Week in Review for 11/4/13 through 11/8/13

House Republicans demand answers after thousands of Illinois residents report losing health insurance.  The implementation day of the federal Affordable Care Act, October 1, 2013, imposed complex and costly new mandates upon private health insurance policies sold, or provided by employers, to Americans citizens and residents.  A large segment of previously profitable health insurance policies have become unprofitable.

In the weeks following the “Obamacare implementation date,” a significant number of Americans have reported to their lawmakers that they have recently received letters from their insurers,
informing them that the terms of their family’s policies have been changed, co-payments have been sharply increased, or even that their policy has been canceled.  Hundreds of thousands, possibly millions, of Americans are being forced to shop, on an emergency basis, for new insurance policies to be effective not later than January 1 of next year; in many cases, these policies are much more expensive than their pre-ACA policies.  

House Resolution 680 (Senger-Bost-Tracy-Sullivan-Sandack) demands that the Illinois Department of Insurance, the State agency that regulates the health insurance industry and is cooperating with the troubled “Obamacare” roll-out, share the actual numbers of how many Illinois individuals and families are losing their private-sector health insurance during the implementation period of this troubled new law.  Questions are also asked about the insurance cost increases imposed upon Illinois’ remaining private-sector health insurance policyholders as a result of ACA mandates.  HR 680 also urges that the federal government take steps to delay implementation of the ACA individual mandate to purchase health insurance.

State revenues increase.  With continued improvements in near-term and medium-term U.S. economic prospects, upticks are being noted in taxes paid to Illinois, especially sales taxes paid on retail goods such as motor vehicles.  The Commission on Government Forecasting and Accountability (CGFA) reported on Tuesday, November 5 that they were increasing FY14 revenue estimates for the fiscal year ending June 30, 2014 by $369 million.  More than one-half of this increase, $200 million, represented increased revenues from State sales taxes.

While these revenues are a welcome sign of hope in relation to the overall Illinois economy, these added funds fall far short of expected new FY14 spending needs created by unanticipated Illinois-wide events.  New challenges include a growing headcount of Department of Corrections prisoners being fed and housed in response to the recent wave of firearms crime in and around Chicago.  In addition, Illinois continues to slow-pay an estimated $4.6 billion in unpaid bills due (as of September 30, 2013) to providers of goods and services, including health care services already provided to Medicaid and other patients.

Dominick’s tells Illinois that its store closures will result in the layoff of more than 5,600.  Large employers are required to notify the Department of Employment Security (DES) whenever a large layoff is coming that will result in further pressure to hard-pressed unemployment insurance funds.  Although it was already known that Chicago’s second-largest grocery store chain would close at the end of calendar year 2013, until last week Chicagoans and the State did not have an official number of the people expected to be laid off.  The closures will hit a peak on Tuesday, December 28, when 5,633 employees are expected to be laid off.  Some of the stores will be sold to competitors, who may rehire some of the affected employees.  The nationwide grocery retailer Safeway has made a strategic decision to withdraw from the Chicago market.    

Criminal Law
House discusses bill to increase penalties for gun crimes; measure seen as response to Chicago violence.  SB 1342 (Muñoz/Zalewski), if approved by both houses, will require some convicted felons and known gang members to serve at least 4 years in state prison if found guilty of gun crimes.  Amendatory language added to this bill in House committee on Tuesday, November 5, dealt with some of the legal language discussed by firearms’ rights groups, who had raised concerns about earlier versions of this proposal that could have sharply increased penalties on some inadvertent violations of State gun laws (such as carrying a firearm without an FOID card).  

Press coverage of this bill centered on the outburst of gun violence in many Chicago neighborhoods in 2013 and sharply rising penetration rates of illegal drugs throughout Illinois, including the Chicago suburbs.  Organized criminal gangs, including gangs headquartered in Mexico, are blamed for increasing Illinois’ supplies of drugs like heroin.  Gang warfare is, in turn, blamed for the sharp increase in gun violence in many locations throughout Illinois in 2013, especially Chicago.  The General Assembly, which is expected to reconvene in special session prior to late January 2014, will have the opportunity to further debate and pass this bill.      

New nonpartisan study shows correlation between 2011 Illinois income tax increase and State’s status as location of nation’s second-highest unemployment rate.   The Institute of Government and Public Affairs, an independent body within the University of Illinois, has launched the “Fiscal Futures Project,” a non-partisan effort to compare Illinois’ economic and budget status with neighboring and comparable states, with the goal of projecting likely job and economic trends in Illinois in the medium-term and long-term future.

In a report published on Wednesday, October 30, the staff of the Fiscal Futures Project found disappointing results from Illinois’ recent income tax increase.  The report, entitled “What Happened to Illinois’ Economy Following the January 2011 Tax Increase?”, found that the increase in most Illinoisans’ individual income tax rates by two-thirds, from 3.0 percent of income to 5.0 percent, was correlated with a sharp pattern of underperformance in Illinois’ ability to create new private-sector jobs and begin to recover from the sharp losses suffered during the economic crisis that began in late 2008.

