Research & Commentary: Tennessee Medicaid Expansion

Published October 27, 2014

Recent moves by Pennsylvania and Indiana to expand their Medicaid programs under the false mantle of being a “free-market alternative” to Obamacare have emboldened some Republican governors to reconsider their opposition to Medicaid expansion. According to The Tennessean, Tennessee Gov. Bill Haslam is considering submitting a Medicaid expansion proposal in the fall.

Given Haslam’s previous statements on Medicaid, it is very likely the new proposal will emulate similar plans enacted in Arkansas and Pennsylvania, where federal dollars are used to help the poor buy private health insurance. After rejecting an expansion of the traditional Medicaid program in 2013, Haslam voiced support for a plan that would include copayments, creating more patient “skin in the game.”

The models used by Arkansas and Pennsylvania have several shortcomings. First, despite the private-market feel of the programs, they still represent an expansion of a failed Medicaid system, where multiple aspects of the insurance plan are dictated by the federal government and the beneficial elements of real market competition are lost. Although many of the “private insurance” models proposed by the states included more substantive reforms such as copays and employment requirements, the Centers for Medicare and Medicaid Services (CMS) have largely rejected them.

John Daniel Davidson of The Federalist uses Pennsylvania’s Medicaid expansion as an example. “The deal Corbett cut with the feds is a case in point. In negotiations with [CMS], the governor requested dozens of changes to Medicaid for the expansion group (those earning less than 133 percent of federal poverty, or $15,500). He wanted to tie cost-sharing reductions to employment and job training, for example, and increase co-pays for a non-emergency ER visit from $8 to a whopping $10. Almost all these requests were denied.”

Tennessee has taken several positive steps to ensure Medicaid expansion is fully vetted before it can be implemented. In April 2014, Tennessee passed laws requiring legislative approval before the state’s Medicaid program can be expanded. That requirement establishes the proper checks and balances of government and forces legislative debate over the wider implications of Medicaid expansion and how it would be implemented and funded in the long run.

Contrary to expansion supporters’ depiction of the new federal funds as “free money,” Medicaid expansion is expensive, creating new costs the federal government may not cover forever into the future, leaving state taxpayers on the hook for the new liabilities. Opponents of expansion note the program is already stretching states thin financially and has a poor track record of providing cost-effective and efficient care.  Medicaid is currently the largest category of state spending; according to the National Association of State Budget Officers, Medicaid consumes 23.6 percent of state government expenditures.

An alternative state legislators should consider is the pilot program currently underway in Florida, known as the “Medicaid Cure.” The program is a premium support model that provides existing Medicaid recipients with a range of premiums and plans from which to choose, dramatically improving health care competition and consumer choice. The results have been promising; the Florida Agency for Health Care Administration found a 64 percent improvement in health outcomes over managed care and an 83 percent satisfaction rate among enrollees.

Without significant reforms, Medicaid will remain fiscally unsustainable. Instead of expanding a flawed model that is overly costly, delivers subpar health care, and shifts more power to the federal government, state lawmakers should focus instead on reform options like those piloted in Florida, which reduce costs and offer better care.

The following articles examine state Medicaid reform from several perspectives.

A Cure for What Ails Us
Justin Owen, Trey Moore, and Christina Weber of the Beacon Center argue the U.S. health care system is broken and politicians in Washington, DC have consistently failed to deliver on promises to repair it. Health care costs continue to grow, while access to care shrinks. Many industry leaders say the Patient Protection and Affordable Care Act (PPACA) amounts to reform in name only.

Tennessee Rejects Medicaid Expansion—For Now
Writing in the Heartlander digital magazine, Loren Heal reports on Tennessee Gov. Bill Haslam’s announcement he would not pursue expanding TennCare, the state’s Medicaid program, under President Barack Obama’s health care law. Heal notes Haslam admitted he would consider expansion in the future.

Medicaid Expansion: Tennessee Would Be Wise to Reject It
Michael Tanner, a senior fellow at the Cato Institute, discusses Medicaid expansion in Tennessee and argues Gov. Haslam and state legislators should protect the state’s taxpayers by resisting the siren song of federal funds and rejecting any expansion of Medicaid.

Medicaid Expansion in Tennessee: Impact and Cost to Taxpayers
The Heritage Foundation examined the cost of Medicaid expansion in Tennessee and found it would cause a rapid increase in spending beginning in 2017, quickly surpassing any modest saving from reductions in state payments to providers for uncompensated care. On net, the expansion would cost Tennessee taxpayers $1.2 billion through 2022, the study found.

Policy Tip Sheet: Medicaid Expansion
Kendall Antekeier of The Heartland Institute explains why states should avoid Medicaid expansion and instead reform this fiscally unsustainable program in ways that offer better care at lower costs to taxpayers. 

Healthy PA Can’t Cure Obamacare Disease
Elizabeth Stelle and Nathan Benefield of the Commonwealth Foundation argue the Healthy PA proposal falls short of providing meaningful reform in exchange for putting more people and more money into Obamacare’s house of cards.

The Empty Promises of Arkansas’ Medicaid Private Option
The Foundation for Government Accountability examines the empty promises of Arkansas’ Medicaid Private Option. It rebuts point by point direct quotes from supporters, including media interviews, floor speeches, and social media posts. 

A Medicaid Cure: Florida’s Medicaid Reform Pilot
The Foundation for Government Accountability explains the success of the Florida Medicaid Cure: “When the patient is the priority, government and HMO bureaucrats are finally held accountable. Costs flatten and patient health and satisfaction improves.”

Why States Should Not Expand Medicaid
Writing for the Galen Institute, Grace-Marie Turner and Avik Roy outline 12 reasons states should not expand Medicaid and should instead demand from Washington greater control over spending to better fit coverage expansion with their states’ needs, resources, and budgets.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database at

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