Medicaid helps millions of low-income children and their families receive health care, serving as a backstop for those who have lost employment-based health care coverage and providing access to health services to those who cannot afford private insurance. During these times of state budgets in the red and growing unemployment, the Medicaid program is facing more pressure than ever.

As Congress develops and debates an economic recovery plan, it’s important that we also ensure coverage for the recently unemployed and their families, as well as assist the providers that serve them. That’s why we support a temporary expansion of Medicaid and SCHIP waivers through an expedited waiver process. This expansion would mirror what was established on the Gulf coast following Hurricane Katrina.

For example, 100 percent federally financed waivers administered through the Medicaid and SCHIP programs could be established to extend temporary coverage for the newly uninsured. Uncompensated care pools could also be established to help providers cover the cost of furnishing services to the uninsured who do not qualify for Medicaid or SCHIP. Funding could be provided through an enhanced federal matching rate.

In addition to waivers, the federal government could also subsidize a portion of the health benefits available through the Consolidated Omnibus Budget Reconciliation Act (COBRA). This would allow the newly uninsured worker to remain in their current health plan while providing financial assistance to help pay for insurance premiums.

Hospitals also support a temporary increase to the Federal Medical Assistance Percentage (FMAP) that would allow states to use these funds to support their Medicaid programs. As the recession grows, so does the demand for Medicaid services, forcing states to manage increases in enrollment at a time when budgets are stretched thin. With states under incredible funding pressures, many have targeted their Medicaid programs in search of savings through provider payment freezes or reductions, as well as through benefits and eligibility changes.

Moving forward, an extension of the moratoria on six Medicaid regulations and a temporary increase in federal Medicaid disproportionate share hospital (DSH) allotments would provide direct operating relief to hospitals.

It’s critical that we strengthen and protect the already tenuous foundation of our health care safety net and make certain providers are able to continue serving our most vulnerable patients. America’s hospitals remain committed to meeting the health care needs of our nation and look forward to helping shape a Medicaid program that is more efficient, effective and works better for everyone.

The financial situation for our families, our communities, and our states is dire. The Center on Budget and Policy Priorities estimates that states face a collective deficit of $350 billion over the next 30 months. Each week, communities are being devastated by major layoffs, and families are struggling to pay mortgages and other bills after the loss of a paycheck. Few people can afford to continue to pay for their health care coverage under these circumstances, and states aren’t in a financial position to provide much help.

That’s why provisions in the economic recovery act that would allow states to cover newly unemployed workers under Medicaid are so important. And from there, we need to quickly tackle the larger problems in our health care system – because there can be no economic security for America’s workers if we don’t fix health care.

If we want to get coverage quickly to the growing ranks of unemployed, expanding Medicaid makes sense. It already provides a full range of health benefits to millions of Americans efficiently and effectively. A paper published in the June issue of Health Affairs concluded that total medical spending is much lower when coverage is provided by Medicaid and SCHIP than by private insurance.

States already set their own levels of eligibility – for example, in Alabama it’s 11% of the federal poverty level for jobless parents, while in Maine, New Jersey and West Virginia it’s 200%. Recent reforms have changed eligibility levels in many states, so it’s clearly not difficult to adjust them when needed. Encouraging states to expand Medicaid eligibility for the unemployed through full federal funding need not present logistical or administrative difficulties.

What’s more, health care providers are already familiar with Medicaid, so expanding it would be better than building a new system with new forms, policies, and rules. Clinics and hospitals can work with states and counties to help unemployed patients enroll at the point of care. Without Medicaid to fill in the growing holes in the safety net, hospitals and clinics will be faced with their own mounting “bad debt,” and families will put off needed medical care.

Medicaid also doesn’t consider preexisting conditions, unlike private insurers in the individual market that “cherry pick” only the healthiest patients.

Overall, Medicaid offers real care with low out-of-pocket costs, unlike many health insurance products. Too often, coverage in the individual market means bare-bones coverage – policies that don’t pay for hospital visits and even skimp on primary care.

Extending Medicaid to the newly unemployed, more low-income people and food stamp recipients would ensure they won’t have to worry about not being covered on top of the many other stresses they face in our faltering economy. Overall, we can’t fix our economy without fixing health care. A good start is getting coverage quickly to those who need it and can’t get it now.

