Medicaid expansion could pump $1.4 billion into state

10:00 PM, Mar 8, 2013   |    comments
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By Chas Sisk / The Tennessean

The state of Tennessee stands to miss out on more than $1.4 billion in federal aid if it does not expand TennCare, according to a recent analysis from the legislature.

The General Assembly's Fiscal Review Committee, a nonpartisan office set up to assess the costs and benefits of proposed legislation, says expanding TennCare would inject more than $418 million into the state's budget in 2013-2014 and another $1 billion in the following budget year. The money would cover the cost of offering TennCare to 161,900 more Tennesseans.

The analysis comes as Gov. Bill Haslam weighs the politically dicey decision of whether to expand TennCare, the state's Medicaid program. Two dozen states, including New Jersey and Florida, both with Republican governors, have committed to expanding Medicaid, while 14 have announced they will not.

The heat surrounding the issue will be evident in the next few days. Opponents plan to rally Sunday at the Capitol to press the governor to leave TennCare as it is, and lawmakers are set to hold their first hearings on the issue next week.

Republican leaders are trying to hold back action on the issue until the end of the month, when Haslam is expected to announce his decision.

"We want to give the governor the leeway he needs to make a wise and sound judgment call for the state of Tennessee," House Speaker Beth Harwell, R-Nashville, said Thursday.

The amount of money at stake is likely to be used by both sides in the debate. One supporter of expansion says the sum suggests Tennessee's economy would benefit from expansion as federal tax dollars flow back into the state to pay for care for more of the poor.

"Any reasonable person would say we can't pass up this opportunity," said Michele Johnson, an attorney for the Tennessee Justice Center, a health care advocacy group.

Opponents will point to the figure as proof of expansion's high price tag.

"Any chance I have to save the federal government $1.4 billion is a chance I'm happy to take advantage of," said state Sen. Brian Kelsey, R-Germantown.

TennCare currently insures 1.2 million Tennesseans, mainly children, parents, pregnant women, the elderly and the disabled. The program is expected to grow under the Affordable Care Act as more people who already qualify but have not enrolled sign up rather than face tax penalties for not having insurance.

The Affordable Care Act calls for offering Medicaid to more of the poor, but last summer's Supreme Court decision made expansion optional for the states. If they expand, the federal government has pledged to cover the full cost for three years, starting Jan. 1, 2014, and 90 percent or more through 2020.

The analysis shows how much Tennessee would get under that scenario through June 30, 2015. It was attached in late February to Senate Bill 804, a measure Kelsey has filed barring the state from expanding TennCare.

So far, the legislature has not taken up Kelsey's bill or its companion measure filed by state Rep. Jeremy Durham, R-Franklin, in the House of Representatives, as Republican leaders have asked sponsors to defer to Haslam. But that has not put a stop to plans to block expansion.

Lawmakers will hear testimony on Tuesday in a pair of committee meetings from experts who oppose expanding TennCare. Durham also is scheduled to speak at Sunday's rally.

Nevertheless, House Majority Leader Gerald McCormick, R-Chattanooga, said he believes most lawmakers still are making up their minds on the expansion question.

"I think they'll listen with an open mind," he said. "There are some other facts that have come to light. ... That's why I have an open mind about it."

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