 2010, it expanded Medicaid.    According to the Congressional Budget Office, about half of the uninsured they intend to cover as a result of the law will be due to Medicaid expansion.

Now the States (all States, not just Illinois) question has  been how will they come up with the additional money to cover their share of these additional people.  The Federal Government will actually pay 100% of this for the first three years of the program.  But what will happen about after that?  In 2017 Federal funds will cover 95% and then 90% going forward beginning in 2020.

Now 10% might not seem like a lot, but when you start thinking of how strained most states are currently and Medicaid spending is one of the largest expenses in every state’s budget.   This leaves states asking themselves … How are we going to pay for the cost of Medicaid?

Now we go back to Illinois where the have just cut Medicaid.  What will happen to Illinois Medicaid next year when Obamacare goes into effect?