Medicaid Expansion Decision May Hinge On Numbers


January 25th, 2013

Lincoln, NE — Supporters of expanding Medicaid in Nebraska say tens of thousands of low-income people could gain health insurance coverage. Critics say the cost could run into unknown millions of state tax dollars.


Omaha Sen. Jeremy Nordquist points to the people who would gain coverage if Nebraska expands Medicaid. “These are low income, many, most of them are working minimum wage jobs, food service or other areas, and they are not able to afford health coverage in any other way,” he said.

Nordquist acknowledges the obvious. “The question that many Nebraskans want answered, and rightfully so, is ‘How do we pay for it?’

But then he adds, “The fact is, we already do. We already pay for health care of the uninsured. But we do so in a way that guarantees the most expensive care, often sought in the emergency room.”

The average Nebraska family with health insurance pays about $1,000 more per year to cover care for people without insurance, Nordquist said. And Nebraskans pay state and local taxes for a variety of government health programs as well. He said the states’s cost for a lot of those programs will drop under the federal Affordable Care Act, which includes the option of expanding Medicaid. “If you take all those savings, this pays for itself to 2020 and pays for itself well beyond 2020,” he declared.

Not everyone agrees that expanding Medicaid will save state tax dollars. Gov. Dave Heineman repeated his view last week. “That will be hundreds of millions of dollars on top of what we’re doing. I don’t think we can afford that. I think we should go very slowly relative to that. We can have this conversation a year or two years down the road about the expansion,” Heineman said.

So which is right? Will expanding Medicaid pay for itself? Or will it cost state taxpayers hundreds of millions of dollars?

Both Nordquist and Heineman cite a study done for the state Department of Health and Human Services by the Milliman consulting firm.

Recently, Milliman estimated the Affordable Care Act could add $285 million to Nebraska’s Medicaid budget between now and 2020.

But only about $88 million of that was for expanding Medicaid. The rest was for other parts of the Affordable Care Act that aren’t optional. Nordquist looks at that same $88 million cost for expanding Medicaid. But he says it would be more than offset by other provisions of the Affordable Care Act, left out of the Milliman study.

By his calculation, the state will save $128 million by 2020.

The biggest single difference concerns potential savings in the state’s behavioral health program, which pays for things like addiction services and family counseling.

The Affordable Care Act requires insurance policies cover behavioral health similar to how they cover physical illness. Nordquist cites an estimate by Director of Behavioral Health Scot Adams that this will save $29 million dollars a year.

That wasn’t included in the Milliman report, says report author Rob Damler, because it’s not part of the state’s Medicaid budget. “The purpose of it (the Milliman report) was to focus on the Medicaid assistance budget, not look at all of the components of state government,” Damler said.

Adams cautions that his estimate of behavioral health savings is uncertain, and urges that it not be relied on to make decisions about state spending. “Given that there are a dozen or so balls up in the air that are uncertain, ill-defined, subject to change, subject to legislative and other action, the confidence level is uncertain at best,” he said.

Adams cited questions including the extent to which insurance will be required to pay for alcoholism treatment, as an example of the uncertainty.

If Nordquist is right and savings do materialize, Omaha Sen. Bob Krist says senators who favor expanding Medicaid have an idea for what the state should do with them. Krist notes that the federal government will pay the full cost of expanding Medicaid for the first three years. But over time, the state will have to pay a share. “By 2020, the pay rate for Medicaid returns to a 90-10 split. That’s the federal government paying 90 cents, and the state government paying 10 cents,” Krist said. “So to prepare ourselves for an increased expense in the out years, we will propose to our colleagues yet another part of our strategic plan. It’s called ‘savings.’

“We need to force ourselves to capture all of the savings projected in years one through three…a companion bill…will put that money into a health care cash fund that will be there if we need it,” Krist said.

Whether or not senators will agree not to spend money if it’s available is just one of many unknowns at this point. Most of the Affordable Care Act still doesn’t take effect until 2014. Nebraska lawmakers will have to decide whether or not to expand Medicaid without knowing precisely how the costs and savings of health reform will finally balance out.

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