Let’s See What Condition Our Condition Is In

Editor’s Note: This article is part of a series, see the bottom for a complete list.

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How did Nebraska’s Medicaid program morph into one that’s rated second only to the one operated by the State of Massachusetts in terms of the most benefits offered while, at the same time, imposing the least number of rules and restrictions on the ability to get and keep those benefits? A little stroll through the history of Medicaid is necessary to answer that question.

Medicaid was a part of President Lyndon Johnson’s “Great Society” program, enacted to wage a “war on poverty.” Medical payments were left out of the original Social Security Act (SSA). Johnson’s 1965 amendments to the SSA created both the Medicare and the Medicaid programs to remedy that perceived problem. Although both are entitlement programs, Medicare was and is a health insurance program, largely for persons 65 years of age and older, which is funded entirely at the federal level by taxes and/or premium payments. Medicaid is a means-tested, needs-based, social welfare program designed to cover low income families with minor children; pregnant women and their babies; and the aged, blind and disabled, and funded by a combination of state and federal tax dollars.

Although a state’s participation is voluntary, all fifty states currently do participate in the Medicaid program. I’m not sure when Nebraska got on board, but it was prior to 1982 when Arizona became the last state to join.

As a joint state/federal program, the states are allowed some control over what Medicaid looks like within each state’s boundaries. As a result, it’s accepted as a truism that, if you’ve seen one state’s Medicaid program, . . . you’ve seen one state’s Medicaid program. An official government website explains it this way:

“Within broad national guidelines established by federal statutes, regulations, and policies, each state establishes its own eligibility standards; determines the type, amount, duration, and scope of services; sets the rate of payment for services; and administers its own program. Medicaid policies for eligibility, services, and payment are complex and vary considerably, even among states of similar size or geographic proximity. Thus, a person who is eligible for Medicaid in one state may not be eligible in another state, and the services provided by one state may differ considerably in amount, duration, or scope from services provided in a similar or neighboring state. In addition, state legislatures may change Medicaid eligibility, services, and/or reimbursement at any time.”

This explains how and why the states varied so widely in the fifty-state comparative study, cited in my earlier article in this series, and zeros in on who’s responsible for Nebraska’s No. 2 ranking. The Nebraska Unicameral — you know, our state legislature that’s historically been comprised of a supermajority of fiscally-conservative Republicans — has consistently voted to expand the state’s Medicaid program beyond what the federal government requires AND, apparently, beyond what at least 48 other states consider financially and politically feasible. If you’re willing to follow me as we slog through some charts and graphs, I’ll explain why I say the buck stops there.

As I noted in my previous article in this series, there are two ways a state can expand its Medicaid program:

by making the services that are optional under federal law mandatory under state law and
by making more people eligible under state law than federal Medicaid law requires.

Nebraska has done both, not just once, but repeatedly over the last 25 years. The first article in this series contains a chart listing the mandatory and optional services Nebraska Medicaid currently provides. I’m not going to repeat that information here. Let’s turn, instead, to the issue of eligibility.

The first graph, embedded below, documents the effect some of the changes in Medicaid laws and regulations, both federally and here in Nebraska, have had on the numbers of Nebraskans eligible for Medicaid between 1987 and 2006. You can visually see and appreciate, I hope, the sometimes steep but always steady increase in the numbers of Nebraskans who qualify. In particular, notice how the slope of the line changes in apparent reaction to changes in the law. The subtitle of the graph, added not by me but by the Nebraska Department of Health and Human Services, admits the causal connection by noting that those changes highlighted in bold on the graph “had significant impact on the number of persons eligible for Medicaid.” There are some small decreases in numbers of eligibles, but, overall, the clear trend has been for the laws to expand eligibility for services rather than to restrict it.

The second graph (below), taken from the Nebraska Medicaid’s annual report for 2012, shows the explosion in numbers of eligibles from 2009 and projected into 2014. As jaw-dropping as the second graph is, don’t miss the parenthetical comment in the fourth line of the graph’s title. It warns that the projections shown on the graph do not take the Affordable Care Act (“Obamacare”) into account.

THE BOTTOM LINE? THIS GRAPH DEMONSTRATES THAT WE’RE IN FOR A HEFTY INCREASE IN THE NUMBERS OF NEBRASKANS ELIGIBLE FOR MEDICAID EVEN IF THE UNICAMERAL DOES NOTHING TO FURTHER EXPAND THE PROGRAM.

Okay. Let’s step back now and look at the big picture. In summary, the Nebraska Medicaid program currently pays for two types of services:

mandatory services (those the federal Medicaid law requires the state to provide, also called “the federal core” services), and
optional services (those the state chooses to provide, which are also called “state expansion” services).

Nebraska Medicaid also covers two types of eligibles or “enrollees”:

mandatory enrollees (those persons the federal Medicaid law requires the state to cover, also called “the federal core” enrollees), and
optional enrollees (those persons the state chooses to cover, which are also called “state expansion” enrollees or eligibles).

A January 2012 report by the Kaiser Commission on Medicaid and the Uninsured has some eye-popping charts that show just how much of the money that’s spent in the U.S. on Medicaid annually is traceable to federal requirements and how much is attributable solely to states’ decisions to exercise their options regarding both services and eligibles/enrollees. Here they are:

The key findings of the report were summarized as follows:

Seventy percent (70%) of enrollees were federal core enrollees, while three in ten were covered through a state expansion (Figure 1, above).
Four in ten dollars were spent on federally-required services provided to federal core enrollees (Figure 2, above). THE REMAINING SIXTY PERCENT (60%) OF SPENDING WAS FOR STATE EXPANSION (i.e., OPTIONAL) ENROLLEES AND OPTIONAL SERVICES.

And that’s the GOOD news.

The proportion of spending dedicated to optional enrollees and optional services is even greater in Nebraska. Here only about three of every ten dollars spent are for federally-required services provided to federal core enrollees. The remaining seventy percent (70%) of spending is for state expansion (i.e., optional) enrollees and optional services.

So, in essence, almost 70% of Nebraska Medicaid spending could be saved if the members of our state legislature, aided and abetted by some cooperative governors along the way, had not already chosen to expand the state’s Medicaid program far beyond federal minimum requirements.

In closing, fellow Nebraskans, the next time our elected officials begin whining and crying about onerous federal mandates and how expensive they are, keep Nebraska’s Medicaid spending in mind and you’ll understand who’s really responsible for the condition Nebraska’s fiscal condition is in.

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This article series is about Nebraska’s Medicaid program, legislation introduced in the Unicameral aimed at expanding it, and the many reasons why expansion is an uncommonly bad idea.

This first grouping of articles don’t necessarily have to be read in order as they are research, principle, and policy focused:

This next grouping of articles report events affecting the progress of legislation in the Unicameral, listed in the order in which they were published: