Most new TennCare costs involve now-eligible people, state says

Most new TennCare costs involve now-eligible people, state says

April 20th, 2010 by Andy Sher in Health

NASHVILLE - Most of the projected $1.12 billion in new TennCare costs the Bredesen administration says state government will incur under federal health care reform stems from the state having to pay for people who now qualify for TennCare but aren't in it, administration officials say.

The federal reforms are expected to have a "woodwork" effect that state officials believe will drive an estimated 60,625 now TennCare-eligible Tennesseans into the program between 2014 and 2019.

That accounts for $913 million, or 81.1 percent, of the overall increase the reforms are expected to have on TennCare, the state's version of Medicaid, according to TennCare Bureau figures.

By comparison, the other 181,666 Tennesseans who will become newly eligible under expanded Medicaid eligibility standards in the new federal law will account for just $199 million of the cost over the five-year period, bureau figures show.

Gov. Phil Bredesen, a Democrat, at one point during the federal debate over health care charged U.S. Senate Democrats with having come up with the "mother of all unfunded mandates." He since has softened his language.

But the figures had state House Leader Gary Odom posing sharply worded questions to TennCare Bureau Director Darin Gordon on Monday during a TennCare Oversight Committee meeting.

"Whether you want to dispute the amount of money that's fine," Mr. Gordon began as Rep. Odom interjected, "I do."

"But," Mr. Gordon continued, "I'll tell you we've had a pretty good history of estimating cost impacts of the program over the past several years."

Mr. Gordon said the state's figures were backed by a recent study from the insurer United HealthCare. But that only provoked skepticism from Mr. Odom, who said, "wait a minute, United Healthcare spent a ton of money opposing this plan."

"If folks are eligible now, their eligibility has absolutely nothing to do with passage of this new legislation," Rep. Odom said. "Why are we not considering that a risk to our program today?"

Mr. Gordon estimated the additional costs to the state would be a little under $200 million a year when health care reform fully is implemented.

Tony Garr with the Tennessee Health Care Campaign later said that in his view too much emphasis has been placed on the state's costs for the estimated 250,000 to 300,000 people who would come onto the TennCare program.

"They're talking about the $1.1 billion the state's supposedly going to have to put up. What they're not talking about is the $22 billion that we (Tennessee) are going to get back in return," Mr. Garr said, citing figures provided by Health Care for American Now!, a national coalition that backed the reforms.

Mr. Garr said Tennessee would see $10 billion to $11 billion in federal Medicaid matching funds for TennCare under the reforms. About $11 billion would go "to premium subsidies" that extend coverage to hundreds of thousands of more people, Mr. Garr said.

He estimated as many as 600,000 to 700,000 Tennesseans would see coverage under the health reform law. That includes the new Medicaid expansion population as well as Tennesseans covered by other aspects of the law, including an "exchange" that will offer subsidized health care to those who cannot afford full costs of insurance.

The federal health care law recently signed into law by President Barack Obama envisions using several strategies to expand health insurance coverage to some 32 million people.

One of them is a major expansion of Medicaid, the state and federally funded health care program primarily for low-income pregnant women and children as well as disabled people.

Beginning in 2014, low-income adults will be eligible for Medicaid - TennCare in Tennessee - if their incomes don't exceed 133 percent of the federal poverty level. That comes to $14,404 for individuals and $29,326 for a family of four, according to current poverty guidelines.

The Bredesen administration projects nearly 182,000 Tennesseans will be eligible under the new guidelines. In order to offset some objections by states, the federal law provides the federal government will pick up 100 percent of the costs on newly eligible enrollees during the first years.

Then, beginning in 2017, states including Tennessee would have to kick in five percent of the cost. That percentage rises to 10 percent for 2019.

But Mr. Gordon said that when it comes to the estimated 60,625 now eligible but non-participating TennCare enrollees, the state's share would be the current match rate of 35 percent with the federal government putting in 65 percent.

Moreover, he said, the new federal law directs that nearly all Americans have coverage, thus requiring people now eligible for TennCare to come onto the TennCare program.