Former Gov. Bill Haslam designed Insure Tennessee to be fiscally responsible while expanding health coverage for Tennesseans.
Fighting a pandemic isn’t a great time to do a lot of things, but it is clearly the right time to take a hard look at how we can improve the health care of our most vulnerable Tennesseans, and how we can do that in a way that positively impacts our state’s budget.
Just as Congress stepped in quickly with loans and creative financial actions in order to preserve jobs and save an economy in free fall, so should our Tennessee legislature, with Gov. Bill Lee’s support, move now to access the federal funds available to our state by expanding TennCare, our state’s Medicaid program.
A difficult opportunity to miss
Here’s the opportunity: Federal funding has been available to states since 2014 to provide Medicaid coverage for uninsured Americans. Tennessee is one of only 14 states not using its federal money, and we’re an outlier on this one. Those funds are being used by 36 states and Washington, D.C., but not Tennessee. Put them to use, and our state could provide health insurance for more than 300,000 working Tennesseans and hard to believe as it is, bring in tens of millions in much needed federal funds.
It’s worth pausing right here: Millions in additional revenues for the state’s hard-pressed budget. No new taxes. A program the great majority of states, red states and blue states, are already taking advantage of.
Former Gov. Bill Haslam, at the time he left office, had joined a bipartisan group of legislators and community leaders who were seeking to put Tennessee among the majority of states using federal Medicaid funds, and he called his innovative program Insure Tennessee. With all the strains likely to face the state in the months and years ahead, it’s time for Lee to endorse the plan developed by Haslam, and finally to secure Tennessee’s share of the readily available federal funds.
How it would have worked
This change to our Medicaid program is a sound business decision. Here’s how it would have worked the last time around, as calculated by the Tennessee Justice Center using projections by the state legislature’s own staff.
Tennessee would access its share of the federal funds by expanding coverage to 300,000 uninsured, low-wage Tennesseans. The federal government would fund 90% of the coverage, providing $1.4 billion in funds that would flow into Tennessee’s economy and support our health-care structure.
Tennessee’s hospital industry agreed with Haslam in 2015 to cover the state’s 10% share of the cost, so that Tennessee taxpayers would pay nothing. The hospitals would pay the state’s share with an increase in Tennessee’s annual hospital assessment.
Hospitals could pay enough more to cover the state share of the expanded coverage because the cost would be offset by additional revenue from the newly covered patients whose insurance would pay for their care. The hospitals’ patient revenues would go up, and the burden of uncompensated care would go down.
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There was another major benefit to all this as well: Tennessee’s painful problem of rural hospital closings. According to studies, the increase in hospital revenues would make it six times less likely that a rural hospital would close.
A financial windfall
All in all, state revenues from the assessments on hospitals and health maintenance organizations would have increased by about $350 million in the first full year, but it would have cost the state just under $150 million to cover the formerly uninsured. The projection, never seriously challenged, showed a net $200 million to the Tennessee budget.
Like the great majority of other states that are using their federal allotments, the State of Tennessee will benefit from using available federal dollars to help struggling Tennesseans while helping our state budget.
Those projected state revenues and expenses will likely change in an economy with large job losses and with them, an increase from the 300,000 uninsured Tennesseans. That was the figure previously used by state officials to project the impact from Insure Tennessee. But the point here isn’t that the benefit of expansion may be less than $200 million. The point is that the need for Insure Tennessee has become even more urgent, the terror of being uninsured in a time of pandemics ever greater. The case has grown stronger, as Tennessee has recently become, with Texas, the nation’s leading states in rural hospital closings.
Lee’s support needed
We missed a chance for change five years ago because Tennessee’s legislature failed to follow the recommendation of Governor Haslam and others who were making a strong case for keeping our federal funds at home.
That case needs a full debate in the upcoming legislative session, and either Lee’s support for bills that would bring Medicaid expansion or his executive order to make it happen. It’s time to act.
Bill King is a longtime Nashville-based consultant to financial institutions and small businesses.
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