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Sen. Dan Watermeier

Sen. Dan Watermeier

District 1

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Legislative Update

April 19th, 2013

The passage of the Affordable Care Act (ACA) by the federal government requires citizens to have health insurance or be subject to a penalty. As passed, the ACA required states to expand their Medicaid program to include adults between 19-65 years of age with incomes up to 138% of the federal poverty level (FPL). Currently, childless adults that are not disabled or elderly do not qualify for Medicaid. Parents of minor children with incomes above 56% of FPL also do not qualify. Last year, the U.S. Supreme Court upheld the federal law but ruled that the Medicaid expansion portion should be optional for the individual states.

To encourage states to expand their Medicaid program, the federal government has pledged to pay 100% of the expansion costs for the first 3 years, after which the reimbursement level will fall to 90%. Although senators agreed that this appears attractive on the surface, opponents also pointed out that the state must consider the burden that will be placed on taxpayers in future years, both on the state and federal level. The federal government’s budget is far from stable and going further in debt will place greater burdens on our children and grandchildren. As rules and regulations are still being developed, some senators expressed concern that the game plan could change once states have made the commitment to expand. An amendment was offered to address this concern, proposing language to allow the Legislature to reverse the expansion if federal reimbursement is decreased. This may not be a realistic option, as once Medicaid is expanded, it would be virtually impossible to reverse that trend. With the proposed expansion, approximately 1 in 5 Nebraskans would be on Medicaid and 1 in 5 tax dollars would be spent on Medicaid.

Senators discussed LB 577, which proposes to expand Medicaid in Nebraska, over several days this past week. This is probably one of the most important issues facing senators this session. Supporters of Medicaid expansion did not have the 33 votes necessary to cut off debate and vote on the advancement of the bill. Consequently, after more than 10 hours of debate, the Speaker of the Legislature pulled the bill from the agenda. Unless circumstances change and proponents of LB 577 can prove that they have the necessary votes, LB 577 most likely won’t be placed on the agenda again this year.

Senators had general concern for this group of Nebraska citizens that find it difficult to afford health insurance, but our state currently has commitments beyond its resources for other populations that are also in need of state assistance. Nebraska should not promise something that it may not be able to keep.

Medicaid benefits have no premiums or deductibles and minimal cost sharing. Medicaid expansion could cause some low-income workers to drop their job-based health coverage. The law addresses the lack of health insurance, but it will not necessarily result in better health care. Furthermore, studies have shown that Medicaid recipients use the Emergency Room more often than those without insurance, as there are no financial disincentives. Until these habits are changed, which the law does not address, we won’t see the reduction in costs that some are predicting. The shortage of primary care physicians could also result in more visits to the ER.

Considering all the uncertainty surrounding the expansion, enough senators felt that it was in Nebraska’s best interest to wait and see how the ACA plays out before committing our state and its citizens to a program that could be financially unsustainable in the future. I appreciate all the correspondence that I have received on this issue and I value your input.

Please continue to inform me of your thoughts and opinions on the issues that are before the Legislature. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My telephone number is (402) 471-2733 and my e-mail address is

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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