Transitional health insurance proposed

A new option to provide coverage for uninsured Nebraskans was discussed Feb. 10 in the Health and Human Services Committee. Several proposals in recent years to access federal Medicaid funds available to Nebraska under the Affordable Care Act (ACA) have stalled during floor debate.

LB1032, sponsored by Omaha Sen. John McCollister, would create the Transitional Health Insurance Program (THIP) as an alternative means of providing health coverage to the approximately 77,000 uninsured Nebraskans who are newly eligible under the ACA.

McCollister said the plan would utilize the private health insurance market to ensure coverage for individuals who fall into the “coverage gap”—those who earn too much to qualify for Medicaid but too little to qualify for insurance premium tax credits under the ACA.

“It’s estimated that two-thirds of this uninsured population are the working poor in Nebraska,” he said, “and over half of these people come from rural areas.”

LB1032 would require the state Department of Health and Human Services (DHHS) to apply for a Medicaid waiver within 14 months of the bill’s effective date. Under the waiver, individuals ineligible for Medicaid with incomes below 133 percent of the federal poverty level would be enrolled in private health insurance through a premium assistance model in which Medicaid dollars are leveraged to purchase private health plans.

McCollister said the plan would provide eligibility in two additional ways. An individual whose employer pays no less than 50 percent of the total cost of the employee’s coverage would receive assistance in purchasing employer-sponsored insurance.

Additionally, participants exempt from enrollment in premium assistance, including individuals who are determined to be medically frail, would be enrolled in Medicaid coverage. Program participants with incomes over 50 percent of the federal poverty level would be required to contribute 2 percent of their monthly household income as a premium, along with an enhanced copayment for nonemergency emergency room use.

The bill also would refer participants to employment and education programs and create a pilot program that would provide education and skills training targeted at specific state workforce needs. The bill calls for data collection and analysis of whether providing health insurance impacts the ability of individuals to transition off of public assistance programs.

As a result, McCollister said, LB1032 would encourage and support innovation and health care best practices in Nebraska.

“We contend that we’re offering the country’s best Medicaid expansion plan,” McCollister said.

The program would be suspended should federal funding fall below 90 percent.

Roma Amundson, testifying on behalf of the Lancaster County Board of Commissioners, supported the bill. She said LB1032 would eliminate almost all of the cost to counties for the health care services that they are required to provide for indigent residents.

“During the last five fiscal years, Lancaster County spent approximately $10 million on the medical needs of general assistance clients,” she said, adding that local government uses property tax funds to cover those costs.

“This bill provides an opportunity to lower property taxes by maximizing the use of federal funds,” Amundson said. “We cannot afford to miss this opportunity.”

Paulette Jones also supported the bill, saying she is one of the 77,000 Nebraskans who fall into the coverage gap. Jones said her income currently puts her $42 over the limit to qualify for Medicaid, which makes it difficult to manage her chronic health conditions.

“I worked my family off of the [public benefit] system and showed them the importance of self-reliance,” she said. “I am currently applying for and interviewing for jobs and I need to be healthy.”

Andy Hale, representing the Nebraska Hospital Association, also supported LB1032, saying states that have expanded Medicaid have seen an increase in health care jobs and a decrease in uncompensated care. In addition, he said, the uninsured rate for low-wage workers has dropped.

“The states that expanded Medicaid in 2014 saw a 25 percent reduction in the number of uninsured workers,” Hale said. “Changes in Medicaid should be motivated by the needs of patients, not by politics.”

Calder Lynch, director of Medicaid and Long-term Care for DHHS, testified in opposition to the bill, citing both fiscal and policy concerns.

Lynch said that an actuarial report commissioned by the department estimates the bill’s cost at nearly $1 billion over the next 10 years. In addition, he said, the program would be complex to implement and could impair the division’s ability to provide quality care for those who already qualify for Medicaid benefits.

“My responsibility is to our enrollees and to the taxpayers,” Lynch said. “I want to be able to deliver better value for the dollars that are invested and we’re working every day to do that.”

Jim Vokal, chief executive officer of the Platte Institute for Economic Research, also opposed the bill. He said 58 percent of the individuals that the bill would provide coverage for already are insured or are eligible for private insurance under the ACA. Placing them in a program that is more expensive than traditional Medicaid coverage—and that is funded by taxpayers—is the wrong solution, he said.

Vokal predicted that approximately 14,000 Nebraskans would drop out of the workforce to access the bill’s provisions.

“We would all like to close the coverage gap by providing more affordable options,” Vokal said. “[But this bill] would trap more Nebraskans in welfare dependency through no fault of their own.”

The committee took no immediate action on LB1032.