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By Jonathan Ingram, Nic Horton and Josh Archambault— Mr. Ingram is Research Director, Mr. Horton is a Policy Impact Specialist, and Mr. Archambault a Senior Fellow at the Foundation for Government Accountability.
Governor Bill Haslam (R-TN) recently announced he struck a backroom deal with the Obama administration to expand Obamacare in Tennessee. The governor has no legal authority to expand Medicaid eligibility on his own, which means the state legislature will decide if Obamacare Medicaid expansion will happen.
Haslam touts his “verbal agreement” with the Obama administration as a “market-based Tennessee solution.” The truth is his new “ Insure Tennessee” plan is heavy on buzzwords and light on substance . Many of the most important details haven’t been released, as the plan hasn’t even been fully designed. But one thing is clear: like all Obamacare expansions, Haslam’s would be a disaster for Tennessee’s taxpayers and most vulnerable patients.
Many Details of Haslam’s Plan Remain Unknown
At the announcement, the governor’s “plan” took the form of a press release and Power Point slideshow. As a result, several important details of Gov. Haslam’s Obamacare expansion plan remain unknown to the public and policymakers. The state hasn't released a draft waiver application, a concept paper, a list of federal requirements he wants waived, budget neutrality calculations or a working draft of the federal terms and conditions of the expansion. In other words, he hasn’t released an actual “plan” at all.
What’s Known Is No Good
The few details provided are nothing to be excited about. His plan expands Medicaid to cover able-bodied adults as envisioned by Obamacare. The vast majority of those adults would get coverage through the state’s existing TennCare (Medicaid) program, although some would have the opportunity to use a taxpayer-funded subsidy to pay the cost of employer-sponsored coverage.
Individuals below the poverty line would pay nothing other than nominal copays for prescription drugs. Those adults above the poverty line would pay small copays for some services, which are set at the same nominal levels allowed under traditional Medicaid. In fact, the cost sharing proposed under Insure Tennessee is actually lower than what federal Medicaid rules allow. In other words, it looks and feels just like old Medicaid.
And while Haslam wants $20 monthly “premiums” for adults above the poverty line, this would operate as a mere suggestion, given the fact that there is no meaningful penalty for refusing to pay the bill. Should Washington allow the state to disenroll people who do not pay their premiums, the absence of a lock-out penalty means they can immediately re-enroll, turning the “requirement” into a suggestion.
Haslam’s plan also includes a benefits account for engaging in certain healthy behaviors. Again, the details are thin at this point, but there’s nothing innovative there. Managed care organizations, including those serving TennCare patients, have been offering these types of benefits accounts for years.
Arkansas Spurned
Haslam did make one good decision, however. After more than a year of reviewing Arkansas’ failed “Private Option” Obamacare expansion experiment, he rejected taking Tennessee down the same path. His Medicaid director explained that simple “math” convinced the Haslam administration that the Arkansas expansion approach is too costly to work. Yet Gov. Haslam apparently ignored the most important lesson from Arkansas’ boondoggle: no matter how much you dress up a Medicaid expansion plan, it is still just more Obamacare in disguise.
“Insure Tennessee” is Just Re-Branded Obamacare Expansion
Marketing gimmicks, no matter how slick they appear on a Power Point slide, cannot change facts. Despite the buzzwords, the plan is, to its core, an Obamacare expansion. It covers the exact same able-bodied, working-age adults Obamacare prioritizes. It is subject to the same cost-sharing limits as traditional Medicaid and utilizes the same existing Medicaid system to deliver the same Medicaid benefits for most enrollees. The plan would operate under a Medicaid waiver, require an amended Medicaid state plan to implement and would be funded through the Medicaid program. Everything Obamacare always wanted.
Touching the Hot Stove Again
A previous Medicaid expansion nearly bankrupted the state after the disastrous TennCare expansion of the 1990s.
