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November 8, 2011 – Today, Nebraska’s Senator Ben Nelson applauded the Senate’s strong bipartisan support for his legislation to fix a glitch in the new health care law so that Medicaid benefits don’t go to middle-income Americans but only to low-income people who need them.
Last night, the Senate voted 94-1 to move forward the 3% Withholding Repeal and Job Creation Act, which included provisions from the Savings Through Eligibility Fairness Act introduced by Nelson earlier this year.
The $13 billion saved in the Eligibility Fairness provisions would be used to pay for repealing a 3 percent withholding requirement that cities, universities and businesses in Nebraska and nationwide say would have a dramatic and negative effect on job creation and business expansion.
“By fixing flaws in two laws, we’re maintaining Medicaid as a safety net only for Nebraska’s most vulnerable citizens and repealing a burdensome withholding requirement, so job creators, communities and businesses can get to work helping our economy recover,” said Senator Nelson. “It’s a win-win making sure middle-class citizens don’t inadvertently receive Medicaid, and that our cities, colleges and businesses aren’t subject to heavy-handed rules that slow down our economy.”
“While I would prefer steering the savings to deficit reduction—as I proposed in my bill—I fully support repealing the 3 percent withholding requirement, and using the Medicaid savings for jobs and to help our economy grow,” Nelson said.
The Senate’s vote last night moved forward for further debate a bill combining the Medicaid fix and the repeal of the 3 percent withholding requirement created in the Tax Increase Prevention and Reconciliation Act of 2005. The 3% withholding bill could receive final approval by the Senate this week.
Dozens of organizations representing universities, cities, counties, builders, truckers, construction contractors, farmers in Nebraska and nationwide have urged Congress to repeal the withholding requirement. Among them is Lincoln Mayor Chris Beutler, who wrote to Nelson earlier this year on the issue.
Beutler said it would require state and local governments that spend more than $100 million on goods and services to withhold from vendors 3 percent of all payments for goods and services beginning in 2012.
“In addition to the administrative burdens of this federal mandate, the provision will ultimately result in increased cost of goods and services to local governments, as vendors raise their rates to make up for the tax,” Beutler wrote to Nelson.
Concerning the Medicaid issue, the Affordable Care Act passed last year will – beginning in 2014—calculate eligibility for Medicaid without counting the Social Security benefits of early retirees as income. This is a change from the current eligibility criteria for Medicaid, which does consider Social Security benefits when determining if people qualify.
As a result, a married middle-class couple with an annual combined income of about $64,000 – including their Social Security benefits and other sources of income – could qualify for Medicaid.
In an Associated Press story on this issue, Richard Foster, Chief Actuary of the Centers for Medicare and Medicaid Services, said this change in eligibility “just doesn’t make sense.” A link to the AP story is here.
To fix this problem, Nelson’s legislation would count Social Security benefits as income when determining eligibility for Medicaid – just as it is today. Social Security benefits would not change.
“I regularly hear from Nebraskans who are already benefitting from the new health care law,” Nelson said. “I am committed to common-sense improvements like this one, which will save money while still protecting the benefits of the law that improve care for Nebraskans.”
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