How Tennessee’s Failure to Close the Coverage Gap Sabotaged the Health Insurance Marketplace

Throughout the county, opponents are screaming that the Affordable Care Act’s Marketplaces are failing; however, in states like Tennessee, the instability of the Marketplace is a direct result of the state’s refusal to accept federal funds to close the Medicaid coverage gap. By not closing the gap, the state is sabotaging its own health insurance Marketplace.

Screen Shot 2017-04-14 at 3.18.12 PMRight now, insurance companies are pulling out of Tennessee because they’re not making money. Why?  Because the Tennesseans who are buying individual plans are often sicker and older than the companies expected. But many of those same Tennesseans would have been eligible for TennCare if Tennessee had accepted federal funding to close the coverage gap. The ACA offered states extra funding to offer Medicaid coverage to everyone with incomes below 138 percent of the federal poverty level, about $16,000 a year for an individual.

Because Tennessee refused to accept federal funding to close the gap, people with incomes below the federal poverty level have no options for subsidized coverage, because premium subsidies for individual plans are only available to people with incomes above the poverty level. (The ACA assumed that everyone below poverty would be eligible for Medicaid.) But people with incomes between 100 and 138 percent of the federal poverty level can receive premium subsidies for Marketplace plans, and many did in Tennessee.  Research from the Department of Health and Human Services (HHS) suggests that these near-poor people, who would have been eligible for TennCare had the state accepted federal funding to expand coverage, account for a significant part of the unexpected costs to insurance companies.

 

Enrollees with incomes between 100 and 138 percent of the federal poverty level make up about 6 percent of Marketplace enrollees in states that expanded Medicaid, while they make up close to 40 percent of Marketplace enrollees in states that did not expand HHS researchers compared Marketplace premiums in states that accepted federal funding to expand Medicaid with states that refused to expand Medicaid. They found that Marketplace premiums were an average of 7 percent lower in states that accepted the federal funding to close the coverage gap.

It has long been clear that the decision to turn down federal funds to close the gap is costly for Tennessee. It denies coverage to 280,000 Tennesseans – many of whom are working, and many of whom have serious health conditions. And by rejecting the federal funds, Tennessee is giving up billions of dollars a year in economic benefits and putting our health care infrastructure at risk. But closing the coverage gap will also help stabilize the Marketplace and lower premiums for people buying coverage on their own. Tennessee should stop sabotaging its own health insurance Marketplace and accept federal funds to close the gap now.

Spotlight Series

Client Spotlight: Janice Combs

Client Spotlight: Janice Combs

One of our recent clients, Janice Combs, has suffered from brain tumors for nearly two decades. TJC client advocates were able to help enroll her in CHOICES, Tennessee’s program for long-term services and supports. Her brother John had this to say about their experiences with the illness and working with TJC:

“They found the first tumors between 10-15 years ago. She was working at the time. She would go ride her bike for 30-40 miles. She had a bad bike wreck, and when they did a CT of her head, that’s when they found the tumors. She worked all the way up until she couldn’t any more. She had a few surgeries, and eventually she was not able to continue working. She lost her insurance and had to go on disability. She got accepted into a program in Knoxville for low-income people. It paid all her healthcare bills. When she couldn’t work anymore, she was no longer eligible for the program. She went on disability and got TennCare.

If she hadn’t had the coverage, she would have never had the surgeries to remove the tumors, and she would not be living. Health coverage has extended her life for years. When she got accepted into CHOICES, she was able to get a lot more care. She was in a nursing home for a year before she came back home. It has enabled her to live on her own for the past year. Now she’s on Hospice care, receiving even more care. If they change Medicaid, maybe she won’t be eligible for those services any more. Her wish is to be able to die at home, not in some facility.

I’ve been very impressed with all that TJC has done for us. It definitely made a difference. People started paying attention and saying, “What’s happening to this one person?” My sister was able to get better care because of that. I’m so grateful for everything that TJC does.”

Federal Cuts to Medicaid Will Harm Rural Hospitals

"If Congress succeeds in implementing the proposed cuts to Medicaid, 37 are at risk of major cuts or even closure"

Congressional leaders have proposed radical changes to the Medicaid program, which we call TennCare. They want to drastically cut federal funding for the program by converting it to a “per capita cap.” According to the nonpartisan Congressional Budget Office, this and other proposed changes will cut federal funding for Medicaid by $880 billion over the next decade. This would breach Washington’s historic commitment to the states, and it will be a disaster for Tennessee, especially for rural communities where TennCare plays a critical role in funding the healthcare infrastructure.

Tennessee is already a national leader in the rate of rural hospital closings.[1] These hospitals get most of their revenues from federal programs,[2] so changes to those programs can spell the difference between survival or extinction. There are 108 general medical and surgical hospitals in Tennessee. If Congress succeeds in implementing the proposed cuts to Medicaid, 37 are at risk of major cuts or even closure because they have, on average, lost money over the past three years.[3]

If cuts to the Medicaid program cause these hospitals close, it would leave 26 more Tennessee counties without a hospital and would have a devastating effect on Tennessee’s economy. The loss of a community’s only hospital is disastrous. It diminishes access to care for everyone, whether or not they have health insurance. It takes longer to get to an emergency room after a stroke or car crash. Cancer patients must travel farther for chemotherapy. Doctors move away to communities with hospitals available to care for their patients.

The impact goes beyond health care. Hospitals are among the largest employers.[4] When a hospital dies, it hemorrhages jobs. These at-risk hospitals directly employ over 14,000 Tennesseans, and indirectly sustain tens of thousands more jobs. Without a hospital, it’s hard to recruit new industry.[5] Young people move away. Communities wither, a cherished way of life fades.

[1] “A State-by-State Breakdown of 80 Rural Hospital Closures,” Becker’s Hospital Review, available at http://www.beckershospitalreview.com/finance/a-state-by-state-breakdown-of-80-rural-hospital-closures.html.

[2] “Medicaid and Rural America,” Center for Rural Affairs, available at http://files.cfra.org/pdf/Medicaid.pdf.

[3] Annual financial and employment data on Tennessee hospitals is derived from the Tennessee Joint Annual Reports on Hospitals, available at http://health.state.tn.us/PublicJARS/Default.aspx.

[4] “Economic Impact of Rural Health Care,” National Center for Rural Health Works, available at http://ruralhealthworks.org/wp-content/files/Economic-Contributions-of-Rural-Health-Care-Jan-2015-UPDATED1.pdf.

[5] Haywood County leaders scramble to fill the void of lost hospital, The Tennessean (July 9, 2016), available at http://www.tennessean.com/story/money/industries/health-care/2016/07/09/haywood-county-scouts-care-alternatives-in-hospital-absence/85982028/.