Tennessee’s Plan to Expand Medicaid Doesn’t Add Up
Gov. Bill Haslam’s deal with the Obama administration would
cost taxpayers plenty and hurt the neediest people already in the program. By
CHRISTIE HERRERA AND JUSTIN OWEN
Jan. 30, 2015 7:19 p.m. ET
Several Republican governors are considering implementing,
or have implemented, ObamaCare’s Medicaid expansion in their states. Indiana’s
Mike Pence is the latest, announcing a new deal this week that abandons conservative
principles by adding 400,000 able-bodied adults to the Medicaid rolls, costing
taxpayers $3 billion a year.
But one of the first such deal-makers was Tennessee Gov.
Bill Haslam, who announced right before Christmas that he had a verbal
commitment from the Obama administration to expand Medicaid subject to some
changes.
But Mr. Haslam’s announcement was only the first step.
Thanks to a law passed last year, Tennessee lawmakers must sign off on any
expansion of Medicaid. On Monday the legislature will convene in a special
session to debate the governor’s plan, called Insure Tennessee. Their decision
could have a big influence on what other Republican states might do.
Tennessee Gov. Bill Haslam plan would make eligible for
Medicaid an additional 400,000 Tennesseans earning about $16,000 a year, as
well as an additional 125,000- 150,000 who are already paying for health
insurance through their employer. Enrollees would have two options: traditional
Medicaid with meager premiums and copays, and a so-called private option under
which they would receive a subsidy to pay for insurance through their employer.
Certain provisions in his Medicaid proposal—such as
requesting enrollees contribute toward their own coverage and offering premium
assistance—have led Mr. Haslam to sell it as “market-driven” and
“outcome-based.” Yet, these provisions are already available in the Medicaid
program. Despite this free-market gloss, there is nothing fundamentally
different between Mr. Haslam’s plan and the type of Medicaid expansion
ObamaCare architects envisioned in 2009.
Insure Tennessee faces many of the same pitfalls as any
expansion of Medicaid, and includes some additional problems of its own. Here
are five important things to know:
First, there are no free federal dollars. Despite claims
that Mr. Haslam’s plan would not cost state taxpayers another dime, every
dollar used to finance the expansion of Medicaid is a dollar borrowed and added
to the national debt.
Second, the plan will hurt the neediest patients already
struggling on the current Medicaid program. Nearly 90% of the additional people
eligible to enroll are able-bodied, working-age adults with no dependent
children. With Health Affairs reporting that two in five Tennessee doctors
already refuse to see new Medicaid patients, a flood of new patients would
strain the program for those already enrolled and struggling to find a
physician.
Third, the so-called private option, called the Volunteer
Plan, is a bad deal for the public. The Volunteer Plan provides a premium subsidy
for workers eligible for ObamaCare’s Medicaid expansion. To get the subsidy,
employers only need to pay 50% of an enrollee’s premiums. On average, Tennessee
employers currently pay 65% of an employee’s premium (according to the Robert
Wood Johnson Foundation), while some cover the total cost. The private option
provides an incentive for many employers to drop their share of premiums down
to 50% so taxpayers can “volunteer” to pay the rest.
Insure Tennessee would require certain new enrollees to pay
a monthly premium equivalent to 2% of income. While skin-in-the-game provisions
are helping in welfare programs, the governor’s plan requires less of the small
premiums and copays allowed in the Medicaid program today.
Mr. Haslam also wants to dis-enroll individuals if they fail
to pay, but such threats are meaningless. Mr. Pence included a similar
provision in Indiana, but the federal government prohibited more than
three-quarters of that state’s Medicaid-expansion enrollees from being
dis-enrolled for nonpayment. Everyone else in Mr. Pence’s ObamaCare expansion
can claim one of a number of broad exemptions to the rule. Or as we like to
call it, “No premium? No problem!”
Finally, the funding scheme used to draw federal dollars is
sketchy at best. Hospitals front the state money through a provider tax, which
the state then uses to prove to the federal government that it has funded its
portion of the program in order to get additional federal tax dollars. In the
end, the hospitals get their money back, plus billions more, in reimbursements
paid for by taxpayers.
Tennessee’s two U.S. senators, Republicans Bob Corker and
Lamar Alexander, have spoken favorably of Insure Tennessee—yet both have
previously called for ending this deceptive financing mechanism, which is now
used by 49 states and would be the primary means for funding Mr. Haslam’s plan.
If the provider tax comes under attack from the U.S. Congress or fails to keep
pace with growing costs, state taxpayers will be forced to foot the bill.
Tennessee lawmakers must decide if they are going to burden
more state residents—and American taxpayers—with ObamaCare’s broken promises,
failed schemes and unsustainable policies, or whether their state will lead the
march toward more freedom, greater access, and better health outcomes. With
several other red states including Utah, Wyoming and Montana waiting in the
wings on Medicaid expansion, what Tennessee does next week could have
implications far beyond the state’s borders.
Ms. Herrera is a senior fellow at the Foundation for
Government Accountability. Mr. Owen is president and CEO of the Beacon Center
of Tennessee.
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