A proposal that would expand health care insurance coverage for more than 100,000 Nebraskans by accessing available federal Medicaid dollars would cost the state more than an estimated $100 million a year over a 10-year period, state senators were told Tuesday.
Calder Lynch, state Medicaid director for the Department of Health and Human Services, said he will testify in opposition to the legislative bill (LB1032) at its public hearing on Wednesday.
At a briefing for news media representatives in conjunction with distribution of a 19-page analysis to members of the Legislature, Lynch said he believes the proposal may be "ultimately not sustainable."
And, he said, it conceivably could impact the ability of the current Medicaid population of children and individuals with disabilities to access needed assistance.
LB1032 is "a very expensive way" of expanding coverage, Lynch said, and in turn could crowd out other state priorities.
The HHS report estimated the bill would provide additional coverage for 74,000 Nebraskans through health care exchanges, provide premium assistance to 34,000 individuals through employer-sponsored insurance and provide coverage for 15,000 medically frail people through Medicaid managed care.
Total state costs of $978 million over a 10-year period would be matched by more than $13 billion in federal funding flowing into the state, according to the HHS report.
The bill, co-sponsored by Sens. John McCollister and Heath Mello of Omaha and Sen. Kathy Campbell of Lincoln, would access additional federal Medicaid dollars that have been available to Nebraska since enactment of the Affordable Care Act.
Mello, chairman of the Legislature's Appropriations Committee, responded to Lynch's concerns by noting the bill has been drafted to use money from the state's health care cash fund to finance the plan and avoid any impact on the state tax-supported general fund for the next five years.
That cash fund includes tobacco settlement dollars sent to the states for tobacco-related health care costs.
"There is nothing new in them paying for a report to justify their position of not doing anything to address this need," Mello said in response to HHS.
"This has been the standard line for the last four years," he said.
Federal Medicaid funding would pay 100 percent of the expansion costs through 2016, with the federal share gradually declining to a permanent floor of 90 percent.
The cost analysis undertaken for HHS by Optumas, a health care strategy firm that acts as the Nebraska agency's contracted actuary, estimated that annual state costs gradually would grow, reaching $89 million in 2021 when the federal share has fallen to 90 percent and trending upward to $181 million in 2027.
Sponsors of the proposal rely on different figures than those in the HHS report, centering on expanded coverage for an estimated 77,000 Nebraskans, most of whom are described as the working poor.
Lynch said "it's a mistake to assume that Medicaid is the only alternative" to meet the needs of uninsured Nebraskans.
"There might be a more targeted solution," he said, "look(ing) beyond government programs to do that."
Lynch raised questions about a provision in the bill that automatically would dissolve the new program if the federal government ever reneged on its pledge to provide 90 percent funding.
The state would likely face legal action if benefits were cut off, he said.
"There is legal and practical concern" about whether the state could pull back, Lynch said.
Lynch also questioned whether a necessary waiver from the federal government to approve Nebraska's plan could be acquired in what would be "the waning days of this administration."
Responding to the HHS analysis, Nebraska Appleseed Director Rebecca Gould said: "We have seen these kinds of 11th-hour reports before from the department."
"At the end of the day," she said, "what matters is what the legislative fiscal office projects and that analysis has not been released yet."
Gov. Pete Ricketts and Lynch should "come to the table and work with the Legislature this session (to find) a solution to this problem that prevents 77,000 Nebraskans from getting the affordable health coverage they need," Gould said.
Sponsors of the bill have pointed to its potential impact in easing the burden that Nebraska's health care providers and employers now encounter in supplying $1 billion in uncompensated care every year.
A number of Omaha corporate and philanthropic heavyweights have warmed to the plan, which would financially impact the University of Nebraska Medical Center in a positive way.
Lynch said Medicaid expenditures in Nebraska have doubled since 2000 with more than 231,000 individuals now covered.