NASHVILLE - Tennessee Republican lawmakers on Friday passed a new funding plan for TennCare that they and Gov. Bill Lee say will enhance maternal care and mental-health services while expanding eligibility for low-income residents, although Democrats say it's based on unrealistic projections and could fall to political and legal challenges.
Lee's administration reached the funding deal in the waning days of the administration of President Donald Trump, as President-elect Joe Biden prepares to take office on Jan. 20.
The plan is designed to give the state more flexibility in spending federal funding from the Medicaid program for low-income Americans and reward Tennessee when it spends less than anticipated on the program. Proponents say it's the first of its kind in the nation.
GOP leaders say their deal with the U.S. Centers for Medicare and Medicaid Services will give them back 55% of every dollar saved - which they say could amount to hundreds of millions of dollars. They hope to spend that money on improved services and expanded eligibility.
"There is a reason Tennessee has this unique opportunity," House Finance Chair Patsy Hazlewood, R-Signal Mountain, told members. "It's because we have managed our government well. Other states might have sought this kind of deal but they know they're not going to get it because they don't have the track record."
At its heart, Hazlewood said, the proposal gives Tennessee the "flexibility and ability to put federal tax dollars where they need to be in in the state, not where the federal government believes" the money should go.
Democrats say low-income Tennesseans are unlikely to benefit from the savings, which is more likely to be used by the state in other ways - or not materialize at all.
Rep. Gloria Johnson, D-Knoxville, criticized Republicans, saying their eight-year refusal to approve expansion of Medicaid under the federal Affordable Care Act prevented an estimated 300,000 adult low-income men and women from being added to the program. The federal government would have picked up 90% of the tab, amounting to more than $6 billion over the past eight years, Johnson said.
Tennessee is one of just 12 states that have refused to participate, Johnson noted.
"Yet we're willing to pass an experimental program without guarantees," she said. "Tennesseans have been waiting for eight years for coverage they don't have."
The GOP-controlled Tennessee House approved the resolution Friday on a 70-22 party-line vote. Republican senators approved it on a 25-6 vote on Thursday, also along party lines.
Given the last-minute approval on Jan. 8 by the outgoing Trump administration, the waiver could face challenges from the Biden administration, as well as lawsuits from advocacy groups. But the state's agreement seeks to lock the provisions in place for at least nine months.
The waiver gives Tennessee authority to overhaul how it runs its Medicaid program and its funding structure. Currently, the federal government's financial support for Medicaid programs like TennCare is open ended. The federal government currently provides Tennessee two thirds of whatever the state spends in approved categories. According to TennCare, that's about $8.8 billion in the current state budget.
The agreement locks in that amount during the length of the new 10-year waiver. But provisions allow the state to receive additional federal funds if enrollment exceeds a growth rate of 1%.
Lee and TennCare Director Stephen Smith say the program would reward Tennessee for its "sound management and efficiency," with the state having operated the program at a lower cost than what the federal government projects it would spend.
If that continues, the state will use those shared savings to provide additional services for new populations while leaving current programs for traditional Medicaid enrollees intact. Smith also said Tennessee will be allowed to reap the rewards of some $6 billion in savings over the next 10 years accumulated as a result of the state underspending federal projections on TennCare's costs.
Legislative approval drew fire from Michele Johnson, executive director of the Tennessee Justice Center advocacy group. She called it "tragic that, in the middle of a deadly pandemic, our legislators have rushed to adopt this crass political gimmick. It distracts from their continued refusal to let 300,000 working Tennesseans receive the federally funded health coverage that former Gov. [Bill] Haslam's plan would provide."
During House debate on Friday, Rep. John Ray Clemmons, D-Nashville, warned the waiver "disregards key protections" in current Medicaid law. And he charged the Trump administration "created a new process that would hamstring the incoming administration for nine months. It makes Tennessee the great American experiment - or the guinea pig of the United States."
Majority Leader William Lamberth, R-Portland, said "just because it's new and it's different doesn't mean that it's bad."
Lee posted a photo of him signing the block grant waiver resolution on Twitter and stated it is "allowing Tennessee to lead the nation with our innovative solution to Medicaid."
Lee also promised new flexibility in how the state administers the federal and state-funded program for some 1.52 million low-income families, as well as additional federal funds from anticipated cost-sharing provisions will "improve the health of Tennesseans and our communities."
Officials said additional changes include addressing Medicaid fraud, adding new populations of people for health care coverage without prior federal approval and boosting the state's ability to negotiate lower prescription drug charges and investing in "overall" health and "not only health care plans."
During testimony this week, TennCare's Smith cited nutrition programs as an example of seeking to address the "overall" health of Tennesseans.
Rep. Yusuf Hakeem, D-Chattanooga, who voted against the resolution, said later that in TennCare Director Smith's conversations with lawmakers earlier this week, there were few details on what would be done with savings, adding it apparently "is not determined how the savings would be used. It's leaving options as to how it's going to be done."
"Bottom line," Hakeem said, "we're going with an experimental program in the middle of a pandemic. And I question the wisdom of that. When you have Medicaid expansion, you can have more people covered now as opposed to seeing what develops over the next few years."
The General Assembly's Fiscal Review Committee staff said in an analysis that "an exact fiscal impact cannot be determined with reasonable certainty. No significant administrative cost increases are anticipated as a result of this waiver. Any increase in federal funding associated with achieved savings under this demonstration will not be known until FY22-23."
As a result, Gordon Bonnyman, an attorney with the Tennessee Justice Center, called the effort a "pig in a poke."
Lee was directed by Republican legislators in 2019 to purse the waiver as Democrats continued to rail about GOP members' years-long refusal to approve Medicaid expansion.
Hamilton County representatives voting for the resolution were Hazlewood, Mike Carter of Ooltewah, Esther Helton of East Ridge and Robin Smith of Hixson. Hakeem is the lone Democrat in the delegation.
On Thursday, both Sens. Bo Watson, R-Hixson, and Todd Gardenhire, R-Chattanooga, voted for the resolution.
Area lawmakers voting for the waiver include Sens. Mike Bell, R-Riceville, and Ken Yager, R-Kingston. Area House members voting for it included Reps. Dan Howell and Mark Hall, both of whom are Bradley County Republicans, and Rep. Ron Travis, R-Dayton.
Contact Andy Sher at asher@timesfreepress.com or 616-255-0550. Follow him on Twitter @AndySher1.