LINCOLN (AP) — Nebraska will see an estimated $44 million cut in federal Medicaid funding in its next two-year budget, a loss that will force lawmakers to make up the difference with state dollars when they convene next year.
The Nebraska Department of Health and Human Services has requested an additional $18.9 million in state aid for fiscal 2014 and $24.8 million in fiscal 2015 to offset the projected loss in federal matching dollars, according to budget documents obtained by the Associated Press.
Like other states, Nebraska splits costs for the federal-state Medicaid program for the poor and disabled with the U.S. government. Federal officials pay a minimum of 50 percent, but their matching contribution to Nebraska has dropped in recent years. Aid is distributed based on each state's per-capita income and population, as well as other factors.
"As far as I know, it's never been cut to the extreme that we're talking about now," said North Platte Sen. Tom Hansen, a member of the budget-writing Appropriations Committee who is running for chairman next year. "We usually make up the difference, so we harm as few people as possible. That's the idea. But it's all a big question right now, where the new money will come from. It's a new ball game."
Hansen said he expects Medicaid funding will one of the top issues when lawmakers set a new budget, along with school funding and possible reforms under the federal health care law.
Nebraska's economy remains strong compared with other states. Tax revenues are expected to increase to nearly $4.1 billion during the next fiscal year, which starts July 1. The state's unemployment rate declined to 3.8 percent in October — one of the nation's lowest and less than half the national rate of 7.9 percent.
Omaha Sen. Jeremy Nordquist said the decrease in funding demonstrates the formula's purpose: to help states when they're struggling and pull back when their economies are running strong.
"It ebbs and flows," Nordquist said. "We've absorbed this in the past. It is an increased cost to our general fund, and our state will have to come up with a bigger share. But it's something we deal with on a constant basis. It'll be part of the total budget package as we look to balance all of the state's needs."
Nordquist said the state is generally required to provide services to Medicaid recipients, but lawmakers may have wiggle room with the amount "overage" given to the department each year. Lawmakers deliberately project more than they think the department will spend to provide a cushion, he said. Lawmakers are also expected to see revenues increase this year as the economy recovers.
Nebraska is among a handful of Midwestern states losing federal aid. Iowa, North Dakota and South Dakota are all seeing their federal contributions drop by at least a percentage point, according to the Federal Funds Information for States, which tracks the effects of federal policy decisions on states.
Nebraska State Budget Administrator Gerry Oligmueller said the amount requested by the Department of Health and Human Services will likely change as lawmakers work with each agency to set funding levels. The federal contribution to Nebraska Medicaid is expected to fall by 1.02 percentage points in fiscal year 2014.
"That's not small," Oligmueller said. "A percentage change in what the federal government expects to pay for Medicaid is not a small number.
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