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Business groups optimistic about TennCare deal

11:22 AM, Mar 29, 2013   |    comments
Gov. Bill Haslam makes the announcement of his decision on TennCare to a joint session of the state legislature on Wednesday. / Jae S. Lee / The Tennessean
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Written by Chad Sisk and Getahn Ward, The Tennessean

Health care and business groups are putting their faith in Gov. Bill Haslam's ability to hammer out a deal on TennCare.

But there are no signs of a master strategy that could bring that bargain about or drive it through the legislature.

After months of doom-saying, health care and business groups have held their tongues following Wednesday's momentous announcement that the state would not start offering TennCare, the state's Medicaid program, to 180,000 more uninsured Tennesseans. The decision appeared to put the state on track to miss out on more than $400 million in federal funding in the first half of 2014 to pay for expansion and more than $1 billion a year after that.

The announcement seemed to be a defeat for businesses and organizations that had lobbied hard for expansion in the face of deep Republican skepticism. But those groups have struck a conciliatory tone, figuring that their best hope lies in Haslam's ability to fashion a compromise that suits health care providers, federal officials and state lawmakers.

"The governor had a will," said Bill Gracey, CEO of BlueCross BlueShield of Tennessee, "but I think he had an uphill fight with the legislature."

Haslam says he is working on a "Tennessee plan" to offer health insurance to more of the poor without incurring any additional cost. Modeled after a proposal from Arkansas, his plan calls for using federal money to buy coverage from private insurers and giving it to people who make less than 138 percent of the federal poverty line, about $32,500 for a family of four.

But the U.S. Department of Health and Human Services has to sign off on that proposal. So far, federal officials have declined to do so, though the department says it is willing to continue negotiations.

Buy-in from the health care industry also is essential to Haslam's plan. The governor expects insurers, hospitals and other health care providers to hold down the cost of coverage so TennCare's $9 billion budget doesn't expand once the state begins paying for a share of expansion in 2016.

Haslam's proposal appeared reasonable to many in the business and health care communities who favored expansion.

"Whether it's done through the exchange or through the TennCare program, it's still coverage and that's what we're ultimately trying to get," said Craig Becker, chief executive of the Tennessee Hospital Association.

Most acknowledge that a straight expansion of TennCare was not a realistic option for Haslam. Although the federal government has pledged to pay at least 90 percent of the cost of expansion into 2020, Republican lawmakers contend that Tennessee would need to budget $200 million to cover its share.

Those concerns outweigh the immediate financial burden of turning down the federal government's offer.

"We don't want to just look at the short-term impacts of this," said Bradley Jackson, director of government relations for the Tennessee Chamber of Commerce and Industry. "We're just as concerned about the long-term financial impact. If this is not a solid proposition, we've seen in the past that the business community could become a target for money."

Plans uncertain

Haslam pledged this week to keep negotiations going, but he did not suggest a plan for passing a deal if he were to succeed.

Once lawmakers adjourn for the year - most likely by the end of April - they would have to be called back to the Capitol for a rare special session or miss out on the first round of federal funding. But legislative leaders said Thursday they have not been asked to consider coming back for a special session.

"Not a word has been said to me about having a special session," House Majority Leader Gerald McCormick, R-Chattanooga, said.

Haslam also appears to have bet that he can strike a deal with the federal government that no other state has managed to reach by taking a harder line than many of his peers.

Unlike Arkansas, the role model for Haslam's proposal, Tennessee is asking the Department of Health and Human Services to approve a private insurance plan after having rejected the federal government's request that Tennessee set up a health insurance exchange where people could shop for coverage.

The governor said Tennessee will not expand its Medicaid program until the federal government has signed off on a private-insurance plan. Arkansas agreed to expand first and work out the details later.

Haslam said he is willing for Tennessee to go alone. He said Wednesday that he had not asked any other governor to join him in holding out for a better bargain.

But negotiating alone could be to Tennessee's advantage, said Jackson of the Tennessee Chamber. With TennCare, which was set up by Gov. Ned McWherter during the health reform debate in the 1990s, Tennessee has proved it can serve as an innovator, he said.

"There's a lot of folks up there (in Washington) that listen to Tennessee," he said.

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