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Haslam Proposes ‘Tennessee Plan’ to Reform Health Care

Press release from the Office of Tennessee Gov. Bill Haslam; March 27, 2013:

NASHVILLE – Tennessee Gov. Bill Haslam today unveiled his plan to pursue real health care reform in the state.

Haslam announced that he will not expand TennCare rolls under the Affordable Care Act but instead is working to leverage the available federal dollars to purchase private health insurance for Tennesseans who would not otherwise have access to coverage.“Tennessee has shown the nation how to produce true reform in education, based on students’ results and educational outcome. We’re beginning to do the same thing with reforming government service – again by measuring outcome and results rather than just years of service as a state employee,” Haslam said. “I believe Tennessee can also be a model for what true health care reform looks like; reform that will take significant steps to save the state and the nation from the unsustainable path we are on now.”

Haslam’s plan would take on the critical issue of aligning incentives among users, payers and providers of health care. The plan would:

  • Leverage available federal dollars to purchase private health insurance for Tennesseans up to 138 percent of the federal poverty level who don’t have access to health insurance, which would translate to 175,000 more insured Tennesseans;
  • Allow co-pays for those who can afford to pay something;
  • Include a definitive circuit-breaker or sunset of the plan that could only be renewed with the General Assembly’s approval;
  • And reform the payment structure for providers so they are compensated for health outcomes, not just based on services performed.

“Hospitals and medical providers have put a lot of sincere effort into working with us toward payment reform,” Haslam said. “I cannot emphasize enough how much I’ve been impressed with our hospitals’ willingness to work with us. To succeed, we also need cooperation from the Department of Health and Human Service (HHS), and we can’t get the same assurances from them at this point. Until we get those assurances, I cannot recommend that we move forward on this plan.

“All we’re asking from Washington is to allow us to use the federal funds to provide coverage on the health care exchange in the same way many other Tennesseans will access coverage regardless of whether or not we expand. It’s a reasonable ask,” Haslam continued.

But as a result of the lack of clarity from HHS, the governor will not ask the General Assembly for approval to accept the Medicaid expansion federal funds as he continues to work for the flexibility needed to implement his plan.

Gov. Haslam Prepared Remarks:

“I appreciate the opportunity to speak this morning. I’m well aware this is an extremely busy time, and I’m grateful for the opportunity to come before you today. It is the first time I’ve asked to do this outside of the State of the State, but I asked for this opportunity because…

There is no more important issue, or more complex issue facing our country and our state today than healthcare, and I wanted to update you about where we are regarding Medicaid expansion.

This may look like a simple decision. On one side, people think how could we not accept federal money to expand Medicaid to cover more Tennesseans and on the other, why in the world would we accept funds tied to ObamaCare knowing the federal government can’t pay for it? But it isn’t that easy.

Let me start by saying there are two basic reasons I don’t like ObamaCare.

The first is cost. Regardless of whether we decide to cover any additional people through the Act, Obamacare will cost the state of Tennessee almost two billion dollars over the next eight years.

I want to be clear – That is our additional cost regardless of whether or not we cover any new enrollees.

Secondly, and maybe even more important than not addressing cost, it doesn’t address the real issues of health
reform – users and payers not being aligned and providers and payers not being in alignment.

When you go to the grocery store, there is a shopper, a product and the store. The shopper knows what the store charges for each item and pays for those items.

With health care, shoppers go to the store, pick out whatever they like – sometimes with a representative of the store suggesting additional items – and then going to check out knowing that someone else will pay the bill. Governor Bredesen made this comparison in his book, Fresh Medicine.

The shopper also rarely knows what the store is charging. Only in health care do we buy something without first knowing the cost.

On the provider side, providers are paid based on a fee for each service or product, not on the outcome of care.

Market tension is what controls cost and promotes quality. There is no market tension when you buy or sell health care goods and services.

To me, the scandal of the Affordable Care Act is that it doesn’t significantly address cost or alignment reform.

And that’s what Washington does – it looks at a complex problem, realizes that some people aren’t going to like the changes, and as a solution, decides to spend more money.

So, many of us are tempted to say, “That’s right, Washington created the problem. They can fix it,” but it’s not just their problem, it’s ours.

