Tenn. Gov. Bill Haslam begs off Medicaid expansion for Tenn.

By Erik Schelzig

Associated Press

Published: Wednesday, March 27 2013 12:04 p.m. MDT

Republican Gov. Bill Haslam speaks in front a painting of Tennessee historical figures in the Old Supreme Court Chamber of the state Capitol in Nashville, Tenn., on Monday, March 25, 2013. Haslam was expected to address a joint session of the General Assembly on Wednesday to announce his recommendation on whether to expand Medicaid under the federal health care overhaul.

Erik Schelzig, Associated Press

Enlarge photo»

NASHVILLE, Tenn. — Gov. Bill Haslam announced Wednesday that a breakdown in negotiations with the federal government means that he won't expand the state's Medicaid program, a decision that will cost Tennessee billions of dollars in federal money and keep 140,000 uninsured Tennesseans from obtaining free coverage.

Haslam told a joint session of the General Assembly that he tried to get approval for a "Tennessee Plan," in which the state would accept the federal money to subsidize private insurance. But he was unable to get the proposal OK'd before his final amendments to the state's annual spending plan came due.

"I cannot recommend to you that we move forward on this plan," Haslam said in a 12-minute speech. "Our budget amendment will not include language to accept the federal funds."

The announcement appeared to catch lawmakers by surprise, as there was only tepid applause by a group heavily dominated by Republican opponents of President Barack Obama and his signature Affordable Care Act.

Democrats said they were perplexed by the decision that they said leaves rural hospitals and the uninsured in the lurch.

"I'm a bit confused, certainly disappointed in what the governor had to say," said House Minority Leader Craig Fitzhugh, D-Ripley. "It certainly doesn't bode well for the Tennesseans that had hoped to have real insurance for their health care."

Republicans, meanwhile, expressed relief that they wouldn't have to spend the rest of the legislative session fighting over a politically unpopular idea.

"If the federal government was looking for true reform in health care they would give us something like a block grant and allow us ... to run an efficient program," said Senate Speaker Ron Ramsey of Blountville. "But they're unwilling to do that."

An expansion of TennCare, the state's Medicaid program, had been estimated to bring in $1.4 billion in federal money in the first year alone. The federal government is covering the entire cost of expansion for the first three years and at least 90 percent thereafter.

Haslam was among the last of the Republican governors to declare a decision on expansion. Both the health care program and the Democratic president are widely unpopular in the highly Republican state.

The governor insisted to reporters after the speech that he will continue to negotiate with the federal government.

"This isn't the end of the story," Haslam said. "Quite frankly, a couple of days ago we thought we had this worked out."

The governor pledged to seek lawmakers' approval if anything changes.

Haslam said in the speech that his idea would require co-pays for the expanded group of Medicaid enrollees "so the user has some skin in the game when it comes to health care incentives."

While Republican governors have been highly critical of the federal health care program, a number of them are re-evaluating their opposition to accepting federal dollars to expand health care coverage to the poor as they review the budget implications and face pressure from hospitals that treat the uninsured.

Republicans also are proposing alternatives that would cover fewer people than Obama's plan, guarantee less financial help or rely more on private insurers.

The hospital industry has called expansion crucial to boosting jobs in that sector, and has warned that declining the money could cause some rural hospitals to go out of business.

The prospects of getting the Republican supermajority to agree to an expansion looked daunting, and don't appear to get any more likely as next year's elections draw nearer, when races for governor, all the House and half the Senate will be on the ballot.

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