The study cited by Ms. Turner allegedly proving that public health insurance plans have 25% overhead was put out by the Manhattan Institute, a conservative think tank who's focus is "promoting free-market principles." (from SourceWatch) It's hardly surprising that an organization with such a mission would publish a study criticizing publicly run health care programs like Medicare and Medicaid.

In contrast, I've cited reports from the Government Accountability Office, a decidedly less biased source.

In addition, the states are not the only ones responsible for policing Medicare and Medicaid fraud. For example, the Medicaid Integrity Program adopted in 2005 allocated substantial federal resources towards fighting fraud - $75 million per year and 100 staff positions. Medicare has a similar, though much larger, program. (More from the Kaiser Family Foundation [pdf])

Do these programs prevent all fraud? No. Is more investment and vigilance required? Absolutely. But the fact remains, even with fraud factored in, public insurance plans like Medicare and Medicaid are still more efficient than private insurance. Because these programs are more efficient and because they provide critical aid to families who need it most - those with low income or who have recently lost their jobs, they deserve federal money now, with no delay.

Former RAND researcher Benjamin Zycher, in a study published by the Manhattan Institute, finds that administrative costs for public health plans would actually be 25% if all costs were properly measured, disputing Jason Rosenbaum’s claim that Medicare and Medicaid have lower administrative costs than the private insurance industry.

And it is the fee-for-service parts of these public programs, not the privately managed care plans, that are an open invitation to fraud, as The New York Times discovered in its in-depth study of Medicaid fraud in New York.

Private plans invest in fraud detection to make sure that premium dollars are being spent for actual medical care. But this requires investments, which the Office of Inspector General at HHS and GAO says government plans do poorly if at all.

And back to the specific issue at hand, the states are responsible for policing fraud in Medicaid. With 100% of the premiums paid by the federal government for this new program for the unemployed, there is little if any incentive for the states to make sure these taxpayer dollars are being spent wisely and carefully.

In response to Ms. Turner's concern about Medicare and Medicaid fraud, I think it's important to point out that both Medicare and Medicaid have lower administrative costs than the private insurance industry, even when those private programs are run through Medicare Advantage, and that the private insurance industry has their own problems with fraud and waste, only they are usually skimming off working America's purchased benefits and using that money to line their own pockets.

Here's a sampling of some recent trouble the insurance industry has run into:

• Aetna agrees to pay $5 million to reimburse students who were shortchanged on reimbursements.
• United Health Group agrees to pay $50 million after it is accused of overcharging millions.

With regard to Medicare and Medicaid fraud, a lot of this waste comes from private insurers who work with Medicare and Medicaid skirting morality or breaking the law to reap larger profits. Another sampling:

• Insurance companies involved in the Medicare prescription drug benefit have overcharged subscribers and taxpayers by several billion dollars.
• Survey Reveals that Doctors Feel Pressured By Health Insurers to Alter Treatment of Patients

I'll be the first to say fraud and waste should be eliminated, from both public and private health insurance programs. But given their lower administrative costs, even with some fraud, Medicare and Medicaid are still good investments.

And as Mr. Aaron so eloquently said, now is not the time to quibble. For every American that loses their job, on average at least one other person - a spouse or child - loses their coverage as well. Expanding Medicaid coverage is exactly what economic recovery is supposed to be about, helping people get back on their feet while times are hard.

Once the President and Congress have acted to turn the economy around, then we can all get to work on the bigger picture, providing quality, affordable health care for all.

Expanding and strengthening Medicaid is an important strategy to not only avoid an increase in the uninsured during this economic crisis, but ultimately reduce the number of Americans without coverage. While there have been declines in employer-based coverage, Medicaid has already been there to cover some of the lowest-income families. The most recent Census Bureau report shows that the number of uninsured individuals fell to 45.7 million in 2007 from 47 million in 2006; however, the decline was exactly equal to the growth in coverage under Medicaid. The program is truly the workhorse of our insurance system, covering low-income people with HIV/AIDS, the homeless, those with serious mental illnesses, and children with developmental disabilities.

