State lawmakers brace for possible federal cuts to Medicaid

SPRINGFIELD – Health care advocates, hospital officials and people who rely on Medicaid for their medical coverage warned state lawmakers Wednesday of consequences that could result from proposed cuts in federal Medicaid funding.

“This is it. This is absolutely it. This is the line,” said Carrie Chapman, senior director of litigation and advocacy at Legal Council for Health Justice, a Chicago-based advocacy group. “Medicaid stays or goes as the program that we’ve know it right now.”

Chapman was among nearly a dozen people who spoke Wednesday to an Illinois House budget committee that oversees spending for human services, including Medicaid, the public health insurance program that covers about 3.4 million lower-income people in Illinois.

Established in 1965 alongside Medicare, the federally funded health insurance program for seniors, Medicaid has traditionally targeted lower-income pregnant women, children, seniors, parents, and people with disabilities. In Illinois, the federal government pays approximately 51% of the cost of covering those individuals’ care.

However, with passage of the Affordable Care Act in 2010, Medicaid eligibility was expanded to include working-age adults with incomes up to 138% of the federal poverty level. Approximately 770,000 people in that category are covered by Illinois Medicaid and the federal government pays 90% of the cost for that expansion group.

Currently, according to the Illinois Department of Healthcare and Family Services, Medicaid pays for about half of all child births in Illinois and two-thirds of all nursing home days. Nearly 50% of Illinoisians living with HIV are covered by Medicaid, as well as almost 80% of people served by community mental health centers.

All told, according to the state comptroller’s office, Illinois spent about $36.9 billion on Medicaid in the fiscal year that ended June 30. Illinois Department of Healthcare and Family Services Director Lizzie Whitehorn said about 62% of total state Medicaid spending comes from the federal government.

At issue was a budget resolution that recently passed the Republican-controlled U.S. House in Washington, which calls for deep cuts in federal spending. Part of that resolution calls on the U.S. House Committee on Energy and Commerce, which has jurisdiction over Medicaid, to cut $880 billion from the federal budget deficit over the next 10 years.

Because Medicaid makes up a large part of all the programs the Energy and Commerce Committee oversees, many have assumed that cuts of that size would have to include substantial cuts to Medicaid.

Democratic Reps. Anna Moeller, right, chair of the House Appropriations – Health and Human Services Committee, and Robin Gabel speak with reporters at a news conference following a hearing on the future of federal Medicaid funding. (Capitol News Illinois photo by Peter Hancock)

“There’s no way they can cut that much out of the federal budget without touching Medicaid, because Medicaid is such a substantial portion of the discretionary funds that they have access to,” Rep. Anna Moeller, D-Elgin, who chairs the legislative appropriations committee, said after the hearing.

Whitehorn noted that the expansion of Medicaid under the Affordable Care Act resulted in cutting the state’s uninsured rate in half and reducing the amount of uncompensated care delivered in Illinois by more than a third.

“Federal cuts would mean we have to limit services or eligibility,” she told the committee. “And we don’t have the money as a state to make up the difference.”

A.J. Wilhelmi, president and CEO of the Illinois Health and Hospital Association, described the list of proposals being considered in Washington as “both sweeping and shocking.” He said they include turning federal Medicaid spending into a block grant to states, establishing per capita caps on Medicaid benefits, and eliminating certain funding mechanisms, known as provider taxes, that are used to draw down additional federal matching funds to support the cost of operating hospitals.

“And make no mistake, there would be no hospital Medicaid program without hospital provider taxes,” he said.

Last month, Gov. JB Pritzker laid out a $55.2 billion budget proposal to the Democratic-controlled General Assembly to fund state government operations over the 2026 fiscal year, which begins July 1. In his budget address, however, he noted the uncertainty of various streams of federal funds that are used to help pay the cost of many state operations, including Medicaid.

Rep. Bob Morgan, D-Deerfield, who serves on the committee, said Wednesday that the decision about future federal Medicaid funding is in the hands of the Republican-controlled Congress. He urged GOP members of the General Assembly to use their influence to persuade the three Illinois Republicans in the U.S. House to vote against cutting Medicaid funding.

State Rep. William Hauter, R-Morton, accuses Democrats of staging a “performative” hearing about federal funding for Medicaid during a House budget committee hearing Wednesday, March 5, 2025. (Capitol News Illinois photo by Peter Hancock)

“So I’ll just close with my request to the minority spokesmen and the minority members of this committee to come back in a week to share with this entire committee those letters and those emails and those texts in discussion with us about the things they have done to make sure that the U.S. House of Representatives and the U.S. Senate and the president do not make these horrible, horrible, damaging, life-impacting cuts to our Medicaid system,” he said.

Republicans on the panel argued that the subject of federal budget negotiations was beyond the scope of the state legislative committee’s purview and suggested Wednesday’s hearing was more about partisan politics than solving the state’s budget issues.

“And so this, I think, is performative,” said Rep. William Hauter, R-Morton. “We don’t know what will happen. There’s a lot of things that we have no control over, budget negotiations going on at the national level.”

Moeller argued the hearing was more than a stage show, noting that Congress faces a March 14 deadline to pass a bill to renew federal spending authority or face a partial shutdown of the federal government.

“This hearing this morning is far more than performative,” she said. “We are going to be heading into our budget cycle, our budget making process, with huge uncertainty hanging over our heads. What happens on March 15, in the next few weeks, in Washington, D.C., will have a direct impact on the level of funding that we will have available for all of these important programs.”

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation. 

This article first appeared on Capitol News Illinois and is republished here under a Creative Commons license.