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Illinois Gov. JB Pritzker’s budget proposal would erase $1 billion in medical debt

Illinois Gov. JB Pritzker, flanked by SIUE Chancellor James Minor and Assistant House Leader Rep. Jay Hoffman (D-Belleville) on Thursday, April 6, 2023, during a press conference at Southern Illinois University Edwardsville in Edwardsville.
Brian Munoz
St. Louis Public Radio
Illinois Gov. JB Pritzker, flanked by Southern Illinois University Edwardsville Chancellor James Minor and Assistant Illinois House Leader Rep. Jay Hoffman, D-Swansea, last April during a press conference at the university's campus in Edwardsville. Pritzker will ask the legislature for $10 million in the next fiscal year to erase $1 billion in medical debt for Illinois residents.

Following Cook County’s lead, Gov. J.B. Pritzker will propose investing $10 million of federal funds in his budget to erase more than $1 billion in medical debt for Illinois residents.

It’s a formula being proposed in New York City, New Jersey, Connecticut and other counties and cities across the country. But Cook County in 2022 became the first local government in the nation to enact the program.

Cook County Board President Toni Preckwinkle created the Cook County Medical Debt Relief Initiative with funding from the American Rescue Plan Act — using $12 million in federal funds with the potential of erasing up to $1 billion in medical debt in Cook County. And others are taking notice.

Pritzker will include the $10 million ask in his budget proposal for the next fiscal year — and the investment would mark the first year in a multi-year plan, the governor said in an interview with the Sun-Times on Tuesday.

“This first tranche of this for FY [fiscal year] 25 will remove the medical debt for 364,000 people. That’s just the first year of a multi-year plan and it’s a $1 billion of the $3 billion that remains outside of Cook County. So the first year — again $1 billion, 364,000 people will have this cloud removed.”

The Democratic governor said he reached out to Preckwinkle when she first announced the program. Then he called his team and said, “We should do this.” Pritzker also called Preckwinkle recently to let her know he planned to take the idea statewide.

“This is removing a burden that people live with for sometimes many years. And frankly, the debt holders also know that it will likely never be paid off. But it sits there like a dark cloud over someone’s life,” Pritzker said. “And we should remove that.”

The state plans to partner with RIP Medical Debt, the same nonprofit used in the Cook County program and in municipalities across the country. The group contacts hospitals and health systems and negotiates the sale or donation of portfolios of medical debt, which ultimately allows the nonprofit to cancel debts for those who qualify based on financial hardship.

The nonprofit uses private donations to buy up and pay off healthcare debt either from secondary markets or directly from hospitals. For every $1 dollar donated, $100 of medical debt can be erased.

The group works to self-identify those who qualify. In Cook County, those who have incomes up to four times the current federal poverty level, or who have a medical debt that is 5% or more of their annual income are included. The same guidelines would be used for a statewide program.

Of the nearly two million Illinois residents with medical debt in collection, 1.75 million are low-income, according to the governor’s office. The total amount of medical debt that can be acquired from those 1.75 million low-income residents is $4 billion — with 25% in Cook County.

According to the nonprofit, medical debt is the leading cause of bankruptcy in the U.S. and collection agencies held $195 billion in unpaid medical debts in 2020.

Cook County has so far abolished over $348 million in medical debt to date, benefiting over 200,000 Cook County residents since the program was launched, according to Preckwinkle's office.

Pritzker will deliver his sixth budget and State of the State address at the Illinois State Capitol on Wednesday. And forecasters in the Governor’s Office of Management and Budget in November predicted the state would be on pace for a projected shortfall of $900 million. The same report, however, predicted a $1.4 billion surplus.

The governor last week said he plans to include $182 million in his budget to help the ongoing migrant crisis. He will also include funding for Smart Start, a multi-year program he created last year to add 5,000 new slots and expand access to early childhood education.

According to sources with knowledge of budget negotiations, the governor’s budget proposal will include a tax increase on sports betting revenues collected by sportsbooks. That is likely to draw opposition from lobbyists for an industry that raked in more than $1 billion statewide in 2023, generating $150 million in state tax revenue, according to Illinois Gaming Board records.

The Chicago Sun-Times' Mitchell Armentrout contributed to this report.

Tina Sfondeles is the chief political reporter, covering all levels of government and politics with a special focus on the Illinois General Assembly, Gov. J.B. Pritzker’s administration and statewide and federal elections.