Medicaid Expansion: Expensive, Unreasonable Risk

January 28, 2016 Leave a comment


By Governor Pete Ricketts

“There is no such thing as a free lunch,” said Milton Friedman, winner of the 1976 Nobel Prize in Economic Sciences. The advisor to President Ronald Reagan and British Prime Minister Margaret Thatcher also said, “Nothing is so permanent as a temporary government program.” Both of these observations are grounded in truth and both apply to continuing efforts to expand Medicaid in Nebraska

.Medicaid is a joint federal and state program designed to be a safety net for the poorest and sickest citizens. Nobody wants to restrict access to healthcare, but we do want to halt the unnecessary expansion of the program which will shift Medicaid’s focus away from its core mission and expose our state’s budget to unreasonable risk.

Our Unicameral has wisely rejected Medicaid expansion three times in three years. Now, special interest groups and a few senators are pushing for Nebraska to expand Medicaid expansion by using taxpayer dollars to buy private insurance. While this is a new plan, it’s the same story: Medicaid expansion is an expensive and an unreasonable risk to Nebraska taxpayers.

Expanding Medicaid would increase the income limit for eligibility and add primarily able-bodied adults to the program with the federal government promising to match at least 90 percent of the cost. Currently, the federal government generally matches just over 50 percent of Medicaid costs for low-income individuals and families, including pregnant women, children, the elderly, and people with disabilities. States, including Nebraska, have an existing commitment to fund the remaining share to serve the core population of vulnerable citizens.

Research shows that numerous healthcare providers don’t take Medicaid patients because Medicaid only reimburses about half of what private insurance does. If we approve Medicaid expansion, it will make it more difficult for the children, elderly, and people with disabilities to get access to providers, posing a threat to the original intent of Medicaid. Current Medicaid enrollees will have to compete with tens of thousands of new enrollees for the limited number of providers who take additional Medicaid patients.

This year’s Medicaid expansion proposal, modeled after Arkansas, is an even bigger financial risk to Nebraska’s budget than previously rejected ideas. After just six months, the Arkansas expansion was $137 million, or 61 percent, over budget. One of reasons was because more people signed up than projected. State officials in Arkansas predicted a maximum of 215,000 able-bodied adults would enroll in Medicaid, but after a year and a half that number had surged to almost 300,000. After the surge, more than 40 percent of Arkansas citizens were on Medicaid, making Arkansas one of the most Medicaid-dependent states in the nation.

Furthermore, purchasing private insurance with federal dollars costs around $1,700 more per person each year than traditional Medicaid in
Arkansas. The U.S. Government Accountability Office found that the Arkansas expansion will cost taxpayers $778 million more in the first three years than basic Medicaid expansion would have.

In Nebraska, Medicaid has grown from 2.9 percent to almost 20 percent of our state budget. A study paid for by the State of Nebraska in 2015 found that expanding Medicaid under this plan using private insurance would cost 94 percent more than traditional Medicaid.

Supporters of expansion tout federal funding as a reason to expand Medicaid in Nebraska. Doing so would create a massive new entitlement dependent on unreliable federal funding. The federal government has a history of breaking their commitment to states. For example, the federal government originally promised to pay 40 percent of the cost of expanding special education, and now they pay less than 20 percent.

This proposal for expanding Medicaid is bad for Nebraska. Every year, the state has to balance our budget, which means we can’t spend money we don’t have. This Medicaid expansion proposal will shift the focus away from our most vulnerable populations and expose our state to additional risk, which creates barriers to tax relief, infrastructure investment, and expanded educational opportunities—all of which would create true economic opportunities for people in need.

Several Nebraska State Senators recently attended a press conference opposing Medicaid expansion. These senators include: Bloomfield, Brasch, Craighead, Friesen, Fox, Hilkemann, Hughes, Kintner, Kolterman, Kuehn, Lindstrom, Murante, Riepe, Schnoor, and Williams. Others said they wanted to join, but were unable to because of scheduling conflicts. Please consider calling to thank your senator for protecting our budget against the risk of expanding Medicaid, or to encourage them to reject Medicaid expansion again. Senators are listening, so please share your thoughts. You can find information to contact your senator at http://www.NebraskaLegislature.gov.

