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Ignoring Obamacare could cost Tennessee more than $1 billion over 5 years

5:55 am by | 1 Comments

NASHVILLE -- The federal health reform law will cost the state up to $1.4 billion in its first 5 1/2 years, most of which will be incurred even if Tennessee doesn't create its own health insurance exchange or expand its TennCare/Medicaid program, TennCare officials said Tuesday.

Gov. Bill Haslam must notify the federal government by Friday if he plans to create a state-level health insurance exchange or defer to a federally run exchange, which could cost the state even more in the long run and without any state control. The governor said he's awaiting answers from Washington on details of state control before deciding, but seemed to be leaning toward a state exchange in his remarks during and after TennCare's budget hearing Tuesday.

The exchange is designed to allow uninsured people to compare and buy health insurance options through a single Internet portal, and those earning up to four times the federally designated poverty level will receive subsidies to pay for the coverage.

"I've always said from the very beginning that anything we (Tennessee) can run instead of the federal government, we are going to run it better and cheaper," Haslam said, citing TennCare's cost increases of 3.5 percent per year compared to the national Medicaid average increase of 7 to 8 percent per year.

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"The simpler thing to do is to say, 'Here, it's your idea, you run it,' but I'm not convinced yet that that's what's best for our citizens. There's going to be an exchange and ultimately, our citizens -- through their insurance companies -- are going to pay for the costs of running that exchange. So who do we think can run it cheaper: us or the federal government? I'll bet on us every time. But we have to be convinced that the flexibility they will give us is worth taking the risk of running it ourselves."

Unlike the exchange question, there is no timetable for the state to decide whether to expand its Medicaid program, known as TennCare in Tennessee. Both the exchanges and Medicaid expansion will launch on Jan. 1, 2014.

Beyond the immediate issue of the exchange is the overall financial impact of the federal Affordable Care Act, or "Obamacare," on the state. In his budget presentation to the governor and finance officials Tuesday, TennCare Director Darin Gordon said that even if Tennessee chooses not to expand Medicaid, the state faces about $1.25 billion in costs between Jan. 1, 2014, and June 30, 2019, the first five years. The bulk of that, $913 million over five years, results from an expected 60,000-person increase in TennCare enrollment by people who are currently eligible for Medicaid but not enrolled.

They are expected to enroll because of the federal mandate that most people carry insurance, the requirement that individuals must be screened for Medicaid before buying insurance in the exchange, and the increased publicity on health insurance leading up to 2014's mandates.

Gordon said another $335.3 million increase over five years will result from a federal excise tax on health plans, including TennCare's managed care companies, which will be reflected as a cost to the state.

Medicaid expansion would not begin to cost the state money, if it chooses to opt into it, until 2017 because the feds pay 100 percent of the costs until that year, when the federal share begins phasing down to 90 percent. But by 2019, that's expected to cost the state $200 million. ___

(c)2012 The Commercial Appeal (Memphis, Tenn.)

Visit The Commercial Appeal (Memphis, Tenn.) at www.commercialappeal.com

Distributed by MCT Information Services

[Image from flickr user robert claypool]

Copyright 2014 MedCity News. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

By Locker, Richard

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1 comments
Nanotech
Nanotech

What a bad piece of writing. The title's statement of O'care costs are never justified or explained. In the first paragraph it seems to say that O'care will cost Tennessee more to implement than not. Other details are never explained and obvious questions about the mandates and programs are never asked or addressed. Is this article meant to confuse us about O'care and it's costs?

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