Governor Bill Haslam announced Monday plans for a two year pilot program to provide health insurance for Tennesseans who currently don't have insurance or have limited options.
He's calling the plan Insure Tennessee. He says he will call a special session to talk about the proposal when lawmakers return to work in January.
"We made the decision in Tennessee nearly two years ago not to expand traditional Medicaid," Haslam said. "This is an alternative approach that forges a different path and is a unique Tennessee solution. This plan leverages federal dollars to provide health care coverage to more Tennesseans, to give people a choice in their coverage, and to address the cost of health care, better health outcomes and personal responsibility."
Covenant Health CEO, Anthony Spezia, said the plan is different from traditional Medicaid in several ways.
"People who are under 138 percent of the poverty who don't qualify for Medicaid can actually buy into their company insurance with vouchers that the state is going to provide," he said.
Halsam said the program will not create any new taxes for Tennesseans and will not add any additional cost to the state budget. The Tennessee Hospital Association has committed that the industry will cover any additional expenses created by the plan, he said.
According to a press release, here are five key areas of the governor's plan:
Fiscally Sound and Sustainable Program
The program will not create any new taxes for Tennesseans and will not add any state cost to the budget. The Tennessee Hospital Association has committed that the industry will cover any additional cost to the state. The program will automatically terminate in the event that either federal funding or support from the hospitals is modified in any way.
New Private Market Choices for Tennesseans
Insure Tennessee offers several options of coverage for individuals below 138 percent of poverty ($16,100 for an individual and $27,300 for a family of three). Tennesseans 21 to 64 years old will be offered a choice of the Healthy Incentives Plan or the Volunteer Plan.
The Volunteer Plan would provide a health insurance voucher to participants that would be used to participate in their employer's health insurance plan. The voucher, valued at slightly less than the average TennCare per-enrollee cost, can be used to pay for premiums and other out-of-pocket expenses associated with participation in an individual's employer sponsored private market plan.
Participants in the Healthy Incentives Plan may choose to receive coverage through a redesigned component of the TennCare program, which would introduce Healthy Incentives for Tennesseans (HIT) accounts, modeled after Health Reimbursement Accounts (HRAs), which can be used to pay for a portion of required member cost-sharing.
Payment Reform Efforts
The governor's Delivery System Reform Initiative lays the foundation for reform by addressing the underlying quality and outcome deficiencies that contribute to growing health care costs and unaffordable insurance coverage. This initiative creates financial incentives for providers to provide high quality care in an efficient and appropriate manner so as to reduce costs and improve health outcomes. Insure Tennessee builds on this reform initiative by creating new participant incentives that align with the existing provider incentives. Ultimately, bringing the health care consumer into the equation is critical to successfully controlling cost growth.
Personal Responsibility and Patient Engagement
The voucher program provides a fixed contribution that can be applied to the costs of a person's private market plan. All costs incurred in excess of the amount of the voucher are the responsibility of the participant. This structure empowers individuals to make a choice about which plan is better for their needs and to manage their health care expenses to avoid additional costs.
Newly eligible individuals who choose to participate in the TennCare program and whose incomes are above 100 percent of poverty will be required to pay premiums and copays for services. All enrollees, including those with incomes below poverty, will have modest pharmacy copays. TennCare members "earn" contributions into their HIT accounts by performing healthy behaviors. The account then can be used to cover copayment expenses.
Spezia said it will provide incentives for Tennesseans who become more engaged and responsible for their health.
"You will accrue certain values and points for making healthy choices. That's a really unique aspect about this program that you will not see in most of the Medicaid expansion programs," he said.
Prepares Participants for Commercial Health Coverage
The design of Insure Tennessee is based on private market principles that provide incentives to participants to engage in their health care by actively managing their health care costs. Through both programs, Insure Tennessee introduces a commercial health insurance experience which can help Tennesseans prepare for independence from public assistance.
"They might get another job, they might join another company where they can afford the coverage so basically it's trying to provide a safety net for those people who right now don't have coverage," Spezia said.
Haslam elected not to expand Medicaid eligibility requirements earlier in the year, but said in August he would be open to some sort of expansion.
In October he said talks with federal health officials weren't going as well as he had hoped; however, in November he said he wanted to have an announcement by Christmas.
Under the federal Affordable Care Act, also known as Obamacare, states can expand the income and eligibility requirements on their Medicaid programs to allow more people to participate. The federal government pays the additional costs initially; the federal funding slightly drops, but stays at 90 percent as of 2020.
While many Democrat-controlled states have chosen to expand the program, Republicans are split on the issue. Of the 28 states that have expanded Medicaid, fewer than 10 were controlled by Republicans at the time they chose to expand eligibility, according to an August analysis from the Kaiser Family Foundation.
Many federal Republicans who oppose the Affordable Care Act say expansion is an unfunded mandate from the federal government. For weeks Haslam has said it will be challenging to find a plan that both federal health officials and state lawmakers both support.
As recently as Thursday, Lt. Gov. Ron Ramsey said he thought Haslam could "sell" the General Assembly on expansion, but he doubted whether the "Obama administration" would approve any plan that could make it through the legislature.
More than 160,000 Tennesseans could be eligible for the new coverage if income requirements are loosened as much as allowed by the law, according to the Kaiser Family Foundation. A recent poll from Vanderbilt University said 58 percent of registered voters in Tennessee favor Medicaid expansion.
Currently, the state provides TennCare only to people who have certain medical conditions, the parents or caretakers of Medicaid eligible children and those who meet other set criteria. Under the Affordable Care Act, states have the option to expanding access to a much wider group with the federal government picking up most of the cost.
The criteria are set by federal poverty guidelines, allowing people who earn up to 138 percent of federal poverty guidelines to qualify. That's $16,104 for a single person and $32,913 for a family of four.