The federal government is awarding Illinois $193 million next year to support rural health care — money that’s part of the One Big Beautiful Bill Act, but not enough to make up for Medicaid cuts from the measure, state health leaders say.
Illinois asked the federal government for $200 million a year for each of the next five years in its application for the funds. The federal government instructed all states to apply for the same amount, according to the Illinois Department of Healthcare and Family Services. Illinois will receive $193 million each year for the next five years, according to the state department.
The federal Centers for Medicare & Medicaid Services announced the award amounts for each state Monday, noting that states are getting an average of $200 million in the first year of funding. The largest amount of $281 million is going to Texas, and the smallest amount of $147 million is for New Jersey.
The cash comes from a $50 billion pot of money set aside for rural health care as part of the One Big Beautiful Bill Act, which was signed into law in July. The fund was created amid concerns that rural hospitals, which often operate on thin margins and serve large numbers of patients on Medicaid, could be devastated by cuts to Medicaid funding within the big beautiful bill.
The Congressional Budget Office has estimated that the new law will reduce federal Medicaid spending by $911 billion over 10 years, according to an analysis by KFF, a nonprofit organization focused on health policy. The reductions are meant to help pay for tax cuts and enhanced border and national security, according to the Congressional Budget Office.
In a statement, the Illinois Department of Healthcare and Family Services said that Illinois’ 1.9 million rural residents face barriers to getting care and often have worse health outcomes as a result, with higher rates of conditions such as hypertension, diabetes and infant and maternal mortality. “This funding will be utilized to help bridge those existing gaps,” the department said in the statement.
The department, however, cautioned that, “While this funding will provide support to improve health care access in rural Illinois communities, it will be far from enough to counteract the cuts imposed to the Medicaid program through various provisions in the Trump administration’s budget bill.”
Margaret Vaughn, executive director of the Illinois Rural Health Association, said she’s grateful Illinois will receive the money, but also said it’s not enough to compensate for Medicaid cuts within the big beautiful bill.
“It’s still going to be very difficult for these people to stay afloat,” she said of the state’s rural health systems and hospitals.
Vaughn said she’ll be interested to see the specifics of where the money will go.
The money is meant to help expand care, support workers and promote regional collaboration, according to the federal government.
U.S. Department of Health and Human Services Secretary Robert F. Kennedy, Jr. called the funding an “historic investment” in a news release, saying it “puts local hospitals, clinics, and health workers in control of their communities’ health care.”
Award amounts to states were determined based on a formula, in which half of the money was distributed equally among states and the second half was based on other factors, including states’ willingness to adopt certain health care policy priorities of the Trump administration.
In its application for the funding, the Illinois Department of Healthcare and Family Services said it planned to use the money to incentivize partnerships between hospitals and other providers; increase the use of technology and mobile health services; and expand the state’s health care workforce. Illinois said it planned to invest the money in chronic disease prevention programs, hospital transformation grants, regional training and certification programs, and the expansion of community college programs, among other initiatives.
Nearly 500,000 people on Medicaid in Illinois live in rural areas, according to a letter sent by Gov. JB Pritzker to the federal government in support of Illinois’ application. Of Illinois’ 65 rural counties, 60 have shortages of primary care, 64 lack adequate mental health services and 57 have gaps in dental care, according to the governor’s letter.
“In response to looming federal cuts to Medicaid, Illinois policy makers estimate that over 270,000 residents could lose coverage, and rural Medicare/Medicaid funding reductions may total $6.36 billion — heightening the existential threat to already fragile rural providers,” Illinois wrote in its application for the money.
Illinois Health and Hospital Association President and CEO A.J. Wilhelmi said in a statement Monday that the association appreciates Illinois’ efforts to secure the federal dollars.
“The economic realities our rural hospitals are facing threaten access to health care services for millions of patients,” Wilhelmi said, adding that in recent years, many rural hospitals have had to cut services and, in some cases, close. “The financial pressures from skyrocketing prescription drug costs and the severe workforce shortages in rural Illinois necessitate that these important resources be distributed to hospitals as effectively and efficiently as possible to support the health care and jobs that our rural hospitals provide.”
The $50 billion fund nationally could offset about 37% of the estimated cuts to federal Medicaid spending in rural areas, according to KFF.