State to pay down employee health insurance, Medicaid bills

Nov. 09--Billions of dollars in old state employee health insurance bills and Medicaid bills will be paid off in the next few days with money from bonds issued to cut into the state's nearly $17 billion bill backlog, Comptroller Susana Mendoza said Wednesday.

Combined with federal matching funds available for some of the bills, a total of nearly $9 billion can be used to pay down medical-related bills, many of which are subject to late payment penalties.

"Important to all of the providers, many of them, who have been waiting far too long to get paid, will begin to see immediate relief," Mendoza said at a Statehouse news conference. "Tonight, the first round of major payments on paying down the bill backlog will be taking effect."

As part of the budget deal in July, lawmakers authorized the state to issue up to $6 billion in bonds to pay down old bills accumulated before July 1. Mendoza said that because the state got a very good interest rate on the bonds, there effectively is $6.4 billion to apply to old bills.

Mendoza said $2 billion was going out Wednesday toward old state employee group health insurance bills. Another $2.5 billion was being applied to Medicaid bills.

On Monday, another $1.9 billion will be used to pay down group health insurance bills.

By the time it's done, Mendoza said, about two-thirds of the backlogged group health insurance bills will be paid. Her office said between $1.3 and $1.5 billion will remain in the hopper.

"We're still going to owe group health," Mendoza said. "It's not enough money to cover, even remotely, all of our bills, even when we're done paying this $6.4 billion total."

Medicaid bills, which are mostly subject to late payment penalties and also qualify for federal matching funds, that were accumulated prior to July 1 will be paid off.

None of the bond money is being earmarked to pay bills owed to human service agencies and other vendors owed money by the state. Mendoza said she is sympathetic to those entities, but said bills owed to human services agencies generally don't qualify for late payment penalties. She said the fiscally prudent thing to do is pay off old bills that qualify for late payment penalties. The state owes about $900 million in late payment penalties.

Mendoza also said that her office has given priority to human services payments as much as possible during the state's budget crisis.

Mendoza said it is difficult to say exactly what the bill backlog will look like in another week after the payments are made because bills continue to arrive in her office, some of them that the office didn't know existed. That could change under legislation approved in the Senate Wednesday.

The Senate voted 52-3 to override Gov. Bruce Rauner's veto of the Debt Transparency Act, legislation pushed by Mendoza to give her a clearer picture of state finances. The bill requires state agencies to report monthly on bills being held in the agencies awaiting payment. Currently, those bills only have to be reported once a year. Mendoza noted that the Rauner administration disclosed $2.8 billion in spending no one knew existed when the state marketed the bill payment bonds.

She said a clear picture of state bills is vital to deal with the state's financial issues.

"We, the legislature and my office, can't do the job we've been elected to do without this full transparency," Mendoza said.

Rauner vetoed the bill because he said it was an attempt by Mendoza to micromanage his agencies and he said the agencies themselves didn't have the capability to report bills on a monthly basis.

Mendoza didn't buy it.

"The numbers are available, they know what they are and they should report them," Mendoza said. There's no excuse for it."

Contact Doug Finke: doug.finke@sj-r.com, 788-1527, twitter.com/dougfinkesjr

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