Pressure From Attorneys General Forced Nelson to Request Removal of ‘Cornhusker Kickback’

Published May 31, 2016


In response to criticism from his constituents, the media, and several attorneys general, Sen. Ben Nelson (D-NE) has requested Senate Majority Leader Harry Reid (D-NV) remove a controversial provision from the health care legislation which would have required federal taxpayers to fund an expanded portion of Nebraska’s Medicaid costs.

The so-called Cornhusker Kickback, which Nelson received in exchange for becoming the final, key vote for the Senate version of President Obama’s health care package, prompted strongly negative responses.

Incomplete Kickback

According to Ed Haislmaier, a health policy expert at the Heritage Foundation in Washington, DC, the provision would have required an exclusive exception for Nebraska in the Senate health care bill which protects Nebraska, but not other states, from an estimated $100 million in new Medicaid costs.

“Both the Senate and House versions of the health care bill would expand Medicaid coverage for either the first two or first three calendar years depending on which version is enacted, if any,” Haislmaier said. “The federal government would pay for some of the costs, and states would have to pay a share. However, what happened in the case of Nebraska is its extra cost after the first couple of years will be paid by the federal government—meaning the national taxpayers.”

Criticism from States

Several attorneys general criticized the Nelson provision as not just untoward but possibly illegal. South Carolina Attorney General Henry McMaster (R) said the problem raised serious constitutional questions.

“The language of the Nelson provision would give the State of Nebraska a permanent exemption from paying the Medicaid expenses all other states in the nation will be required to pay,” McMaster said. “This raises very serious concerns about equity, tax fairness, and the constitutionality of having federal tax levies and mandates that treat one state differently from all the others.”

Michigan’s Attorney General Mike Cox (R) found Nelson’s deal “outrageous.”

“The last thing Michigan families need is to have their pocketbooks ransacked by Congress to pay for a sweetheart deal for Nebraska,” Cox said.

Attorneys General Reject Offer

According to Alabama Attorney General Troy King (R), Nelson personally tried to calm the anger at his alleged kickback deal by approaching McMaster and other attorney generals around the country with a new proposal that would have translated to more money for their states.

“Sen. Nelson offered to give all states their own version of the ‘Nebraska compromise’ in return for our group of attorneys general calling off the dogs,” King said. “We rejected Sen. Nelson’s offer. This issue has never been about health care reform legislation – rather, it is about upholding the Constitution.”

Even removing the provision may not help Nelson’s poll numbers, which have dropped significantly in Nebraska polls. In an interview with the Nebraska newspaper The Freemont Tribune published January 8, Nelson told reporters he now believed “it was a mistake to take health care on as opposed to continuing to spend the time on the economy.”

Thomas Cheplick ([email protected]) writes from Massachusetts.