Medicaid expansion is coming, but will the federal money flow into Tennessee?

Robert Houk • Nov 25, 2013 at 10:22 AM

Just days after President Obama made an awkward apology for his failed promise: “If you like your health care plan, you can keep it,” U.S. Sen. Lamar Alexander was talking about the plight of a 39-year-old Middle Tennessee woman named Emily, who he said was about to be slammed by the Affordable Care Act.

Alexander said Emily was one of the 16,000 Tennesseeans who would soon be forced to give up their limited health care plans under CoverTN and enroll in coverage that meets the minimum standards set by the Affordable Care Act. As a result, Alexander told me Emily (who suffers from Lupus — a pre-existing medical condition that under Obamacare, is no longer supposed be an obstacle to her when it comes to finding affordable health insurance) will see her annual insurance costs increase by more than $6,000.

That’s not right, said Alexander, who will face a tea party challenger in the Republican Primary next year. The state’s senior senator said Emily and others like her should be able to keep their modest policies.

And besides, Alexander told me, Obamacare simply expands an already “expensive health care delivery system.”

What’s needed, he said, is true free-market reform. Curiously, though, some of Alexander’s market reforms sound quite similar to Obama’s.

Days after his apology, Obama announced he would allow Americans to keep their modest health plans for one more year. The question, however, is: Will insurers want to do that? State officials have said it’s highly unlikely they will continue to operate CoverTN for another year.

CoverTN is a limited-benefits program that was created by former Democratic Gov. Phil Bredesen in 2006 following a major purge of the state’s TennCare rolls. It has been called a “bare-bones” program by health care advocates, who point to CoverTN’s sparse coverage for hospitalization, prescription drug costs and long-term care.

Nonetheless, with premiums that range from $30 to $100 a month, it’s easy to see why folks like Emily want to keep the CoverTN policies they have now.

It’s also likely that many of those now enrolled under CoverTN will be eligible to receive coverage under a Medicaid expansion under the Affordable Care Act. Darin Gordon, the state’s commissioner of Health Care Finance and Administration, told The (Nashville) Tennessean recently he fears his department will have to dip into its $315 million reserve fund to enroll more people in TennCare, which is where Tennessee spends its Medicaid dollars.

And that’s going to be the dilemma Gov. Bill Haslam and members of the state General Assembly will face in the coming months. Earlier this year, Haslam turned down federal money to cover what was then expected to be an additional 180,000 state residents on TennCare.

These new enrollees would be mostly the working poor — Tennesseans who have no health insurance with their employer, who can’t afford to be in the state’s new health exchange and who make up to 138 percent of the poverty level.

The federal government would cover the total cost of this coverage for the first three years and 90 percent thereafter. These funds are intended to soften the blow for as much as $7.8 billion in Medicare cuts to Tennessee hospitals.

Haslam’s decision to reject those funds means billions of health care dollars that could be coming here will now go to states (like Kentucky) that have agreed to expand their Medicaid rolls.

At the same time, Tennessee’s failure to accept the funds will result in the loss of 90,000 health care and health-related jobs. A study commissioned by the Tennessee Hospital Association found 3,425 of these jobs will be lost in Washington County.

Dennis Vonderfecht, who is retiring as president and CEO of Mountain States Health Alliance at the end of the year, said recently his health system already has been forced to make cuts as a result of the state’s refusal to accept the additional Medicaid dollars, and he expects more will come in the near future.

Vonderfecht said he and other health care leaders are still hopeful that Haslam will be successful in convincing the U.S. Department of Health and Human Services to allow Tennessee to “leverage” federal dollars meant to purchase private health insurance for the uninsured.

Their confidence in the governor’s being able to pull that off may have been shaken a bit earlier this month when Health Secretary Kathleen Sebelius told a reporter in Memphis she has seen no details from the governor regarding his so-called “Tennessee Plan.” Interestingly, the secretary’s comment came about the same time that Lt. Gov. Ron Ramsey told another reporter the General Assembly would not accept any federal dollars to expand TennCare. Ramsey also said Haslam’s administration is just wasting its time trying to negotiate with Sebelius on the issue.

Even so, Vonderfecht is confident local lawmakers are open to continuing the discussion and want to see the governor show more leadership on the matter. The first thing he must do in that regard, says Alan Levine, who will succeed Vonderfecht as head of MSHA in January, is to have the state prepare a specific plan for the reauthorization of those Medicaid dollars.

“Without those documents, there can be no meaningful conversation,” said Levine, who has experience in shaping state Medicaid policies in Louisiana and Florida.

I doubt such documents will be prepared in Nashville. Haslam knew it was going to be next to impossible to convince the Republican super majority in the General Assembly to approve a TennCare expansion under Obamacare. That’s why he attempted to repackage the Medicaid expansion as the Tennessee Plan. Even that, tea party Republicans say, would bear the taint of Obamacare, thus making it entirely unacceptable.

So what are the alternatives? There are very few. Haslam’s staff has begun to map out major budget cuts and cost-saving strategies for TennCare, but those measures fall far short of what will be needed to cover the additional enrollees.

There’s also the possibility that moderate Republicans in the House and Senate will listen to the pleas of their local hospital administrators and take the additional Medicaid dollars. That’s not likely to happen with 2014 being an election year.

The only strategy I see Republicans pursuing is to continue to kick up such a fuss that Obamacare is repealed outright or effectively stalled for one year. It’s a tactic similar to that of a petulant child holding his breath until he turns blue (which, by the way, rarely proves successful). While it’s possible that either could happen if the rollout of the Affordable Care Act is as terrible as Republicans hope it will be, a repeal of Obamacare is unlikely to happen until 2015. And that’s only if the midterm elections next year go the way Republicans hope.

Robert Houk is Opinion page editor for the Johnson City Press. He can be reached at rhouk@johnsoncitypress.com.

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