Why Tennessee Should Reject Gov. Haslam’s Version Of Medicaid Expansion

J. Scott Moody and Lindsay Boyd CEO, State Budget Solutions; Policy Director, Beacon Center
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Tennessee policymakers have exhibited an admirable commitment to cultivating a market-driven economy that has made the Volunteer State the envy of its neighbors. Indeed, Tennessee has emerged from the recession years better than most. However, state legislators are now considering an expansion of the federal Medicaid program under Obamacare. If approved, Tennessee will fall behind its neighboring states and erase years of smart growth policies.

This week, Federalism in Acton (FIA), a project of State Budget Solutions, released a new report that irrefutably shows how Medicaid expansion will reverse the recent gains in Tennessee’s private sector. As a result, Tennessee families will bring home less income and will lose jobs.

Medicaid expansion proponents tout the program as a “free” revenue source that would funnel more money into state coffers. However, as the State Budget Solutions’ FIA report explains, these “free” dollars come from you, the taxpayer. Simply put, Medicaid expansion funds are not generated from new economic activity. Rather, Medicaid spending is a mere redistribution of taxpayer dollars, while private sector growth remains the only avenue of generating new growth.

Governor Bill Haslam estimates that expansion of the state’s Medicaid program will cost $1.4 billion, with initial funding coming from redistributed taxpayer dollars from the federal government. Based on FIA’s calculation, the expected downshift to Tennessean’s personal income growth would amount to a whopping $3.6 billion over that time period.

This loss of annual income to Tennessee families will manifest itself in two very problematic ways — lower household income and fewer jobs. If these problems were mutually exclusive, it would mean Tennessee residents should expect to see $1,148 less in annual income per household or the loss of 67,433 private sector jobs. Collectively, the impact will fall somewhere in between, resulting in both job and income reductions that will hurt all Tennesseans.

Governor Haslam’s “state-based” expansion plan submitted earlier this fall to the Department of Health and Human Services is simply Obamacare’s Medicaid expansion by another name. If accepted, the proposal will have vast financial consequences and unsustainable costs. Taxpayers and their representatives in the legislature should ignore the significant unforeseenfinancial costs that far outweigh any misleading claims of added benefits to Tennessee’s most vulnerable families.

J. Scott Moody is the CEO of State Budget Solutions, a non-partisan, non-profit, national public policy organization with the mission to change the way state and local governments do business.

Lindsay M. Boyd is Policy Director of the Beacon Center of Tennessee, a non-partisan, non-profit state organization with the mission to empower Tennesseans to reclaim control of their lives so that they may freely pursue their version of the American Dream.