TN GOP can't halt Medicaid expansion

A new White House proposal to offer nearly free health insurance to millions of low-income Americans would accomplish the same goal as previous efforts to expand Medicaid in Tennessee but would cut the need for state funding or approval from state lawmakers.

The plan – part of President Joe Biden's sweeping "Build Back Better" agenda – would subsidize insurance purchased through the Affordable Care Act, commonly known as Obamacare, for impoverished Tennesseans who don't qualify for TennCare, the state's Medicaid program.

The proposal has the same aim and impact as Medicaid expansion but would not actually expand TennCare in any way. Instead, it would cover the same low-income population while sidestepping the primary obstacle preventing Medicaid expansion in Tennessee – state Republicans.

"It takes them completely out of the picture. It's the federal government using federal funds to subsidize health insurance," said John Graves, an expert on health care reform at Vanderbilt University Medical Center. "There is nothing the legislature can do about this."

If the Biden proposal survives a divided Congress and is enacted into federal law, it could be transformative for Tennessee and other deep-red states where Medicaid expansion has long been a political non-starter.

But the transformation would be temporary. Biden's proposal funds the new insurance subsidies for only four years. To extend the subsidies beyond 2025, Biden or his successor would need to secure more funding through a new law.

What is the TennCare 'coverage gap?'

TennCare, which is jointly funded by the federal and state government, provides health insurance to about one-fifth of Tennesseans, including many children, pregnant people, disabled adults and families who live at or below the poverty line.

But because Tennessee leaders repeatedly rejected Medicaid expansion, TennCare has a significant coverage gap: It does not cover childless adults – no matter how poor they may be – unless they fall into some other eligible category.

This leaves no affordable insurance option for individuals who make less than $12,880 per year or couples who make less than $17,420, according to federal poverty guidelines. These people are poor enough to conceivably qualify TennCare but are not eligible since they don't have children or a disability.

This is where the Biden plan kicks in.

The new federal subsidies would cover the entire Obamacare premiums for Tennesseans who live below the poverty line and aren't eligible for TennCare or some other form of subsidized health insurance. It is estimated that about 120,000 Tennesseans fall into this gap, according to legislative analyses from the Kaiser Family Foundation and the Center for Budget and Policy Priorities.

For people impacted by this law, the subsidized Obamacare coverage would appear largely similar to the low-cost insurance they could have received through Medicaid expansion. Insurance would ultimately come from the same companies, like BlueCross BlueShield of Tennessee, and participants wouldn't pay premiums but may face some small copays.

To a person on the receiving end of this coverage, the most significant difference would be how you sign up. Instead of joining TennCare under Medicaid expansion, enrollees will instead need to purchase a subsidized insurance plan through Healthcare.gov.

Mandy Pellegrin, policy director at the Sycamore Institute, a nonpartisan think tank in Nashville, said this additional step may present an obstacle for some Tennesseans, causing a few eligible people to get lost in the process of choosing a coverage plan.

But beyond this small caveat, the proposal brings renewed optimism to efforts to insure the poor in Tennessee, Pellegrin said. Biden's plan has "excited" advocates for Medicaid expansion who've grown exhausted of being stonewalled by lawmakers, she said.

"They are completely removed from this," Pellegrin said. "It is 100% a workaround."

Tennessee GOP stopped Medicaid expansion for years

Medicaid expansion, made possible under the Affordable Care Act in 2014, allowed states to grow their Medicaid programs to cover millions of low-income residents who were not previously eligible and unlikely to have insurance. Under the terms of the law, the federal government covered 90% of the cost of insuring these new enrollees.

Most states seized the opportunity to expand Medicaid while a minority rejected expansion, citing cost concerns or political objections to Obamacare in general. Additional states expanded years later due to political shifts or voter initiatives, and today there are just 12 non-expansion states – all of which are controlled by Republicans.

Tennessee is among the most steadfast of these holdouts.

Despite research showing expansion would benefit the poor and rural hospitals, and public polling that most Tennesseans support expansion, the state's Republican supermajority have trounced every proposal to expand TennCare – even attempts from within their own party.

Former Gov. Bill Haslam presented an expansion-like plan in 2014 but it was promptly killed by lawmakers. Sen. Richard Briggs, R-Knoxville, a doctor, has repeatedly tried and failed to pass expansion bills. Democratic lawmakers fruitlessly push for expansion each year, but don't wield enough power to advance a bill without Republican allies.

The debate was briefly revived after the election of Biden, who campaigned on a promise to improve Obamacare and woo non-expansion states to finally expand. Biden's strategy was clear: offer a deal so sweet that no state could turn it down.

It didn't work.

In a coronavirus relief law passed early this year, Biden offered to pay billions to hold-out states if they finally decided to expand. Tennessee could've gained as much as $900 million in two years on top of the federal government covering 90% of the expansion cost.

Tennessee's Republican leadership said in March they would at least consider Biden's new offer, but to date they have taken no action. In the eight months since Biden's offer, lawmakers convened for legislative session three times and no serious discussion on expansion has occurred.

None of the other non-expansion states took Biden's offer either.

Biden's proposal must get through Congress, past Sen. Joe Manchin

While the Biden proposal completely sidesteps the state lawmakers in Nashville, it does require the approval of Congress in Washington D.C.

The expanded subsidies are part of a $1.85 trillion spending package that also includes universal preschool and large investments in efforts to combat climate change. Republicans balked at the price tag, and the legislation is likely to need votes from every Democrat to pass the Senate.

For now, fate of the proposal appears to hinge on a familiar thorn in Biden's side – Sen. Joe Manchin.

Manchin, a centrist Democrat from West Virginia who wields significant political power because of his deciding vote, spoke in opposition to the proposal last month. He argued it was unfair for the federal government to pay for subsidies in the 12 non-expansion states when the rest of the country, including West Virginia, shouldered a portion of expansion costs for years.

"For states that held out to be rewarded 100% is not fair," he said.

Other Democrats have tried to counter this argument. Georgia Sen. Raphael Warnock, who represents a holdout state, stress federal tax dollars collected in Georgia are funding Medicaid programs that low-income Georgians can't join.

The status quo is not fair to them, Warnock argued. The same argument could be made for Tennesseans.

"People of Georgia are paying taxes for health care that they cannot access while subsidizing health care in West Virginia and in other states," Warnock said.

The USA TODAY Network contributed to this story.

Brett Kelman is the health care reporter for The Tennessean. He can be reached at 615-259-8287 or at brett.kelman@tennessean.com.