Tennessee Gov. Bill Haslam called it a “third option” as he turned down an expansion of Medicaid funding at least for now with the federal government paying 100 percent of the cost in the first three years.
The goal he is pursuing is an expansion of TennCare, the state’s version of Medicaid, to include more of who are now uninsured but a use of the federal funding to allow those added to buy private health insurance.
The Medicaid decision is the second and arguably the more important of two Affordable Care Act decisions Haslam has made. His first was the decision not to set up a state exchange for health care insurance and instead rely on a federal exchange.
While Haslam said the two decisions involved different factors, they have in common his insistence that he couldn’t get detailed answers from federal health care regulators at the Department of Health and Human Services and he was unwilling to accept federal conditions.
“There are a lot of federal requirements that come with Medicaid that make it difficult to provide quality care in the most cost-effective way possible,” Haslam told legislators Wednesday, March 28, in announcing his decision. “Instead of insuring more people through an inherently flawed system, we’d hoped to purchase private insurance to insure as many as 175,000 more Tennesseans. To do that HHS says we have to provide additional benefits, above and beyond what everyone else in the exchange will receive.”
There would also have been Medicaid guidelines on copays and an appeals process that were unlike those in private insurance plans.
Haslam acknowledged his decision on the federal funding and expansion for now will be hard on hospitals across the state.
In Shelby County’s case, the hospital is The Regional Medical Center at Memphis and the estimate of people affected by the Medicaid expansion decision is 60,000 to 80,000, according to Shelby County Mayor Mark Luttrell’s March 14 letter to Haslam. Luttrell urged Haslam to expand TennCare with the federal funding.
“Some low income residents may find affordable coverage now in the federal Health Insurance Exchange, but we estimate that most will be eligible for the Medicaid expansion,” Luttrell wrote. “Unfortunately in Shelby County, we are keenly aware of the implications of non-insurance. This includes the uncompensated costs of delayed care for low-income persons who simply do not have the resources to seek care at earlier, less acute and less costly points in their illness.”
Luttrell told Haslam he had “no doubt” a decision by the state not to participate in the Medicaid expansion “would be damaging to The Med, if not devastating.”
Haslam acknowledged that possibility in January when he set the political parameters for his decision to come on Medicaid expansion.
“There are hospitals across this state, many of them in rural communities, that are going to struggle if not close under the health care law without expansion, and that’s not something to take lightly,” he told the Tennessee legislature in his state of the state address that month. “Most of us in this room don’t like the Affordable Care Act, but the decision to expand Medicaid isn’t as basic as saying, ‘No ObamaCare, no expansion.’”
Haslam’s consideration is also rooted in the decisions of his Democratic predecessor as governor seven years ago.
That’s when Phil Bredesen, a health care executive and Nashville mayor before becoming governor, cut a large number of people from the TennCare program. It was one of the most controversial acts of Bredesen’s two terms in office.
Without a Medicaid expansion, Haslam’s budget, delivered to the Tennessee legislature in January, anticipated a $350 million increase in TennCare costs over last year. That includes “the higher cost of medical care, more people who qualify for Medicaid in tough economic times and primarily the impact of the Affordable Care Act,” Haslam said in his state of the state address.