Many residents of Central Nebraska know of my work in providing services to the uninsured and underserved. My stand on expansion of Medicaid in Nebraska is not a commentary of Obamacare and does not reflect partisan interests. It does represent a skepticism born of over 30 years spent in the health care industry. I hope this column helps explain those concerns:

The U.S. Supreme Court is in the process of hearing arguments that have indirect, but very relevant ramifications for Medicaid Expansion. The case being heard relates to agreements between major drug manufacturers who produce name brand drugs and drug manufacturers who produce generic brands of the same or similar drugs. Consumer and provider groups have raised objections to the revelation that these name brand manufacturers paid generic manufacturers to withhold their lower priced generics for a number of years in exchange for yearly payment. Under this arrangement the name brand manufacturers continue to dominate the market and the generic manufacturers make more from a share of the name brands profits than they could if their medications sold directly in the market. This arrangement, which clearly harms consumers, is entirely legal. The arguments before the Supreme Court are that it should be illegal.

What does this have to do with Medicaid expansion in Nebraska? I relate this case as a cold hard reminder of the complexities of the health care system and the variety of ways the system operates contrary to what we would consider typical and common sense business practice. To manage and control this system, in its entirety, is not possible. However, we are intending to offer Medicaid coverage to tens of thousands more Nebraskans, turning them loose in an industry that gets paid for providing drugs, procedures, exams, and institutional care regardless of outcomes. We are surrendering control of their care and our tax dollars, too.

To be clear, dishonesty isn’t the issue. Skewed incentives, to both providers and consumers, is the issue. Changing those skewed incentives and accountabilities is possible, and some efforts are already underway, but to assume that a host of new patients won’t subject our delivery system to unintended consequences is naive. The assumption that expanding Medicaid coverage automatically provides equal access and improves quality care is a hope and a prayer.

I bring to this debate over three decades of experience in the health care industry. I have been heartened as a result of the Affordable Care Act, by the serious dialogue I now hear about the need for health care reform. I give credit to the Affordable Care Act for bringing the topic front and center. But I am a skeptic when it comes to expanding Medicaid in this state, or any state when institutional dysfunctions, which trump good intentions, place at risk already scarce tax dollars that could educate children, rebuild decaying bridges or preserve our precious and vital water resources. I would clearly love to expand Medicaid, but I am the worst kind of skeptic – a knowledgeable and experienced one. I will be a hard sell.

My column last week covered the beginning of the 103^rd Legislature, first session, and the upcoming debate on the development of a budget as one of two challenging issues to be resolved. The other issue is the proposed state tax reform initiative brought forward by the Governor. This is the promised follow-up column on that important topic. Since several other area Senators have given you their perspective on tax reform I am pleased to offer mine as well.

I am excited to be a member of the legislative body that will be deliberating a dramatic, and perhaps historic, change to our State’s tax structure. It has been half a century since we have considered this large a change in tax policy.

As proposed, through the introduction of several bills, the State would eliminate, in part or in entirety, individual and corporate income tax. There are additional bills that would reduce all or some retirement income and estate tax. Any one of these numerous bills would have been fodder for spirited editorializing and debate. As a result, my first reaction is that, much like our recent reform of the child welfare system, this challenging discussion will cover several sessions.

Those of you who have taken ‘civics’ classes might recall the phrase “the Governor proposes, the Legislature disposes” (insert President and Congress if you wish). In brief, this witticism defines the role of the legislative body as one of law making, revenue raising and apportioning, and the role of the Governor as administration of government and leadership. I appreciate the Governor’s leadership by not only proposing tax cuts but also proposing that these cuts be paid for by eliminating a large number of sales tax exemptions. However, therein lies the challenge. The Legislature is left with the extremely difficult job of “disposing.”

Nebraskans would be well advised to pay close attention to the specifics of these proposed sales tax exemptions. As initially proposed they will impact the pocketbook of every resident in some way.

The Governor’s stated goal is to improve our ‘ranking’ as a tax friendly state for business development. My personal experience is that most Nebraskans have jaded opinions of ‘ranking’s due to the treatment of BIG RED by supposed ranking experts. However, I believe the debate is more likely to be one of statewide fairness. Will Nebraskans of all income levels, geographic locations and industries be treated equally to the benefits of tax eliminations and challenges wrought by the loss of tax exemptions? I harbor a concern that urban Nebraska, where the preponderance of business development occurs, will be the big winners. Conversely, agricultural greater Nebraska will feel the greatest impact from the loss of sales tax exemptions while not sharing in the business and job growth that would serve as the revenue offset to the increased cost of doing business.

Of course, the background dynamic is that we all, me included, want the benefits of tax reductions without loss of tax exempt benefits. The challenge of this dynamic was best stated by long time U.S. Senate Finance Committee Chair Russell Long, who when questioned about the public’s attitude toward tax reform replied, “don’t tax you, don’t tax me, tax that fellow behind the tree.”