  1. We all know that in Tennessee, we have serious problems with health care.
  2. We’re doing a better job than the rest of the country in controlling costs of Medicaid growth, but they’re still taking a larger and larger percentage of our budget.
  3. We’ve all met people across this state who don’t have healthcare coverage and whose families are in incredibly difficult positions that we agree should have coverage. A lot of us in this room have a real concern for those the Bible refers to as “the least of these.”
  4. Our hospitals – and I know it is harder to identify with the image of a struggling hospital than a struggling Tennessean – but they’ve been put in a very difficult position by the Affordable Care Act.
    They are losing many of the funds which they received to provide healthcare for our state’s indigent. While many hospitals can survive this, I am convinced that several of our hospitals will be left in an impossible situation and will not survive this transition. Some of our communities – rural and urban – could very well lose their community hospital.
  5. Tennessee businesses could also pay a steep price. In addition to the myriad of taxes and fees associated with the Affordable Care Act, our businesses stand to lose 50 to 70 million dollars a year.
  6. Finally, there is at least 20 million dollars a year at stake for our local governments who currently take responsibility for indigent care in their communities.

Let me read you a quote: “Soaring health care costs make our current course unsustainable…And the ever-increasing cost of Medicare and Medicaid are among the main drivers of enormous budget deficits that are threatening our economic future. In short, the status quo is broken, and pouring money into a broken system only perpetuates its inefficiencies.”

Do you know who said that? President Obama in 2009.

Unfortunately, President Obama’s plan was reform in name only and is costing us a lot of money. That’s why a lot of us in this room don’t like the plan.

But I believe it is our job as leaders to pursue real health care reform here in Tennessee. It is our job to say what we’re for in terms of addressing the biggest issue facing us.

For the last several months, I’ve been working toward a “Tennessee Plan” for health reform to change the way health care coverage looks in Tennessee.

I understand those who don’t think it makes sense for us to just say that Tennessee isn’t going to accept the federal dollars because we don’t like ObamaCare.

But this state also has nearly 20 years of experience providing health care coverage through a Medicaid managed care program, and we are all too familiar with all of the federal rules and restrictions that prevent us from operating the program as efficiently as possible.

A pure expansion of Medicaid – expanding a broken system – doesn’t make sense for Tennessee either.

That’s why I’ve been working toward a third option: to leverage the federal dollars available to our state to transform health care in Tennessee without expanding our TennCare rolls.

I’d like to put in place a program to buy private health insurance for Tennesseans that have no other way to get it by using the federal money.

I fundamentally believe that people having health care coverage is better for our citizens and state than people not having coverage.

The plan would include co-pays for those that can afford to pay something, so the user has some skin in the game when it comes to health care incentives.

We would work with providers to lower the cost of care and to move from a model of paying for every service regardless of the result, to a payment method that is based on outcomes and quality care.

Our plan would have a definitive circuit-breaker or sunset that could only be renewed with the General Assembly’s approval based on when the amount of the federal funding decreases.

During that period when our costs are covered 100 percent by the federal government, we’d work with our medical care providers to implement true payment reform. I am confident that working together, we could truly reduce medical costs.

We’d have a one-time opportunity to encourage their cooperation because health care providers will know that for the next three years, a portion of the population which had previously been receiving services with no reimbursement to the hospitals or doctors, will now have insurance.

But those same providers would clearly know that coverage for that population will go away unless they can prove to us that at the end of three years, when we start paying a percentage of the costs of the new population our total costs would stay flat.

That is a high bar for our providers. But I’m convinced that they can do it, and my conviction is based on the fact that the hospitals and medical providers have put a lot of sincere effort into working with us toward payment reform. I cannot emphasize enough how much I’ve been impressed with our hospitals’ willingness to work with us.

To succeed, we also need cooperation from the Department of Health and Human Services, and we can’t get the same assurances from them at this point.

Until we get those assurances, I cannot recommend to you that we move forward on this plan. Our budget amendment will not include language to accept the federal funds.

There are a lot of federal requirements that come with Medicaid that make it difficult to provide quality care in the most cost-effective way possible. Instead of insuring more people through an inherently flawed system, we’d hoped to purchase private insurance to insure as many as 175,000 more Tennesseans.

To do that, HHS says we have to provide additional benefits, above and beyond what everyone else in the exchange will receive.

We’ll also have to follow certain Medicaid-driven guidelines when it comes to co-pays and the appeals process instead of allowing these individuals to be treated like everyone else in private insurance plans.

The end result is that these Tennesseans would be receiving services from both the private insurer and TennCare.

