1 In 5 Americans Would Lose Healthcare

Safety Net Hospitals are almost entirely reliant on Medicaid funding to sustain their operations. The rising cost of healthcare, coupled with a significant increase in charity care and stagnant reimbursement rates, has left these institutions on the brink of financial collapse. In many cases, some hospitals are only able to make payroll thanks to temporary advances from the Department of Healthcare and Family Services (HFS). Without these advances, many safety-net hospitals would be forced to close their doors, leaving vulnerable communities without essential care. 

HFS has submitted a "Pre-Print" to the Federal Centers for Medicaid and Medicare Services (CMS) to increase the Illinois Hospital Assessment Program (HAP) by nearly $2 billion annually. This program levies a tax on hospitals, which is then used to leverage a federal Medicaid match and redistribute the enhanced funds to hospitals. Provider taxes like the Illinois HAP are a critical source of funding for hospitals across the country, and while the Trump Administration and some Congressional budgeteers have targeted these taxes, they remain vital for the survival of many hospitals. We are hopeful that Congress will not cut these payments and that hospitals will receive the desperately needed increase later this spring, pending federal approval. 

In 2024, the Illinois General Assembly enacted a long-awaited 10% rate increase for Medicaid expenditures to hospitals— the first such increase in nearly 20 years. Unfortunately, due to rate     right-sizing within HFS, this increase was only implemented for a single year, and it has now been eliminated. Moreover, hospital charity care has surged by 300% over the past two years, driven by a variety of post-COVID factors. This has put an immense strain on an already fragile financial landscape, further exacerbating the challenges faced by Safety Net Hospitals. 

Safety Net Hospitals need equitable funding that allows these hospitals to not only survive but thrive. Without the ability to invest in equipment, technology, and staffing to meet the growing needs of our communities, the health disparities between areas like the Gold Coast and Austin—just a short drive apart—will continue to widen. The life expectancy difference between these two communities is 16 years. This stark contrast highlights the urgent need for more sustainable financial support for hospitals serving these at-risk populations. We are urgently requesting a 20% Medicaid rate increase for safety-net hospitals, so we can finally be compensated at a rate that reflects the true cost of care. 

Additionally, we require a state budget for FY 2026 that maintains or increases the current level of grant funding for safety-net hospitals. These grants are critical for our survival, as they help us make it through each fiscal year. Any reductions could have catastrophic consequences for individual hospitals and the communities they serve. The time for action is now. Without these critical funding increases, the future of Safety Net Hospitals—and the communities that rely on them—is at risk. We urge the state to invest in these hospitals, ensuring they can continue to provide care, jobs, and economic stability for the most vulnerable residents of Illinois. functional.