From fear mongering about a public option to false assertions that federal employees have sub-par health insurance, Republicans and conservative Democrats are coming up with all sorts of excuses to preserve the nation's broken health care system. As White House budget director Peter Orszag suggested over the weekend, these delay tactics show that plenty of Washington lawmakers are intent on killing reforms long-supported by the American public.

But that's not to say that the bills working through Congress are perfect. Governors from across the country warned at the summer meeting of the National Governors Association, for example, that if not implemented properly, a federally-mandated Medicaid expansion could sink state governments into deeper deficits. The New York Times has the story:

Each of several health care bills coursing through Congress relies on a large increase in eligibility for Medicaid, the state and federal insurance program for the poor, as one means of moving toward universal coverage.

Because the states and the federal government share the cost, any increase in eligibility levels, benefits or payments to doctors would impose new burdens on the states unless Washington absorbs them. In at least one of several bills circulating in Congress, the states would eventually pick up a share of the new costs, and the governors fear they cannot count on provisions in other bills that they will not bear costs.

Here in Illinois, all children under 19 whose parents earn at or below 133 percent of the federal poverty line (FPL) are covered by either Medicaid or the SCHIP program. Same goes for jobless and working parents and pregnant women making at or below 185 percent and 200 percent of the FPL respectively.

But the state does not cover those other impoverished adults who aren't elderly, disabled, or caring for children in their own home. The Adequate Healthcare Task Force estimates that 300,000 fall into that category. If Congress approves the bill working its way through the Senate Finance Committee, every one of those people would be covered.

Meanwhile, the recently-released, tri-committee House bill would actually expand Medicaid to cover all non-elderly people with incomes at or below 133 percent of the poverty level, or $29,300 for a family of four. John Bouman of the Sergeant Shriver Center on Poverty Law estimates that this version would cover about 500,000 additional Illinoisans.

Aside from the larger expansion, the benefit of the House version is that the federal government would cover the cost of all new enrollees, as compared to the 57 percent share they currently finance. (In total, the Congressional Budget Office estimates that 15-20 million people would gain public insurance nationwide at a cost of about $500 billion over 10 years to the federal government.)

The Senate version is less forgiving, with the feds only paying the bill for five years while encouraging states to issue bonds to cover the remaining costs. That discrepancy is what has the governors worried.  And rightfully so. After all, they're already struggling to balance state budgets while covering modest increases in Medicaid costs.

Be sure to keep an eye on this issue as the debate over health care reform escalates in D.C.  A fully-federalized expansion would have numerous benefits for the state of Illinois, as Bouman explained over email today:

The state budget savings would be indirect (since we're not covering these people now), but substantial.  Hospitals receive special payments (disproportionate share and other special add ons) for serving the uninsured.  Those would be greatly reduced.  The whole cost-shift of caring for the uninsured would be eliminated.  Some of the pressure on ER's would be reduced.  The Cook County health system would have a dramatic reduction in uncompensated care.

For a detailed memo explaining the benefits of Medicaid expansion, check out this report from the Center for Budget and Policy Proposals.