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Both sides unhappy with Tennessee governor’s ‘third way’ plan for expanding coverage

11:06 am by | 1 Comments

Gov. Bill Haslam

NASHVILLE -- Gov. Bill Haslam acknowledges his decision not to expand Medicaid in Tennessee and instead pursue a "third way" reform centered on using federal money to buy private health insurance for the working poor "frustrated people on both sides" of the issue.

Opponents of Medicaid expansion are frustrated because he didn't weld the door permanently shut. Instead of covering more uninsured Tennesseans directly through the Medicaid program, Haslam said he'll keep trying to work out a compromise with the Obama administration based on Haslam's plan to use the billions of new federal dollars to buy commercial health insurance for uninsured residents. The governor's plan would also require the newly covered to pay the kinds of co-pays and other provisions that are standard with private health coverage.

Supporters of expansion are frustrated because it appeared the governor bowed to pressure from the far right and turned down an opportunity to cover 180,000 more uninsured Tennesseans with full federal funding for three years and 90 percent federal funding thereafter.

Haslam delivered his interim verdict to the legislature March 27, in language crafted to appeal to both sides. For conservatives, he called Medicaid "a broken system" and proclaimed, "I don't like Obamacare," the federal Affordable Care Act that includes Medicaid expansion as a key provision.

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For liberals, Haslam said he understands "those who don't think it makes sense for us to just say" no to the federal money "because we don't like Obamacare," and added, "I fundamentally believe that people having health care coverage is better for our citizens and state than people not having coverage."

The immediate reaction was predictable.

"It's a failure of our moral obligation to protect the health and welfare of the most vulnerable among us, a failure that will be paid with the lives of the working poor in our state," said House Democratic Caucus chairman Mike Turner of Nashville. "This is quite simply shameful."

Americans for Limited Government declared that "while some governors have caved, Bill Haslam has stood on principle protecting taxpayers across the country from an unsustainable expansion of the entitlement state."

The rhetoric from health care providers and advocates who favor expansion was more measured and hopeful that the governor can work out a deal with Washington.

And in the days since the announcement, Haslam seems to be positioning himself closer to some form of Tennessee participation in the Affordable Care Act than to totally rejecting it.

In back-to-back speeches to the Nashville Chamber of Commerce and the Tennessee Chamber of Commerce & Industry on Tuesday, he said he's still talking with U.S. Health and Human Services Secretary Kathleen Sebelius, President Barack Obama's Cabinet official in charge of implementing the Affordable Care Act.

"She reached out to call us over the weekend to say 'I heard your talk and we want to work with you,' " Haslam said. "I walked through the things important to us. She reiterated they are definitely interested in talking with us. Obviously, the devil's in the details.

"I didn't just throw this up as a way to get out of it. I've always thought that this is a real possibility, but I also am not ignorant of the fact that what we're trying to do is not the easiest thing in the world."

Artificial deadline

The original Affordable Care Act mandated Medicaid expansion on the states -- to cover adults with incomes up to 138 percent of federally defined poverty levels. When the Supreme Court last summer upheld the ACA's other controversial provision, requiring all Americans to obtain health insurance one way or another, it also held that the Medicaid expansion provision must be optional for states. Since it requires states to spend money later, the court said, states cannot be forced to participate.

The federal act holds out a huge incentive that has convinced some GOP governors elsewhere to join: The federal government will pay 100 percent of the costs of covering the newly eligible from 2014 through 2016, then 95 percent in 2017, 94 percent in 2018, 93 percent in 2019 and 90 percent in 2020 and beyond. The states must pay the remainder.

Under the current Medicaid program in Tennessee -- called TennCare -- the federal share is about 67 percent of the costs and the state pays the other 33 percent. (That ratio varies from state to state depending on the state's average personal income, with federal taxpayers paying a bigger percentage in poorer states and a smaller percentage -- but never less than 50 percent -- in the wealthiest.)

Hospitals especially favor the expansion because they'll have more revenue as more people are insured and they provide less uncompensated care for the uninsured. And hospitals will be particularly hurt if Tennessee doesn't work out a deal because they'll lose special subsidies called "disproportionate share" payments they now get under TennCare, which reimburse them for at least some of the uncompensated care they provide the uninsured.

Without Medicaid expansion, the Tennessee Hospital Association warns that hospitals providing the most uncompensated care, especially in rural areas, will close and thousands of employees will lose their jobs. In Shelby County, the Regional Medical Center at Memphis will be hit hardest, but so will other hospitals that receive the subsidies.

