Medicaid funding cut now $52 million

By GRANT SCHULTE
Associated Press

LINCOLN, Neb. (AP) _ Nebraska is seeing yet another federal funding cut to Medicaid this year, forcing lawmakers to reduce services or make up the difference with state dollars before they approve a new budget.

The state is expected to lose another $8 million in Medicaid funding, on top of a $44 million reduction that state officials anticipated last year, state budget administrator Gerry Oligmueller told The Associated Press. The money was expected to go into the state's upcoming two-year budget, which runs from July 2013 until June 2015.

Oligmueller said the federal payments will drop by about one-half of a percentage point, from 54.74 percent to 54.28 percent.

"While that may seem relatively small, it translates to a large dollar amount,'' Oligmueller said.

The decline is a good-news, bad-news situation for Nebraska: Federal aid is distributed based on each state's per-capita income and population, relative to other states. For states like Nebraska, which are faring better than others, the federal government reduces its payments.

Sen. Heath Mello, chairman of the state's budget-writing Appropriations Committee, said the reduction came as a surprise. Mello said the committee will propose a series of cuts to different programs within Medicaid, spreading them out to reduce their impact. States are generally required to provide services to Medicaid recipients.

"It caught us by surprise,'' Mello said. "It was something we didn't plan on. This is one of those issues that come up during the legislative process that we have to deal with.''

A state revenue-board meeting on Thursday could also influence how much wiggle room lawmakers have in their budget for Medicaid and other priorities. Mello said his budget-writing committee is keeping close tabs on the meeting, in which board members update their projections for how much tax revenue the state will collect.

"If there's a significant change, it could throw a wrench into the budget that we're finalizing now,'' Mello said.

Like other states, Nebraska splits costs for the federal-state Medicaid program for the poor and disabled with the U.S. government. The federal government pays at least 50 percent, but its matching contribution to Nebraska has dropped in recent years.

The federal contribution to Nebraska Medicaid has bounced from a low of about 54 percent to a high of nearly 65 percent since the program began in 1963, according to the Nebraska Department of Health and Human Services. The federal contribution has gradually trended downward since the 1990s.

"It's funding to allow the program to remain whole,'' said department spokeswoman Kathie Osterman. "It may be an increase in federal funding and decrease in state, or a decrease in federal and an increase in state. Both have happened.''

A bill that would have expanded Medicaid to cover more low-income adults in Nebraska stalled this week, after lawmakers fell short of the 33 votes they needed to force an end to debate. Republican opponents in the officially nonpartisan Legislature spent hours questioning the measure and assailing it as unaffordable.

The measure, an optional piece of the federal health care law, promised a minimum 90 percent match rate from the federal government and full funding for the first three years. The 90 percent match would only have applied to residents who qualified for coverage under the expansion.

Nebraska is among a handful of Midwestern states losing federal aid. Iowa, North Dakota and South Dakota are all seeing their federal contributions drop by at least a percentage point, according to the Federal Funds Information for States, a service used by state governments to study the impact of federal budget decisions.

Compared with other states, Nebraska's economy has fared well in recent years. Tax revenues are expected to increase to nearly $4 billion during the next fiscal year, which starts July 1. The state's preliminary unemployment rate in March was 3.8 percent _ one of the nation's lowest, and half the U.S. rate of 7.6 percent.

Last modified onMonday, 22 April 2013 10:01

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