Some see Medicaid rejection as costly to Tennessee

5:31 PM, Jun 13, 2013   |    comments
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By Paul C. Barton, Gannett Washington Bureau

WASHINGTON - When Tennessee rejected an expansion of Medicaid under President Barack Obama's health-reform law, Gov. Bill Haslam said "expanding a broken system doesn't work."

An expansion of Medicaid to cover those between 100 percent and 138 percent of the federal poverty level, bringing close to 180,000 more Tennesseans into the health system, was supposed to be a central part of the Patient Protection and Affordable Care Act. The Supreme Court, however, made it optional.

Haslam has proposed an alternative that involves giving money to poor Tennesseans to buy private health insurance through the new health care exchanges, the centralized marketplaces to be created in each state. He is waiting for federal approval.

So far 26 states and the District of Columbia are participating in the expansion, an idea seen as particularly unpopular in conservative areas.

"The argument seems to be that enrolling poor and near-poor adults . . . will provide coverage to people who are able-bodied, rather than the most vulnerable," said Stan Dorn, a Medicaid specialist at the Urban Institute, a think tank.

"It's true that many can and do work, but their jobs pay low wages and often do not offer benefits like health insurance. "

Not only would a Medicaid expansion significantly reduce the number of uninsured, Dorn and other liberal analysts say, it would reduce uncompensated care, a major factor influencing statewide premiums.

"In states that don't, hospitals will get stuck with all of the pain and only half of the gain," he said.

Moreover, it would bring billions in new federal funds into Tennessee because Washington would pay 100 percent of the cost of expansion the first three years, with the federal share decreasing to no less than 90 percent afterward. Some Republican governors have said the cost of covering 10 percent of the tab for people added to Medicaid in the future would be a burden on state budgets.

The Urban Institute says Tennessee will be leaving $22.5 billion in federal funds on the table through 2022 by not participating.

A new article in the journal Health Affairs argues "in terms of coverage, costs, and federal payments, states and their citizens would fare better by expanding Medicaid coverage."

It's money that would turn over many times in the state's economy, including the generation of additional state and local tax revenues, said Dorn.

"It's like saying no to several military bases," he added.
Dorn also said no expansion will mean more low-income adults with health problems will seek coverage through new health exchange, driving up costs there.

Further, once low-income adults realize they are missing out on free coverage, it could spark them to mobilize politically.
Among political analysts, said Vanderbilt University's Bruce Oppenheimer, "the consensus was that there will be comparisons made to bordering states in particular."

Contact Paul C. Barton at

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