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After fight over Medicaid expansion, Nebraska lawmakers will now battle over how to pay for it

January 12, 2019

LINCOLN — The battle over expanding Medicaid to more low-income Nebraskans didn’t end when voters approved Initiative 427 last fall.

But the debate has shifted from whether to do the expansion into one about how to pay for covering an estimated 90,000 more people.

State Sen. Adam Morfeld of Lincoln, who led the petition drive to put Medicaid expansion on the ballot, expressed confidence that state lawmakers and Gov. Pete Ricketts will include the necessary dollars in the state budget this year.

“We’ve worked on this for seven years, and the people have spoken,” he said. “It’s going to have to be funded pursuant to law.”

But Sen. Steve Erdman of Bayard, who fought legislative efforts to expand Medicaid, predicted the debate will be “as controversial and heated as any budget discussion in the recent past.”

He noted that the majority of voters in his legislative district opposed expansion and would rather see property tax cuts. The measure passed based on the strength of the support in Nebraska’s urban areas.

“The people voted to expand Medicaid coverage,” Erdman said. “They didn’t vote how to pay for it.”

He said he expects there will be proposals to pay for expanded coverage by cutting services to all Medicaid recipients.

The federal government requires states to pay for 13 types of health care services, such as hospital care, pregnancy care and nursing home care. Nebraska covers an additional 19 services that are classified as optional. Those range from prescription drugs to speech therapy to dental care.

Other possibilities would be imposing work requirements for Medicaid recipients, as allowed by the Trump administration, or requiring co-pays. Both ideas have the potential to cut costs and might discourage people from seeking care.

Sen. Sara Howard of Omaha, the Health and Human Services Committee chairwoman, said there also has been discussion about options for raising revenue, with the money earmarked for the expansion.

Some states have used fees or taxes on health care providers to help cover their expansion costs. Others have earmarked tobacco taxes for the purpose.

Ricketts will unveil his budget plans, including his plans for the Medicaid expansion, on Tuesday, when he delivers his State of the State speech.

He has declined to offer details until then. But he emphasized that he opposes any new or increased taxes and said that Medicaid expansion is competing with other spending priorities for the growth in tax revenue.

“The additional costs that come along with that have got to fit within the budget,” he said.

Those costs, according to the legislative fiscal office, will be about $48 million during the two-year budget period ending June 30, 2021. Those are the years for which lawmakers will be crafting a budget this session.

The estimate assumes that enrollment will not begin until Jan. 1, 2020, or partway through the first budget year, and that the costs of covering new people will be offset by savings in some other state programs.

Sen. John Stinner of Gering, the Appropriations Committee chairman, said the budget will be tight, but “doable,” with Medicaid expansion in the mix.

But he noted that current projections of state revenue leave no room for additional property tax relief. That could create conflicts, as senators look for ways to address what is a top priority for many.

Sen. Matt Williams of Gothenburg, however, said he expects lawmakers to find a way to fund the expansion.

“To do otherwise is a slap in the face of the voters,” he said.

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