Medicaid expansion debate begins

Lawmakers began debate April 16 on a bill that would require Nebraska to opt in to expanded Medicaid coverage available under federal health care reform.

LB577, introduced by Lincoln Sen. Kathy Campbell, would require the state Department of Health and Human Services (DHHS) to add the adult population newly eligible under the federal Patient Protection and Affordable Care Act (ACA) to the state’s Medicaid state plan amendment.

Under the ACA, low-income adults ages 19 to 65 with incomes of up to $15,856 would be eligible for Medicaid if a state chooses to extend benefits to them, Campbell said.

Expanding Medicaid to this group would be a good financial move for the state, Campbell said, because it would allow Nebraska to cover the newly eligible adult population with 100 percent federal funding from 2014 to 2016. Federal funding would decrease incrementally, she said, leveling off at 90 percent starting in 2020.

The uncompensated hospital care individuals in this income group already receive creates higher medical bills and insurance premiums for all Nebraskans, Campbell said.

“All of us are paying those costs,” she said.

Campbell said states are allowed to choose a benchmark benefit plan for the newly eligible adult population under the ACA. One of the options, known as the secretary-approved benefit plan, allows states to include the Medicaid benefit package currently offered in the state.

LB577 would direct DHHS to request the secretary-approved benefit plan and to include the mandatory and optional coverage under traditional Nebraska Medicaid. The bill also would specify that the benefit plan comply with the requirements of the Mental Health Parity and Addiction Equity Act and include habilitative services as provided by the ACA.

Omaha Sen. Jeremy Nordquist supported the bill, saying it makes good fiscal sense. He cited a study that found the average Nebraska family pays approximately $1,000 more per year in premiums to offset uncompensated care provided to low-income individuals who seek emergency room care rather than preventative care because they lack insurance coverage.

“Just because someone is uninsured doesn’t mean that they don’t get care,” he said. “And we are paying for it with state tax dollars, with property tax dollars and with higher premiums.”

Nordquist said expanding Medicaid with federal funding would provide low-income adults access to medical coverage while freeing up $2.3 million in state general fund dollars in the current biennium that is used to pay for a variety of health care programs for low-income Nebraskans, including the AIDS Drug Assistance Program and the State Disability Program.

In addition, he said, the ACA is expected to result in an annual savings of $29 million per year in behavioral health spending due to private health insurance reform. By applying a portion of these offsets to the cost of administering LB577, Medicaid expansion could be paid for through 2020 without endangering other budget priorities, Nordquist said.

Sen. Tanya Cook of Omaha also supported the bill, saying health care providers across all disciplines testified in support of LB577 when it was heard by the Health and Human Services Committee. Lack of a health care safety net degrades Nebraskans’ quality of life, she said, making access to health care more than simply a fiscal issue.

“Health care providers support the expansion of Medicaid because it is the moral and right thing to do,” Cook said. “Those whose lives are dedicated to healing the sick are asking for our help.”

Syracuse Sen. Dan Watermeier opposed the bill, saying the state’s medical system is unprepared to handle the influx of Medicaid recipients that would result from passage of LB577.

Nebraska’s current Medicaid enrollment of 240,000 already will increase by approximately 50,000 due to other mandatory provisions in the ACA, he said. The estimated 54,000 more who could join under the bill raises concerns about the quality of care all Medicaid recipients would receive, he said.

“Nebraska is just plain and simple not ready for this,” Watermeier said, adding that perhaps lawmakers should wait and examine other states’ experience with Medicaid expansion.

“We don’t have to be the first to do this,” he said. “This may be one of those times when it would be good to be second in line.”

Describing himself as a “skeptic” regarding the bill, Grand Island Sen. Mike Gloor said expanding Medicaid within the existing system likely would not solve the problem of access to health care in Nebraska. Because reimbursement rates are so low, he said, there is a limit to the number of Medicaid recipients that a provider is able and willing to accept.

“The assumption that expanding Medicaid automatically improves access
… is a hope and a prayer,” Gloor said.

Campbell offered an amendment, which was divided into two separate amendments, that she said was intended to address concerns regarding the federal government’s commitment to funding Medicaid expansion.

Under the first amendment, if at any time the federal match falls below 90 percent for the newly eligible group, the Legislature would be required to determine whether to affirm, amend or repeal eligibility from that group during the next regular legislative session.

“What people wanted was a way for senators to monitor this program,” she said. “[The amendment] would afford us that opportunity to make revisions as we have done [with Medicaid] since 1965.”

Sen. Bill Kintner of Papillion opposed the amendment, saying government rarely ends a program once it is established, regardless of the cost or ultimate effectiveness.

The state will have to cut roads, schools and other funding priorities if spending on Medicaid expansion “starts spiraling out of control,” he said.

“Eventually, we’ll have to go to the taxpayers,” Kintner said.

Sen. Jim Scheer of Norfolk expressed similar concerns, saying the expansion would obligate future generations to fund Medicaid for low-income Nebraskans without a long-term guaranteed funding source.

In addition, he said, even the initial three years of 100 percent federal funding ultimately represents Nebraska taxpayer dollars paid in to the federal government.

“Regardless of where those dollars come from, they are our dollars,” Scheer said.

Senators voted 30-12 to adopt the first Campbell amendment.

Omaha Sen. Beau McCoy offered a motion to reconsider the vote, saying many senators were waiting to speak on the issue when the vote was taken.

“I don’t think we’ve had a full and fair debate,” he said. “We need to have all members have the opportunity to weigh in more on this.”

A second Campbell amendment would set a sunset date for LB577 of June 30, 2020, unless extended by the Legislature.

The McCoy motion and the amendment were pending when senators adjourned for the day.