June 14,
2012
To the
Honorable Members
of the 97th
General Assembly,
Today, I sign Senate Bill 2194. Since I laid out this mission
to save Medicaid from collapse in my budget address and convened a legislative
working group to reduce the Medicaid liability by $2.7 billion, we have made
significant progress as a state. This package marks the first step in a
bi-partisan effort to save Medicaid and preserve the system for those who need
it most. It includes program changes, liability reductions, and new
revenue streams, and allows us to access federal matching dollars to achieve
that goal.
This bill
consists of three main parts: an increase in the price of cigarettes, an
enhanced hospital assessment, and a clarification of requirements for hospital
tax exemptions.
Raising the price of cigarettes is not only good fiscal policy, but good health
policy. This legislation will help an estimated 60,000 people quit
smoking, reduce Medicaid costs from smoking-related conditions and raise $700
million in revenue for Medicaid programs, half of which comes as
dollar-for-dollar matching funds from the federal government. The
enhanced hospital assessment will raise $480 million to support the health care
system in Illinois, plus $100 million to help pay Medicaid bills. The assessment program expires on December
31, 2014 and it is my strong expectation that all parties will work together in
the next year to begin implementing hospital rate reforms with all deliberate
speed and develop a plan to transition from static payments prior to that date.
Senate
Bill 2194 also sets standards on how non-profit hospitals may qualify for
continued property tax exemptions, and how investor-owned hospitals may qualify
for an income-tax credit, based on the provision of charitable care. Hospitals
have sought clarity on this issue, following the Illinois Supreme Court’s ruling
in the Provena Covenant Medical Center v. Dept. of Revenue case. I
encouraged a legislative solution that would uphold the Illinois Constitution,
preserve the integrity of our state’s tax code and continue to incent hospitals
to provide charity care to those in need.
The
Illinois Constitution is clear that property tax exemptions may be granted only
to property that is “used exclusively for charitable purposes.” Senate
Bill 2194 provides a standard for charity care and allows hospitals to count a
variety of activities and expenses toward this threshold beyond direct
provision of care. The real test will be in how these provisions, in combination
with SB 3162, are implemented in Illinois hospitals and what Illinois hospitals
do, going forward, to help the people most in need. It is my hope that
together, SB 2194 and SB 3162, result in more charity care being provided to
the uninsured in our state.
Sincerely,
PAT QUINN
Governor