Every year of my legislative career I have brought forward bills that relate to our health care system. The bills have ranged from attempting to change our primary care system to the dispensing of medications in nursing homes to improving the process of sharing medical information across the state. However, the bill that has drawn the most attention has been my bill of several years ago that attempted to raise the tax on cigarettes and tobacco products. I have introduced a similar bill this year.

The first time I addressed the cigarette and tobacco products tax issue, the state was at the height of our nationwide financial crisis and Nebraska was looking at an historical budget shortfall. The revenue raised, if that bill had passed, would have gone a long way toward addressing our state’s budgetary needs. However, I did not suggest raising the tax as simply a way to raise revenue for the State. I brought the bill forward then, and now, in an effort to recover from smokers some of the millions of taxpayer dollars in health care expenditures directly related to the effects of this addictive product.

There is an even more important reason to raise the tobacco tax. This tax is one of the few taxes that a person can choose not to pay. If you don’t want to pay the tax, don’t use tobacco products. That, of course, is the point. The increased price will reduce the number of tobacco users and, over time, reduce the expense to Nebraska’s taxpayers. Although much attention has been drawn to the revenue generated by a tobacco tax increase, the far more significant dollars that tax payers should be concerned about are the hundreds of millions in long term future savings to be realized through the corresponding reduction in Nebraskans suffering from smoking related illness.

The greatest savings, and decrease in smokers, would be in the youth of our state. Price increases in tobacco products in other states across our nation have resulted in documented decreases of 20 percent in the category of young smokers.

With all these facts and realities in mind I have re-introduced a bill, LB 439, to raise the cigarette tax 72 cents to a total of $1.36 per pack. This is equal to the current tax in Iowa. This year, rather than using the added tax revenue for general use in our budget I am targeting specific health needs across the State. The estimated $ 66.6 million a year in additional revenue from cigarette tax is designated to go to:

$ 28.0 M Health Care and Human Service Provider Rate Stabilization Fund

$   5.0 M Tobacco Prevention and Control Cash Fund

$ 23.5 M Health Care Cash Fund

$   5.0 M Emergency Responder tax credit

$  2.8 M Cancer Research Funds

$  2.3 M General Fund

I will talk about the specifics of these programs in a future column.

Another $1.1 M would be raised by the increase in tobacco products and go into the Tobacco Administration Cash Fund. Any excess revenue from this fund, after paying for administration costs, can be returned to the General Fund by the Legislature.

The legislation passed two years ago that resulted in a smoke free Nebraska was a hard fought battle but has proven to be overwhelmingly popular. That support for being smoke free is felt to be one of the reasons the American Cancer Society’s recent survey found that 73 percent of Nebraskans are in favor of a tobacco tax increase.  It might surprise you to learn that almost 50 percent of the smokers interviewed in that survey are also in support of the increase. Why? As a member of the media who smokes told me during an interview, “I want to stop but need an incentive. This will do it for me.”

Getting passage of this bill will be extremely difficult.  The tobacco lobby is one of the strongest and best financed in the nation.  Just getting the bill advanced from Committee for debate will be a challenge.

My motivation for this bill comes from a lifetime of working around patients suffering the effects of tobacco use.  From a public health stand point, I feel there is no other health issue as devastating to the health of Nebraskans as the direct and indirect effects of tobacco use. An increased price will be the motivation for some tobacco users to kick the habit. I recognize that a majority of tobacco users will continue to use the product but the increase in tax revenue will help offset the subsidization of this habit by the 80 percent of Nebraskans who are not consumers of tobacco products.

I came to the legislative body hoping that my experience and knowledge in health care could be put to use in ways that make a positive difference.  Reducing the use of tobacco in this state fits that criterion.

I am relieved that we have finally started our 2013 legislative session. It seems as if the anticipation over this session has been higher than any other year I have been in Lincoln. This is due to rumors over potential controversial legislation combined with the ongoing budget challenges. As is the case with any big game, “tip-off” is always a big relief to the players!

We start each legislative session with several weeks devoted almost entirely toward the introduction of bills. I am writing this column with several days left to submit bills but two clear high profile topics have emerged that will get extensive hearing and debate time and media coverage. The first theme, not surprisingly, is the State budget. This session is the longer of our two year sessions so that we have time to prepare the biannual budget. During these challenging economic times putting together the budget is a continue challenge.

The second theme relates to bills introduced on behalf of the Governor that propose the most sweeping changes our State tax system has seen in the last half century. Given space limitations I will address the budget in this column and save my comments on bills relating to taxes for my next column.

My legislative term has coincided with the economic down turn that has hit our great country. Although Nebraska, with it’s agricultural economy and conservative State government spending, has fared better than most other states we have still had our hands full. Past budget shortfalls that had to be made up were in the $400 to $600 million range. I’m sure that most readers have forgotten that three years ago the economy dropped so dramatically that the Legislature went into special session to cut the budget even more. Good News! This budget cycle is projected to leave us with a $200 million shortfall, a significant improvement over previous years. However, now that the outlook is better financially those departments, organizations and interested groups who put their requests on hold for the past 4 years or voluntarily (with a little coaxing, perhaps) trimmed budgets, are back in force asking for relief. Send them packing you say? I guarantee that no matter who you are, at least a handful of these groups represent issues, infrastructure, and corresponding increased spending, that you support. In summary, the budget process will be a challenge but I am confident we will tackle it successfully as we have in the past.

