Tennessee turns down Obamacare Medicaid expansion

Tennessee Gov. Bill Haslam’s alternative plan to expand Medicaid under Obamacare was dealt a devastating blow on Wednesday, when a Senate panel rejected it on the third day of a legislative special session called solely for that issue.

Tennessee was widely seen as the next Republican state that could expand Medicaid under Obamacare, with Haslam negotiating with federal officials for months on an approach that included conservative policy elements. But Insure Tennessee always faced significant obstacles in getting legislative approval, and it was killed even though hospitals had agreed to cover the state’s share of the costs.


The 7-4 vote against the plan by the state Senate Health and Welfare Committee came after impassioned testimony on both sides of the debate. The plan has little chance of being revived during the regular legislative session.

In the Senate as well as the House, witnesses from the Tennessee Hospital Association, the Tennessee Business Roundtable and the Tennessee Medical Association all spoke in support of Haslam’s proposal. Yet the head of the conservative Beacon Center of Tennessee suggested the state could be locking itself into expansion long term, even if it wants to get out.

Although the federal government has said it is voluntary and can be rolled back if a state chooses, CEO Justin Owen said expansion may not be so easily undone. “Can you trust the federal government?” he asked Tuesday during a House Insurance and Banking Committee hearing.

The General Assembly’s leadership was divided, too. Senate Majority Leader Mark Norris wouldn’t sponsor the resolution on Haslam’s proposal. House GOP leaders were not unified on it. Majority Leader Gerald McCormick sponsored the resolution, but House Speaker Beth Harwell never clearly came out in favor or against it. House Republican Caucus Chair Glen Casada was a firm opponent from the start.

Some Republicans were also skeptical of Haslam’s contention that the state wouldn’t be saddled with costs from expansion.

Republican Rep. Jeremy Durham pointed out that the White House previously proposed lowering the provider taxes states can levy and that Tennessee’s Sen. Bob Corker has called for eliminating them.

“The idea that there would be no state dollars [involved], I just don’t find that realistic,” Durham said Tuesday.

Under the ACA, the federal government is covering 100 percent of the costs of Medicaid expansion through 2016. The federal match then begins to decline, but it will not dip below 90 percent.

So far, 10 states with Republican governors have expanded Medicaid, with Indiana Gov. Mike Pence being the latest to secure approval for an alternative model. Other GOP governors who have come out in favor of expansion, including Gov. Gary Herbert in Utah and Gov. Matt Mead in Wyoming, are now trying to get state lawmakers to endorse the models they have negotiated with the federal government.

Haslam, the chair of the Republican Governors Association, proposed a two-year pilot program. It included setting up health reimbursement accounts to help individuals cover their out-of-pocket costs while requiring premiums and co-pays.

The plan, which still needed an official federal sign-off, would have covered more than 250,000 uninsured adults.

“It’s incredibly disappointing that seven votes in a committee kept the governor’s plan from getting the full legislative consideration it deserved and that the public expected,” Tennessee Justice Center Executive Director Michele Johnson said Wednesday. “The serious problems that prompted the governor’s proposal are still with us.”