We have experience with such a scenario today in the form of dual eligibles – people who receive both Medicare and TennCare. It is dysfunctional and not in the state’s best interest to set up again.

The whole reason to accept these federal dollars would be to leverage them to shape and impact health care coverage in Tennessee.

All we’re asking from Washington is to allow us to use the funds to provide coverage on the health care exchange in the same way many other Tennesseans will access coverage whether or not we expand. It’s a reasonable ask.

In the past several years, Tennessee has shown the nation how to produce true reform in education, based on students’ results and educational outcome. We are beginning to do the same thing with reforming government service – again by measuring outcome and results rather than just years of service as a state employee.

I honestly feel that we have a once in a lifetime opportunity to do the same thing in healthcare: To have a healthcare system that is based on outcomes. To have a healthcare system that is based on a healthier Tennessee, which I think we can all agree is essential for our future.

Our plan can save Tennessee money, and if it does, it will also save the federal government at least three dollars for every one dollar we save and in some cases even more.

I believe that Tennessee can be a model for what true healthcare reform looks like – to cover more Tennesseans and to take significant steps to save Tennessee and the United States from the unsustainable path we are on now.

So here are my two promises: First, we commit to you that we have no intention of pursuing this path without your engagement, involvement and approval. Second, we’ll continue to pursue a vision for a healthier Tennessee with access to health care, but at a lower cost for our state and our country.

It’s my hope that we can provide quality healthcare for more Tennesseans while transforming the relationship among health care users, providers and payers. If Tennessee can do that, we all win.

Thank you for the privilege of being here and for the honor of working with you as your Governor.”

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Press Releases

Beacon Center Supports Haslam Medicaid Decision

Press release from the Beacon Center of Tennessee; March 27, 2013:

NASHVILLE – Gov. Bill Haslam announced today that he would not currently seek Tennessee’s participation in a Medicaid expansion as envisioned by President Obama’s signature healthcare law. Instead, Haslam will focus on reforming the entitlement program known in the state as TennCare.

The Beacon Center of Tennessee applauds Gov. Haslam on his decision. The governor has spent much time and energy studying the impact of a Medicaid expansion. After the federal government rejected his request for flexibility to reform TennCare in lieu of an outright expansion, he rightly concluded that merely expanding the program now is bad policy for both TennCare recipients and taxpayers alike.

Over the past several months, the Beacon Center has worked to inform policymakers and the general public that a Medicaid expansion would be unaffordable and immoral. Through policy reports, media interviews, opinion articles, and an infographic, the Beacon Center made the case that both taxpayers and TennCare recipients would be harmed by an expansion.

“We are proud of Gov. Haslam for standing up against this ill-conceived plan to add more struggling Tennesseans to a broken TennCare program,” said Beacon Center CEO Justin Owen. “Even President Obama himself said that healthcare reform should not be just about adding more people to the rolls of the government-run healthcare program before seeking to do just that.”

TennCare already eats up 27 cents on every dollar in the state budget, higher than the national average. Rather than expand the program, the governor and lawmakers should consider meaningful reforms that will make TennCare more sustainable and increase recipients’ access to care. A Medicaid expansion would have done the exact opposite, thus making it unaffordable and immoral.

“Now is the time to roll up our sleeves and press for real reforms that will improve the quality of life for TennCare enrollees and protect taxpayers’ wallets,” Owen said. “We look forward to helping advance reforms that will do just that.”

The Beacon Center of Tennessee’s mission is to change lives through public policy by advancing the principles of free markets, individual liberty, and limited government.

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Press Releases

Senate Dems: Haslam Plan ‘No Solution’ for Uninsured, Rural Hospitals

Press release from the Tennessee Senate Democratic Caucus; March 27, 2013:

‘Tennessee Plan’ leaves uninsured, rural hospitals with no solution

NASHVILLE, Tenn. – Gov. Bill Halsam promised a decision on expanding Medicaid today, but instead delivered a “no” dressed up as a year of delayed action and indecision.

“We expected clarity today on Medicaid, but all we got was confusion,” Senate Democratic Caucus Chairman Sen. Lowe Finney said. “Our rural hospitals and the uninsured will be the ones to suffer.”

The governor gave a definitive “no” on expanding Medicaid. He instead pitched a so-called “Tennessee plan,” but it’s unclear whether the plan will work. Meanwhile, federal payments to hospitals for uncompensated care will end Jan. 1.

