Hospital Tax Awaits Signing

A supplemental budget appropriation that allows Illinois to collect a hospital assessment tax and distribute it along with additional federal Medicaid proceeds is awaiting Gov. Rod Blagojevich’s signature.

The General Assembly last week gave final approval to the measure, which was sponsored by Sen. Jeff Schoenberg, D-Evanston, and House Majority Leader Barbara Flynn Currie, D-Chicago. The supplemental budget item allows the state to collect the taxes on hospitals in the third and final year of the existing hospital assessment plan. Hospitals will receive a total of $1.2 billion under the final year of the program.

The fiscal 2008 budget had contained an appropriation, but a delay in the state’s distribution of the second year funds forced officials to tap the fiscal 2008 appropriation late last year. Once completed, the plan will have leveraged an additional $1.8 billion in federal funds. A predecessor one-year program leveraged another $430 million. 

“This spending plan will bring immediate relief to many hospitals in need throughout the state, especially 'safety-net’ hospitals serving poorer communities, teaching hospitals, and rural hospitals,” Schoenberg said.

The Senate has held three public hearings on a revised program to replace the expiring one. Only the 62 hospitals in Cook County would pay the assessment based on patient volume. The tax would raise about $730 million, with the expectation that it would leverage nearly $600 million in federal matching funds. Much of the overall pot would then go to hospitals across the state, although Cook County hospitals — especially those with the largest Medicaid volumes — would receive the largest share.

The Federal Centers for Medicare and Medicaid Services must approve it also. The current assessment tax on not-for-profit hospitals is imposed statewide and distributed statewide. The state also keeps a portion to fund health-related services.

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