Gov. Bill Haslam told the General Assembly on Wednesday he will reject an expansion of Medicaid for now because the federal government has not agreed to some aspects of a “Tennessee plan” that involves using federal money to buy private insurance.
“A pure expansion of Medicaid, expanding a broken system, doesn’t work,” said Haslam, contending he wants to use federal money to buy private insurance akin to the approach being tried in Arkansas.
That would mean more people with health insurance without expanding the number on TennCare, the state’s system for Medicaid, he said.
But the federal Department of Health and Human Services has insisted on conditions for implementing the proposal that are unacceptable, Haslam said, and for now he will not recommend expansion in Tennessee.
“Our budget will not include language to accept the federal funds,” he said.
The statement brought applause from many Republicans assembled to hear his address, which left the door open for a change if federal officials change their position.
State Sen. Mae Beavers, R-Mt. Juliet, said she didn’t expect Haslam to approve the proposed Medicaid expansion, because there was not enough support in the Senate.
In any case, she said she was glad he rejected it.
“[Under the Washington-endorsed plan], the money would be there for three years, and then [that money] would be gone and it would be up to the state to come up with the money to fund it,” said Beavers.
Haslam had earlier rejected establishment of a state-operated health care exchange in Tennessee, leaving the federal government to operate the clearinghouse between insurance companies offering policies and customers.
A broad array of interest groups urged the governor to accept expansion, ranging from the Tennessee Health Care Coalition, which advocates for low-income and disabled persons, to the Tennessee Hospital Association and the Tennessee Chamber of Commerce and Industry.
The Legislature’s Fiscal Review Committee staff estimates that expansion would make 144,500 Tennesseans newly eligible for TennCare in the first year and bring about $1 billion in federal funds into the state.
Legislation that would block any expansion of Medicaid in the state had been scheduled for hearings later today in the Senate Commerce Committee and the House Insurance and Banking Subcommittee.
Republican leaders from across the state praised Haslam’s decision.
“Once again, Governor Haslam has proven he is a man of principle,” said Tennessee Republican Party Chairman Chris Devaney in a prepared statement. “[Haslam] took his time to thoroughly research this issue and gather all the facts. Instead of merely providing an answer that was politically motivated, he dutifully went about the business of being a true leader.”
U.S. Sen. Lamar Alexander, while more moderate in his praise, stood behind Haslam’s decision.
“I trust Governor Haslam to do what is in the best interest of Tennesseans,” said Alexander in a prepared statement. “I will do all I can to help the state get the flexibility he has asked for.”
Haslam said, if federal officials would go along with his plans, Tennessee can be “a model for what true health care reform looks like; reform that will take significant steps to save the state and the nation from the unsustainable path we are on now.”
The governor said his plan would take on “the critical issue of aligning incentives among users, payers and providers of health care.”
As described in a news release from the governor’s office, the Haslam “Tennessee Plan” would:
• leverage available federal dollars to purchase private health insurance for Tennesseans up to 138 percent of the federal poverty level who don’t have access to health insurance, which would translate to 175,000 more insured Tennesseans.
• allow co-pays for those who can afford to pay something.
• include a definitive circuit-breaker or sunset of the plan that could only be renewed with the General Assembly’s approval.
• reform the payment structure for providers so they are compensated for health outcomes, not just based on services performed.
• and reform the payment structure for providers so they are compensated for health outcomes, not just based on services performed.
– The Knoxville News Sentinal contributed to this report via MCT.