Medicaid Expansion and the ACA will reduce
spending for state and local programs
- Nebraska currently provides assistance with some health care costs for persons who are unable to afford those costs or for whom the state is obligated to provide care. Medicaid expansion combined with other provisions of the Affordable Care Act (ACA).
- The Nebraska Comprehensive Health Insurance Pool (NECHIP) offers subsidized coverage for persons who cannot obtain insurance due to a pre-existing condition.1 In 2014, the ACA will prohibit insurers from denying coverage on the basis of the applicant having a preexisting condition.
- Nebraska subsidizes behavioral health services for persons who have limited incomes. The ACA requires coverage of behavioral health services in policies offered in the Exchange. Those services would also be covered through the Medicaid expansion.2
- Nebraska pays for health care for inmates housed by the Department of Corrections if those services are provided outside of a correctional facility. Many of those inmates will have incomes of less than 138% of the federal poverty level and would be eligible for Medicaid through the expansion3
- Nebraska provides screening services for breast and cervical cancer for low income Nebraskans.4 Disease screening services will be covered through Medicaid expansion to persons with incomes up to 138% of poverty and policies offered in the Exchange.
- Milliman, in its report on the cost of Medicaid expansion in Nebraska, identified savings in two programs: coverage of pregnant women above 138% of poverty5 and the state disability shift and expansion to 138% of poverty6. The report also noted that there would be state savings that would result from the termination of the disproportionate share hospital program.7
- As information in the footnotes indicates, General Fund savings attributable to the programs listed above are estimated to be at least $25 million annually.8
- In addition to state program savings, counties anticipate savings, as a result of Medicaid expansion, in General Assistance and mental health programs.9
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1 The CHIP Distributive Fund receives revenue from the state taxation of health insurance premiums. In CY2011, NECHIP used $27,233,528 in funding from the CHIP Distributive Fund to subsidize coverage. http://www.nechip.com/cb_statements This link is to a list of NECHIP Financial Statements. The information cited is from the December 2011 Income section of the Financial Statement. The CHIP Distributive Fund is financed by a health insurance premium tax. Tax collected that is not required to cover NECHIP costs is allocated to the Insurance Tax Fund (50%), the General Fund (40%) and the Mutual Assistance Fund (10%). http://www.revenue.ne.gov/tax_exp/2002/l.pdf
2 Fiscal Note on LB 577 dated February 27, 2013. The potential amount of General Fund savings noted in the narrative section of the fiscal note is $6,000,000. Earlier estimates set the savings at $29,000,000. Behavioral health savings are not included in the fiscal note tables. http://www.nebraskalegislature.gov/FloorDocs/Current/PDF/FN/LB577_20130228-083515.pdf
3 Fiscal Note on LB 577 dated February 27, 2013. While the cost of hospitalization of inmates outside of the correctional facility was estimated at $2,213,620, full year savings were projected by the Department of Corrections to be $729,616. The lower estimate resulted from the assumption that some inmates may not be legal residents and therefore ineligible for Medicaid, some may not cooperate with the application process and some providers may not accept Medicaid.
4 Robert M. Damler, Principal and Consulting Actuary for Milliman in a letter to Vivianne Chaumont dated January 8, 2013, Page 10. Milliman estimates that the coverage of cancer screening will reduce Medicaid costs for persons between 138% and 225% of poverty who will move to coverage in the Exchange ($800,000 GF) and in the Nebraska’s Every Woman Matters program ($600,000 GF). http://www.statereforum.org/sites/default/files/ne_medicaid_ppaca_fiscal_impact_2.pdf
5 Robert M. Damler, Principal and Consulting Actuary for Milliman in a letter to Vivianne Chaumont dated January 8, 2013, Page 10. Milliman estimates that services to pregnant women between 138% and 185% of poverty will shift to the stand-alone CHIP program, which has a higher federal match rate thereby reducing state costs by $600,000. Milliman also notes that the enhanced CHIP match rate will reduce state expenditures by $79,400,000 in the five-year period ending June 30, 2020.
6 Fiscal Note on LB 577 dated February 27, 2013. The State Disability Medical Program covers persons who have a disability that is expected to last at least six months. The program provides coverage for up to 12 months, at which time it is expected that Medicare coverage begins. Both Milliman and the LB 577 fiscal note identify annual savings greater than $9,000,000.
7 Robert M. Damler, Principal and Consulting Actuary for Milliman in a letter to Vivianne Chaumont dated January 8, 2013, Enclosure 1, Page 2. There is an estimated $12,300,000 in savings in the three-year period ending June 30, 2020.
8 The projected savings does not include the $79,400,000 in savings through 2020 that is attributable to the enhanced CHIP match rate.
9 Fiscal Note on LB 577 dated February 27, 2013. Estimates of savings for Douglas and Lancaster Counties are included in the fiscal note. Douglas County estimates potential annual savings of $3.82 million in General Assistance, health care and mental health services. Lancaster County only estimated savings in General Assistance, which was set at $2.5 million in FY-15.