Why Is Ben Nelson Opposing The Most Efficient And Least Expensive Way To Cover Poor Americans?

Sen. Ben Nelson (D-NE)Adding to his demands for stronger abortion restrictions, Sen. Ben Nelson (D-NE) has announced that Senate Democrats would have to allow states to “opt-in” to the Medicaid expansion to secure his vote for the Senate health care bill. In a letter to Nebraska Governor Dave Heineman, who has previously raised concerns about the provision in the Senate bill that would expand Medicaid to 133% of the federal poverty line (FPL), Nelson wrote “In your letter you note that the current Senate bill is not in Nebraska’s best interest. I agree. That is why I continue to work to change it,” Nelson wrote. “Under my proposal, if Nebraska prefers not to opt in to a reformed health care system, it would have that right.”

But for a senator who is also concerned about the “cost” of the bill and controlling health care spending, proposing an ‘opt in’ policy is counter productive. If some states chose not to opt in, then Americans below 133% FPL would have to buy unaffordable and unsubsidized coverage from the exchange or the individual health insurance market. Most would go uninsured, but contribute to national health care expenditures once they enter the emergency room — increasing costs in the long run.

Alternatively, Democrats could change the Senate legislation to offer subsidies to poorer residents living in states without Medicaid expansions. But if the expanded Medicaid population can find subsidized coverage in the exchanges, governors would be discouraged from spending state dollars to help finance the expansion. Federal expenditures on subsidies would only increase, dramatically raising the price tag of the bill and irritating Nelson even further. The circular logic reveals the true consequence of Nelson’s position: should Congress insert a Medicaid opt-in provision while heeding Nelson’s cost concerns, poorer Americans would lack access to affordable health care coverage.

Medicaid is the “most efficient and least expensive way to cover the poor” and it’s especially designed to address the unique health needs of lower income populations. According to some estimates, “it would cost up to 30 percent more, in terms of total medical spending, to put poor people in subsidized private insurance plans rather than in Medicaid.” Individuals “would pay seven times as much–an estimated $771 per year in out-of-pocket expenses versus $109—in private plans, because Medicaid has low-cost sharing requirements.”

The Medicaid expansion would “have the biggest impact in states with high numbers of poor uninsured people and tight Medicaid eligibility standards.” Nebraska has the 23rd highest number of uninsured residents with incomes below 133% of FPL. Since the federal government would cover the first three years of Medicaid expansion, Nebraska would be required to insure some 80,000 Americans through its Medicaid program and spend “$45 million in extra expenses after six years, or from fiscal year 2014 through fiscal year 2019.”

In other words, Nebraska is not at the front lines of the Medicaid expansion controversy. Expanding the program wouldn’t come cheap but it wouldn’t overwhelm the state either. In the context of comprehensive health care reform, the policy would lower the cost of achieving near universal coverage and help reduce national health care expenditures. Nelson should want to share in that responsibility.