Why Did Tennessee's Medicaid Expansion Plan Fail? In a Word, Obama

Governor Bill Haslam's expansion plan had market-based elements, a way to cover the state's share, and a deal to leave early if it cost too much. But distrust of the federal government and the president in particular was too much to overcome.

When Tennessee Governor Bill Haslam unveiled the plan he had negotiated with CMS to expand Medicaid in his conservative state, it seemed the Republican had covered all his bases.

Insure Tennessee had market-based elements like vouchers to buy private insurance, co-payments, a pledge from hospitals to cover the state’s $74 million share, and even a tenet to quit the deal if it cost too much.

But in the end, it wasn’t enough. Support from Haslam, who was re-elected in November with 70% of the vote, and a hospital-based coalition could not match resistance from conservatives who told legislative committees they didn’t trust the federal government and didn’t want its money, because it would add to national debt.

However, both conservatives and a key Democratic legislator from Memphis said that the plan’s failure essentially came down to distrust of one person: President Obama.

“Those who oppose it associate everything with President Obama,“ state Rep. Johnnie Turner told the Tribune News Service. “That’s what has killed this.”

Medicaid expansion has been a key feature of the Affordable Care Act (ACA); it allows persons between 100% and 138% of the poverty line—many of them the “working poor”—obtain health coverage, some for the first time in their lives. Because the ACA assumed expansion would be universal, it paid for this element by significantly scaling back funds paid to hospitals to care for the uninsured.

When the US Supreme Court made expansion a state-level decision, a phenomenon occurred in which many states that have eschewed expansion are those where distrust of the federal government and President Obama run high. But as The American Journal of Managed Care has reported, poverty tends to run high, too, and hospitals are feeling the pain financially as they continue to treat uninsured persons in the “coverage gap.” These are persons who make too much for traditional Medicaid but not enough for marketplace plans.

Since the midterm elections, several Republican governors have tried to craft expansion plans with market-based elements or work requirements; Indiana, for example, just became the 28th state to expand Medicaid with a plan that features health savings accounts. In Tennessee, however, the plan required legislative approval.

During Tennessee’s special session, which was called just for the Medicaid proposal, opponents from Americans for Prosperity sporting red T-shirts, showed up alongside hospital executives and members of the Tennessee Business Roundtable. The T-shirts carried the day. On Wednesday, the Senate Health and Welfare Committee voted down the plan 7-4, killing it for now.

Lack of trust pervaded the session. Citizens didn’t believe the federal government would let Tennessee end expansion once people enrolled, and some legislative leaders just didn’t believe that the state would not some bear some of the costs, according to several press accounts.

Haslam and others said the vote leaves unanswered how Tennessee will deal with 250,000 residents who have no health coverage.

“The serious problems that prompted the governor’s proposal are still with us,” Tennessee Justice Center Executive Director Michele Johnson told POLITICO.

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