As President Donald Trump’s temporary freeze on federal funding to state and local governments seeded disruption and panic throughout the country Tuesday, state officials reported that Medicaid funding in Illinois had shut down.
Trump’s administration announced the pause in federal grants, loans and other financial assistance as they embarked on a sweeping review of spending — a measure aimed at “ending ‘wokeness’ and the weaponization of government,” according to a memo from Matthew Vaeth, acting director of the Office of Management and Budget.
The funding freeze could affect trillions of dollars and cause widespread disruption in health care research, education programs and other initiatives. Grants that have been awarded but not spent are also halted, according to the Associated Press.
Democratic attorneys general from five states on Tuesday said they planned to file a lawsuit to challenge the funding freeze. New York Attorney General Letitia James said at least 20 states reported being frozen out of their Medicaid reimbursement systems, including New York and Illinois. U.S. Sen. Ron Wyden, D-Oregon, said that his Medicaid staff “confirmed reports that Medicaid portals are down in all 50 states.”
Though Medicare and Social Security would not be affected by the freeze, White House officials initially would not commit to also shielding Medicaid from the administration’s move. “I’ll check back on that,” White House Press Secretary Karoline Leavitt said at a briefing Tuesday. Later, the White House stated that Medicaid would not be affected by the freeze, the Associated Press reported.
Nevertheless, state agencies started reporting to Gov. JB Pritzker’s office Tuesday morning issues with accessing federal funding sites and disbursement systems, including Medicaid systems, the governor’s office said. Pritzker has been in communication with the state’s federal delegation, local elected officials, nonprofits and other governors about the matter.
By mid-afternoon, Leavitt had tweeted on X, “The White House is aware of the Medicaid website portal outage. We have confirmed no payments have been affected — they are still being processed and sent. We expect the portal will be back online shortly.”
Millions in Illinois rely on Medicaid
Nearly 4 million lower-income Illinoisans had their health care covered in 2023 by Medicaid, a system in which the federal government reimburses the state about half of every dollar in medical costs.
Roughly a quarter of the state population is eligible for Medicaid coverage, including many children, pregnant women and people with disabilities.
Illinois Comptroller Susana Mendoza said the state processed all $518 million in Medicaid bills last week and received its federal match on Monday, before the Trump administration apparently shut down access to the system. “However, I am very concerned about how long this ‘freeze’ may last,” Mendoza said in a statement.
In the federal memo, Vaeth wrote: “The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.”
Vaeth said each agency must complete a comprehensive analysis of all federal financial assistance programs.
“In the interim, to the extent permissible under applicable law, Federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders.”
Illinois Attorney General Kwame Raoul
Anthony Vazquez / Sun-Times
Illinois Attorney General Kwame Raoul joined James, and the attorneys general from California, Massachusetts, New Jersey, and Rhode Island, in vowing to “collectively fight this unconstitutional mandate.”
“This unconstitutional pause in funding will have a devastating impact on the public safety, prosperity and quality of life of all,” Raoul said. “Democrats and Republicans alike will be negatively impacted by this pause in funding.”
Raoul outlined some of the programs that will be impacted by the freeze, including the Internet Crimes Against Children Task Force, which goes after child predators; law enforcement programs; veterans’ support groups; Head Start and child care programs; university research; support for farmers and infrastructure investments.
“On January 20th, our nation had a peaceful transfer of power. But let’s be clear, January 20th was an inauguration, not a coronation,” Raoul said. “Congress is given the power to appropriate the funding. The executive branch cannot unilaterally disregard those appropriations passed by a separate and equal house of government.”
Impact on Chicago
Mayor Brandon Johnson questioned Trump’s authority to withhold funding appropriated by Congress, even temporarily.
“These are unprecedented attempts to defund child care or to defund infrastructure projects,” Johnson said at a City Hall news conference. “This is something that is well outside the purview of the executive office.”
Chicago Mayor Brandon Johnson.
Ashlee Rezin/Sun-Times file
Johnson said U.S. Sens. Dick Durbin and Tammy Duckworth, both Illinois Democrats, assured him that “they are going to continue to fight on behalf of the residents of Chicago.
Corporation Counsel Mary Richardson-Lowry said she is analyzing what impact the freeze would have on the city’s $17.1 billion budget and on “any existing projects and initiatives.”
The potential impact of even a temporary freeze could be staggering. Budget Director Annette Guzman said an analysis of all federal grant funding received by the city last year, as well as future appropriations enacted by Congress, showed that roughly $4 billion hangs in the balance. That figure represents total grant funding to Chicago; if Trump’s action is allowed to stand, some portion of that amount could be withheld.
“We don’t know the full implications of what OMB’s actions will mean and we don’t know what potentially Congress will do based on the letter that came out,” Guzman said.
“We have large grants in infrastructure. We have grants from a lot of departments on the federal level,” Guzman said. “There’s varying degrees of what we think could be impacted based on pronouncements from the Trump administration both before coming into office as well as since they’ve taken office.”
Johnson urged city employees and agencies not to hit the panic button just yet.
“I just want to underscore as I’ve spoken with our senators — we’re not entirely sure if he’s working within the framework of his authority,” the mayor said.
Durbin called the freeze unconstitutional and “above all else, it’s inhumane.”
“Every American relies on federal funding — from public safety, disaster relief, medical research funding, and small business loans to Head Start and child care programs, veterans care, nutrition assistance, food inspections, and so much more,” Durbin said in a statement. “Denying critical funding for our families will not make America great.”
Cuts to research, violence prevention and more
While Chicago area officials grappled with what the federal funding freeze might mean, researchers at the University of Chicago were already being directed to rein in any work that relies on dollars from Washington.
In a memo, University of Chicago Provost Katherine Baicker told faculty to not to “purchase new supplies or equipment, start new experiments, embark on funded travel, etc.”
“This is not a request that I make lightly. The research enterprise is at the core of our University’s mission and is of profound importance to the daily work of our faculty, researchers, staff, and students. I also know that this is insufficient guidance and that you must have many questions (as do I),” Baicker wrote.
“I wish that I had more information to share now, but will continue to be in touch as we learn more. But we must for now proceed under the assumption that grant expenditures incurred after today while this memorandum is in effect may not be covered by federal funding.”
The University of Chicago
Community activists also sounded the alarm on federal dollars being cut off for violence prevention programs.
“We must stand up and resist this fascism that is taking over our country. And we must do it now,” said South Side pastor Rev. Michael Pfleger.
Ald. Scott Waguespack, (32nd), who chaired the City Council’s Finance Committee before being deposed by Johnson, was among those warning top mayoral aides during budget hearings that they had “better be prepared for major cuts or shifts” in federal spending under Trump.
Waguespack said the Johnson administration should be “cautious about spending any federal dollars” going forward until the legality of Trump’s federal funding pause is determined.
“I would think that every mayor, every village mayor around Illinois, not to mention the whole U.S.,” Waguespack said, “is looking at their budget this morning wondering how they’re going to make ends meet if even a small portion is withheld.”
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