Gov. Haslam took a step in the right direction when he rejected an expansion of the traditional Medicaid program. However, legislators must remain wary of ongoing negotiations with HHS that would use the same federal funds to subsidize private insurance.
The federal government is dangling “free” money in front of state lawmakers as an incentive for them to go along. For the first three years, the federal government promises to pay 100 percent of the cost of expansion. While the 100 percent will gradually decline to 90 percent by 2020, it still might sound like too good of a deal to pass up, compared to the 65.29 percent that the federal government currently reimburses Tennessee for Medicaid.
But even with the federal government picking up 90 percent of the cost, Tennessee taxpayers would not be off the hook. In fact, over the next 10 years, it is estimated the Medicaid expansion would cost Tennessee taxpayers more than $1.7 billion. Worse, those estimates significantly underestimate the cost to Tennessee if it had gone forward with the expansion. It ignores a second category of recipients likely to be added to the Medicaid rolls if this expansion moves forward, what the Robert Wood Johnson Foundation has dubbed “the woodwork effect.”