Tennessee risks loss of health care funding

medicaid-logoBy Zachary Toillion

The Affordable Care Act has mechanisms in place in order to compel states to expand Medicaid. The federal government covers the increased Medicaid costs until 2016 and 90 percent of the costs associated with the expansion after 2020.

The original text of the law mandated all states expand Medicaid eligibility to those whose income is 138 percent of the federal poverty line, but the provision was found unconstitutional by the Supreme Court in 2012. Since the ruling, over thirty states have decided to expand their Medicaid programs granting coverage to roughly six million additional people.

In traditionally conservative states, proposed expansions of Medicaid have been met with skepticism, leading them to apply for waivers to craft their own unique expansions using Medicaid funding. The majority of states that applied for waivers did so proposing a private marketplace or mechanisms to lower costs.

Earlier this year, one such plan was put forth by Gov. Haslam. The plan would have received funding from premium payments as well as copays and deductibles, similar to a private health insurance plan. Those enrolled would receive a voucher to help pay premiums and be eligible for additional funding based on the usage of their coverage. Combined with the Medicaid expansion funds from the federal government, the plan would be budget neutral. The plan was soundly rejected by the legislature.

The rejection of Medicaid expansion has put Tennessee at risk of losing significant funding from the federal government. Another provision of the Affordable Care Act provides additional funding for uncompensated care in the form of a Medicaid Section 1115 waiver. This uncompensated care funding is given to health care providers that treat uninsured patients.

A key aim of the affordable care act is the reduction of uncompensated care costs by insuring more people. In states like Florida, Texas and Kansas, 1,115 waivers have been called into question because of the state decision not to expand Medicaid. Tennessee’s uncompensated care funding is roughly $750 million. If federal officials decide to revoke Tennessee’s waiver, funding could plummet by $500 million. Negotiations are underway to extend the waiver until June 2016 as political advocacy groups continue to debate Haslam’s plan.

While the debate over Medicaid expansion continues, open enrollment in the Affordable Care Act’s health insurance exchanges began November 1. Tennessee is one of 28 states that use the national health insurance exchange which can be accessed at HealthCare.gov.

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