'Cornhusker kickback' is toast

WASHINGTON — The deal critics dubbed the “Cornhusker kickback” is toast.

Sen. Ben Nelson, D-Neb., asked Friday that Senate Majority Leader Harry Reid, D-Nev., scratch Nebraska's permanent exemption from additional Medicaid costs under the Senate health care bill.

“I request . . . it instead be replaced with a provision giving all state governments the same treatment regarding the state match for the new Medicaid expansion,” Nelson wrote in a letter to Reid.

In place of the Nebraska exemption, The Associated Press reported, officials said President Barack Obama and lawmakers involved in health care negotiations decided to increase federal money for Medicaid in all 50 states. It was not clear if there would be enough additional money to cover the expansion completely.

The Medicaid expansion is a key element in the bill's overall goal of expanding health coverage to millions who lack it.

Nelson's letter appeared to remove another obstacle to reconciling the House and Senate bills. The White House has been hosting marathon bargaining sessions.

Rep. Jim Clyburn, D-S.C., the third-ranking House Democrat, said, “Something should be going to CBO very soon,” indicating that aides were drafting the decisions made around the table. The Congressional Budget Office is the official arbiter of the cost and extent of coverage that any legislation would provide.

Nelson wrote in his Friday letter to Reid that Nebraska's exemption was intended to serve as a placeholder and was never a special deal just for his home state.

“To remove any attempts at continued distortion or miscommunication on this point, however, I ask that the Nebraska Medicaid exemption be removed and that all states receive equal treatment under the Medicaid expansion,” Nelson said.

The Senate bill requires states to begin shouldering some of the financial burden from the Medicaid expansion in 2017. During negotiations on the bill, Nelson expressed concern that it represented an unfunded federal mandate.

So Reid singled out Nebraska for an exemption as part of his final revisions to the bill. Nelson then provided the crucial 60th vote to break Republicans' filibuster and advance the bill.

Reid defended Nebraska's exemption at the time by saying “You'll find a number of states that are treated differently than other states. That's what legislating is all about. It's compromise.”

But critics swiftly accused Nelson of selling his vote for the bill and officials in other states, including California Gov. Arnold Schwarzenegger, protested the one-of-a-kind exemption.

Even former President Bill Clinton urged that it be jettisoned.

“That Nebraska thing is really hurting us,” he told House Democrats in an appearance designed to build support for the overall legislation.

Nelson spokesman Jake Thompson said Friday that Nelson remains optimistic that all states will receive additional or full funding to cover the Medicaid costs or have the ability to opt out of the program's expansion.

Nelson has said that simply removing the exemption would not affect his support for the final bill. He had declined to say how he would vote if the Nebraska exemption were not removed.

“He's pretty confident that his concerns will be addressed, so that won't be an issue,” Thompson said Friday.

Nebraska Gov. Dave Heineman had been critical of the state's Medicaid exemption. Heineman spokeswoman Jen Rae Hein said Friday that the governor has concerns about the bill that go beyond the Medicaid provisions, however, and he still hopes that Nelson opposes it.

Meanwhile, Sen. Mike Johanns, R-Neb., on Friday criticized a deal that Democrats reportedly struck over a proposed tax on high-premium health insurance plans. The New York Times reported that health plans covering state and local government employees and collectively bargained health plans would be exempt from the tax until 2018.

Johanns said exempting those plans puts a disproportionate burden of health care costs on the backs of non-union workers.

“It is remarkable to me that despite the outcry over this bill and its back-room deals, Democrats start the new year with another special carve-out to get this limping bill across the finish line,” Johanns said.

This report contains material from the Associated Press and The New York Times.

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