Bill to help hospitals advances

Feb. 15, 2024, 4 p.m. ·

Nebraska Capitol (Photo by Fred Knapp, Nebraska Public Media News)
Nebraska Capitol (Photo by Fred Knapp, Nebraska Public Media News)

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A proposal designed to shore up financially troubled hospitals is advancing in the Legislature. And local government groups say their constituents support raising sales taxes to lower property taxes, but also want to maintain local services.

Thursday, senators considered a bill to get more Medicaid money for hospitals from the federal government. Sen. Mike Jacobson, lead sponsor, said most Nebraska hospitals are losing money because Medicaid payments have not kept up with rising costs, and over the last year and a half, they’ve been cutting services.

“Three rural hospitals have closed their labor and delivery units. Two hospitals have closed their hospital-owned nursing homes. Hospitals have also closed behavioral health, hospice and home health services. All of these are needed community services that could no longer be sustained by our nonprofit hospitals with current reimbursement rates,” Jacobson said.

Sen. Christy Armendariz, who’s made Jacobson’s bill her personal priority, said if Medicaid doesn’t pay enough, the costs get shifted to others.

“Unfortunately when the hospitals come up short treating patients, they go to other sources – more than likely to those private pay patients (who) are gonna pay a little bit more to fill those unmet cost(s),” Armendariz said.

Under the bill, hospitals would pay up to 6 percent of their revenues into a fund that would then be used to leverage additional Medicaid reimbursements from the federal government. Jacobson said the state and federal governments would agree on goals for measurable improvements in services, such as screening patients for emotional health and connecting them with services like transportation and housing to try and head off future problems. He said for every dollar hospitals put into the fund, the federal government would reimburse them an additional $2.19. He said that would bring an extra $1 billion a year into the state.

Sen. Ben Hansen, chair of the Health and Human Services Committee, supported the bill, but expressed concern that the federal government might change the rules for reimbursement in the future. Hansen said he’s seen it happen repeatedly.

“About five years later, the federal government comes back and says, ‘Well, this is what we mean by health equity and access. We want to see these metrics now, otherwise you're not gonna get this money anymore.’ And of course, everybody on the floor here freaks out and says, ‘We can't give up federal money, federal funds, we can't lose federal funds.’ And so a lot of times we end up voting for stuff and continuing programs such as this that we may not agree with, to not lose these federal funds,” Hansen said.

Jacobson said there are no guarantees about how the program will be structured in the future, but Nebraska should take advantage of it now, something he said 44 other states are already doing.

“This is a huge program for the state. I can't imagine why we would not want to continue this program as long as the federal government is going to be there to fund it,” he said.

At Gov. Jim Pillen’s insistence, Jacobson offered and senators accepted an amendment to sunset the program at the end of 2026, when senators could decide if it was working as intended. Sen. Machaela Cavanaugh said she wants that sunset to be taken out when the bill reaches the next stage of debate. Senators then vote 40-0 to give the bill first-round approval.

Also Thursday, the Nebraska Association of County Officials released a poll they said shows Nebraskans support Pillen’s idea of raising sales taxes in order to lower property taxes. Jon Cannon, who lobbies for the county officials, described the results this way.

“If you’re looking at a 1 percent increase in the sales tax, which is what we were looking at, 65 percent of Nebraskans either strongly favor or favor that. And if it’s just a .5 percent increase in the sales tax, 69 percent either strongly support or support,” Cannon said.

The way the question was worded, it said there are proposals in the Legislature to reduce property taxes by increasing the state sales tax rate, in order to allow local governments to continue to provide important services, and asked people if they would support that.

Last year, Pillen and the Legislature increased state aid to schools in an effort to reduce property taxes. But three-quarters of the state’s school districts voted to exceed the so-called “soft cap” of three percent on tax increases contained in the bill. In reaction, this year Pillen is proposing a “hard cap” on local government tax increases, in exchange for sales tax revenue from the state. But Lynn Rex, a lobbyist for the Nebraska League of Municipalities, said that would hurt local government services in inflationary times

“The governor’s talked about a zero percent cap. For us, we just can’t make that work. We’re negotiating, trying to get to a three percent cap on property tax asking, or cpi, which is ever (sic) greater,” Rex said.

CPI refers to the consumer price index, a measure of inflation. The Revenue Committee has held public hearings on various proposed tax changes, and is now expected to hammer out a recommendation.

On other subjects, the Legislature appears to have reached compromises on two bills debated this week. Regarding expanded broadband, senators agreed to restrict public power’s ability to lease unused fiber optic cable to private companies to only areas deemed unserved. That’s defined as areas with service at speeds slower than 100 megabits per second for downloads and 20 megabits per second for uploads.

Competitors can challenge new leases before the Public Service Commission by claiming they already provide such service. But if the commission finds they’re not meeting those speed requirements, they can be barred from future challenges for the next two years. The amended bill got first-round approval on a vote of 34-2.

Also this week, Sen. Mike McDonnell said he would revise his proposal to use $160 million from the state’s cash reserve to prepare so-called “mega-sites” with infrastructure already prepared, to lure big industrial projects. Instead, McDonnell said he would amend the bill to authorize a study costing up to half a million dollars to determine how much funding is actually needed and where such projects would go. Following that promise, lawmakers voted 41-1 to advance the bill.

The Legislature has now adjourned for a four-day weekend, and will resume work Tuesday.