LINCOLN — Cut more deeply into the annual support provided for Nebraska health needs.
Put more money into the fund used to generate that support, perhaps by raising state taxes on cigarettes.
Do nothing for now.
A panel of Nebraska lawmakers heard those conflicting suggestions at a hearing Tuesday about securing the future of the state's Health Care Cash Fund.
The fund was created in 2001, using Nebraska's share of a national tobacco settlement agreement and money collected through a now-closed Medicaid loophole.
Originators wanted a perpetual fund that could support a host of long-neglected health-related needs with its earnings.
State Sen. Kathy Campbell of Lincoln, chairwoman of the Health and Human Services Committee, said she has heard near-unanimous support for maintaining that original goal.
“I think people do want it to be there in the future for the health care needs of the state,” she said.
But Campbell said it will take more discussion to figure out the best way to keep the fund from dwindling away.
Two state financial officials projected Nebraska will spend more out of the fund than will come in from tobacco companies and investment earnings during the next decade.
That's true, even though the Legislature cut spending from the fund by 5 percent each year for the next three fiscal years, said Jeff States, Nebraska's state investment officer.
“It's gradually depleting itself,” he said. “It's progressively not sustainable.”
The fund provided $59 million in the year ending June 30 for biomedical research, children's health insurance, public health, behavioral health and substance abuse services, gambling assistance, respite care and more.
The amount will be cut to $56 million in the next fiscal year, to $53 million in fiscal year 2014-15 and to $50 million in fiscal year 2015-16 and beyond.
Liz Hruska, a legislative fiscal analyst, said the Legislature needs to reduce spending in the upcoming session or risk the sustainability of the fund.
But lobbyist Walt Radcliffe, representing four institutions that receive biomedical research dollars through the fund, urged lawmakers to undo next year's spending cut.
He pointed out the uncertainties of long-term projections, noting that past projections showed the fund could be sustained even with higher spending.
Creighton University economist Ernie Goss backed Radcliffe's suggestion.
Goss said his projections show little change in the fund balance even if spending remains at current levels. He also said cutting back on the research dollars would mean fewer jobs and less federal research money.
Dave Holmquist, a lobbyist for the American Cancer Society's Cancer Action Network, said the money provided by the fund had boosted Nebraska's rank in health care spending.
He proposed shoring up the fund and battling smoking by raising the cigarette tax.
Campbell said she wants to avoid next year's 5 percent cut and take a more measured approach to the fund's future.
She also hopes to build up the fund so it can be used for emerging health priorities.
Sen. Danielle Conrad of Lincoln, who introduced the interim study, said Nebraska should be careful about cutting support for health programs. She said the varying opinions at the hearing suggest lawmakers can take more time to work on the future of the health fund.
“I hesitate to buy into the theory that you have to cut it to save it,” Conrad said. “We don't need to hit the panic button.”
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