Nebraska senator's sweetener now a stumbling block for health-care bill

By Amy Goldstein
Washington Post Staff Writer
Friday, January 15, 2010; 3:57 PM

It was a single paragraph, added at the last minute on Page 2,129 of the Senate's mammoth health-care bill: a promise that the federal government would pay forever for extra poor people to join Medicaid in Nebraska. And it triggered a swift, partisan backlash.

The rebellion against the $100 million promise has spread to nearly one third of the nation's attorneys general, including two Democrats. Meanwhile, the Nebraskan whose state would get the help -- Sen. Ben Nelson, a conservative Democrat who was the crucial 60th vote for the bill -- says he never asked for the favor to get his vote and wants it to go away.

The dispute is one of the issues Senate and House negotiators are trying to resolve as they work with the White House to mesh their health-care bills. On Friday, former president Bill Clinton joined the critics, telling House Democrats in a private speech in the U.S. Capitol, "that Nebraska thing is really hurting us."

As talks go on behind closed doors, debate rages off Capitol Hill over whether the Senate's offer of extra Medicaid money to one state is unconstitutional, as its critics allege, and whether any court would intervene. The furor comes from two sources: states' longstanding worries about the financial burden of Medicaid, and the polarized politics of health-care reform.

Medicaid, the government health insurance program that began in the 1960s for low-income Americans, is a shared responsibility of the federal government and states. How much the government pays depends on a state's wealth. The program contains about 45 million people and would be expanded, to different extents, under the Senate and House bills as one of the main ways to extend health coverage to the uninsured. The prospect of expanding Medicaid, though, comes as most states are struggling to pay for people already eligible for the program, because the economy has eroded state budgets and caused many more Americans to become poor enough to qualify.

Under the Senate bill, the government would pay the entire cost of expanding Medicaid from 2014 through 2016. After that, all states would get substantially more federal help for newly eligible patients than they do today. But only for Nebraska would the government pay the whole cost permanently.

Before the Senate had cast its final health-care vote, Sen. Lindsey O. Graham (R-S.C.) telephoned his state's attorney general, Henry McMaster, a Republican candidate for governor, to suggest he examine the constitutionality of the Nebraska provision. McMaster began to enlist other attorneys general -- dubbing themselves the "cornhusker kickback working group" -- to protest what he called "vote-buying . . . paid for by taxpayers." The group -- now expanded to 15 attorneys general -- has threatened to sue if the extra help for Nebraska remains in a final health-care bill.

McMaster said that the cost of helping Nebraska would fall on every other state. He said it is unconstitutional for congressional spending to be "arbitrary or capricious. . . . A state being treated differently because that was the price needed to secure that senator's vote, that is not a reason recognized by the U.S. Constitution."

Nelson said that, during his negotiations with Senate Democratic leaders courting his support, the question of Medicaid funding was "not what got my vote." But, he added that he did tell Senate Democratic leaders the Medicaid expansion would be an "unfunded mandate" imposed on states -- the kind of fiscal liability he has criticized since his tenure as Nebraska's governor in the 1990s.

To solve the problem, Nelson said, he proposed that every state be allowed to cancel the expansion of Medicaid after 2016, when the full federal payments would stop. As a counterproposal, he said, negotiators suggested the permanent payments for Nebraska, estimated to cost $100 million in their first decade.

Several Senate sources, speaking on condition of anonymity, confirmed Nelson's account that the extra money, as one put it, "isn't something he came asking for." None of the participants will disclose who came up with the idea. The negotiations included Senate Majority Leader Harry M. Reid (D-Nev.), Sens. Charles E. Schumer (D-N.Y.) and Max Baucus (D-Mont.), and White House aides.

Nebraska's Medicaid director refused to discuss the program and whether it needs special help. Federal data show that Nebraska ranks in the middle of the 50 states in the proportion of its Medicaid expenses paid by the federal government -- and that it is below average in some of its eligibility levels and in the percentage of state residents it covers.

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