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Tennessee Medicaid Expansion On Hold, Governor Says

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TENNESSEE MEDICAID
(AP Photo/Erik Schelzig) | AP

Tennessee Gov. Bill Haslam (R) outlined a plan for Medicaid expansion and reform today, but will not advance a plan in his budget without federal approval.

Haslam outlined an option, based on a model being pursued in states including Arkansas and Ohio, that would use federal Medicaid dollars to finance the purchase of private health insurance. But the governor told lawmakers that he wouldn't recommend the expansion without federal approval of the plan and legislative consideration.

"A pure expansion of Medicaid -- expanding a broken system -- doesn't make sense for Tennessee," Haslam said during an address before a joint session of the Tennessee Legislature. "I'd like to put in place a program to buy private health insurance for Tennesseans that have no other way to get it than by using the federal money."

Obama's health care law seeks to expand Medicaid to anyone earning up to 133 percent of the federal poverty level, which is $15,282 for a single person this year, but states can opt out. The chief executives of 25 states and the District of Columbia have declared their support for the Medicaid expansion, while more than a dozen Republican governors have ruled it out.

Under the health care law, the federal government will pay the full cost of enrolling these newly eligible people from 2014 through 2016, after which the share would gradually decline until it reaches 90 percent in 2022 and future years.

Haslam is the latest governor, joining Arkansas' Mike Beebe (D), Ohio's John Kasich (R) and others, to seek an alternative that would require state legislation and federal approval to place these poor residents into private health insurance rather than the traditional Medicaid program.

Despite outlining his proposal, Haslam told legislators he wouldn't push them to move forward absent an OK from the Obama administration that would guarantee the state's access to new federal dollars.

"To succeed, we also need the cooperation of the Department of Health and Human Services in Washington," Haslam said. "Until we get those assurances, I cannot recommend to you that we move forward on this plan."

Haslam expressed skepticism that the Obama administration would relax Medicaid rules governing what benefits people would receive and how much they could be asked to pay for medical services, which he said would be part of his reform plan.

The Arkansas Legislature currently is weighing a privatized version of the Medicaid expansion, and Gov. Beebe has said he's received informal approval from federal authorities. Florida's Legislature is also considering this approach after rejecting Gov. Rick Scott's (R) proposal to accept the Medicaid expansion.

Under the plans put forward by these states, instead of enrolling in Medicaid, people would purchase plans on Obamacare's health insurance exchanges, the online marketplaces where small businesses and individuals who buy their own coverage will be able to comparison shop and seek financial assistance. Health care reform provides tax credits to small companies that offer health benefits to workers and to individuals who earn between the federal poverty level, which is $11,490 for a single person this year, and four times that amount.

In addition to concerns about whether the private health insurance plans would offer the same level of benefits as Medicaid and not overburden poor beneficiaries with co-payments, this private model may cost more than traditional Medicaid. Proponents contend that private plans have wider networks of health care providers, and that the system benefits those whose incomes change, requiring them to repeatedly switch between Medicaid and private health insurance.

Correction: A previous version of this article incorrectly stated that the Tennessee governor was expanding Medicaid under the Affordable Care Act. His plan will not move forward without state legislation and federal approval.

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