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Give Thanks for Rural Health

November 18, 2015 Leave a comment


By John Crabtree, johnc@cfra.org, Center for Rural Affairs

Thursday, November 19th is National Rural Health Day. On the Thursday before Thanksgiving each year, rural Americans give thanks for our health and the doctors, nurses, pharmacists and other providers that help keep us that way. In truth, most rural and small town Americans are thankful for our health, healthcare providers and the hospitals, clinics and other businesses where they work most other days as well.
Small town America faces unique healthcare challenges. Rural Americans are more likely to be uninsured or underinsured than our counterparts in urban centers, in part because rural Americans are more likely to be self-employed or working for an employer that does not offer health insurance benefits. This makes the expansion of Medicaid coverage so vitally important to working families in rural and small town America who don’t make enough money to qualify to receive subsidies for healthcare coverage in the new health insurance marketplaces (exchanges).
Moreover, access to healthcare can be a challenge in many small towns that lack a hospital or clinic.  Increasing the ranks of those with adequate coverage through Medicaid expansion and the exchanges is one answer, but ingenuity must be another. As we celebrate National Rural Health Day, we should continue to look for new ways to expand rural healthcare access through telemedicine; new provider roles for physician’s assistants, pharmacists, nurses and nurse practitioners; and different hospital and clinic ownership models including cooperatives, community ownership, and ownership of clinics and healthcare practices by medical service providers other than physicians.

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Medicaid Expansion a Fiscal Winner for Nebraska

June 29, 2015 Leave a comment


The Center for Rural Affairs released the third and final Rural Policy Brief examining the basic economic and income issues for all Nebraskans connected to expanding Medicaid. The brief is part of a series examining findings of the University of Nebraska at Kearney report on the implications of LB 472 and their significance to rural and small town Nebraska.

 

Evidence shows that states that have expanded Medicaid have witnessed substantially faster growth in healthcare jobs than those states that have not expanded. Medicaid expansion will support 10,779 jobs in Nebraska in FY 2019-20. And Nebraska has already foregone half a billion federal dollars because of inaction on Medicaid expansion. The bottom line is… Medicaid expansion is a fiscal winner in Nebraska.

John Crabtree, Center for Rural Affairs

 

To view or download a copy of the Center’s Policy Brief go to:

http://www.cfra.org/bottom-line-medicaid-expansion-ne

 

On April 1, 2015, Dr. Allan Jenkins, Professor of Economics at the University of Nebraska at Kearney, and Dr. Ron Konecny, Professor of Management at the University of Nebraska at Kearney, released Nebraska Medicaid Expansion: Protecting a Critical Infrastructure, Supporting Main Street, Improving Worker Health and Productivity (the UNK Report). The UNK Report is an extensive benefit-cost analysis of several factors that should be considered in the debate on LB 472, the Medicaid Redesign Act, and Medicaid expansion in Nebraska.

 

“The UNK Report finds that Medicaid expansion will support 10,779 jobs in Nebraska in FY 2019-20,”  explained John Crabtree of the Center for Rural Affairs. “This is crucial in lower income areas of the state, including rural Nebraska, where Medicaid expansion would have a larger effect and where jobs, particularly well-paying healthcare jobs, are needed.”

 

According to analysis of the UNK report by Jon Bailey, the Center for Rural Affairs’ former Director of Rural Policy, Kentucky, one of the most aggressive states in their Medicaid expansion program, found that by 2021 the number of new jobs created as a result of expansion is expected to grow to approximately 40,000, with an average salary of $41,000. In comparison, the UNK Report finds jobs created as a result of Medicaid expansion in Nebraska will have an average salary of $44,845 in FY 2019-20.

