Nebraskans are making more, so the feds are kicking in less.
The federal government has covered a steadily shrinking portion of Nebraska's Medicaid payments over the past decade, based on a formula that ties the match percentage to a state's average per capita income.
And while that match rate has dropped just a few points in recent years, it's costing the state mega millions.
The state Department of Health and Human Services has requested nearly $76 million — equal to nearly 10 percent of the state's budget for Medicaid payments in 2014 — over the next two fiscal years to cover the gap anticipated from a 2 percent dip in the federal match. That's assuming the rate doesn't fluctuate again in 2017.
“It’s a large number, but it’s something the Legislature always funds because if they don't fund it again, the ability to contain Medicaid spending is pretty difficult," said Liz Hruska, an analyst with the Legislative Fiscal Office.
Federal law gives the state little room to change what services are eligible for Medicaid reimbursement, she said. And any service the state chooses not to cover would probably end up costing taxpayers more in the long run, because patients would simply turn to other, costlier services that aren't optional under federal law.
Another cash-saving measure, cutting payment rates, would threaten to shrink the already shallow pool of care providers willing to treat Medicaid patients, Hruska said.
In 2016, the federal match for Medicaid payments in Nebraska is expected to fall from 53.27 percent — already the lowest in history — to 51.16 percent. Not including enhanced rates during the recession, the match has been as high as 64.5 percent, in 1992.
That rate isn't exactly volatile, however.
By law, the match can't dip below 50 percent. About a dozen states — ranging from New York and California to North Dakota and Wyoming — are at the floor.
The formula for calculating the match, called the Federal Medical Assistance Percentage, uses a three-year rolling average of each state's average per capita income relative to the national average.
As personal income goes up, the match rate goes down.
Tom Bergquist, deputy director of the Nebraska Legislative Fiscal Office, compared it to a "Seinfeld" episode in which the character George Costanza decides to always do the opposite of what he would normally do.
"If every instinct I have is wrong, then the opposite must be right," Bergquist said.
On the plus side, the state's added Medicaid costs might be partially offset by an increase in federal reimbursements for the Children's Health Insurance Program.
While the CHIP match rate is tied to the Medicaid match, the Affordable Care Act provides for an enhanced match rate that should save the state close to $50 million total during the 2016 and 2017 fiscal years.
Still, ballooning Medicaid costs represent a financial burden the state can't do much to ease.
Medicaid is the second costliest individual item in the state's general fund budget, accounting for about 19 percent of the total. State aid to schools is No. 1, at 22 percent. Funding for state colleges and the University of Nebraska comes third, at 14 percent.
And DHHS' request for an additional $76 million in Medicaid funding represents "a pretty big chunk" of the overall increase requested by state agencies for the next biennial budget, Bergquist said. The total requested increase is still being tabulated.
"That would probably be one of the largest items in the budget right now," Bergquist said.