MEDICAID EXPANSION

LINCOLN — Providing health coverage for nearly 124,000 low-income Nebraskans would cost the state almost $1 billion over the next decade, according to a report released by state officials Tuesday.

The report shows that the state cost for Legislative Bill 1032 would average $788 per year per insured person.

A majority of the costs would be covered by nearly $14 billion in federal funds.

But opponents said the bill would be unaffordable.

"I think this is a very expensive way of covering these individuals," said Calder Lynch, the state's Medicaid director. "I have serious concerns from both a fiscal and policy perspective."

The report looks at the potential cost of Legislative Bill 1032, introduced by State Sen. John McCollister of Omaha. The bill represents the latest proposal for extending publicly funded health coverage to more low-income Nebraskans.

The report was done by Optumas, an Arizona-based company that has done other actuarial studies for the Nebraska Department of Health and Human Services.

State officials released the report the day before a legislative hearing on LB 1032. Legislative fiscal staff plan to issue an estimate of the bill's cost later.

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It also came out the same day as a report from the federal Centers for Disease Control and Prevention showing that the number of uninsured Americans has dropped during the last two years.

Among adults age 18 through 64, the percentage without health coverage nationally dropped to 12.9 percent as of September, down from 20.4 percent in 2013 and 16.3 percent in 2014, according to that report.

Eight states saw a significant drop in uninsured rates from 2014 through September, including seven states that have expanded Medicaid coverage.

Nebraska, which has repeatedly rejected Medicaid expansion, saw its uninsured rates inch slightly higher.

Rates dropped slightly in Iowa, which expanded its Medicaid program in 2014. Iowa previously had offered limited health coverage to some people now qualifying for the Medicaid expansion.

The federal act envisioned that states would expand their Medicaid programs to cover people with incomes up to 133 percent of the federal poverty level, who could not afford the new private health insurance options.

LB 1032 is based on the Medicaid expansion program offered in Arkansas since 2014.

It would use Medicaid funds to buy private health insurance for some people and to pay the employee's share of insurance premiums for others.

Those who are medically frail would be covered under the regular Medicaid program.

Republican Gov. Pete Ricketts has been outspoken in his opposition to proposals for expanding publicly funded health coverage in Nebraska.

He argues that it is unaffordable and would expose Nebraska to long-term budget risks if the federal government does not uphold its funding commitments.

Lynch echoed those concerns Tuesday, saying there is a risk that future Congresses would make changes in the Affordable Care Act. The act currently provides for the federal government to pick up 90 percent of the tab for the newly covered people.

LB 1032 provides that the Nebraska program would end if federal funding drops below 90 percent. But Lynch said "legal and practical realities" would make it difficult to end the expanded coverage.

According to the Optumas report, the new program would cover 74,206 previously uninsured people by buying private health insurance.

The program would pay the employee share of premiums for an additional 34,662 people who work at jobs offering insurance.

Finally, an estimated 15,121 people with pre-existing health problems would be added to traditional Medicaid.

Providing that coverage would cost the state $1.5 billion over 10 years, according to the Optumas analysis.

The cost would be offset by $333 million of savings on other state-funded programs that would no longer be needed.

It also would be offset by $249 million collected as premium contributions from those gaining coverage. Under LB 1032, people earning more than 50 percent of the federal poverty level would have to contribute 2 percent of their income toward health care.

LB 1032 would provide health coverage to people who cannot qualify for Medicaid now.

Under state law, able-bodied adults without minor children cannot qualify for Medicaid no matter how low their income. Parents and disabled adults can qualify only if their incomes are well below the poverty level.

But people making less than the federal poverty level — $24,300 for a family of four — cannot qualify for tax credits in the health insurance marketplaces, leaving many Nebraskans in a coverage gap.

The number of states adopting Medicaid expansion has grown steadily, to 31 states and the District of Columbia. Four other states are considering following suit.

Contact the writer: 402-473-9583, martha.stoddard@owh.com

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