Comptroller Dan Hynes today urged the federal government to immediately increase Medicaid funding to Illinois and the rest of the nation. The result, he said, would be timelier payments to cash-strapped service providers, which would lead to greater access to health care for the poor.

In a letter to Senator Richard Durbin and Senator Barack Obama, Hynes said reduced tax revenues and tightened credit markets caused by the current financial crisis are severely undermining Illinois' ability to administer its Medicaid program. "As cash flow decreases and government payment delays increase, credit markets have severely impacted providers of vital services such as Medicaid," Hynes said. "With increasing frequency, providers are finding their own credit lines frozen or reduced at a time when the demand for such services and their cost is expanding. This unfortunate phenomenon is placing the health care and social service infrastructure of the states, and the means of implementation for many federal programs, in jeopardy."

Hynes is currently hosting statewide meetings on the state's broken health care system, focusing on the lack of access to health and dental care for Medicaid recipients. "We are being told over and over in these meetings by our own citizens that doctors won't treat them because the state is so slow to pay. It's a disgrace that has to stop."

In his letter to Durbin, Hynes made two recommendations:

• Increase the percentage of Medicaid costs reimbursable to the states by the federal government, as it did for a year in 2003. A similar program in 2008 would give Illinois an estimated $240 million in additional funding over four quarters of Medicaid spending, or up to $300 million over five quarters. Each percentage point increase over the current 50% would generate $80 million in additional federal revenues for Illinois based on current appropriations.
• accelerate the states' anticipated federal Medicaid reimbursement for the remainder of FY 2009 through a single advance payment to provide cash liquidity to state governments. Currently a state is reimbursed for Medicaid outlays only after it pays for those costs. Illinois is anticipating over $2 billion in additional federal revenues for its General Revenue Fund Medicaid expenditures for the remainder of FY 2009. By advancing this sum to Illinois, the federal government would provide instant liquidity to the state's General Revenue Fund and ease bill backlogs that now exceed 45 business days and will only increase over the next four to five months.

Hynes said that by accelerating federal revenues, Illinois would be relieved from having to borrow for short-term cash flow purposes. Assuming credit was even available, borrowing $2 billion dollars could cost the state in excess of $50 million in interest on the short term market. "This action would stabilize Illinois' finances in the short-term, prevent reductions in Medicaid and other social service levels, and avert potential closures of vital facilities. It would also benefit all other categories of Illinois payees including school districts, higher education, and local governments currently affected by the state's weakened fiscal condition," Hynes said in the letter.

"As Illinois' Chief Financial Officer, I urge you to take whatever steps possible to enact these concepts into law and provide Illinois and other state governments with the resources needed to sustain critical programs that benefit citizens across the United States," Hynes concluded. "I am confident all state governments would support the actions I am proposing. While the overall costs to the federal government would be relatively contained, the positive impact on the states and their populations would be enormous.