The governor's announcement was based largely on an artificial deadline: He had to submit a budget last week to lawmakers for the fiscal year starting July 1 that must account for the additional federal money if the state participates. Lawmakers will approve the budget as they steam toward the General Assembly's targeted April 19 adjournment for the year.

Medicaid expansion doesn't kick in under the ACA until next Jan. 1, and states can decide any time before or after to participate. But the three-year meter on full federal funding starts running Jan. 1, not when a state joins.

If he works out a deal, the governor could call the General Assembly into a special session at any time and ask for lawmakers' approval.

"If I thought it (a potential agreement) was the right answer for Tennessee, I would do that," Haslam said. "But I'm not going to do that unless I think we are where we need to be and it's what I can recommend. It's conjecture at this point to say I think we can get there."

More efficiency

Haslam's plan would:

Leverage federal dollars to buy private health insurance, on the ACA's new health insurance exchanges, for Tennesseans between 100 and 138 percent of federal poverty level who don't have access to health insurance -- about 175,000 Tennesseans. HHS guidelines say states can seek a waiver allowing that, but without it cannot force the newly eligible onto the private insurance exchanges and must have Medicaid as an option for them.

Allow co-pays for those who can afford to pay something.

Guarantee that the plan could be renewed only with the legislature's approval.

Change the payment structure for health care providers so they are compensated for health outcomes, not just services performed.

Haslam said hospitals assured him that the additional revenue would enable them to install the new payment structure and enough efficiencies that they could cover the state's 10 percent share of the costs by the time it kicks in.

The governor believes that even though TennCare's annual costs are rising at lower percentage rates than the national Medicaid average and private health insurance premiums, it's still an inefficient program because federal law limits the kinds of incentives for patients and providers to hold down costs that exist with private and employer-subsidized health insurance.

The Tennessee Hospital Association said it supports Haslam's approach, is hopeful he will be allowed to proceed and that lawmakers will approve it in a special session this year "to take advantage of the 100 percent federal financing."

Michele Johnson, managing attorney of the Tennessee Justice Center, a nonprofit public interest and advocacy law firm serving needy families, said she "prays the governor will do all in his power to make health coverage a reality for working Tennessee families." It's "vitally important for all Tennesseans -- not just uninsured working citizens but also the rest of us, who will benefit from $6.6 billion pumped into our economy and our health care infrastructure."

She said the "guidance" for states HHS published last week "makes clear he can do much of what he proposes. Now he has what he needs to ensure Tennessee's allotment of federal funds are not given to another state."

Haslam told reporters that HHS "seems fine with the private insurance piece, but the two things where there's probably the rub would be what are called wraparound services ... and co-pays." Wraparound services include transportation to and from doctors' offices and other help for the needy to get care, which are provided under Medicaid but not by private insurers participating in the ACA's new insurance exchanges.

"They've said co-pays at a certain level for people above 100 percent poverty level, they're fine with. They've even said they'd be interested in talking about (co-pays for) emergency room visits that aren't true emergencies, at different levels. Our point is this: These are folks that if we don't cover them, a lot of them are going to go on the exchange and that's the exact coverage they will get."

Asked whether he believes Tennessee will be participating in some way when the expansion goes into effect Jan. 1, the governor said, "I really don't know yet. We're working toward getting the right answer. I honestly don't know whether we're a week a way, a month away or a year away."

[Image from flickr user Nashville Chamber of Commerce]

Staff reporter Richard Locker is the Nashville bureau chief for The Commercial Appeal. ___

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
MaryRusso
MaryRusso

THE ACA is a jobs bill for the major HEALTHCARE Corporations of the USA as well as government-contracted bureaucracies and Not For Profits execs..       Listen to the constant "truth" -given all the extra money, the Healthcare providers will now serve those they hadn't before. Somewhere in this story the "truth" becomes obscured. Who really benefits from this? 

Certainly the politicians who are using income redistribution from those in the 100K and below bracket to those in the $29K and below bracket.  Although PPACA was enacted in the spirit of Social Justice.... the NotforProfit  NGO's and Political Action/Advocacy organizations (paying themselves first) also are benefiting as well.  To me this appears to be a professional "service sector" job creation scheme more than an act of "Social (actually meaning Economic)" Justice adn government-enforced "Morality".  

A different approach could be seven tiers of healthcare, (dependent on age, heredity, social and economic factors) that align to  Healthcare/Wellness programs that offer a bundle of services for one low, State-wide, negotiated price.  Surely the Actuarial tables could provide a tiered system that helps people plan for their Healthcare needs and BEFORE TAXES savings plans.  It's truly the Insurance companies, Healthcare Corporations, government-contracted bureaucracies and NotForProfit execs that are the real "winners/beneficiaries" with PPACA. 

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