Gibbons: Should Nevada reject federal Medicaid funds?

By David McGrath Schwartz

Thursday, Jan. 14, 2010 | noon

Gov. Jim Gibbons' office has asked state staff to evaluate dropping out of the federal Medicaid program, members of his administration confirmed today.

The radical proposal would drastically cut the state's health care safety net.

Stacy Woodbury, Gibbons' deputy chief of staff, said the governor's office has asked the Department of Health and Human Services to look into "opting-out" of Medicaid as a long-term way to save money.

A conservative national think tank, The Heritage Foundation, suggested in a recent report that states will begin dropping Medicaid as a way to avoid long-term costs mandated in the federal health care reform bills being debated in Congress.

The state Department of Health and Human Services has estimated that federal expansion of Medicaid would cost the state about $636 million over six years, money that Gibbons has said the state doesn't have. Gibbons has threatened to sue the federal government if the health care reform bill passes.

Woodbury said she talked to the health officials last week, and after talking with Gibbons on Monday, told Director Mike Willden "to give it a serious look."

Woodbury said the state might need to act quickly to get out of Medicaid, before the health care reform is finalized, to avoid mandates in the bill preventing states from opting out.

Woodbury said the state is not looking to leave all of the state's poor without health care. State money would "provide health care to the safety net program for the most vulnerable Nevadans, the elderly, blind and disabled," she said. Most of those on today's Medicaid would be shifted to "health care exchanges" in the reform bill, and paid for by federal subsidies instead of cost to the state.

Woodbury said she expects to have a report back as soon as the end of January, and opting out of Medicaid could be taken up in a special legislative session.

Gibbons is likely to call a special session soon to deal with the state's current budget shortfall, estimated as high as $450 million, though Woodbury said there would unlikely be any short-term budget savings from opting out of Medicaid.

"We're evaluating what it would look like, if it was legal, if it was feasible," said Ben Kieckhefer, spokesman for the state Department of Health and Human Services. "We're considering what we would still be able to do as a state with the general fund that we have. We're also evaluating the effect it would have on people as well as local governments and the health care system."

In June, the Legislature passed a Medicaid budget of $2.9 billion. Of that, $868 million was from the general fund. Almost all of the balance would come from the federal government, which would then be rejected under this proposal. The state money would still be available to provide some sort of assistance for low-income people, Kieckhefer said.

Advocates for the poor have long complained that Nevada has some of the tightest restrictions in the nation in who can access the Medicaid program.

Assemblywoman Sheila Leslie, D-Reno, said that opting out of Medicaid would likely have to go through the Democratically controlled Legislature.

"The human cost is unfathomable," she said. "We'd be locking the doors of our health care system to the poor. It's unthinkable."

She also added that at a time when Republicans complain that Nevada isn't getting more money back from the federal government, giving up $2 billion per budget cycle "doesn't make sense."

"I don't think they'll have to evaluate it for too long before they realize that losing $2 billion in federal health care dollars is a bad idea for the state," Leslie said. "I just don't understand the motivation."