Nebraska Governor Johanns Announces Plan That Would Change Medicaid Eligibility Rules, End Coverage for about 19,000

Nebraska Gov. Mike Johanns (R) on July 23 said he plans to cut approximately $20 million from the state budget by eliminating what he called "loopholes" in the state's Medicaid eligibility requirements, the Omaha World-Herald reports. The state expects income from taxes to be $255 million less than an earlier projected $5.2 billion in the current two-year budget cycle. In trying to save the state money, Johanns said he is focusing on the "four fastest-growing areas of the state budget," one of which is Medicaid (Reed, Omaha World-Herald, 7/24). Under a plan thought to save $11.7 million this fiscal year, which ends June 30, 2003, and $17.6 million during a 12-month period, Johanns has proposed to end a mathematical formula called "stacking," which the state uses to determine Medicaid eligibility. Through stacking, the state breaks families into smaller units and assigns each unit a portion of the family's annual income. Through the practice, some middle-income families, who otherwise would have incomes too high to qualify for Medicaid, are able to receive benefits. Johanns also would reduce the amount of income the state disregards when determining eligibility, a move expected to save $2.7 million in this fiscal year and $4 million over a 12-month period. Currently, the state subtracts 20% from a family's annual income before calculating eligibility, but Johanns has proposed scaling back the amount to the federally accepted minimum -- disregarding the first $90 of a family's monthly income. Johanns' proposal would not eliminate other income disregards, including money spent on child care.

Coverage Loss
About 6,000 children in moderate income families would lose Medicaid coverage under Johanns' plan. The state Department of Health and Human Services estimates that about 7% of the 132,500 children enrolled in Medicaid are in families with annual incomes higher than the current eligibility limit -- 185% of the poverty level -- but qualify because of stacking or income disregards. If the mathematical techniques are disallowed, about 13,000 adults also would lose Medicaid coverage. Johanns is expected to unveil his budget proposal during a special legislative session on July 30. His proposal also would freeze payment levels to Medicaid providers to save the state about $7 million per year and would begin to alter some payment rules for hospitals and pharmacies (Hicks, Lincoln Journal Star, 7/24).