Gov. Bill Haslam announced this morning he's decided against expanding Tennessee’s Medicaid program under the federal health care overhaul—at least for this year—avoiding a big fight with many members of his own party over the last weeks of this legislative session.
In a speech to a joint session of the legislature, the governor said he was negotiating with the Obama administration for a better deal, seeking permission to enroll new Medicaid beneficiaries in private insurance plans. He said he wanted assurances that the state won't wind up saddled with increasing costs in the later years of expansion.
“Until we get those assurances, I cannot recommend that we move forward on this plan,” he said, as Republicans burst into applause.
Haslam wrestled with his decision for months. As late as a couple of days ago, he claimed he had yet to make up his mind. He complained federal officials have been indecisive about giving the state the flexibility Haslam wants in running the program.
Pressuring the governor to expand Medicaid and accept a huge windfall of federal money—an estimated $7 billion for Tennessee over the next five years—was a who’s who of the state’s business world, including the health care industry and eight of Tennessee’s chambers of commerce. The Tennessee Chamber of Commerce & Industry came out in favor of expansion just yesterday. The state’s major newspapers editorialized for it.
“Blind opposition to the nation’s health care reform law is irrational and self-defeating,” the Jackson Sun wrote Sunday.
Former Gov. Phil Bredesen was for it—reversing his earlier opposition to the Affordable Care Act—and so was former Sen. Bill Frist, a friend and political mentor to Haslam. Nashville is home to 250 health companies that pump $30 billion a year into the economy. They include HCA Corp., the hospital chain co-founded by Frist’s father.
The industry warned some hospitals, especially financially struggling ones in rural parts of the state, might have to close if the state rejected Medicaid expansion. The state’s hospital association predicted the loss of 90,000 jobs and a near-recessionary economic impact in some places.
But saying yes would have incited a riot in the GOP’s base. Many lawmakers have been antsy all session to enact bills prohibiting Tennessee from expanding Medicaid coverage.
House Speaker Beth Harwell opposed Medicaid expansion last year, but she has been reluctant to comment this session while Haslam was deciding what to do. Last week, Lt. Gov. Ron Ramsey said flat out the votes didn’t exist in the Senate for expanding Medicaid without serious concessions from the federal government in the administration of the program.
Saying no rejects a jackpot of benefits to the state. The law expands Medicaid coverage to anyone earning up to 133 percent of the federal poverty level, or $14,300 for a childless adult and about $30,000 for a family of four. That would add roughly 190,000 beneficiaries in Tennessee over the first five years.
The federal government will pay for all of the expansion through 2016, and at least 90 percent after that. That’s supposed to cost the state $100 million annually. But no matter what the state eventually does, it will cost another $900 million over the next five years chiefly to cover the addition to the rolls of new beneficiaries who already qualify for Medicaid but don’t know it. Under what’s called “the woodwork effect,” these beneficiaries are expected to learn that they qualify when they go to ObamaCare’s health insurance exchanges to buy coverage and meet the law’s individual mandate.
The Supreme Court upheld the law, including the mandate, nine months ago but gave states the choice of opting out of Medicaid expansion. Now, 27 states are planning to participate or considering it, including eight with Republican governors, and 17 are opting out or leaning toward that. Add Tennessee to that opt-out list now.
Democrats argue the state has a moral obligation to opt in, providing medical care for nearly 200,000 now-uninsured Tennesseans. The No. 1 complaint of Republicans lately has been that that they don’t trust the federal government to come through with the promised funding.
“This is one that I’m really, really concerned about,” Ramsey said this month. “Obviously, the humanitarian side of me would say that if you can provide health insurance to more people then we ought to be doing it. But the realistic side of me says that the federal government, even though they say they’re paying 100 percent, can’t keep that up. It is impossible. There is no guarantee. As a matter of fact, I would almost lay odds that they will not keep their promise of funding and then what are our options?”