Expanding Medicaid coverage to the unemployed and their dependents will provide an important source of insurance for laid-off workers who can not afford or are not eligible for COBRA. According to a recent Commonwealth Fund report, only 9 percent of unemployed workers have COBRA coverage, an alarming yet predictable proportion given the prohibitively high premiums seen under the program. Offering Medicaid without income or asset provisions to those eligible for unemployment compensation will provide a measure of relief and reduce the administrative costs of implementation. By withholding a modest premium from compensation checks, policymakers would ensure that the coverage is targeted to those without other sources of insurance (e.g., from a spouse's employer).

To strengthen the program for the long term, Medicaid should be redesigned as a health insurance system that provides stable, accessible coverage for American families. Nearly all—95 percent—of health care opinion leaders who participated in a recent Commonwealth Fund/Modern Healthcare survey favor simplifying Medicaid's eligibility and reenrollment rules to improve continuity of coverage. For example, electronic insurance clearinghouses could be created to facilitate enrollment of eligible individuals. In addition, low-income individuals should be able to stay on the program as their circumstances change, with premiums assessed as incomes rise. Eighty-five percent of opinion leaders support federal funding to expand coverage to all uninsured below 150 percent of the federal poverty level.

With low administrative costs and a track record of providing access to needed health care for those who are the most difficult to serve, Medicaid provides an important foundation on which we can build more wide-ranging reform in the future. Strengthening public programs within a mixed private–public system of affordable coverage is a crucial strategy for achieving needed savings and ensuring access to care for all.

Medicaid is a vital health care safety net and has been incredibly successful in that mission. Over the years, however, Medicaid has been stretched thin to the point of breaking by being asked to fill in the gaps that continually appear in our health care system State budgets (even in relatively healthy economies) struggle to sustain Medicaid’s increasing role as the only payer of long term care and the primary source of care for people with disabilities. Adding more responsibilities, whether long term or short term, further stretches this safety net, endangering everyone currently protected by it.

In the current economic recovery discussions, Congressional leaders are wisely working on multiple solutions for the unemployed and uninsured. While an automatic expansion of Medicaid is difficult to support, several changes were made to improve the provision, including making it a state option, and fully funding the coverage (including administrative costs) with 100% federal financing. States will still be faced with a difficult choice, because onthe one hand, 100% federal financing in this economic climate will be difficult to ignore, but at the same time, the program will be time limited, and states will soon be faced with the difficult political decision of ending the program entirely, or being forced to switch its financing to 100% STATE funding. In either event, taking up this option raises two concerns. First it will add more covered lived onto the Medicaid rolls, hastening the arrival of the moment in which Medicaid will need massive financial infusions in order to sustain reimbursement rates. Second, for many governors, it will raise significant concerns about the future of Medicaid or any public program in the provision of health care.

While not everyone who is unemployed is eligible for COBRA, for those who are, it makes much more sense to find a way to subsidize them so they can remain in their existing plan. Doing this meets two key policy goals: first, it keeps individuals in their existing health care plan, with their existing network of providers and in a care framework that they already understand; second, it keeps them in private sector coverage, which means that those providers are being reimbursed at higher rates, causing less stress on the health care system as a whole. For this reason, it likely makes sense to add another Medicaid option – the option to use the 100% federal financing to subsidize COBRA or other private sector options for coverage.

Inevitably, this issue leads us away from a conversation about economic recovery to one about fundamental health care reform.

It’s times like these that show us just how important our nation’s safety net is, and just how many holes are in it. As research tells us, and state experience is reinforcing, for every one percent increase in unemployment, the number of uninsured increases by 1.1 percent, and an additional 1 million people turn to Medicaid and the Children’s Health Insurance Program (CHIP) for assistance. For families with children, Medicaid and CHIP are critically important programs that provide access to good health care for children.

But while children in most states can get Medicaid or CHIP if they live in families that earn up to twice the federal poverty level ($44,100 in annual income for a family of four), coverage for parents is meager by comparison: In 34 states, parents can’t get into Medicaid even if their incomes are equal to the federal poverty level. And federal law prohibits states from covering adults without children in Medicaid unless they are elderly or have severe disabilities, no matter how little they earn.

The provision in the House economic recovery package that would allow states to establish temporary Medicaid eligibility for workers who have lost their jobs is the right thing to do. This provision will add important protections for unemployed workers who cannot afford to take up the “COBRA” option to continue their employer health benefits.

