Why It Matters
Illinois lawmakers are advancing legislation that would redirect private insurance funds into a new state-administered grant program to pay for abortions for residents with little or no insurance coverage. The proposal expands Illinois’ already broad government involvement in abortion funding and could place the state in direct conflict with federal regulatory guidance, raising significant legal and compliance concerns for insurers operating in Illinois.
The bill is an initiative from Gov. JB Pritzker’s office, signaling the Democratic administration’s continued push to expand abortion access in the state, even as federal regulators have flagged similar approaches in other states as potentially exceeding what the law permits.
What Happened
House Bill 5408, sponsored by Rep. Anna Moeller, D-Elgin, would establish a new Abortion Access Fund administered by the Illinois Department of Public Health. The fund would collect money that insurance companies are already required to set aside under the Affordable Care Act for abortion coverage beyond cases of rape, incest, or life-threatening circumstances.
Under current federal law, insurers offering abortion coverage beyond those narrow exceptions must collect at least $1 per month from enrollees and hold those funds in a separate account used exclusively for abortion claims. The Illinois bill would require insurers to report balances in those accounts to the Department of Insurance and transfer remaining funds into the newly created state grant program.
The Illinois Department of Public Health would then distribute those funds as grants to abortion providers to cover the cost of procedures for uninsured or underinsured individuals. The bill passed the House Human Services Committee on March 25 along a strict partisan vote of 8-4 and was placed on the House calendar for a second reading.
By the Numbers
- $1/month minimum — the federally required per-enrollee contribution insurers must collect for abortion coverage under ACA plans that go beyond the standard exceptions
- $25 million — the amount insurers had collected under Maryland’s similar law when it was expanded in 2025
- $2.5 million annually — the maximum Maryland’s health department allocates from its equivalent fund each year
- $100 million+ — analysts’ estimated total collected under California’s comparable program, though actual figures have not been publicly reported
- 87,210 abortions — the most recent figure from the Guttmacher Institute for abortions performed in Illinois
Zoom Out
Illinois is not alone in pursuing this approach. Similar legislation has already passed in California and Maryland, with comparable measures under consideration in Massachusetts and Washington State. The model attempts to leverage an under-utilized ACA provision to redirect privately collected insurance funds toward state-managed abortion grant programs.
However, the approach carries real legal risk. In December 2025, the Centers for Medicare & Medicaid Services issued guidance warning that state efforts to redirect these segregated funds “exceed the permissible uses” under Section 1303 of the ACA. Health policy attorneys dispute that interpretation, but the regulatory uncertainty creates operational challenges for insurers.
The Illinois Life & Health Insurance Council has formally opposed the bill. Policy and advocacy director Kate Morthland said in a statement that the measure “mirrors the Maryland approach, which federal regulators have already warned exceeds permissible uses,” adding that it creates “legal and operational uncertainty” and is “not workable for the industry in its current form.”
Illinois has positioned itself as a destination for abortion services since the U.S. Supreme Court’s 2022 overturn of Roe v. Wade, enacting multiple protections and increasing state support for abortion providers. Gov. Pritzker’s administration has repeatedly clashed with other levels of government over fiscal and regulatory authority, and this bill continues that pattern — this time in direct tension with federal guidance on insurance fund management.
Illinois already mandates coverage of abortion services through state Medicaid, ACA marketplace plans, and private insurance — making it one of the most expansive abortion-funding environments in the country. This bill represents a further step toward using government machinery to subsidize abortion procedures for those who fall outside existing coverage systems.
What’s Next
HB 5408 now awaits a second reading on the full House floor. If it advances through the chamber and passes the Illinois Senate, it would head to Gov. Pritzker’s desk — where it is widely expected to be signed, given the bill originated from his office. The Illinois Department of Insurance has declined to estimate how much money has accumulated in the relevant segregated accounts, meaning the full financial scope of the grant program remains unclear. Legal challenges from the insurance industry or federal regulators remain a significant possibility if the bill becomes law.