Tennessee governor’s budget proposal includes TennCare expansion for 25,000

Tennessee Gov. Bill Lee greets legislators as he leaves the House Chamber after giving his his State of the State Address on Monday in Nashville. (AP Photo/Mark Zaleski)

Gov. Bill Lee's proposed budget includes funds to expand TennCare coverage to roughly 25,000 children and parents, a move celebrated by those who support Tennessee's decision to forgo traditional Medicaid expansion in favor of a waiver that gives the state more flexibility.

TennCare is Tennessee's Medicaid program that provides health care for about 1.7 million residents, mostly low-income children, pregnant women and people with disabilities.

Lee said expanding services is possible through savings from Tennessee's Medicaid waiver agreement with the U.S. Centers for Medicare & Medicaid Services, which in 2021 granted TennCare leeway from some federal rules around managing the program.

"Despite enormous criticism from those who said we couldn't or wouldn't, we are going to do exactly what we said we would do when we pursued this shared savings waiver -- expand services for the most vulnerable and provide those services to even more Tennesseans," Lee said during his annual State of the State address Monday. "And now that day has come."

As a result of shared savings through the program, Tennessee will receive more than $300 million in additional federal funds. Lee said he wants to direct that money toward making TennCare's recent 12-month extension of postpartum coverage permanent, as well as adding other support services for new mothers, providing one year of continuous enrollment for children and expanding eligibility for parents and caretakers of children.

Part of the plan includes covering the cost of diapers during the first two years of a baby's life for mothers on TennCare, he said.

(READ MORE: Tennessee budget breakdown highlights Lee's spending priorities)

While the proposal was applauded in a news release from the Senate Republican press office Thursday, Dr. Katrina Green, a Nashville-based emergency physician and advocate, said Lee accepting a Medicaid expansion through the Affordable Care Act would have a greater impact than expanding coverage to 25,000 people.

"It's laughable, if it weren't so tragic, that 226,000 uninsured nonelderly adults would become eligible for coverage if he simply accepted Medicaid expansion," Green said in a news release, citing data from the Kaiser Family Foundation.

With Affordable Care Act expansion, the federal government pays 90% and the state pays 10% of the cost of expanding Medicaid coverage to nearly all adults with incomes up to 138% of the federal poverty level, which in 2020 was $17,609 annually for an individual, according to Kaiser. More than 70% of adult Tennesseans living below poverty would gain coverage with that expansion.

Tennessee is one of 11 states that have opted not to expand Medicaid under the Affordable Care Act, which Green said is also contributing to Tennessee's rural health care crisis.

"Sixteen hospitals have closed in Tennessee since 2010, and 13 of those have been rural, the second highest rate in the United States," she said. "This is harming the rural Tennessee population he claimed to prioritize in his remarks."

In the coming weeks and months, the General Assembly will review Lee's budget proposal and make its own budget recommendations for how to spend the $300 million from the Medicaid waiver, according to the GOP Senate news release.

"The savings from this waiver prove that our excellent conservative fiscal management in Tennessee yields big returns for taxpayers and enables us to provide better care to more citizens in need," Senate Commerce and Labor Committee Chairman Paul Bailey, R-Sparta, said in the release. "I am excited for the future of this program and grateful to Gov. Lee for his support and the amazing folks at TennCare who worked hard to secure this waiver and improve efficiencies."

Other new services added to TennCare since the waiver was implemented include expanding dental benefits for all adults and additional support for people with intellectual and developmental disabilities.

Contact Elizabeth Fite at efite@timesfreepress.com or 423-757-6673.