Wednesday, January 20, 2010

When States Can't Pay Their Medical Bills

... medical institutions might not make payroll:
"I would describe bankruptcy as the inability to pay one's bills," says Jim Nowlan, senior fellow at the University of Illinois' Institute of Government and Public Affairs. "We're close to de facto bankruptcy, if not de jure bankruptcy."

Legal experts say the protections of the federal bankruptcy code are available to cities and counties but not states.

While Illinois doesn't have the option of shutting its doors or shedding debts in a bankruptcy reorganization, it seems powerless to avert the practical equivalent. Despite a budget shortfall estimated to be as high as $5.7 billion, state officials haven't shown the political will to either raise taxes or cut spending sufficiently to close the gap.

As a result, fiscal paralysis is spreading through state government. Unpaid bills to suppliers are piling up. State employees, even legislators, are forced to pay their medical bills upfront because some doctors are tired of waiting to be paid by the state. The University of Illinois, owed $400 million, recently instituted furloughs, and there are fears it may not make payroll in March if the shortfall continues.
One wonders: after Massachusetts, could Obama's Senate seat be next?



Anonymous said...

Well lord knows the American public will not abide any tax increase. No, I suppose they see the remedy as being to turn the Illinois Senate seat Republican and cut taxes - perhaps even offer a little tax rebate.

The damn system is BROKEN and that's why some folks are looking for reform. I'm pretty sure you see it as broken, too; and this is BEFORE anything has been enacted. Can't blame Obama's health reform quite yet. What the heck do you suggest?

DrWes said...


The damn system is BROKEN and that's why some folks are looking for reform.

It's not broken, just dysfunctional. No one argues we need cogent ideas. See my prior post for concrete suggestions. Now, love to hear what you'd propose.