The Treasury Department on Friday urged the Senate to boost the federal government's contribution to Puerto Rico's Medicaid program, and warned that failure to take this step could lead to a healthcare crisis on the island territory.

Secretary of State Jack Lew told Senate Finance Committee Chairman Orrin Hatch in a Friday letter that Puerto Rico received additional funding for healthcare under Obamacare. But he said that money will expire in December 2017, after which there is a real risk that reduced revenues will reduce hospital staffs on the island.

"The loss of these funds will create a disruption in cash flow and affect the operations of providers that participate in the Commonwealth's health insurance program, impairing access to care for all age groups," he wrote. "This disruption will reduce cash flow and force hospitals to reduce services, lay off staff, and delay payments to suppliers."

He also said the problem is even more serious because of the spread of Zika in Puerto Rico.

To avoid the crisis, Lew said Congress needs to permanently boost the share of Medicaid costs borne by the federal government.

"Puerto Rico's Medicaid program must be reformed to raise the standard of care, strengthen program integrity, prevent unstable Medicaid financing from exacerbating Puerto Rico's economic crisis, and avoid a drop in coverage when one-time funds from the ACA expire," he said.

"Reforms should include removing the cap on Puerto Rico's Medicaid program and gradually increasing the federal support Puerto Rico receives through the federal Medicaid match."

Lew said Congress needs to take other steps aimed at boosting Puerto Rico's flagging economy. He said that includes making Puerto Ricans eligible for the Earned Income tax Credit, which would help boost employment.

He added that other steps could be taken to boost business growth in Puerto Rico, such as directing more federal incentives to the island.

Puerto Rico has a $72 billion dollar debt that it has said it cannot pay off, a crisis that prompted Congress to pass legislation delaying debt service payments, and creating a board that will be able to restructure the debt.

But Lew warned that the bill was only the first step to pulling the country out of its economic woes.

"Going forward, addressing Puerto Rico's inadequate treatment under the federal Medicaid program is critical," he wrote.