Gov. Bill Haslam's proposal to extend health coverage to 280,000 low-income Tennesseans has failed during a special legislative session.

The Senate Health Committee defeated the Republican governor's Insure Tennessee plan Wednesday on a 7-4 vote.

HASLAM

But there were indications by Wednesday evening that the door could be open for some kind of amended alternative to Insure Tennessee.

The best indication of that may come Thursday when Gov. Phil Haslam addresses  the annual luncheon of the Winter Convention of the Tennessee Press Association.

As those on all sides of the issue began to sift through the events in the legislature, many talked of the legislature taking another look at some kind of alternative version in the regular legislative session.

If that happens, state Senate majority leaders Mark Norris of Collierville said Wednesday it will have to start in the House which did not act before the decisive Senate committee vote that killed the proposal.

"The Lt. Governor's position is that the Senate won't take up anything that hasn't passed the full House," Norris told The Daily News, referring to Lt. Gov. and Senate Speaker Ron Ramsey.

Among the Senate health committee members voting to kill the proposal was Germantown Republican Brian Kelsey.

Kelsey was an outspoken opponent of a Medicaid expansion on any terms and the sponsor of the bill that required Haslam win the approval of the legislature for any expansion he might negotiate with federal officials.

After Wednesday's decisive committee vote, Kelsey remained vocal in his opposition to Insure Tennessee along broad ideological lines.

"I'm hopeful several bills will be offered during the regular session that address this from a conservative free market standpoint," Kelsey told The Daily News at the end of the busy day on Capital Hill.

The committee vote was followed by a Senate vote to adjourn the special session. The House followed, ending the special session.

Late Wednesday afternoon, local reaction was beginning to come in from political leaders.

Shelby County Mayor Mark Luttrell said he will "let the dust settle" on the end of the special session to assess whether there is an alternative to Insure Tennessee that could emerge or a non legislative alternative.

“Right now it’s very nebulous and we are just going to kind of work thorught his thing a day at a time until we get a little bit more clarity," he said. "It could be a significant cost to Shelby County if we can’t fuind a reasonable alternative. That signficant cost would be borne by the taxpayers in the form of property tax."

The funding from the Medicaid expansion would have replaced an estimated $70 million in federal reimbursements Regional One Health, the county funded safety net hospital, gets for treating the uninsured from the three-state region.

Regardless of the fate of the Insure Tennessee plan, that federal funding is gone and replacing it with a hike in the county property tax alone would mean a 10 percent property tax rate hike, according to Luttrell's estimate.

Methodist Le Bonheur Healthcare vice president Cato Johnson Sr. pointed to a possible resurrection of the proposal in the regular legislative session that follows in his initial reaction Wednesday.

"We believe Gov. Haslam put forth a thoughtful, well-constructed, fiscally responsible plan that would have fostered improved health for Tennessee citizens and economic vitality for our state," Johnson said in a written statement. "We deeply regret this outcome, and hope the legislature will reconsider during regular session."

Greater Memphis Chamber president Phil Trenary said the chamber is "disappointed" by the outcome.

"Their action today has a direct negative impact on the health of Tennesseans, hurting our workforce and our economy," Trenary said in a written statement Wednesday evening. "It is puzzling that the Senate committee members took action that is effectively re-routing billions of dollars of taxs paid by Tennesseans to other states. ... I hope this decision can be revisited."

U.S. Rep. Steve Cohen of Memphis called the defeat "foolish," "sad," and "sick."

"This vote is foolish because it leaves $1 billion in federal funds each year on the table that could have helped keep hospitals open, boosted our economy, and improved our citizens' health," Cohen added in a statement from Washington. 'This vote is sad because it shows inhumanity and disdain for Tennessee's sick and our poorest citizens in need of health care. And it is sick because some of those Tenneseans will die as a result of this decision. Those who voted 'no' today made a foolish, sad, sick and outright wrong decision."

Watch this story for more local reaction.

Haslam spent 21 months negotiating with federal officials for a special deal for Tennessee that included market-based elements like vouchers to buy private insurance, co-pays and assurances that the state could pull out of the deal if it ended up being more expensive than expected.

Hospitals pledged to cover the $74 million state share, meaning taxpayers wouldn't be on the hook for extra health insurance costs.

Opponents of the Insure Tennessee proposal objected to adding to the federal debt by having the state draw down $2.8 billion in federal money under President Barack Obama's health care law.

However, supporters of the plan said they were comfortable with the accountability measures the governor has included, and that the proposal is needed to help those Tennesseans in dire need of health coverage.

Republican Sen. Kerry Roberts of Springfield said one of the reasons he voted against the measure is because he wanted to see more details about consequences the state would face if it pulled out of the plan.

"This was a very agonizing decision for everyone on that committee," he said.

Nurse practitioner Cathy Hill-McKinney of Troy said her conservative Republican beliefs had not influenced her support for the plan. She said a cancer patient she cared for – who couldn't afford treatment and eventually died – could have utilized the governor's plan.

"I wish you would at least give it a shot," she said earlier in the day. "We've got an opportunity to do something really good."

With the plan's failure in the Senate, it appeared unlikely that the House would move forward with its version of the proposal.

However, House Speaker Beth Harwell said Tuesday that she has offered to have her committee chairmen draw up alternate suggestions for Haslam should his plan appear to be headed for defeat.

- The Associated Press contributed to this report.