AFP-NE’s LB 887 Testimony in Opposition

Jan 30, 2014 by AFP

On January 29, 2014 AFP-NE Director, Matt Litt, testified in opposition of ObamaCare Medicaid expansion. The hearing started at 1:30 PM and went beyond 6:00 PM. Here is what Litt presented at today’s Health and Human Service Committee hearing on LB 887.


Chairwoman Campbell and Members of the Committee:

My name is Matt Litt, M-A-T-T-L-I-T-T, and I am the Nebraska Director of Americans for Prosperity, a free-market advocacy group with over 40,000 members statewide.

I am here today to express our opposition to LB 887.

Medicaid expansion would cost the federal government $930 billion from 2014 to 2022.  It is unknown how the federal government can fund nearly $1 trillion in additional spending without gradually shifting those costs onto the states.

The cost of Medicaid expansion in Nebraska would be devastating to our state budget.  Gov. Heineman estimates that Medicaid expansion would cost Nebraska as much as $766 million over 10 years.  And if the federal government does reduce the federal Medicaid match that number could go up dramatically. President Obama has already suggested funding cuts on two occasions: the 2011 debt ceiling negotiations and his fiscal year ’13 budget.

States have been negotiating with the Center for Medicare & Medicaid Services on different ways to expand Medicaid under ObamaCare. The latest trend is a quasi-private plan, like the one we are discussing today.

Americans for Prosperity-Nebraska opposes this bill for three reasons: it will further crowd out the vulnerable of our state, it further expands the harmful regulations of ObamaCare, and is simply unaffordable.

There are 11 counties in Nebraska without a primary care physician. People are already seeing their appointments cut shorter. What happens when we increase the number of patients, 54,000, and don’t increase doctors? Longer wait times and fewer appointments. More importantly, what does flooding the system with 54,000 more people do to the neediest that are on traditional Medicaid? Medicaid patients already have issues with finding a doctor and getting appointments. The WIN Act will only intensify this problem and hurt those who need help the most.

This bill and others like it around the country have been sold to people as a private solution, yet Medicaid expansion is anything but a private enterprise. All Medicaid expansion programs must operate under ObamaCare’s health insurance exchange marketplace. It should be mentioned that the Exchanges are still facing issues: children not being enrolled with their families, the backend of the site has yet to be completed, insurance companies are not receiving reliable data, there security concerns, and more.

LB 887 does not provide a Medicaid waiver so that enrollees can take their premium subsidies and enter into a truly free marketplace and purchase the type of coverage that’s right for them and their families. Instead, according to the WIN Act, enrollees must enter through the exchanges and purchase coverage that meets the essential health benefits test defined by the federal government. Thus, “essential health benefits” people don’t need and/or want are being paid for by the taxpayers. These “essential health benefits” are leading to more costs.

To further illustrate the point that this is a quasi-private, at best, option: the US Department of Health & Human Services (HHS) still has much more to determine. For example, in LB 887 HHS still must determine payment models and reimbursement methodologies. The people of Nebraska and their representatives cannot fully know what to expect because bureaucrats in Washington DC have yet to decide.

Finally, expanding Medicaid under ObamaCare is simply unaffordable. The cost over the long run is unknown but is likely to dwarf the cost of LB 577 because of its ‘quasi-private-option’ component. Private insurance coverage is more expensive than simply offering Medicaid program coverage, due to a higher reimbursement rate, etc.

To quote the first draft of the LB 887 Fiscal Note, “there is a great degree of uncertainty in projecting the cost of this provision”. We respect the work of the Fiscal Office, but the problem is they are trying to interpret a law, the ACA, that is still being written and implementation has been murky at best.  No one can accurately project costs. If you’ll recall, the Fiscal Note for LB 577 was modified five times.

The latest Fiscal Note on LB 577 projected total costs for the state to the end of the decade for implementing Medicaid expansion to be $82,039,888, now LB 887 predicts the state’s funding obligation through the end of the decade to be $89,745,971. That is more than a $7.7 million difference. The point is every time we evaluate the Medicaid expansion concept the costs to the state budget keep increasing and there’s no guarantee when or at how much these costs will stop increasing. President Obama has repeatedly offered cutting the federal funding portion of Medicaid in budget deals.  Federal FMAP cuts are routine, in fact our state budget absorbed $52 million in Medicaid funding cuts last year alone.  Relying on the federal government to fulfil their funding commitments would be irresponsible, considering the facts and recent history.

Furthermore, Nebraskans may be picking up the tab sooner than later. It is stated in the CMS waiver for the Arkansas expansion plan that the state has to pick up 100% of the costs over what CMS agrees to pay. The Iowa waiver has a similar budget neutrality provision. Another unknown cost for Nebraskans.

Washington DC is out of money and by rejecting Medicaid expansion under ObamaCare, Nebraska lawmakers would protect our state from having to foot the bill when Washington once again fails to deliver.

While providing access to affordable health coverage for all Americans is a laudable goal, simply expanding government programs and adding to our already unmanageable federal debt is not the right approach.

Thank you for your time and service to our state. I will try to answer any questions you may have.