April 10, 2012 Speaker Flood, Any proposal to expand Nebraskas Medicaid program should never have gotten

serious traction in the Unicameral, considering legislative and budgetary history, uncertainty associated with the future of the Medicaid program under the 2010 federal health care reform law, and clear indications that any further program expansion will exacerbate existing problems confronting the state. Medicaid Reform, the State's budget, and LB599: The Unicameral passed LB709 in 2005 and LB1248 in 2006, for the purpose of reforming Nebraska's Medicaid program precisely because expenditures were exceeding the rate of growth in General Fund revenues. In spite of reform efforts, they still do. The Nebraska Department of Health and Human Services projects that, at current growth rates, by 2025 the Nebraska Medicaid Program and state education expenditures will consume 95 percent of the entire state budget. The Nebraska Unicameral is directly responsible for the exploding cost of the Nebraska Medicaid Program. Nebraska Senators have consistently voted to provide benefits beyond those required by the federal government in at least three ways: By offering benefits that are optional under the federal Medicaid regulations; by setting income eligibility limits higher, often substantially higher, than federal minimums; and, as pertains to LB599, by choosing to extend coverage to groups not covered under federal law. Consequently, the Unicameral had to use $330,908,334 of $1.7 billion in federal ARRA funds to stabilize the Nebraska Medicaid program in 2009 and 2010. Even so, a special session of the Unicameral was called in November 2009 to address ongoing budget problems. Clearly, the State's resources are stretched to the maximum. Yet, in participating in this two-year effort to pass LB1110/LB599, the Unicameral has expended a great deal of time, energy, and State resources on behalf of a very unsympathetic cause. LB599 would expand Nebraska's Medicaid program to include people deemed ineligible because they are in the country illegally or because they failed or refused to comply with federal Medicaid requirements. Shouldn't State law promote rule of law, personal responsibility, and accountability, rather than reward behavior that, is, in fact, the opposite? LB599, Rule of Law and Personal Responsibility Subsidize a behavior and you get more of it. Statistical data suggest that State policy makers' expansions of Medicaid to date have encouraged irresponsible family planning. Somewhere between a third to half of the births in Nebraska are paid for by Medicaid, including Medicaid managed care, even though "only" 12

GiN Letter to NE State Senators Re: LB599, April 10, 2012 - Page 2 to 15 percent of the population as a whole are Medicaid beneficiaries. Clearly, there appears to be a disproportionately high birth rate among low-income Nebraskans. Remove the subsidy rather than extend it, as LB599 would do, and having a family you cant afford might actually appear to be the irresponsible, unfeasible, and unwise decision that it truly is. Additionally, theres a reason Nebraska comes in at number eight among the top ten states with the fastest growing immigrant populations. In fact, Nebraska has the tenth largest and fastest growing illegal immigrant population in the U.S. Again, subsidize something, as LB559 would, and you get more of it. LB599 Presents False Choices Supporters who assert the State's Medicaid costs will be higher in the long run due to a greater number of birth defects in children born without the benefit of prenatal care, assumes a cradle-to-grave dependency on welfare among children born to low-income women and their families. Not only does this mindset reveal a soft bigotry of low expectations, it ignores the fact that low-income couples would be less likely to increase their family size in the absence of the subsidy extended by LB599 and other similar measures. Stating that low-income women would be more likely to resort to abortion in the absence of subsidized prenatal care, is equally groundless. When coverage for prenatal care was terminated in 2010, the number of abortions performed in the State did not increase. In fact, abortions decreased by 3.4 percent. Why? If a low-income woman cannot afford prenatal care, she won't be able to afford an abortion. Abortions cost more than prenatal care and, unlike prenatal care, payment for an abortion is typically required up front, rather than in the form of periodic payments. The Patient Protection and Affordable Care Act (PPACA) and LB599: Most people know that, under PPACA, the states' Medicaid programs will be required to maintain minimum coverage at the level of 138 percent of the federal poverty level. However, few people are aware that, if states provide higher levels of coverage under Medicaid at the time PPACA becomes fully effective, those states will be required to maintain those higher levels of coverage regardless of Nebraska's ability to pay for coverage at those levels. Consequently, to extend coverage beyond the minimum dictated by federal law, as LB599 does, is effectively surrendering Nebraska's control over its budget to the U.S. Department of Health and Human Services. Moreover, expansion of the Nebraska Medicaid program is inconsistent with Nebraska's status as a plaintiff in the case challenging the constitutionality of PPACA. The plaintiffs including Nebraska contend, in part, that Congress' attempt to expand Medicaid is an unconstitutional, coercive exercise of federal power. During oral arguments in the case, the Supreme Court Justices and legal counsel for the parties discussed federalism, state sovereignty, and how Medicaid, in particular, has affected the relationship between the states and the federal government. Supreme Court Chief Justice John Roberts stated the conflict very succinctly in his comments to the States' attorney: And it seems to me that they have compromised their status as independent sovereigns because they are so dependent on what the Federal Government has done, they should not be surprised that the Federal Government, having attached the -- they tied the strings, they shouldn't be surprised if the Federal Government isn't going to start pulling them.

GiN Letter to NE State Senators Re: LB599, April 10, 2012 - Page 3 A significant number of current Nebraska Senators voted for LR539 in 2010, which encouraged Congress to respect Nebraska's state sovereignty as articulated in the Ninth and Tenth Amendments to the U.S. Constitution. But the great numbers of Nebraskans who supported LR539 expected their State Senators to be, perhaps, even more concerned with state sovereignty than members of Congress. Nebraskans expected their legislators to protect Nebraska's sovereignty, not surrender it in exchange for the federal government's thirty pieces of silver. Conclusion: LB599 embodies irresponsibility across the board; financially, legislatively, and morally. Senators who previously voted for LB599 should vote NAY on the third and final round. Senators who are already opposed should redouble their efforts to convince their colleagues that LB599 should not pass. Senators who were Present, Not Voting should actually do the job they were sent by constituents to do: vote on legislation presented. Senators should note that GiN regularly communicates with Nebraskans who follow our activities, both through our website and by email. In addition to the many other articles GiN has published about legislation moving through the Unicameral, GiN has recently distributed information about LB599. If Senators wish to read what has been distributed and/or make comments that can be viewed by visitors to the GiN website, we encourage such visits and interaction (at http://grassrootsne.com). Sincerely, Shelli Dawdy Founder Linda Rohman Policy Research Coordinator