TennCare debate simmers over possible expansion

It would be difficult to argue that Joyce Coggin does not receive medical care. Figuring out who pays for it is where things get complicated.

Pulling orange prescription bottle after orange prescription bottle from a Save-A-Lot shopping bag, the 54-year-old Old Hickory woman recounts a litany of health problems, many of which she traces to early childhood. She counts off nine prescription medications in all.

Coggin has been ineligible for TennCare, the state's Medicaid program, for the better part of the past decade because her husband's Social Security payments are too high to qualify. She is delaying treatment for back pain and for a heart condition, which has already sent her to the hospital once.

"I ain't got no insurance, and I ain't got money to do it," she says bluntly.

But that does not mean she goes without care entirely, as the medicines in her bag prove. Instead, she gets care piecemeal, visiting a family doctor when she can scrape together the $60 fee and local hospitals when her conditions grow intolerable.

How to handle the medical costs of people such as Coggin lies at the heart of one of the most important debates that will take place in Tennessee this spring - a debate that will go a long way toward determining how health care reform plays out here.

Gov. Bill Haslam faces a decision over whether to expand TennCare to Coggin and more than 200,000 other Tennesseans who lie on the cusp of eligibility. Many of his Republican colleagues, including Rick Scott of Florida and Bobby Jindal of Louisiana, already have declared they will not expand their states' Medicaid programs.

Critics of the Affordable Care Act say extending TennCare will inflate the $9 billion program's budget at a time when Tennessee cannot afford to take on new spending. But Democrats and many in the health care industry argue that Tennesseans are already paying the bills for people such as Coggin, through a patchwork of tax dollars and insurance premiums.

"Everybody pays a hidden tax already," said Chris Coleman, staff attorney for the Tennessee Justice Center, a public advocacy group.

Lobbyists and lawmakers on both sides are squaring off for a battle that's likely to last until late in the 2013 legislative session, expected to end in April or May.

Tennessee hospitals are pressing hard for expansion. Under the federal Affordable Care Act, they stand to lose millions of dollars in reimbursements for treating patients such as Coggin who cannot pay their bills. They say the only way to fill that hole is for more Tennesseans to get insurance coverage that will steer them away from hospitals and pay for their treatment when they do find themselves there.

But 16 Republican lawmakers in the state Senate and dozens more in the House have signed onto a bill that would block Haslam from expanding TennCare. Opposition to "Obamacare," as critics call the Affordable Care Act, remains popular among Tennessee voters, and many in the GOP are reluctant to support any aspect of health care reform.

Haslam said in last week's State of the State address that he would work slowly toward a decision. The stakes are high enough that both the governor's Democratic predecessor and Haslam's onetime Republican foe agree he is taking the correct approach.

"This is one that takes a lot of analyzing," said Lt. Gov. Ron Ramsey, R-Blountville. "If it wasn't for the effect on hospitals, I think the decision would be easy."

Rooted in Tennessee

Republican governors and legislators nationwide are wrestling with the question of Medicaid expansion, but the dilemma has its origins here in Tennessee.

To help fund the Affordable Care Act, Congress decided it would slash reimbursements to hospitals known as disproportionate service payments - essentially paybacks for providing care to the poor. The payments, which total more than $11 billion a year nationwide, will be cut by nearly three-quarters in 2014, when the Affordable Care Act's insurance mandate goes into effect.

Across Tennessee, hospitals have been getting about $305 million a year in federal reimbursements, most of which will disappear next year. The Tennessee Hospital Association says that money has defrayed some of the more than $850 million annually that its members spent in 2011 on providing care for the poor.

Other cuts could decrease reimbursements to Tennessee hospitals by as much as $5.6 billion over the next decade, according to the THA.

Hospitals did not oppose cuts to disproportionate service payments because the Affordable Care Act was supposed to make most of the poor eligible for Medicaid, known as TennCare in Tennessee.

But last summer, the U.S. Supreme Court said in its ruling upholding the Affordable Care Act that Congress could not force states to expand their Medicaid programs. Justices cited a brief filed by James F. Blumstein, a Vanderbilt University law professor and expert on health care, that argued the federal government could not unilaterally change the terms of Medicaid programs.

"They're leaving it at the right level of government," Blumstein said of the Supreme Court ruling.

Former Gov. Phil Bredesen, a Democrat who wrestled with TennCare costs during his tenure from 2003 to 2011, said Haslam may be able to work out a better deal for Tennessee by moving slowly on expansion.

"I think he's handling it properly," Bredesen said. "I hope we expand the program here in the state, and I hope we can do it in a way that the state can keep its hand on the lever in terms of the cost."

No one disputes that expanding TennCare would be a momentous step. A University of Memphis study released last year estimated that 224,994 more Tennesseans would be eligible for expanded TennCare. Most of those people are the working poor who cannot get on the program because they make too much money, are not disabled and have no children.

The Affordable Care Act - which set out to remove those people from the ranks of the uninsured - requires the federal government to pay the full cost of expanding TennCare for three years and at least 90 percent through 2020.

Many Republican lawmakers say even that deal is bad for Tennessee. They estimate the state would need to budget $200 million - roughly what it spends on the Department of Safety, or double what it collected in estate taxes before a cut last year - to cover an expansion of TennCare.

"Tennessee taxpayers simply can't afford $200 million a year," said state Sen. Brian Kelsey, the Memphis Republican who filed the measure, Senate Bill 1, that would block expansion.

But the math is not so simple, say many in the health care field. They argue that without an expansion of TennCare and without disproportionate share payments, hospitals will be hard-pressed to make ends meet.

Bad debt and charity care already eat up between 10 percent and 20 percent of many hospitals' budgets, according to the THA. Without some way to fill that gap, many hospitals would have to cut services - such as surgical procedures and care for expectant mothers - and might even be forced to close some rural medical centers.

Alan Watson, chief executive of Maury Regional Medical Center, said he is not yet ready to plot out scenarios if TennCare were not expanded. But with the hospital and its two affiliates losing more than $42 million a year to bad debt and charity care - about 16 percent of its total operating budget - Watson said major changes would be needed.

"That's a huge gap of funding that's going to be lost," he said.

City hospitals face cuts

The impact could be felt in urban hospitals as well, and not simply those that deal primarily with the poor. HCA's TriStar network, which operates 16 hospitals and surgery centers in Middle Tennessee, lost more than $340 million to uncompensated care in 2011.

Among those receiving that care was Coggin, who was hospitalized for a heart ailment. Medical bills related to that visit contributed to a $23,000 debt that forced her and her husband to file for bankruptcy late that year.

"That cost is passed on to everybody," said Coleman, the health care advocate. "The way that we're going to reduce health care costs is by making sure everybody has enough access to primary care."

Hospitals and other advocates for TennCare expansion will have a difficult time convincing skeptical lawmakers, however.

With 16 sponsors, only one more lawmaker would need to support Kelsey's bill for it to pass the state Senate. And with Republicans holding more than two-thirds of the seats in the House, it likely would pass easily in a floor vote there.

Ramsey said he wants to give Haslam some time to decide. The leader of the Senate said last week that he will ask Kelsey to delay his bill.

But Ramsey also was careful not to suggest he favors expansion of TennCare, expressing doubts that hospitals' situation is as dire as they say.

"They will be left in the lurch, but I'll be honest, the hospitals are notorious for inflating numbers," Ramsey said. "I'm in no hurry. There's no deadline."