Illinois reform plan hits funding snags

The governor's proposal would extend health coverage to nearly all uninsured adults in the state, but the tax to pay for it has attracted strong opposition.

By Doug Trapp, AMNews staff. May 28, 2007.

Washington -- The future of one of the most ambitious state health reform plans offered this year is unclear because of disagreement over financing.

Illinois Gov. Rod Blagojevich's initiative, Illinois Covered, would create a three-level health insurance program. It would consist of a state-defined but privately run pool of health plans for workers without insurance access, a program to subsidize employer-sponsored health insurance bought by employees, and subsidized insurance for people earning less than the federal poverty level.

The proposal would provide access to affordable insurance for the state's 1.4 million uninsured, according to the governor's office.

However, the $3.1 billion proposal needs $2 billion in state general revenues. Blagojevich proposed this funding come from his $7 billion gross receipts tax plan, which he unveiled in March. It would levy a 1% tax on goods, retail and manufacturing and a 2% tax on services. Businesses with less than $2 million in revenues and nonprofits would be exempt.

Two Senate committees approved the tax bill, but the business community railed against it, labeling it the state's biggest tax increase ever. The Illinois State Medical Society is concerned about the proposal's potential effect on physician practices, said President Rodney C. Osborn, MD. It wasn't immediately clear how many practices would pay the tax, he said, but many physicians expressed concern at a recent ISMS meeting.