Following separate press conference announcements last week, South Carolina Attorney General, Henry McMaster, and twelve other Republican state attorneys general sent a letter to the House and Senate leadership declaring unconstitutional the last minute deal struck with Sen. Ben Nelson (D-Neb.) to help secure his vote in favor of the Senate health reform bill. The provision at issue in the Senate health reform bill would provide indefinite federal funding for 100 percent of the costs associated with Nebraskans who become newly eligible for Medicaid under the reform bill. It is estimated that Nebraska’s federal guarantee would cost the government $100 million.

McMaster and the other Republican attorneys general contend that the Nebraska deal would result in taxpayers in the other 49 states having to unfairly pay the tax burden associated with the Nebraska Medicaid benefits, an unequal and unconstitutional application of the law. Sens. Lindsey Graham (R-S.C.) and Jim DeMint (R-S.C.) prompted McMaster, who is running for governor in South Carolina, to examine the legality of the Nelson deal. In a separate announcement, Texas Attorney General Greg Abbott also threatened legal action unless the Nelson Medicaid provision was removed from the final health reform bill.

Senator Nelson was one of the last Democratic holdouts who, after much coaxing from Majority Leader Reid, agreed to vote for passage of the Senate health reform bill.Addressing Senator Nelson’s concerns about the financial burdens of Medicaid expansion in Nebraska and satisfying the staunchly pro-life Senator’s requirements for restricting the use of federal funds to cover abortion procedures were necessary to secure Nelson’s vote for the Senate bill. Now, the threat of legal action by the State attorneys general could force the Senate and House negotiators of the compromise bill to revise or drop the sections of the Senate bill aimed at Nebraska, perhaps endangering ultimate passage of health care reform legislation.