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Sen. Dan Watermeier

Sen. Dan Watermeier

District 1

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Legislative Update

March 1st, 2013

In 1965, legislation was passed authorizing a Medicaid program in Nebraska. Medicaid offers health insurance for children in low-income families, pregnant women, the elderly and the disabled, as well as a small number of parents with income levels below 54% of federal poverty level. Medicaid is jointly funded by the federal government and the state, with the federal government currently paying 55% and the state 45%.

In 2010, President Obama signed the Patient Protection and Affordable Care Act, creating an individual mandate for health insurance and establishing health insurance exchanges. As a result, it is expected that the number of participants in Medicaid will grow among those currently qualified, due to increased awareness of the program.

Last year, the Supreme Court ruled that the requirement to expand Medicaid was to be voluntary for individual states. The expansion would cover low-income adults from ages 19-65. LB 577 was introduced to require the state to expand Medicaid. This reflects a major expansion of the program, as adults without dependent children were not previously eligible for the program, unless they were disabled. As an incentive for states, the federal government has agreed to pay 100% of the costs of the expansion for the first three years. This reimbursement would decrease to 90% by 2020.

Whether the state should approve this expansion was the topic of five hours of testimony at the public hearing on LB 577, held this past week before the Health and Human Services Committee. The director of the Medicaid division, within the Nebraska Department of Health and Human Services, testified against the bill. The Governor has made his opposition well-known, in that he thinks it will cost too much money and take dollars away from other state priorities.

Although it is hard to predict accurately, the Legislative Fiscal Office projects that the cost to implement the expansion from 2014 through 2020 would be $2.5 billion, of which $75 million would come from state funds. This does not include the additional $60 million that will be required from state funding and $140 million from federal funds for mandatory costs associated with the federal health care reform law over just the next two-year period. This will be one of the major issues that the Legislature deals with during this session.

I introduced LB 101 before the Revenue Committee this past week. LB 101 would reduce the valuation of agricultural land for school district taxation purposes from 75% to 65% of actual value over a five-year period. School districts are the largest recipient of local property taxes. Such a decrease in valuation would trigger an increase in equalization aid for school districts that contain agricultural land and receive equalization aid. The number of non-equalized school districts is increasing and this legislation could help reverse that trend.

Rural landowners represent a small percentage of the state’s population but shoulder a significant portion of the property tax burden. Agricultural land values have increased by double digit numbers the last several years, thereby enhancing the problem.

During the discussion of the Governor’s proposal to repeal the income tax and eliminate specific sales tax exemptions, we heard repeatedly that property taxes need to be included in any discussion of our tax code. Legislation calling for a comprehensive study of our tax system has been introduced and prioritized.

At the public hearing, I asked the Revenue Committee to advance LB 101. However, if the decision was made to hold all bills dealing with tax revisions pending the outcome of the comprehensive study, I requested that LB 101 be included in these discussions.

If you have comments on the Medicaid expansion or other issues before the Legislature, I welcome your input. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My e-mail address is and my telephone number is (402) 471-2733.

Sen. Dan Watermeier

District 1
Room #2000
P.O. Box 94604
Lincoln, NE 68509
Phone: (402) 471-2733
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