Tennessee to Expand Medicaid as GOP Adapts to Obamacare

Tennessee has moved to the forefront of a new group of Republican-led states jockeying for hundreds of millions of dollars available under Obamacare for Medicaid expansions.

Governor Bill Haslam, a Republican, announced yesterday that the state would expand its Medicaid program for the poor under a “real Tennessee solution” that the Obama administration supports in principle. Indiana, Utah, Wyoming and Alaska are also considering an expansion, at least 90 percent of which would be funded by the federal government.

All of the states cast their expansions as departures from the traditional Medicaid program, in which participants pay little or nothing toward their care and the government compensates most doctors and hospitals directly. Their modified programs would generally require individuals to bear more of the costs of their health care. It’s a compromise that lets state Republicans work with the Obama administration even though their party rejects the health-care law.

“We made the decision in Tennessee nearly two years ago not to expand traditional Medicaid,” Haslam said in a statement. “This plan leverages federal dollars to provide health care coverage to more Tennesseans, to give people a choice in their coverage and to address the cost of health care, better health outcomes and personal responsibility.”

Under the plan, called Insure Tennessee, low-income adults would receive either a voucher to help pay premiums for insurance their employers provide or would be enrolled in the state’s Medicaid program, called TennCare, where they would be liable for unspecified out-of-pocket costs. They could pay their share of costs from accounts funded by the state in exchange for “making healthy choices and utilizing the health care system appropriately,” Haslam’s office said in a presentation.

Verbal Approval

In another sign of a thaw in attitudes toward the Affordable Care Act, five states with Republican governors -- Michigan, Idaho, Iowa, Ohio and Tennessee -- were among 11 states awarded a share of $665 million in federal grants today under the law. The money is intended to finance experiments in improving care and reducing health costs.

The states’ projects may include helping doctors and hospitals purchase new computer systems or use data to streamline their care, or additional training for health workers, the U.S. Health and Human Services department said in a statement.

Verbal Approval

Tennessee’s Medicaid plan must be approved by the state legislature next year and by the Obama administration. Haslam’s office said he had secured “verbal approval” for the outline of the plan from the U.S. Health and Human Services secretary, Sylvia Mathews Burwell.

The Obama administration “is willing to work with any state interested in expanding Medicaid, and welcomes the news out of Tennessee,” Aaron Albright, a spokesman for the U.S. Centers for Medicare and Medicaid Services, an arm of Burwell’s department, said in an e-mail. “The department has had productive discussions with Governor Haslam, and we look forward to the state submitting its plan to give low-income Tennesseans new options for health coverage.”

Supreme Court

When Democrats wrote the Patient Protection and Affordable Care Act, they envisioned forcing every state to enact a Medicaid expansion by otherwise withholding all funding for the program. The Supreme Court ruled in 2012 that approach was unconstitutional, rendering the Medicaid expansion voluntary for governors.

The expansion is aimed at providing Medicaid coverage to people earning near poverty-level wages. In many states, adults without children aren’t eligible for Medicaid no matter how little their incomes. In states that haven’t taken advantage of the Affordable Care Act’s expansion, including Texas and Florida, most adults with income beneath the poverty level, about $11,670 for a single person, are ineligible for any government assistance purchasing health insurance.

Coverage Gap

Haslam’s office said his plan aims to fill this “coverage gap” created by the Affordable Care Act and the Supreme Court’s decision. Tennessee would bring to 28 the number of states that have adopted the Medicaid expansion in some form, according to the Kaiser Family Foundation, a Menlo Park, California, nonprofit group that tracks decisions on the issue.

“This is just a first step in potentially a long process,” Robin Rudowitz, a Medicaid expert at the foundation, said in a phone interview. “There’s usually a lot of negotiating back and forth between the state and federal government on what the exact provisions might be.”

Under the former health secretary, Kathleen Sebelius, the Obama administration said it would consider a limited number of expansions based on using Medicaid funding to pay private insurance premiums. The first was in Arkansas, where the Democratic governor, Mike Beebe, and Republican legislative leaders agreed to a model they called the “private option.” Under that plan, people eligible for the Medicaid expansion would be enrolled in commercial health plans sold on the state’s new insurance exchange.

No Limit

The U.S. has since approved three other Medicaid expansions that required a waiver from federal law, in Pennsylvania, Michigan and Iowa, Rudowitz said. All of them had Republican governors at the time.

Burwell has suggested there is no longer any limit on the number of Arkansas-style expansions that may be approved. “My message to governors is that ‘If you’re interested in expanding, call me,’” she told state Medicaid directors last month.

Haslam credited Burwell in a meeting with journalists at The Tennessean in Nashville yesterday. “The new secretary, Sylvia Burwell, has been great,” Haslam said in a video of the meeting the newspaper posted on its website. “She has kind of personally taken this on as a challenge.”

Indiana has submitted a waiver application to the federal Medicaid agency for its expansion plan, and Utah is negotiating one, Rudowitz said.

Wyoming’s governor, Matt Mead, has proposed an expansion in which participants would have to “pay appropriate co-payments” toward their care and higher-income enrollees would pay a monthly premium. Those who “complete health challenges” would see their premiums reduced.

Alaska Governor Bill Walker has ordered the state’s health and social services commissioner to design a Medicaid expansion plan, a spokeswoman said.

If Republican governors are increasingly amenable to the Affordable Care Act, their compatriots in Congress remain largely hostile. Republican congressional leaders have sued President Barack Obama over his implementation of the law and vow further votes to repeal it next year.

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