Families USA has found that, on average, workers who receive unemployment insurance (UI) would have to spend more than 30 percent of their UI checks to obtain COBRA coverage for themselves, and almost 84 percent of those checks on COBRA coverage for themselves and their families. Moreover, a significant number of workers losing their jobs in this recession are not eligible for COBRA at all because their former employers have gone out of business or they worked for small businesses that are not subject to COBRA.

The temporary Medicaid coverage in the House bill (H.R. 1, the American Recovery and Reinvestment Act of 2009) makes abundant sense – and it is well targeted as well. Medicaid would only be extended to people and families with incomes below 200 percent of the federal poverty level, or who receive food stamp benefits, or who receive or exhausted UI benefits. Those UI benefits now average a meager $1,300 per month.

This economic disaster – by all accounts the worst recession since the Great Depression – is devastating families across the country. Offering temporary eligibility for Medicaid will help those unemployed workers who can’t otherwise afford COBRA or other private coverage. It should be implemented as promptly as possible.

Broadening Medicaid (with the increase in federal match already passed) is a good temporary solution to widespread unemployment and economic emergency periods. Using existing platforms is far cheaper than other alternatives for this group – mostly lower income working americans. This is both a way to keep people healthy and a way to shore up providers and hospitals who will face layoffs as they absorb larger numebrs of patients who have lost jobs and health insurance.

To quibble now about whether expanding Medicaid is the best way to extend health insurance is rather like arguing that a fireman should not break some windows in order to direct water on the flames.

Unemployment is rocketing up. People are losing insurance coverage. The collapse of state revenues threatens to prevent them from expanding or even maintaining Medicaid coverage. State fiscal duress is forcing tragic and short-sighted cuts in other public services.

Increased federal support to help states serve those currently eligible for Medicaid and newly unemployed beneficiaries (along with assistance for those who are COBRA-eligible) is just about the best possible economic recovery medicine for an ailing economy. These measures ‘spend’ money quickly. They help sustain access to health care. And they support state capacity to provide other public services, as well.

Of course expanding Medicaid is not the best way to ensure financial access to health care in the long run. Deciding how best to do that is an important longer term objective to the achievement of which president Obama is pledged. But right now the challenges are to prevent the ongoing decline from inflicting more immediate personal pain and suffering than is inevitable and to stimulate economic recovery. Generous aid to the states to maintain and expand Medicaid (especially if it is targeted on the neediest states, as in the House bill) is just about the best medicine for an ailing economy—a fast acting therapy that both relieves pain and helps cure the disease.

President Obama says that reforming government entitlement programs will be "a central part" of his administration’s efforts to control federal spending. House Majority Leader Steny Hoyer echoed the pledge last week, saying that the health reform process must cast a very wide net to include Medicare and Medicaid. “We can no longer afford to think of health reform and entitlement reform as two separate issues,” he said recently.

How, then, is it wise to include a massive, unprecedented expansion of Medicaid in the stimulus bill without a single hearing to explore the implications or to incorporate reform measures?

The stimulus legislation making its way through Congress provides new money to the states to cover unemployed workers through their Medicaid programs—with the federal government paying 100% of the cost of the coverage.

The risk of fraud is great, the program expands entitlements without considering the implications, and access to care could be compromised for vulnerable, lower-income people on the program now:

• Fraud. States are primarily responsible for fighting fraud and abuse in their Medicaid programs. Yet if the federal government is reimbursing them 100 percent for adding new populations to the program, they have virtually no incentive to make sure that the money is being spent wisely.

And their track record is abysmal even when they have some of their own money at risk. The Government Accountability Office repeatedly has said that the Medicaid program is at “high-risk” for fraud and recently cited nearly $33 billion in improper payments made during 2007 alone, acknowledging that even the GAO does not know the full extent of the problem.

• Expanding entitlements. This temporary stimulus program also has the potential to grow into a major new entitlement. The bill does not sunset this new program to cover unemployed workers and their families, even though it does make the matching money temporary. This carries the risk of significantly expanding government’s role in providing health benefits to millions more Americans without exploring the long-term implications or alternatives.

• Compromising access. Finally, opening the program to millions more Americans will ultimately add to the program’s financial pressures, potentially compromising benefits and access to care for the lower-income people Medicaid is designed to help.

Real solutions require a new way of thinking. Simply putting more money into taxpayer-financed entitlements without exploring alternatives or building in safeguards does not represent the change President Obama has promised.