The deal Gov. Bill Haslam struck with the Tennessee Hospital Association as part of his push to expand Medicaid in Tennessee is being closely followed by state leaders and hospital executives in other states that have resisted expanding coverage as part of the president's healthcare law.
The deal was proposed to Haslam more than a year ago, according to Craig Becker, who heads the THA. Since Haslam's unveiling, several of Becker's counterparts in other Southern states have called him to explore whether it's a model that can be replicated. The fact that Haslam now heads the Republican Governors' Association shouldn't hurt in terms of rallying support among other state leaders.
Months leading up to the announcement, Hospital lobbyists were imploring the governor to act behind closed doors, but because of all the program's moving parts, including the Affordable Care Act waiver, receiving approval from federal officials took time.
During that time, however, uninsured patient bills were mounting, some hospitals in rural Tennessee were closing and the whole industry was feeling squeezed.
'We're Not Just Crying Wolf'
"We basically left over $800 million on the table in federal dollars. Which is a lot of money that could've done a lot of different things," Becker said, referring to the year in which Haslam was deliberating about whether to accept federal Medicaid money tied to the Affordable Care Act.
"We've all been telling him, look, we're stressed. Each individual hospital has come to him and said, look we're gonna have to lay people off. We've seen layoffs. We've seen hospitals close. We're not just crying wolf here," Becker said.
The problem is that the Affordable Care Act, or Obamacare, as some call it, has become a byword for President Obama, which means most Republican governors have been keeping some political distance from the program.
Even still, the Haslam administration denies that the state is expanding Medicaid, saying instead that they launched Insure Tennessee. The administration used phrases like "a program that works for Tennessee" and one that is "market-driven."
The fact that federal government support underpins the program is less talked about by the governor's office.
Instead, they pivot to how the THA will be paying for the state's contribution. It's not the first time the group has ponied up. For years, hospitals have helped out the state's TennCare program in the face of falling revenue by effectively taxing themselves in order to draw down federal matching money.
What Do Hospitals Get Out Of The Deal?
Instead of having to write-off the entire cost of care for an uninsured patient, the federal government would pick up 90 percent of the tab for the newly eligible, once the ACA is fully implemented. At first, the feds cover 100 percent.
Becker said uncompensated care was one of the major drags on rural hospitals and it's what sent as many as 20 hospitals statewide on the financial brink — some counties even instituting a wheel tax in order to keep local hospitals afloat.
To the association, putting in the state's portion was a no-brainer in terms of dropping the number of uninsured and letting the federal government pick up nearly all of the expense.
But Russ Miller, who speaks for doctors as the head of the Tennessee Medical Association, worries that if hospitals end up paying more than they expect for the program, it might mean less pay for physicians. Miller is supportive of Haslam's proposal, but he said he still has many unanswered questions.
"What's up in the air is the plan to pay for it, the hospitals are providing funding for it, but it's the reimbursing of those providing the care that leave us with some question marks," Miller said.
Another possible wrinkle is that state lawmakers will have to appropriate the money donated from the association to fund the Medicaid expansion. If, after the two-year trial period, some issues emerge, the association's funding could become a hot-button issue.