Should Nebraska expand Medicaid?

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July 11th, 2012

Lincoln, NE – In its recent ruling to uphold the Affordable Care Act, the Supreme Court gave states a new decision to make on Medicaid. The court said federal funding cannot be taken away if states decide not to expand the program as the federal government wants. That puts the choice up to Nebraska lawmakers, and they need to decide whether the benefits are worth the costs.

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Governors in at least 11 states, including Nebraska, have indicated they disagree with expanding Medicaid because of the cost.

Gov. Dave Heineman sent a letter to state senators Wednesday outlining his opposition to expanding Medicaid in Nebraska. (Photo courtesy State of Nebraska)

In a letter to state senators released Wednesday, Gov. Dave Heineman outlined those concerns. Heineman said the Supreme Court ruled the Medicaid expansion is optional to states and that an expansion would add to the state’s project budget shortfall, forcing cuts in state aid to education or a tax increase.

But if the federal government had its way, there would be a big change in 2014. Nebraska and other states would make Medicaid available to everyone making up to 133 percent of poverty level, which is around $30,000 per year for a family of four.

Doing that could mean thousands of Nebraskans would become eligible for Medicaid, including many patients at thePeople’s Health Center in Lincoln. Executive Director Deb Shoemaker said 43 percent of the patients at the clinic for low-income individuals are currently uninsured – but even if they don’t have coverage, she said, they still need care.

“They may have some kind of chronic condition that requires medications, that requires testing, and that requires that they come in and see a doctor more often than most people would see a doctor,” Shoemaker said. “For them, this would be huge, to be able to have the kind of care that they need in order to manage their chronic disease.”

If Nebraska says no, the poverty line would become the dividing line. Uninsured people above the poverty line could use new federal subsidies to buy insurance on health exchanges, but some people below the poverty line would not get those subsidies – or Medicaid. Becky Gould of the Nebraska Appleseed Center for Law and the Public Interest said childless adults have no Medicaid option in Nebraska right now, regardless of how little their income might be.

“If the expansion doesn’t happen, that population remains not eligible for Medicaid as it exists, but also would not be in a position to purchase coverage in the exchange,” Gould said. Supporters such as state Sen. Jeremy Nordquist of Omaha have called expanding Medicaid a good investment because the federal government will pick up the entire the bill for the first three years – and at least 90 percent after that.

Medicaid and Education top the state’s spending list. From 1992 to 2012 Medicaid grew from 12 percent of the budget to 18 percent. In that same time the portion of funding for K to 12 education remained around 23 percent. (Graphic by Grant Gerlock, NET News)

“I think it would be a very wise investment for us as a state, for our state’s economy, to keep these people healthy and get them health coverage,” Nordquist said.

But opponents argue that it’ll still cost the state millions. Through 2019, the Kaiser Family Foundation estimates the cost for Nebraska would come to about $155 million to cover as many as 110,000 new people. Estimates prepared for the Governor’s office came in even higher.

Policy analyst Jordan Cash of the conservative Platte Institute in Omaha said state senators should be skeptical of the federal offer.

“It may seem like free money in the first couple of years, but once people get used to receiving this coverage, the federal government will stop,” Cash said. “Eventually it is going to cost the state millions and millions of dollars.”

Another point of skepticism stems from the fact that Medicaid already takes up a big – and growing – chunk of the state budget. Twenty years ago it was about 12 percent of spending. In 2012, it’s 18 percent, or $644 million dollars.

Even without expanding Medicaid, there’s simply not enough money to go around, state budget administrator Gerry Oligmueller said, adding that Nebraska’s budget is projected to grow at about twice the pace of revenues coming into the state.

“Consequently, not everything that the various interests would like to see funded in the state budget can be a reality when we construct the budget for fiscal years 2014 and 2015,” Oligmueller said.

Gould at Nebraska Appleseed believes expanding Medicaid should still be a priority, saying to not expand would be short-sighted.

“If we’re talking about making sure that folks in our state can contribute to their communities, participate in work force, and not drive up costs in health care system, then providing that care in Medicaid is the best way to do it,” Gould said.

It will be up to Nebraska state lawmakers to decide whether more people can count on the state for health care or whether it’s beyond what the state can afford.

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