“This is a time when the people of Tennessee need clear, precise and bold leadership, and Governor Haslam offered none of that today,” House Democratic Caucus Chairman Mike Turner said. “It’s a failure of our moral obligation to protect the health and welfare of the most vulnerable among us. It’s a failure that will be paid with the lives of the working poor in our state – this is quite simply shameful.”

According to the Tennessee Hospital Association, the projected statewide job loss without the Medicaid expansion will be 90,000 jobs. In addition, they estimate that there will be an economic loss to the state of nearly $13 billion.

“I truly believed that the governor was going to use this opportunity to show real leadership,” House Democratic Leader Craig Fitzhugh said. “Instead we’ve seen more of the hand-wringing and delayed action that we’ve become accustomed to. Lives will be lost while we wait for a real decision.”

Hospital administrators, health care advocates, chambers of commerce, mayors of cities both big and small, and many others have implored the governor over the past year to expand Medicaid.

“The governor made this decision in a vacuum without consulting leaders from either party,” Senate Democratic Leader Jim Kyle said. “We’ve heard from a broad coalition of groups who will suffer if we don’t expand Medicaid, and apparently their concerns fell on deaf ears.

“It matters who governs.”

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Press Releases

Medicaid Expansion Advocates Release Supporting Studies

Press release from Healthy Tennessee Economy; March 21, 2013:

Thursday, March 21, 2013 – Three more independent studies released in just one week continue to reinforce the calls from the state’s business community to put politics aside when making the decision on Medicaid expansion.

“Another day, another independent study showing the importance of Medicaid expansion to our state’s economy and business community,” said Dan Hogan, CEO of Medalogix and Nashville Business Journal’s 2012’s Most Admired Small Business CEO.

Last week’s Jackson Hewitt Tax Service report, “The Supreme Court’s ACA Decision and its Hidden Surprises for Employers: Without Medicaid Expansion, Employers Face Higher Tax Penalties Under ACA”, that showed in millions in increased federal tax penalties for businesses was followed by a warning to states by Moody’s Investors Service.

“We need to focus on how Medicaid expansion will impact Tennessee’s economy, the bottom lines of our employers, and the health of our workforce.” said Steven Andre, General Manager of the Hutton Hotel. “This isn’t about whether our legislators like ‘Obamacare’, it’s about dealing with the real impact this decision will have on our state’s economy.”

This week a report issued by Moody’s Investors Service, “Reduction of Medicaid & Medicare Disproportionate Share Hospital Payments a Looming Challenge for States and Hospitals.”, made clear that “States that opt out of Medicaid expansion will have to choose whether to compensate for the shortfalls with their own funds or leave hospitals to absorb the costs, which will increase rating pressure on the hospitals,” said Nicole Johnson, a Moody’s Senior Vice President. “States that choose to fund uncompensated care costs themselves could face budgetary strain.”

Yesterday, AARP released its own economic impact study that detailed billions in increased goods, services and wages that would result from Medicaid expansion here in Tennessee.

The report, presented to the Governor and legislature by AARP, showed that expansion would result in additional production of goods and services valued at $17.6 billion and wages, salaries and benefits worth $7.9 billion. A direct result of a 30:1 ratio of federal dollars received vs state tax dollars spent on the expansion.

“AARP’s economic impact study shows a 30 to 1 return on our investment as taxpayers if we expand Medicaid,” said Hogan. “We can’t allow politics to get in the way of a great economic opportunity for our state.”

Here’s what the state’s largest newspapers have to say about Medicaid expansion:

The Tennessean Editorial – February 23, 2013
“Medicaid expansion, fiscally smart, right thing to do.”

Memphis Commercial Appeal – February 3, 2013
“Compelling reasons to expand Medicaid.”

Knoxville News Sentinel – February 13, 2013
“Haslam should push for Medicaid expansion.”

Chattanooga Times Free Press – February 12, 2013
“It would recklessly wrong and massively hurtful..to say no (to Medicaid expansion).”

