Dec. 02--Gov.-elect Bruce Rauner warned on Tuesday that state government is in a much more desperate financial mess than anyone has been willing to admit. "The deficit is far worse than has been discussed," he said.
We already knew it was pretty bad. Already knew that lawmakers and Gov. Pat Quinn had concocted a phony spending plan this year to get them through a November election.
The Civic Federation of Chicago earlier this year laid bare many of the gimmicks and short-term stunts lawmakers used to mask how bad things are. But now that the guy who didn't have a vested interest in that phony budget has gotten a look under the hood, he's warning that ... well, take a big gulp.
Lawmakers are back in Springfield for a few days. Only one of them --one! -- lost re-election in November. So, safely past the wrath of voters, are they scrambling to save money, cut spending, do anything to ease the financial shock a new governor will face?
No. They're maneuvering to expand state government. They're moving to create a state health insurance exchange under Obamacare.
A House committee voted 9-6 on Monday to create the exchange. A floor vote could come Wednesday. The Senate has already approved this exchange.
The lure is $270 million in federal money that would be available to build an Illinois exchange website to handle insurance coverage that now is handled by the federal site HealthCare.gov.
A sponsor of the legislation to create the state exchange, Rep. Robyn Gabel, D-Evanston, tells us that the state won't incur any operating costs.
And that could be true. Health insurers now pay a 3.5 percent federal fee on each insurance policy attained through the federal exchange. The state would set a similar fee, no greater than 3.5 percent, to pay for the state exchange.
Operating a state exchange would cost an estimated $72.5 million in the first year, $57.5 million in the second year and about $50 million a year thereafter, according to Sarah Myerscough-Mueller, a legislative aide to Quinn.
Gabel tells us that the insurance fees should generate plenty of money to pay for exchange operations -- as long as the state signs up at least 500,000 people. After Obamacare's first year of operation, however, only 217,000 people have signed up in Illinois.
If fees don't generate enough revenue to run the exchange, what then? Will lawmakers force insurers (and by extension consumers) to pay more? Or will Illinois tap tax revenues to keep its exchange running?
We understand, Illinois lawmakers are worried that Illinois residents could lose federal subsidies if the U.S. Supreme Court rules next year that those subsidies are legal only in states that have their own exchanges. Most states do not. If Illinois sets up its own exchange, the subsidies, presumably, would be secure.
But several states have run into enormous, expensive obstacles in creating and running insurance exchanges. There is risk. There is also no guarantee how the Supreme Court will rule or what the impact of that ruling will be.
Now we refer you back to the top of this editorial. There is a budget shock on the horizon.
So why are lawmakers focused on expanding state government?
They should have one priority: saving state government from ruin.