Starting in late 2012, Illinois private-sector job creation slacked off sharply, which became one of the causes behind Illinois’ current unemployment rate of 9.2 percent (as of August 2013).  This trend casts sharp doubt upon claims made by some that Illinois needs to renew and roll over this “temporary” tax increase when it begins to phase out in January 2015.  

Reforms launched by Rep. Patti Bellock lead to Medicaid audit findings.  The State’s largest program of subsidized health care, Medicaid, tends to add many more people to its beneficiary rolls than the numbers subtracted.  Although State and federal law make many beneficiaries legally ineligible for further Medicaid subsidies once their household incomes rise past a complex formula of household eligibility guidelines, many beneficiaries do not take active steps to notify authorities of their newly ineligible status.

Responding to this situation, House Republican Medicaid policy spokesperson Patti Bellock began to push strongly in spring 2012 to force the State, including the Quinn administration, to audit existing beneficiaries.  While full implementation of this scrutiny has been repeatedly delayed, preliminary findings have uncovered a startling pattern of waste and abuse.  Preliminary audit findings covering the scrutiny of 712,000 beneficiaries indicate that as many as one-half of the persons within this group who have the right to visit doctors and charge the cost of their case to Medicaid do not fulfill all of the eligibility criteria for the program.  Throughout Illinois, an estimated 2.8 million Illinoisans are eligible for Medicaid, with another 300,000 to 500,000 scheduled to join the program due to eligibility changes implemented as part of the federal Affordable Care Act (“Obamacare”).  

Affordable Care Act scheduled to add almost 30,000 newly-freed parole inmates to Medicaid rolls, starting in 2014.  Under State and federal laws in place until 2010, many persons in parole status – typically, a parolee is a person who has been convicted of a felony criminal offense and has recently served time in a correctional center – did not qualify for Medicaid benefits.  One of the features of the Affordable Care Act changes Medicaid eligibility criteria so as to add persons in parole status.  The federal Supreme Court has found that each individual state can decide whether or not to implement the Medic aid-expansion sections of the Affordable Care Act (“Obamacare”); as one result of Illinois’ majority party choosing to opt in to ACA/Medicaid, approximately 28,700 parolees gained eligibility to be added to the taxpayer-funded program.  The Department of Corrections told the Associated Press on Tuesday, November 6 that they would fully cooperate with this facet of the Affordable Care Act.  Expressing the knowledge that many of their parolees face serious physical and mental-health challenges, the Department’s spokesperson explained that their chief goal was to funnel their parolees into Medicaid, work with the health-aid program under the umbrella of the ACA, and reduce the likelihood that some of their former inmates would commit new crimes and return to Departmental custody.      

Same-Sex Marriage
Narrow approval for same-sex marriage law helps send bill to Governor.  As passed by both houses of the General Assembly, SB 10, the “Religious Freedom and Marriage Fairness Act,” will not become effective until June 1, 2014.  It will direct Illinois’ county clerks to grant marriage licenses to same-sex couples.  The bill was passed on Tuesday, November 5 with 61 votes in the House, one more than the sixty-vote majority required.  Fourteen states have enacted some form of same-sex marriage, two states (Hawaii and Illinois) are described as being in the process of doing so, and 34 states will continue not to allow it.

Rep. David McSweeney leads charge to save Lake County taxpayers’ money.  HB 3656, a bill written by McSweeney and sponsored by colleague Scott Drury, abolishes the Lake County Board of Election Commissioners.  This body has no duties under current law other than overseeing the election process within Lake County during the days immediately prior to and after election days.  Abolishing the Lake County elections board, and turning its duties over to the office of the Lake County Clerk, would save Lake County taxpayers an estimated $465,000/year.  After winning the approval of the House on Wednesday, November 6 by a vote of 104-13-0, HB 3656 moved to the Senate for final approval.

Illinois leads the nation in maintaining approximately 7,000 separate units of local government, almost all of which operate at taxpayers’ expense, and a difficult lawmaking process is necessary to consolidate or merge them or to merge offices within them.

Key bill to clarify procurement process for toll road builder.  The Illiana Corridor, a proposed 47-mile-long limited access highway that will connect Illinois’ Interstate 55 with Indiana’s Interstate 65 through southern Will County, is expected to move to the design stage soon.  This will include selection of a private partner and a design-build contractor.  SB 2365 (Harmon/Riley) clarifies that the formal State procurement process, which is an open, somewhat cumbersome process designed to reduce public-sector sweetheart deals, shall not apply to the sub-procurement deals inked by the toll road project’s private partner.

The Illinois Department of Transportation (IDOT) is not expected to build this new limited-access highway.  The Illiana private partner, which is expected to be a private equity firm with access to global capital, will raise the $1.3 billion necessary to build the highway.  As a Wall Street firm, the private partner will not be directly involved in building the road; instead, it will contract this task out to a design-build contractor.  As passed by the House and Senate this week, SB 2365 clarifies that this second step in the procurement process, the private partner’s selection of the design-build contractor, will not have to follow the i-dottings and t-crossing mandates of the State procurement code.  The Procurement Code and its mandates will continue to apply to the selection, by IDOT and its Indiana counterpart highway agency, of the private partner.