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LINCOLN — After leaders with Nebraska’s Department of Health and Human Services assured lawmakers that the governor’s proposed budget cuts would be manageable while maintaining services, more than 20 health care professionals and advocates told a different story.
The Nebraska Legislature’s Appropriations Committee heard a collection of concerns Monday about Gov. Jim Pillen’s proposed budget adjustments at a public hearing at the Capitol. Opponents largely argued the cuts would raise health care costs and limit access to quality treatment for Nebraskans.
Lawmakers are currently working to fill a projected $471 million budget deficit before the end of the 60-day legislative session. Under Pillen’s plan, DHHS would shoulder the largest portion of state funding reductions, losing $22 million this fiscal year and another $130.4 million the next year.
Department officials worked with Pillen on his proposal. DHHS CEO Steve Corsi said the agency drafted its budget adjustments attempting to follow Pillen’s vision of “running government like a business” while acknowledging continued health care needs.
“There are a number of different reductions that we’re making just by doing business better,” Corsi said.
State Sen. Machaela Cavanaugh of Omaha, a member of the Appropriations Committee, pushed back on this notion, saying she is hesitant to support cuts to what she called state-obligated funds.
“There are just some things at DHHS that we can’t efficiency our way out of,” Cavanaugh said.
Cavanaugh listed a proposed $16.1 million cut to biomedical research for the University of Nebraska Medical Center as an example of a state-obligated fund. Last year, Pillen proposed a $11 million cut from the program that was only partially approved.
Corsi said he didn’t see a need for the research program to be discontinued as a result of the cuts and suggested lawmakers find alternative funding sources to support it. He pointed to the Hospital Quality Assurance and Access Assessment Act, which the Legislature passed in 2024. State officials expect the legislation will create new state revenues and potentially bring in millions of federal dollars.
However, at least one testifier representing Creighton University said the private institution is not eligible for funding under the legislation.
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Groups opposed to Pillen’s budget proposal for DHHS included the Nebraska Medical Association, the Nebraska Hospital Association, Children’s Nebraska, the American Cancer Society, the Nebraska Health Care Association and others.
Over the course of a nearly five-hour hearing, testifiers expressed concerns about a range of specific cuts, including the biomedical research cut, a $2.7 million cut to pediatric cancer research and a $4.7 million cut from the state’s Health Information Exchange.
The most common concern, however, was a proposed $18 million cut for the elimination of retroactive Medicaid eligibility. Federal law offers Medicaid coverage for medical expenses incurred up to 90 days before an application is submitted, but it allows states to reduce this period to 30 days through a waiver.
Nebraska is currently in the process of making this change, which is set to take effect by the end of this year. Drew Gonshorowski, director of the Division of Medicaid and Long-Term Care, testified Monday that the governor’s proposed budget cuts still would allow “sustainable coverage” under Medicaid.
When asked about the retroactive coverage provision, Gonshorowski said the vast majority of Medicaid applications received by DHHS are processed within 10 days. He said he is confident the department can work with hospitals to ensure future applications are processed within 30 days.
However, several testifiers representing various health centers said the change would make it increasingly difficult to treat Medicaid patients, particularly infants and children.
Megan Connelly, vice president of Community Health and Advocacy at Children’s Nebraska, said last year nearly half of Children’s Nebraska’s patients were covered by Medicaid, but they were only reimbursed roughly 20% of the retroactive costs. About 62% of patients approved for retroactive applications were processed within 30 days, while the rest took longer, she said.
“Behind these numbers are very sick Nebraska babies and children and families navigating a medical crisis,” Connelly said.
Connelly said Medicaid applications for newborns cannot be submitted during a pregnancy, so the 30-day deadline would be even more challenging in the event of complications during birth.
Scott Jansen, practice administrator for Complete Children’s Health, pointed to several proposed cuts that he said would force his group to question if they can continue accepting Medicaid patients entirely. On the retroactive provision, he said his organization would also struggle to treat newborns on Medicaid.
Ivan Mitchell, representing the Nebraska Hospital Association, said limiting Nebraska’s retroactive Medicaid eligibility would increase health care costs at a time when such costs are already rising rapidly, putting a strain on hospital services. He said the change would effectively create a “hidden tax.”
Mike Dewerff, chief financial officer for Bryan Health, agreed the potential savings associated with the proposed change wouldn’t add up to the reality of provider costs. He said the adjustment would equate to the state spending $2 on provider impacts for every $1 of savings.
“There are smarter, more responsible ways to solve the budget challenges than creating a problem that’s twice the size of the solution,” Dewerff said.
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