Tennessee Needs the Medicaid expansion

by Tennessee Justice Center on July 11, 2012

Our friend Lenny Croce, staff attorney at the Oak Ridge office of the Legal Aid Society of Middle Tennessee and the Cumberlands, wrote a great op-ed about why Tennessee needs Medicaid expansion.

On June 28, the Supreme Court upheld almost all of the federal Affordable Care Act (ACA). However, it ruled the federal government cannot force Tennessee to expand its Medicaid program (TennCare) beginning 2014 for low-income Tennesseans who cannot purchase their own health insurance and who do not qualify for TennCare. Some now may hope that Tennessee will not have to expand TennCare. The refusal of state leaders to not expand TennCare does not serve any of interests of Tennesseans and will have human and economic consequences that are unacceptable.

As Justice Scalia pointed out in dissent, “Those states that decline the Medicaid Expansion must subsidize, by the federal tax dollars taken from their citizens, vast grants to the states that accept the Medicaid Expansion.” In effect, if Tennessee turns down funding for TennCare expansion, New York, Florida, California and other states will get the benefit of Tennesseans’ federal tax dollars.

Working Tennesseans in low-wage jobs will be left without insurance. When they have a major illness or injury, the cost of their care will still have to be picked up by those of us who are fortunate to have health insurance. Tennessee companies that provide health insurance or their employees will bear that cost entirely on their own, without having the benefit of federal Medicaid funds.

Giving our federal tax dollars to other states is about the loss of jobs and revenue in Tennessee. The University of Memphis Sparks Center for Business & Economic Research estimates the federal funding associated with the Medicaid Expansion will generate 7,500 jobs statewide in 2014 alone. Sales tax generated by federal funding for the Medicaid expansion would offset much, perhaps all, of the additional costs to the state.

Most of the new costs to Tennessee will remain whether or not it takes the federal dollars provided for the expansion. Tennessee will still have to pay higher rates for primary care under TennCare. The insurance exchanges, whether operated by the state or federal government, will funnel more people into TennCare who are already eligible, but did not know they were eligible and had not applied.  These new TennCare enrollees will account for all of the new costs to Tennessee in the first three years under the Act, not the expansion population that will be funded entirely by the federal government.

Targeted hospital subsidies, known as disproportionate share hospital (DSH) payments, will decline under the Affordable Care Act because, in theory, the Medicaid expansion will eliminate the need for subsidies by reducing uncompensated care. If hospitals lose those payments, and the loss is not made up by the expansion of Medicaid, many Tennessee hospitals, especially in rural areas, simply will not be viable. Communities will lose a major employer, doctors will leave, and efforts to recruit new industry will be much more difficult.

TennCare is by far the largest source of federal revenues to the state. Federal TennCare funds support the Department of Children’s Services, the Department of Health, the Department of Human Services, the Department of Intellectual and Developmental Disabilities, and the Department of Mental Health. More than $900 million of federal funds come to the state only because the hospital industry has in recent years paid an assessment with which the state is able to match the federal dollars. Without the Medicaid expansion, hospitals will have neither the financial ability, nor the political will, to continue paying the assessment. Without the hospital assessment, the resulting loss of federal funds will destabilize the state budget and e ACA will destabilize the state budget. severe impact across and multitude of services from state and local governments.

- Lenny Croce

Go here to view the article online.

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