Neb. senator’s deals for home state in health care reform bill include perks for big insurers

Neb. insurers benefit from Nelson’s compromise

LINCOLN, Neb. — Nebraska — never seen as a key player with special needs in the health care debate — stands to reap millions of dollars worth of financial goodies should the Senate version of the health care bill get final approval.

Not only did Sen. Ben Nelson help cut a deal that covers the state’s Medicare expansion cost of $100 million over 10 years — all other states will have to help bear their own costs — insurance companies in Nebraska will get tax and fee breaks.

Insurance giant Blue Cross/Blue Shield of Nebraska, for instance, would pay between $15 million and $20 million less in fees under the Senate bill than it would have without a change the Nebraska Democrat helped broker, according to Nelson’s office. Another insurer, Mutual of Omaha, won’t have to pay taxes on so-called Medigap insurance that buttresses Medicare insurance used by the elderly.

Unlike the Blue Cross/Blue Shield deal, that tax break will be extended to other companies. Mutual of Omaha spokesman Jim Nolan said he didn’t “have a figure to share” about how much the company may save.

A Blue Cross/Blue Shield of Nebraska spokesman estimated that the cost-savings figure released by Nelson’s office was probably close to accurate and added that the company didn’t ask for the break.

The savings will go directly to consumers, said Pat Bourne, the company’s vice president of commercial business and government affairs.

Republicans blasted the perks for Nebraska, saying they were a sign the health care bill couldn’t stand on its own merits.

“There should be no special deals, no carve-outs for anyone in this health care bill; not for states, not for insurance companies, not for individual senators,” U.S. Sen. Mike Johanns, R-Neb., said.

Nebraska Democrats, meanwhile, defended Nelson, saying he did his job by protecting the state’s interests.

“Ben Nelson has done his job and if anyone has a problem with him, maybe they should take a lesson from him on how to protect … your state,” state Sen. Danielle Conrad said during a rally Monday to support her fellow Democrat.

Should the Senate version get final approval, public perception of the plan over the next few could determine the political fate of Nelson, who constantly walks a political tightrope in his conservative, Republican-leaning home state. Nelson is up for re-election in 2012.

The senator was only holding out for a compromise on abortion — not financial perks for Nebraska — as the overhaul debate dragged on, said Nelson spokesman Jake Thompson. Nelson held out for weeks until giving Senate Democrats the 60th vote they need to advance a historic package of health care reforms.

Under the abortion compromise, insurers participating in new insurance supermarkets called exchanges could cover the procedure. But in plans covering abortion, individuals would have to pay for it separately so government dollars wouldn’t be used for it.

Also, individual states would be able to pass laws prohibiting abortion coverage in the exchange plans.

Nelson is catching plenty of heat for the deal from both sides of the abortion debate. But it’s the Medicaid and insurance-tax perks for Nebraska that are drawing either praise or political fire.

The senator was an insurance lawyer and consultant before he entered politics and served as executive vice president of the National Association of Insurance Commissioners. He was also a former Nebraska insurance commissioner.

According to the Center for Responsive Politics, the insurance industry has contributed more money to Nelson than any other industry over the past five years — about $650,000.

The senator’s spokesman contends there are good policy reasons behind the deals.

Mutual of Omaha and other Medigap providers won’t see a surge in customers and revenue because of health care reform, Thompson said. So if Medigap plans aren’t exempted from the new, industrywide tax on health insurance companies, Medigap recipients would see their premiums rise, he said.

The change for Blue Cross/Blue Shield of Nebraska was negotiated because of a state law that inappropriately taxes the company although it is a not-for-profit, Thompson said. The exemption from paying $15 million to $20 million if the change is made wouldn’t be automatic, he said — the company would have to keep spending on overhead at a minimum to obtain it.

Nelson backers will likely talk less about the insurer deals and more about how state government won’t have to pick up Medicaid expansion costs in Nebraska. Over the next decade, state officials estimate about 74,000 more Nebraskans will be covered by Medicaid because of health care reforms.

Late last week before Nelson got the concessions, Nebraska Gov. Dave Heineman asked him to vote against the bill because it would increase Medicaid costs. After Nelson got assurances Nebraska wouldn’t have to pay for the expansion, the Republican governor wasn’t satisfied.

Heineman said Monday the Medicaid expansion was one of several problems he has with the overhaul bill and that Nelson’s deal doesn’t allay his concerns because he believes all states should get the same treatment.

In response to Heineman’s opposition, Nelson fired off a letter to the governor saying he’s prepared to ask that the provision covering Nebraska’s Medicaid share be removed “if it is your desire.”