Nancy Hicks, Lincoln Journal Star
August 21, 2010

Savings for counties

The governor may be upset over the potential cost of allowing more poor people into the Medicaid program, but county commissioners ought to be singing hallelujah.

Health care reform has the potential to save counties -- and thus property taxpayers -- a bundle.

The county is the medical provider of last resort, paying the bills of poor people who aren't eligible for Medicaid or anything else.

That's generally seriously ill adults younger than 65 who have no money and no assets (home, savings account).

Last year, Lancaster County spent about $2 million on health care for these people.

It's the assumptions, silly

That's why one think-tank (Kaiser Family Foundation) can say health care reform will likely cost Nebraska $155 million over six years (2014-19) and another company (Milliman Inc.) can estimate the six-year cost at $573 million.

The costs are based on different assumptions.

Like how many lower income people will switch from workplace health insurance to Medicaid.

Or how much doctor rates will rise.

The competing analyzes already have drawn criticism.

The lower estimate by the Kaiser Foundation did not include physician payments, any increase in children served by Medicaid or the state's new administrative costs, according to the American Enterprise Institute, a conservative national research organization.

The Center on Budget and Policy Priorities has accused Milliman Inc. of using an artificially high rate for the number of people who will switch from private or company health plans to tax-funded Medicaid in a report the company did for the state of Indiana. (Everyone will switch in the company's full-participation scenario.)

State costs would be 28 percent to 38 percent lower if the analysis assumed a lower switch rate, according to the center.

That same assumption -- everyone switching -- is used in Milliman's Nebraska report.

Staggering and shocking

Staggering is what Gov. Dave Heineman called the estimated 10-year cost of Medicaid in the Milliman report ($526 to $765 million).

It is a big number, but it is for 10 years -- and 10 years worth of anything might be staggering.

Lancaster County will likely save at least $20 million over 10 years under health care reform, a smaller scale of staggering.

Medicaid spending is already a big number.

In fiscal year 2009, Nebraska spent about $504 million in state tax dollars on Medicaid. Another $1 billion came from the federal government.

Medicaid is the second of the Big 3 state budget busters.

No. 1 is state aid to public schools - about $1 billion.

No. 3 is state funding for the university - about $500 million.

Bad HHS data

A study is only as good as its underlying information, says state Sen. Jeremy Nordquist, a Democrat who likes health care reform.

Nordquist said the state agency providing information to Milliman for the Medicaid cost study "has a questionable history of getting the numbers right."

In 2009, the state Department of Health and Human Services estimated 5,430 children would be added to Medicaid in the first year if the Legislature raised family income eligibility levels to 200 percent of the poverty level.

The higher income level passed, and 2,186 additional children enrolled during the first year, according to information from HHS.

The cost for the expansion turned out to be about $538,000, not the $7.9 million HHS estimated.

"How can we trust their numbers?" Nordquist asked.

Milliman and other states

Milliman Inc., the company that earned $47,000 for its report on how health care reform will affect Nebraska, is writing similar reports for at least five states, according to Robert Damler, who wrote Nebraska's.

Damler said he can't name two of the states because their reports are not public.

But the other three -- Nebraska, Indiana and South Carolina -- are all among the 20 states trying to stop federal health care reform with a lawsuit.

The 2012 election

The Congressional race has begun. At least it looked that way Wednesday morning when Gov. Dave Heineman's voice rose in indignation after U.S. Sen. Ben Nelson's name came up during discussion of health care reform.

More often these days, the current governor and the former governor are pointedly provoking each other.