 

The UNK Report also found that Medicaid expansion is a significantly more cost-effective state policy approach that also creates employment. For example, the UNK Report compares Medicaid expansion (through LB 472) with the Nebraska Advantage Act’s per job cost amount. The Nebraska Department of Revenue estimated that the Nebraska Advantage Act cost from $42,747 to $234,568 per job created. In comparison, the model used in the UNK Report finds that each $46,572 increase in Medicaid spending creates one job – about 20 percent of the largest Nebraska Advantage Act cost per job figure.

 

According to Crabtree, the UNK Report definitively settles one of the major opposition points to Medicaid expansion, namely that it would eventually cost the state too much in General Fund expenditures, particularly when the federal cost share for expansion declines to 90 percent in 2020 and thereafter.

 

“Medicaid expansion in Nebraska would bring about $69.3 million in General Fund savings for the five year period in programs already funded through the state’s General Fund, and which would no longer be necessary if Medicaid were expanded,” said Crabtree

 

“As we have pointed out in previous policy briefs, the UNK report contains a solid and rigorous benefit-cost analysis, showing the multiple benefits to Nebraska’s economy, its communities, and to individuals and families,” concluded Crabtree. “And Nebraska taxpayers have already watched half a billion dollars of federal support for Medicaid expansion slip away because of the Unicameral’s inaction. For the sake of over 77,000 Nebraskans  who fall into the Medicaid Gap, and for all Nebraska taxpayers, policymakers must act on expanding the state’s Medicaid program.”

 

Check out the Center’s counter on Medicaid dollars lost to Nebraska taxpayers at:

http://www.cfra.org/news/150305/nebraska-medicaid-losses-top-400-million

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Stronger Health Care Infrastructure and Healthier Nebraskans: Medicaid Expansion in Nebraska

June 17, 2015 Leave a comment


Center for Rural Affairs report examines economic and income issues of expanding Medicaid
 

LYONS, NE – Today, the Center for Rural Affairs released a Rural Policy Brief examining the basic economic and income issues for all Nebraskans connected to expanding Medicaid. The brief is the second in a series examining findings of the University of Nebraska at Kearney report on the implications of LB 472 and their significance to rural and small town Nebraska.

 

Medicaid expansion in Nebraska will make health care providers, particularly those in rural Nebraska, fiscally stronger, thus ensuring access to health care for all Nebraskans, while also beginning to alleviate health care cost shifting that affects all Nebraskans and Nebraska families. 

Jon Bailey, Center for Rural Affairs

 

To view or download a copy of the Center’s Policy Brief go to: 

http://www.cfra.org/stronger-health-care-infrastructure-nebraska

 

On April 1, 2015, Dr. Allan Jenkins, Professor of Economics at the University of Nebraska at Kearney, and Dr. Ron Konecny, Professor of Management at the University of Nebraska at Kearney, released Nebraska Medicaid Expansion: Protecting a Critical Infrastructure, Supporting Main Street, Improving Worker Health and Productivity (the UNK Report). The UNK Report is an extensive benefit-cost analysis of several factors that should be considered in the debate on LB 472, the Medicaid Redesign Act, and Medicaid expansion in Nebraska.

 

“The UNK report also demonstrates that Medicaid expansion will create a healthier work force in Nebraska,” said Jon Bailey, Rural Policy Director at the Center for Rural Affairs and author of the policy brief. “Evidence from states that have expanded their Medicaid programs show that access to health care by expanding Medicaid leads to better health in numerous ways.”

 

“For low-income workers, lack of access to health care – one issue Medicaid expansion would resolve – leads to issues that affect their ability to work, decreases their productivity, negatively affects employers and their businesses, and contributes to the cycle of poverty for individuals and families,” explained Bailey. “Expanding Medicaid will make people healthier, make them more productive workers, and enhance their workforce longevity. Employers and businesses will also benefit from a healthier and more stable labor force.”

 

According to Bailey’s analysis of the UNK report, Medicaid expansion in Nebraska will also address health care cost-shifting and reduce the “hidden health tax” to individuals. This cost shift results from increased health insurance premiums and higher taxes needed to address the bad debts and charity care of health care providers associated with treated uninsured individuals. Medicaid expansion in Nebraska would directly reduce this cost shifting by $30.6 million in 2015-16 and by a total of $156.1 million by 2019-20.
“Medicaid expansion in Nebraska is a policy and economic winner for the state and those who benefit from the additional health insurance coverage it provides,” concluded Bailey. “Nebraska policymakers need to act on expanding the state’s Medicaid program or face losing all the positive health care, economic and workforce benefits while continuing to foist millions of dollars of uncompensated care onto the premiums of the currently insured.”

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Stop Obamacare’s Medicaid Expansion

April 8, 2015 Leave a comment


Proponents of Medicaid expansion here in Nebraska are not giving up. This week, the Nebraska Legislature is scheduled to debate whether to expand Medicaid under Obamacare. Since the last time I wrote about this issue two weeks ago, proponents of expansion released a study claiming that expanding Medicaid would be an economic boon for our state. Nebraskans, however, should not buy into claims that expansion of government entitlement programs are justified as something that “save(s), create(s) and support(s)” jobs. Nebraskans have never used subjective measures touting “saved” or “supported” jobs when determining the efficacy of entitlement expansions, and it would be irresponsible to begin doing so today.

 

History has shown that taking money from taxpayers and giving it to another group of individuals through an entitlement program does not result in real or sustainable economic development. If you could simply grow an economy through the transfer of wealth by government, poverty would not have existed under Soviet rule of Russia and our Federal Government could simply spend its way out of any recession. Expanding Medicaid will not result in the tax relief and good-paying jobs we need to grow Nebraska for the next generation.

 

Not only is the basis for Medicaid expansion flawed, but it would be an expensive burden for Nebraska taxpayers, adding an additional $158 million burden to the state budget and competing with other budget priorities like meaningful property tax relief or future roads funding. Today, Nebraska’s Medicaid program consumes $1.8 billion of the state’s total budget to serve about 238,000 people annually. This year, Medicaid makes up nearly 19% of total state spending. In 1979, it represented 2.9%. Just this past year, the Federal Government recalculated Nebraska’s Medicaid match rate, creating an additional $75 million that the State of Nebraska must pay just to maintain our existing Medicaid program. As you can see, our current Medicaid program is already costing Nebraska taxpayers more and more money.

 

Expanding Medicaid in Nebraska is a risky proposition for taxpayers not only because of the expense but also because we cannot trust the Federal Government’s long-term financial commitment to state programs. History has shown time and again that the federal government frequently makes promises of funding, and then scales back its commitment. The most recent example of this is the Federal Government’s decision to end its financial commitment to CoOportunity Health, a consumer operated and oriented plan which provided private health insurance coverage to thousands of Nebraskans. CoOportunity was started as a part of an initiative born out of Obamacare and partially funded with federal dollars. At the end of 2014, the Federal Government walked away from its commitment to CoOportunity, leaving the co-op insolvent and policyholders scrambling to find new coverage. If the Federal Government failed with CoOportunity, it would be unwise to depend on long-term funding for expanding our Medicaid program here in Nebraska.

 

Rather than depending on the Federal Government, let’s look for solutions here in Nebraska so that we can get more people covered by private insurance. Right now, we have many good jobs open around the state, many of which offer private health insurance benefits. This past week, I signed Executive Order #15-03 to create the State Workforce Development Board to bring together a broad range of stakeholders to provide state-level coordination and integration among federal and state workforce development programs. By leveraging current workforce development programs, we can connect more Nebraskans with open good-paying jobs that have the benefits they need rather than expanding entitlement programs. A recent analysis predicted that up to 45,000 Nebraskans who currently pay for private health insurance would trade their coverage for Medicaid under the proposed expansion. Any effort to connect Nebraskans with healthcare should avoid incentivizing people to drop private coverage.

 

With the approaching debate, it is important that your state senator hear your thoughts on this proposed expansion of Medicaid under Obamacare. You can find all the information you need on how to contact your state senator about this important issue by visitingwww.NebraskaLegislature.gov.

 

Governor Pete Ricketts

Governor Pete Ricketts

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