- Associated Press - Monday, March 28, 2016

LINCOLN, Neb. (AP) - Federal officials touted a new Medicaid proposal Monday as a way to boost Nebraska’s economy while increasing access to mental health and substance abuse treatment services.

Issued a day before Nebraska lawmakers are scheduled to debate a new Medicaid measure, the U.S. Department of Health and Human Services’ report says 21,000 uninsured people with a mental illness or substance abuse disorder have could have qualified for coverage in 2014 if the proposal had been in effect.

“There’s no doubt that expansion increases access to health care and benefits the state economy,” Vikki Wachino, director for the Center for Medicaid and CHIP Services, said in a conference call with reporters.

States that have expanded Medicaid coverage under the federal health care law have seen reductions in their general fund expenses to cover the uninsured, according to Richard Frank, an assistant secretary in the U.S. Department of Health and Human Service. He also said providing coverage to low-income residents allows them to become more productive.

The proposal faces an uphill battle in Nebraska’s Legislature due to conservative groups and members of Gov. Pete Ricketts’ administration who say it’s unsustainable. Passing the bill would create “a new entitlement program that takes away resources from vulnerable Medicaid patients, reduces workforce participation among able-bodied adults and confines new enrollees to a harmful welfare trap,” said Jim Vokal, CEO of the Omaha-based Platte Institute for Economic Research.

It’s backed by a coalition of doctors, hospitals, local governments and uninsured residents. Supporters of the proposal were planning to rally Tuesday outside the Capitol in black clothing to represent the “coverage gap” created by the state’s decision not to expand Medicaid.

Three previous attempts to expand Medicaid under the federal health care law have failed in Nebraska.

The latest approach with the latest bill uses federal Medicaid funding to buy coverage for residents who don’t have access to an employer-sponsored plan and pays a worker’s share of premiums if an employer does offer coverage. People deemed medically frail would receive coverage through the state’s current Medicaid program.

Supporters also have included a provision that would end the program after three years unless lawmakers choose to renew it and require an independent review of its fiscal impact so that lawmakers and the governor could decide whether to continue it.

The federal government would cover most of the costs, but the state would draw $63 million over three years from Nebraska’s health care cash fund.

The Medicaid coverage gap exists because tax subsidies are only available to people with household incomes between 100 percent and 400 percent of the federal poverty level.

The Affordable Care Act doesn’t provide the subsidies for people who make less than that because the law originally required all states to expand Medicaid, which would have covered that population and made the subsidies unnecessary. But in 2012, the U.S. Supreme Court ruled that the federal government can’t punish states that don’t expand Medicaid.

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