Tennessee expanded Medicaid eligibility to a new class of able-bodied childless adults in 1994, just like Haslam wants to do today under Obamacare. In the decade following, the state’s Medicaid costs more than tripled, growing faster than any other state in the region and much faster than revenue. Enrollment soared and expansion costs were well over projections.
By the mid-2000s, Medicaid was devouring nearly 36 percent of the entire state budget. Facing continual budget shortfalls, one governor even proposed creating a state income tax to cover the skyrocketing costs of the program. (The legislature wisely rejected his proposal.)
It took Democrat Governor Phil Bredesen, in 2005, to roll back TennCare expansion and eliminate eligibility for childless adults—which turned into a boon for the state’s economy. Employment and private insurance coverage increased, Social Security disability applications dropped and the state’s credit rating was upgraded.
Gov. Haslam promises that things will be different with his expansion, because federal taxpayers and hospitals are paying for it (more on that in future posts). Empty promises indeed. Tennessee voters know federal money isn’t “free,” and neither is the hospital funding gimmick he’s proposing.
Reversing Prosperity and Opportunity
Haslam’s plan discourages work and will shrink the economy. As the Congressional Budget Office explains, Medicaid expansion discourages work by creating a massive new welfare cliff. That means the thousands of able-bodied adults Haslam wants to enroll into Medicaid will have no incentive to get a job, work more hours and ultimately get off welfare to support themselves.
Peer-reviewed research on past expansions to able-bodied adults in Arizona, Iowa, Maine, Maryland, Michigan, New Mexico, New York, Pennsylvania, Utah, Washington, D.C., Wisconsin and even Tennessee found similar results. Based on these past expansions, Tennessee could expect to see as many as 60,000 to 65,000 able-bodied adults drop out of the labor force. Is this the type of pro-growth reform Tennesseans expected when they voted Haslam into office after the Great Recession?
Insure Tennessee Prioritizes Non-Working Able-Bodied Adults Over The Truly Needy
Thousands of children and adults with developmental disabilities in Tennessee are languishing on waiting lists for Medicaid services. But under the new plan, those individuals would be moved to the back of the line to make room for a new class of able-bodied adults.
The expansion covers adults in their prime working years, who have no disabilities keeping them from meaningful employment. The vast majority of them (more than 88 percent) have no dependent children at home. Gov. Haslam acknowledges that nearly half of those who would be made eligible under his plan don’t work at all and President Obama’s own Department of Justice estimates that up to 35 percent of expansion enrollees will have checkered criminal pasts, having served time in prison, jail or on probation.
Seniors, children and individuals with disabilities who already rely on the Medicaid safety net will be forced to compete with this new class of able-bodied adults for appointments with medical providers and for scarce taxpayer resources. Worse yet, Obamacare expansion creates aperverse incentiveto put the most vulnerable on the chopping block first when belt tightening begins.
Legislators Should Flex Muscle to Protect Tennessee Patients and Taxpayers
Gov. Haslam cannot unilaterally expand Medicaid under Obamacare without the legislature’s support. The legislature has already rejected Obamacare expansion before and has wisely prohibited the governor from moving forward on his own.
They need to keep it up. Instead of wasting time debating how to tweak Haslam’s Obamacare Medicaid expansion, lawmakers should reject expansion outright. Once they do that, they can get down to the serious business of growing the economy, restoring the working class and generating new prosperity throughout the state.
Medicaid expansion nearly bankrupted Tennessee once before. State lawmakers should make sure Haslam isn’t allowed to do it again.
TWITTER: @JoshArchambault, @nhhorton, and @ingramlaw , and follow The Apothecary on Facebook. Or, sign up to receive a weekly e-mail digest of articles from The Apothecary.
INVESTOR’S NOTE: HCA Holdings (HCA), LifePoint (LPNT), and Community Health Systems (CYH) will be impacted by Medicaid expansion in Tennessee. As well as WellPoint (WLP) and United Healthcare (UNH).