Chambers of Commerce who are supportive of Medicaid expansion:
Nashville Area Chamber of Commerce
Greater Memphis Chamber of Commerce
Knoxville Chamber of Commerce
Chattanooga Chamber of Commerce
Jackson Chamber of Commerce
Johnson City Chamber of Commerce
Clarksville Area Chamber of Commerce
Springfield Chamber of Commerce

Republican Governors who are supportive of Medicaid expansion:
Gov. Chris Christie (NJ)
Gov. Rick Scott (FL)
Gov. John Kasich (OH)
Gov. Rick Snyder (MI)
Gov. Jan Brewer (AZ)
Gov. Brian Sandoval (NV)
Gov. Susan Martinez (NM)
Gov. Jack Dalrymple (ND)

Other individuals and organizations who are supportive of Medicaid expansion:
Fmr. Senate Majority Leader Bill Frist (R)
Tennessee Business Roundtable
Blue Cross Blue Shield of Tennessee
Captain D’s

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Press Releases

Dems in TN Legislature Push for Medicaid Expansion

Press release from the Tennessee Senate Democratic Caucus; February 26, 2013:

NASHVILLE – House and Senate Democrats pushed in a Tuesday press conference for a full debate and an up or down vote on a bill to allow Tennessee to expand Medicaid.

“Unfortunately, this General Assembly has been in session for more than a month now, and we’ve spent most of our time on trivial matters,” House Democratic Leader Craig Fitzhugh said. “Whether we expand Medicaid affects the lives and livelihoods of hundreds of thousands of Tennesseans and has profound implications for our states budget.

“It’s time for us to do what the people sent us here to do and tackle the elephant in the room.”

Gov. Bill Haslam, Lt. Gov. Ron Ramsey and Speaker Beth Harwell have remained open to Medicaid expansion, and Republican legislation to block expansion was taken off notice in the House and Senate.

“Accepting federal funds to expand Medicaid will create thousands of new jobs and create millions in new revenues for state government,” Senate Democratic Caucus Chairman Lowe Finney said. “If we don’t expand, Tennessee businesses will face millions in new taxes.

“This should not be a partisan issue. This is about jobs and people.”

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Senate Republican Get Set to Block TennCare Expansion

Press release from the Tennessee Senate Republican Caucus; January 31, 2013:

NASHVILLE, Tenn.––Senator Brian Kelsey (R-Germantown) and 15 State Senate co-sponsors today filed the TennCare Fiscal Responsibility Act. Senate Bill 804 will prevent expansion of the Tennessee Medicaid program under provisions of the Affordable Care Act, also known as “Obamacare.” The bill is an updated version of Senate Bill 1, filed by Sen. Kelsey in November.

“I am pleased to have the support so far of 16 of the 33 state Senators in Tennessee, and I hope to have other members sign on as co-sponsors,” said Sen. Kelsey.

Last week, a similar version of the bill, House Bill 82, was filed in the House of Representatives with 22 co-sponsors by Rep. Jeremy Durham (R-Franklin).

In June 2012 the United States Supreme Court ruled in National Federation of Independent Business v. Sebelius that states have the right to opt out of Medicaid expansion without losing pre-existing federal Medicaid funding.

“Tennessee Taxpayers simply can’t afford $200 million a year to expand TennCare,” said Sen. Kelsey.

Under the Medicaid expansion envisioned by the Affordable Care Act, Tennessee is estimated to pay $200 million a year for its 10% share to expand Medicaid to individuals with incomes up to 138% of the poverty level. The federal government promised to pay 100% of the expansion cost for the first three years, diminishing to only 90% in future years.

“In 1981 Congress reduced its Medicaid funding match to help cut the federal budget deficit, and with over $16 trillion of debt, I suspect they’ll do it again,” said Sen. Kelsey.

Other states that have opted not to expand their Medicaid programs have also cited their doubt that the federal government will keep its promised level of funding, thus leaving state taxpayers to foot the bill.

The 15 co-sponsors are:

Sen. Janice Bowling (R-Tullahoma)
Sen. Jim Tracy (R-Shelbyville)
Sen. Bill Ketron (R-Murfreesboro)
Sen. Dolores Gresham (R-Somerville)
Sen. Mike Bell (R-Riceville)
Sen. Ken Yager (R-Harriman)
Sen. Steve Southerland (R-Morristown)
Sen. Frank Niceley (R- Strawberry Plains)
Sen. John Stevens (R-Huntingdon)
Sen. Todd Gardenhire (R-Chattanooga)
Sen. Stacey Campfield (R-Knoxville)
Sen. Mae Beavers (R-Mt. Juliet)
Sen. Jim Summerville (R-Dickson)
Sen. Ferrell Haile (R-Gallatin)
Sen. Jack Johnson (R-Franklin)