Obama administration says Tennessee can't phase in Medicaid eligibility and get extra federal funds

Obama administration says Tennessee can't phase in Medicaid eligibility and get extra federal funds

December 11th, 2012 by Andy Sher in Local Regional News

Kathleen Sebelius

Photo by Associated Press/Times Free Press.

NASHVILLE - The Obama administration says Tennessee and other states cannot phase in Medicaid eligibility and still get extra federal funds to pay for it under the Affordable Care Act.

Health and Human Services Secretary Kathleen Sebelius said Monday there will be no half-way measures, saying "the law does not create an option for enhanced match for a partial or phased-in Medicaid expansion to 133 percent of poverty."

In Tennessee, Republican Gov. Bill Haslam is still weighing whether to participate in the Medicaid expansion that some estimate could provide health coverage to as many as 330,000 low-income people in Tennessee. Medicaid is operated as TennCare in the state.

Haslam, who faced opposition from fellow Republicans in the GOP-led legislature over the insurance exchange, insisted Monday his decision was not political. He said a lack of hard information from the Obama administration on what the state could or could not do with the exchange prompted his decision. The federal government will run it instead.

There has been talk in Tennessee that federal officials might allow states to phase in the Medicaid expansion provision under the federal law and still get full federal funding, but Sebelius' statement quashes that.

She did say the department "will consider waivers at the regular matching rate now and, in 2017 when the 100 percent federal funding for the expansion group is slightly reduced."

While rejecting the state-operated exchange, Haslam said he hasn't ruled out going along with the Medicaid expansion. The federal government would pay 100 percent of the cost of the new enrollees for three years before phasing down its share to 90 percent after 2019.

A decision last summer by the U.S. Supreme Court left the expansion decision to individual states, striking down a requirement in the law that required states to expand their programs.

Tennessee hospitals and health-care advocates are clamoring for the state to participate in the Medicaid expansion with hospitals saying a rejection would devastate rural hospitals, which stand to lose special indigent care payments under the Affordable Care Act.

Haslam said that while he is aware of their concern and the opportunity to provide more people coverage, he worries the federal government could decide years later to cut the 90 percent match rate for the new enrollees to the standard 65 percent match Tennessee receives.

That could pose problems in funding other programs like education and prisons, Haslam said.