The Congressional Budget Office (CBO) has released preliminary cost estimates showing that the Republican budget reconciliation plan would significantly reduce federal Medicaid support and increase costs for states.
Over the nine-year period from 2026 to 2034, federal Medicaid funding would drop by $698 billion, which could mean Illinois loses about $24.4 billion — or $2.7 billion annually, based on its 3.5 percent share of national funding. The plan is also projected to result in $78 billion in additional state costs nationwide, which would translate to $2.73 billion for Illinois, or roughly $303 million more per year. The CBO has also estimated that around 490,000 Illinois residents would lose Medicaid coverage under the proposal.
According to an analysis published by the National Association of Counties (NACo) on May 14, 2025, the budget proposal impacts Medicaid for counties in the following ways:
Cuts to Medicaid Disproportionate Share Hospital (DSH) payments are delayed until 2029, preserving a key funding source for county-supported hospitals serving low-income populations. (House Energy & Commerce Committee)
Beginning in 2029, new Medicaid work requirements on able-bodied adults could increase administrative burdens and reduce access to care for vulnerable county residents. (House Energy & Commerce Committee)
The bill imposes new out-of-pocket costs on low-income Medicaid enrollees, likely increasing uncompensated care in county hospitals and clinics. (House Energy & Commerce Committee)
The bill reduces the federal Medicaid match for certain states covering undocumented immigrants, potentially shifting costs to counties in those states. (House Energy & Commerce Committee)
ISACo will continue to monitor the federal budget process to keep counties informed of new development.