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April 27, 2010, 11:45 a.m. CT

Jen Rae Hein, Gov’s Office
Ashley Cradduck, Gov’s Office
Peg Jasa, Dept. of Insurance

Gov. Heineman Sends Letters to HHS Secretary & Legislature Regarding Health Care Reform

(Lincoln, Neb.) Gov. Dave Heineman today sent a letter to U.S. Secretary of Health and Human Services, Kathleen Sebelius, regarding Nebraska’s election not to participate in a new national high-risk health insurance pool, created in the federal health care reform law.

Nebraska’s Congressional Delegation and members of Nebraska’s Legislature were also notified. The letter to Sec. Sebelius is notification that Nebraska will opt-out of creating a new, temporary high-risk insurance pool.

Text of the letters follows:

Dear Speaker Flood and Members of the Legislature:

Many of you have asked about the status of federal health care legislation and its impact on Nebraska. As you know, most Nebraskans are opposed to this legislation because it will raise taxes, cut Medicare and premiums will continue to increase. I share their concern.

Attorney General Bruning has joined with nineteen other states in challenging the constitutionality of the law. Additionally, I am working with several state agencies to determine the law’s full impact on Nebraska.

Recently, U.S. Health and Human Services Secretary Kathleen Sebelius sent a letter to all Governors, asking whether we had an interest in participating in the new federal temporary high risk insurance program. A copy of my reply to the federal government is enclosed.

Thank you.


Dear Secretary Sebelius:

Your April 2, 2010 letter requests an immediate indication from the State of Nebraska of our interest in contracting with the U.S. Department of Health and Human Services to administer a new, temporary high risk insurance program. The program is detailed in Section 1101 of the Patient Protection and Affordable Care Act of 2009 (Act) and is to commence operation on July 1, 2010.

I asked the Nebraska Department of Insurance for its review of this matter, and after careful analysis, the State of Nebraska will not seek to operate this new federal insurance program. The Insurance Director, Ann Frohman, has advised me that the proposed level of federal support and premiums will be inadequate to meet all expected obligations of this program. Even with enrollment caps, we are very concerned that funding will not be sufficient to assure a solvent runoff of all claims when the program expires in three years. With so much financial uncertainty, the State of Nebraska cannot afford to subsidize a second high risk insurance program.

It is important to note that because Nebraska currently operates a high risk insurance pool, this does not mean the current pool can provide the structure or synergies for a new program. A separate pool will be needed given that the new program relies on a plan design, pricing scheme, and funding requirements which are much different than Nebraska’s current program.

In conclusion, I question what value comes with adding a new layer of bureaucracy at the state level to administer this program. I understand that the federal government will, regardless of our decision, proceed to operate the new high risk pool and provide coverage to eligible Nebraskans.

Please keep me informed of developments on your agency’s operational plans for the State of Nebraska.


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