Medicaid expert says state's report flawed

2010-09-15T18:38:00Z Medicaid expert says state's report flawedBy NANCY HICKS / Lincoln Journal Star
September 15, 2010 6:38 pm  • 

A report that says Nebraska's Medicaid costs will soar under federal health care reform is seriously flawed, according to a national Medicaid researcher.

The Milliman report, being used by Gov. Dave Heineman to bash federal health care reform, seriously overestimates the net costs of Medicaid expansion to the state, wrote Leighton Ku, professor of Health Policy at the School of Public Health and Health Services at George Washington University and director of the Center for Health Policy Research.

The Milliman report's high cost estimates are based on the assumption that every Nebraskan who is eligible will use Medicaid.

"But no voluntary program ever experiences 100 percent participation," Ku wrote in an analysis of the Milliman report.

"This is just an over-the-top assumption which can only lead to overestimates."

"The full participation scenario is just ridiculous and should be ignored," wrote Ku, who has studied Medicaid and low-income health care issues for two decades.

Even the midrange estimate -- that Nebraska will spend an additional $526 million on Medicaid over 10 years -- is too high, both for the number of new participants and cost per enrollee, he wrote.

The state defended Milliman's report.

"Milliman was hired to provide an actuarial impact of health care reform on Medicaid in Nebraska. We believe it accurately reflects the costs," said Kathie Osterman, spokeswoman for the Department of Health and Human Services.

Ku said much lower estimates offered by the Urban Institute as part of a Kaiser Foundation report are more reliable.

Medicaid expansion would cost the state $106 million to $155 million over a six-year period, under the Urban Institute estimate.

In addition, the state will get $2.34 billion to $2.73 billion in new federal matching funds during those six years, the Urban Institute says.

The Heineman administration hired the independent actuarial firm, Milliman Inc., to do the Nebraska analysis. The governor has used the Milliman estimates in his campaign against federal health care reform.

Omaha Sen. Jeremy Nordquist said Ku's analysis reiterates the serious flaws in the Milliman report.

It shows the $47,000 Milliman report was intended for political rhetoric rather than for actual policy decisions for health care reform, Nordquist said.

Ku's analysis was done for First Focus, a national nonprofit organization dedicated to improving public policy for children, which supports health care reform.

"We are deeply concerned about the governor's push to pit health programs for kids against education programs," First Focus President Bruce Lesley said in an e-mail about the Ku report.

"Kids need both a strong education and to be healthy to succeed," Lesley said.

Osterman said it should be noted that Kaiser and First Focus are liberal advocacy groups in favor of federal health care reform.

Ku said he was concerned that Heineman was using a "very flawed" report when talking about health care reform.

In addition to flaws in computing state costs, he said, the Milliman report completely leaves out the additional federal funds that will come to the state.

Flaws Ku said he found in the Milliman report include:

  • No offsetting reduction in state costs for high-risk insurance the state now subsidizes.
  • No consideration of the fact that low-income people will not pay penalties for failure to have insurance.
  • An exaggerated base of people eligible for Medicaid based on overestimates of the number of people without insurance.
  • High assumptions about Medicaid's future per-person cost.
  • Unexplained estimates of state administrative costs
  • No consideration of additional federal revenue that will come to Nebraska.

Reach Nancy Hicks at 402-473-7250 or

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