Illinois to reinstate scheme to bring in more Medicaid dollars

July 17, 2005 — Illinois hopes to get $600 million a year in federal health care funds under a hospital tax plan signed Sunday by Gov. Rod Blagojevich.
The three-year program still must be approved by the U.S. Department of Health and Human Services. State officials are optimistic that it will be OK'd since the program is a revised and expanded version of one that has been used before, generating $430 million.

The program works by taxing Illinois hospitals and putting the money into the Medicaid program to qualify for federal matching funds. Then the original tax money and the extra federal money are returned to hospitals.

Most hospitals end up getting back more than they paid in taxes.

Officials expect the plan to bring the state an extra $600 million a year. Hospitals would get $470 million, while state government would get $130 million to spend on nursing homes and other Medicaid costs.

Kenneth Robbins, president of the Illinois Hospital Association, said in a statement that the plan "is a victory for the hospitals, doctors and families of Illinois."

Hmmm. Sounds like a promising scheme, but the fact that the hospitals appear to make a profit on it seems wrong.