Another Red State Moves To Expand Medicaid

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Tennessee Republican Gov. Bill Haslam became the latest red-state governor to approve a twist on Obamacare’s Medicaid expansion Monday.

Haslam is supporting a private-option version of Obamacare’s Medicaid expansion, which was pioneered by Arkansas in 2014. The proposal will have to be approved by the Department of Health and Human Services and the Republican-controlled legislature; if it goes through, Tennessee will be just the 28th state to move forward with the expansion of the welfare program through Obamacare.

“We made the decision in Tennessee nearly two years ago not to expand traditional Medicaid,” Haslam said Monday. “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.”

Republican-controlled states that have opted to expand Medicaid have typically tried to include more conservative-minded proposals in their versions — although the Department of Health and Human Services has taken issue with some. For one, Indiana is still negotiating with HHS for its latest Medicaid expansion proposal’s requirement that enrollees under the expansion would be charged a very small monthly premium — a sticking point for the Obama administration.

But HHS secretary Sylvia Burwell has been vocal about her willingness to work with Republican governors who want to expand Medicaid, especially after the onslaught of Republican gubernatorial victories in this year’s elections. Haslam’s office said they’ve received “verbal approval” from HHS for the basis of the plan, according to Bloomberg.

Under the Tennessee proposal, 21 to 64 year-olds can choose between the Health Incentives Plan and the Volunteer Plan. The volunteer plan offers a voucher to participants to be used for premiums and out-of-pocket expenses in an employer-sponsored, private health insurance plan. The Healthy Incentives Plan can get coverage through the state’s Medicaid program, which would be amended to allow health reimbursement accounts.

“When a state has an opportunity to take power away from the federal government and institute real conservative reform, that is an opportunity must be taken seriously,” Lt. Gov. Ron Ramsey said of the plan. “Governor Haslam has negotiated a deal which returns tax dollars back to Tennessee while using conservative principles to bring health insurance to more Tennesseans.”

The argument, for some red-state Republicans, is that instituting a private-option Medicaid expansion, which allows residents to purchase private health insurance plans with federal funding instead of traditional Medicaid coverage, is more free-market than the prototype Medicaid expansion preferred by the Obama administration. That may be true — but most Republicans are holding firm that any expansion of the already-large Medicaid program is against conservative principles. 

But it does leave anti-expansion state politicians in an awkward position. Expanding Medicaid will up states’ spending in the end, but all federal taxpayers are paying for it, whether their state has accepted the expansion or not.

In 2014, red states saved federal taxpayers $88 billion by refusing to expand the welfare program, according to a White House report. That will decrease in 2015, as several more states have agreed to expand the program. 

Republicans who agree to expand Medicaid have typically put conservative spins on the law, but while potentially effective, the evidence suggests they may not save money. Arkansas, the first state to try out a private option, has surpassed its budgets every month since its launch. The General Accountability Office reported in October that the Obama administration’s waiver for Arkansas’ Medicaid program put it $778 million overbudget.

Medicaid providers are paid the least for seeing patients of any federal program — and the quality of the coverage has suffered as a result. While providing vouchers for private insurance, as in the Tennessee example, may offer a wider selection of providers, the cost to taxpayers will likely turn out higher, if Arkansas is any example.

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