Initiative 427 Puts Expanding Medicaid in Nebraska on the Ballot

Initiative 427 would make tens of thousands of lower income Nebraskans eligible for government assistance paying for health care through Medicaid. But critics warn of the potential costs to the state budget that would come along with it.

The Affordable Care Act initially set out to expand Medicaid nationwide, but the Supreme Court determined in 2012 that each state should instead decide for itself. That created a coverage gap for people who earn too much money to qualify for Medicaid, but not enough to afford private coverage.

On Election Day, Nebraska could join 33 states and the District of Columbia that have chosen to expand Medicaid under the Affordable Care Act. If Nebraska voters approve Initiative 427, supporters say the coverage gap would be closed by making Medicaid available to anyone 19 to 64 years-old earning up to 138 percent of the federal poverty line, about $17,000 for an individual or about $35,000 for a family of four.

“These able bodied adults who need this coverage include your server who is battling depression, your receptionist with anxiety or your grocery clerk with severe allergies and so many more,” University of Nebraska-Lincoln student Bailey Ahlberg said in support of the ballot initiative at a hearing held at the state Capitol last month. “Having access to better health care on their way to a better life means they would be covered in the event of an accident. They would have access to preventive care and they would be healthier employees and students,” she said.

There are currently about 245,000 people enrolled in Medicaid in Nebraska according to the Centers for Medicare and Medicaid Services. The state Legislative Fiscal Office (PDF) and the Nebraska Department of Health and Human Services (PDF) have different estimates of how many more people would enroll in Medicaid if Initiative 427 passes, but the program could see another 90,000 people or more within a couple years.

Supporters of expansion argue those people will need health care either way. Without access to Medicaid they are more likely to put off treatment and that can be costly in the long-run.

“We have a system of uncompensated care in our state where if someone goes to the emergency room and they don't have insurance, they have to be seen but that cost gets borne somewhere else in the system,” said Molly McCleery, deputy director of the Healthcare Access Program at Nebraska Appleseed. “So it gets passed off to people who are paying their premiums. It gets passed off in the form of higher medical costs and so we all sort of absorb this if this doesn't happen,” she said.

But expanding Medicaid brings with it a cost to the state budget and that’s why many opponents, like Susan Gumm of Omaha, say they’ll vote “no” on Initiative 427.

“Nebraska is already one of the highest tax states and we already have difficulty paying for our current citizens on Medicaid,” Gumm said at the same hearing at the Capitol. “Medicaid expansion would almost certainly lead to higher taxes to cover the inevitable costs.”

The projections also vary on just how much expanding Medicaid would cost. By 2021 it could be anywhere from $400 million to more than $600 million overall. Under the Affordable Care Act, the federal government would pay 90 percent of that cost. The remaining share paid by the state could range from nearly $40 million to more than $50 million per year, which would add about one percent to the state’s annual budget.

“It doesn't sound like a lot, but where is that money going to come from?” asked Jessica Shelburn, state director of Americans for Prosperity in Nebraska. “In the Legislature they were fighting over thousands of dollars in this last biennium and now we're talking about adding $52 million?”

Shelburn said lawmakers could consider reducing reimbursement rates to doctors in order to pay for expanded enrollment, or the state could pull back on some optional benefits provided to Medicaid enrollees such as dental care, physical therapy and prescribed drugs.

“I think it's a very real likelihood that the State may look at reducing some of the optional services, so people who are already on Medicaid could lose services that they are currently receiving as a result,” Shelburn said.

McCleery from Appleseed said the state would have other options. Some states are looking at increasing cigarette taxes or hospital fees. McCleery says as long as Nebraskans are paying into Medicaid expansion nationwide, the state should get something out of it.

“We know right now the harm that not having insurance is doing to so many of our friends and our neighbors and to our communities,” McCleery said. “And that's something that we do know and we can act on right now.”

But for Shelburn and other critics of Initiative 427, adding to Medicaid spending in Nebraska or nationwide is more than taxpayers can afford. “It's not like they have a bank account set aside with $600 million in it to pay for Medicaid expansion in Nebraska or in any other state,” Shelburn said.

Nebraska won’t be the only state to decide on expanding Medicaid in the mid-term election. The issue will also be on the ballot in Utah and Idaho, and Montana voters will choose whether to make expansion permanent.