I am pleased to report that I have been elected as the Chair of Banking, Commerce and Insurance Committee (BCI), a committee I have served on the past four years. I will continue to serve on the Health and Human Services committee, too. With the changes coming into our health care system as a result of health care reform (Obamacare) I am positioned nicely to use my years of health care experience to help guide necessary policy discussions and decisions.

Because of my position as Chair I am introducing twice as many bills as I have in past years. In future columns I will review some of the bills that I think will be of interest to readers in central Nebraska. I am pleased that the Governor has included a process for funding the replacement of the Grand Island Veterans Home. I will be working both in Lincoln and in Grand Island to not only make sure the necessary funding is obtained but that Grand Island remains the site for this much needed facility.

Please feel free to contact me with your questions and concerns at: Senator Mike Gloor, P.O. Box 94604, District 35, Lincoln, NE 68509. My email address is mgloor@leg.ne.gov and the office phone number is 402-471-2617.  Please note that my office within the Capitol is now in room 1401. For those who come to visit, I’m in the hall with the photographs of Governors, just inside the lower North entrance.

On of my 2009 articles proclaimed, “My Medical Home bill was offered as fulfillment of a campaign pledge — that I would try to reform the State’s Medicaid program that provides health care to low income Nebraskans by reducing rising costs and its impact on taxpayers while improving health outcomes for patients. LB 396 will create a pilot program, using family physicians, as medical homes for Medicaid patients. Don’t be confused by the term medical home. It is less about a structure or building and more descriptive of the relationship between a patient and their physician. This approach also includes guidance, education, monitoring and even technology to enable the patient to help manage some of their own health care needs. This Medical Home model has saved money and provided better and more accessible health care in similar programs across the country.”

We’ve come a long way since then. An advisory council, chaired by Dr. Tom Werner, of Grand Island, has been meeting since October of 2009 guiding the Department of Health and Human Services, Medicaid Division, in the design and implementation of the pilot. The Department of Health and Human Services brought together over 30 members of their staff to figure out goals and standards, funding and payment, evaluation methods, contracts and computer capabilities – the nitty gritty of how this pilot program works. We have to compliment the Department on how they took this on and created this pilot program.

Two rural medical practices were awarded contracts to be the test sites for the patient-centered medical home. In April of 2011 the Kearney Clinic in Kearney and Plum Creek Medical Group in Lexington began working toward becoming a PCMH (patient-centered medical home). Together they have around 7,000 Medicaid patients. Now, a year later, Plum Creek Medical Group has achieved the second, higher level of standards. Kearney Clinic has achieved the first level of standards and is closing in on the second level. When the clinics reach the third level of standards they will be at the highest level of standards, providing a high level coordination and a web portal for patients to access records, communicate with medical staff and make appointments. Each level comes with a little higher reimbursement level.

The physicians on the advisory council knew it would not be easy for the medical practices in the pilot project to transform to a new way of doing business but that the reward would be better patient outcomes, better work flow and more physician and employee satisfaction. In addition, these practices are better prepared for the health care reform happening at a national level. Although they are in the throws of change, the pilot practices are already seeing the rewards.

By June 1, 2014, the Department will evaluate the success of the pilot program, and report the results to the Governor and the Health and Human Services Committee. The report will include an evaluation of health care outcomes, cost savings, and recommendations for improving, continuing, expanding or ending the program. It is our expectation that the pilot project will be successful to the extent that Nebraska’s Department of Health and Human Services will move to medical home as the preferred method of delivering care. They have already started this move with a section in their latest managed care contracts mandating PCMH pilots. This could result in another 16 medical practices making the transition to PCMH within 4 years.

Major insurance companies across the country and in Nebraska are starting to offer medical home plans as a component of their insurance products. Blue Cross Blue Shield of Nebraska started their pilot one year ago and are currently expanding it. At the national level Medicare is also moving to patient-centered medical home programs. A legislative study resolution over the 2012 interim will give the Legislature’s Banking Commerce and Insurance Committee a chance to explore ways to encourage private health insurance companies and employers to build patient-centered medical homes. The tipping point that’s coming will be the collaboration of Medicare, Medicaid, private payers and health care providers into a multi-payer medical home system. In order to collaborate in such a manner without running afoul of anti-trust laws, government must provide a structure for communication between the entities involved.

States like North Carolina have been using the patient-centered medical home model of delivery for a decade now. They report improved health of their citizens and millions of dollars in savings. Each state is different but we are confident Nebraska is on it’s way to healthier patients and successful patient-centered medical homes statewide.

As always, please feel free to voice your concerns about this or other legislative issues to me at: Senator Mike Gloor, District 35, P.O. Box 94604, Lincoln, NE 68509; 402-471-2617; or by email at: mgloor@leg.ne.gov. Senator Mike Gloor, Grand Island