Medicaid Expansion Approval Leaves Funding Questions

Nebraska voters’ approval of Medicaid expansion Tuesday leaves questions of how the measure will be implemented, and how the state will pay for its share of the cost.

As results came in Tuesday night, supporters of expanding Medicaid, like state Sen. Kate Bolz of Lincoln, were happy.

“I’m very pleased with the outcome – not just the results tonight, but what it means to folks who are in need of health insurance coverage all across the state,” Bolz said.

Opponents, like Gov. Pete Ricketts, were less pleased. In a live interview at a noisy election party with Omaha television station WOWT, Ricketts said, “If that passes, what we’re going to do is have to put it in the budget, less money for things like K-12 education, higher education, and property tax relief, and I’m not going to raise taxes, so we’re just going to make it work within the budget.”

Under Medicaid expansion, an estimated 90,000 more low-income Nebraskans will qualify for health coverage. The federal government is supposed to pay for 90 percent of the cost. But that still means the state will have to come up with 10 percent of the money.

Sen. John Stinner of Gering chairs the Legislature’s Appropriations Committee. As the results came in Tuesday night, Stinner was looking ahead to how that money would fit into the next two-year budget.

“It’s hard to know if it’ll be fully implemented. I presume it will be fully implemented. Then it’s just a matter of setting priorities and making some choices,” Stinner said.

The Legislature’s fiscal office puts the state’s 10 percent share over the next two fiscal years at $52 million. Jessica Shelburn of Americans for Prosperity Nebraska, which opposed Medicaid expansion, said that’s going to be tough for the state to afford.

“That’s money that we just don’t have as a state right now. And the governor was saying we weren’t going to raise taxes. So then that leaves cutting programs, services, in order to fulfill this obligation,” she said.

But Sen. Adam Morfeld, a leading supporter of Medicaid expansion, said new revenue from a U.S. Supreme Court decision approving a sales tax on internet sales will more than cover the cost for the first year.

“After that, we’re going to start seeing revenue and the impact of 10,000 jobs coming to our state within the first three years, which is going to increase the amount of revenue to the state,” Morfeld said, referring to projections by expansion supporters.

Kenny Zoeller, executive director of the Nebraska Republican Party, said there are still legal questions about the measure, which was approved by voters in an initiative after opponents blocked attempts to get it approved in the Legislature for the past six years.

“I think the Supreme Court laid out that there are still a lot of legal question marks when it comes to this initiative. Does the Legislature have to fund it?” Zoeller asked.

Zoeller was referring to a Nebraska Supreme Court decision in September. The court’s opinion said while the initiative could appear on the ballot, it was too early to decide whether or not it violated legal requirements for approving the money.

Lawyer Andy Barre, who represented the pro-expansion campaign in that lawsuit, said he hopes that question is answered by legislative action.

“What Mr. Zoeller seems to be saying is that the Legislature wouldn’t have to appropriate the money. That’s something that’ll be decided in the first instance in the Legislature. That’s not necessarily a battle for the courts. That’s something that’s political. And I would expect that the Legislature would listen to what the people have said at the ballot box and appropriate the money,” he said.

Barre acknowledged that the Legislature might not appropriate all of the money required, setting up a possible legal challenge.

“In that case, you’re not talking about the Legislature absolutely failing to fund Medicaid expansion. The question is do they have to fund all of it. If we get to that point, the Legislature doesn’t actually appropriate the money, then I would anticipate there probably would be some litigation. And I just don’t know that we have precedents in Nebraska that clearly govern that right now,” he said.

Zoeller also says there’s a question about whether the initiative violates the separation of powers. Barre dismisses that concern. But Zoeller says he anticipates a legal challenge.

“I can’t say if there is, will or will not be. I just know that there are so many question marks right now, I would be shocked if there was not a challenge,” he said.

Stinner says while he expects Medicaid expansion will be funded, that may delay restoring funds that were cut from higher education, or raising the rates paid to Medicaid providers.

Asked about the possibility of raising taxes to cover the costs, Bolz, also on the Appropriations Committee, says it’s too early to talk about that.

“The outcome is not even 24 hours old yet, and it’s probably too soon to draw any conclusions. But I think we all need to come together and come to the table to implement what is a clear representation of what the voters and the people of Nebraska want,” she said.

Bolz added she’s got meetings scheduled in the next weeks with policy experts and people affected by Medicaid expansion to come up with options for moving forward.