Haslem’s Insure Tennessee Proposal Debuts to Mixed Reception

Published January 29, 2015

In recent months, Republican governors in several states—including Pennsylvania, Indiana, Utah, and Wyoming—have considered new proposals to expand their states’ Medicaid programs. Each of the states, which have resisted expansion so far, have considered plans including what they call free-market alternatives to the often unpopular Affordable Care Act.

The most recent governor to propose a Medicaid expansion plan is Tennessee Gov. Bill Haslem. Haslem’s proposed program, called Insure Tennessee, would expand Medicaid to all those with incomes below 138 percent of the federal poverty level, currently $16,100 for an individual and $27,300 for a family of three.

State Sen. Brian Kelsey questioned whether many of the new recipients would ultimately be able to stay on the program, pointing to past problems.

“Obamacare Medicaid expansion will add to the federal debt and the income tax burden owed by Tennesseans,” said Kelsey. “It is unclear whether funding will exist in two years or whether these able-bodied, childless adults will have to be kicked off the Medicaid rolls, as many were in 2005.”

In 2005, then-governor Phil Bredesen was forced to reduce Medicaid eligibility drastically after previous expansions had increased enrollment and threatened to overwhelm the state budget. Nearly 350,000 Tennesseans lost TennCare coverage as a result.

Public, Private Options

Under Haslem’s proposed expansion, individuals between the ages of 21 to 64 would be able to choose between two plans, the Healthy Incentives Plan or the Volunteer Plan.

The Volunteer Plan would provide a health insurance voucher to participants to use in their employer’s health insurance plan. The voucher would be available to pay for either premiums or out-of-pocket expenses of an employer-sponsored private market plan. The voucher would be valued slightly less than the current average TennCare per-enrollee cost.

The second option, the Healthy Incentives Plan, would enroll the newly eligible in the current TennCare program but require modest premiums and copayments for certain services. It would also create financial incentives for good health care behavior. Contributions would be placed in accounts called Healthy Incentives for Tennesseans (HIT), similar to Health Reimbursement Accounts (HRAs). Funds in these accounts would be available to use for TennCare premiums and co-pays.

Lindsay Boyd, policy director at the Beacon Center of Tennessee, a free-market think tank, said the plan is fiscally irresponsible. “Medicaid expansion under Obamacare in Tennessee would be issuing taxpayer handouts with borrowed money to a new entitlement population, most of whom are able-bodied adults without children and of working age,” Boyd said.

According to research from the Foundation for Government Accountability, a think tank focusing on health care and welfare programs, most of those who would be newly eligible under Haslem’s expansion are childless, able-bodied men, more than one-third of whom have criminal histories.

Political Difficulties Expected

In April 2014, Tennessee passed laws requiring legislative approval before the state’s Medicaid program can be expanded. The law was intended to ensure that what happened in Ohio, where Gov. John Kasich unilaterally expanded Medicaid after the state legislature refused to do it with legislation, wouldn’t happen in Tennessee.

Kelsey expressed concern the program would hinder employment growth and noted passage in the legislature is far from certain.

“Only 16 percent of the Medicaid expansion population in Tennessee is working full-time. This plan will discourage the others from finding full-time employment,” said Kelsey. “There are several of us in the legislature who are opposed to expanding government for Obamacare. We will not give up until this plan is stopped and Obamacare is repealed.”

Because Haslem’s proposal is not a straightforward expansion of Medicaid, it still needs approval by the U.S. Department of Health and Human Services (HHS). To date, HHS has denied most elements of other states’ reform proposals, approving only modest changes from the existing Medicaid program for new enrollees.

Matthew Glans ([email protected]) is a senior policy analyst at The Heartland Institute.