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Public Notices

April 20, 2014

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State And Local Hospital Leaders Urge Expanding TennCare

Sun Photo by Lisa Warren

Shown above, from left, are: Chuck Whitfield, president and CEO of Laughlin Memorial Hospital;

Craig Becker, president of the Tennessee Hospital Association, and Daniel Wolcott, president and

CEO of Takoma Regional Hospital.

Originally published: 2014-01-25 07:28:13
Last modified: 2014-01-25 07:32:29

Warn Of Problems For Hospitals And Businesses If Step Is Not Taken



Local and state hospital leaders say that Greene County's economy is poised to take a significant hit if steps are not taken to lessen the impact of national health-care reform on Tennessee hospitals and businesses.

Their fingers are not pointed solely at Washington, but also towards Nashville - where Tennessee Gov. Bill Haslam has said he will not expand TennCare, the state's Medicaid program, under the federal Affordable Care Act (ACA), also known as Obamacare.

Tis decision by the governor, leaders say, will collectively cost Tennessee business-owners and hospitals tens of millions of dollars within the next decade.


On Thursday morning, Craig Becker, president of the Tennessee Hospital Association, was in Greeneville, where he spoke to local business leaders and others about the impact he anticipates unless TennCare is expanded.

Becker was part of a health-care forum that also featured leaders of both Laughlin Memorial Hospital and Takoma Regional Hospital.

The event, which was held at the General Morgan Inn, was jointly sponsored by both local hospitals and the Greene County Partnership.

Partnership President Tom Ferguson thanked both hospitals for coming together and co-sponsoring the event.

"We are blessed in Greene County to have two exceptional hospitals," Ferguson said.

"We have a subject today," he continued, "that whether you're 20 years old or you're 80 years old, it's probably one of the most important issues that we're going to discuss this year and into the future."


As an advocate for Tennessee hospitals, Becker that one of his most pressing issues in 2014 will be the Affordable Care Act and working to get individuals enrolled in the program.

Becker said there are about 500,000 Tennesseans who should be eligible for enrollment through the federal health insurance exchange.

To date, about 60,000 Tennesseans have signed up for health insurance through the federal exchange, he said.

But, Becker said, there are another 400,000 currently left out of coverage who would be eligible if the state agreed to expand Medicaid/TennCare as was called for under the ACA.

Those 400,000 will not be covered, Becker said, unless 1) Gov. Haslam and the federal Centers for Medicare and Medicaid Services can come to an agreement about how the TennCare rolls should be expanded, and 2) the Tennessee General Assembly approves that agreement.

State politics could prevent this from happening, though, he said.

"In my opinion, our decision-makers can't separate the difference between ObamaCare ... and taking care of basically 400,000 people who would be eligible for the Medicaid expansion," Becker said.


Each year, hospitals in Tennessee provide about $1.4 billion worth of free care because of patients who are unable to pay, he stated.

"It is an unbelievable amount of uncompensated care, and it's only getting worse," Becker said.

This, he explained, is a major reason why the THA was in support of universal health-care coverage.

"The Supreme Court, however, threw a little wrinkle into it when [the Court] ruled that the Affordable Care Act is legal -- but what was not legal was that you cannot force the states to expand their Medicaid programs to cover [the expanded Medicaid programs]," he said.

To date, he added, 24 U.S. states have already expanded - or announced plans to expand - their state Medicaid programs. "Tennessee is not one of those states," he said.


To persuade states to expand their Medicaid programs as envisioned under the ACA, the federal government has said that it will cover the full cost of the expansion for the first three years.

After that, the federal government's share of the cost begins to decline, and it reaches 90 percent of the cost in 2020. The states cover the rest of the cost as the federal share decreases.

Opponents of expanding Medicaid/TennCare fear that, as the federal government's assistance to states to cover the cost of the expansion goes down, the state would be left with a very large, growing budget/l obligation that would make it hard for the state to cover other major state priorities, such as education, law enforcement, highways, the environment, etc.

Currently, according to the TheCityPaper, of Nashville, TennCare health coverage is largely limited to children of low-income families, pregnant women, the elderly and the disabled. Roughly 1.2 million people are now on the state's TennCare rolls.

Some critics recall that several years ago, during the second term of Gov. Phil Bredesen, the governor and the state legislature reluctantly and painfully cut back TennCare rolls because financing TennCare at its then-current level was making it hard to pay for other major state priorities.

Gov. Haslam has said that he does not want to expand Medicaid/TennCare now, then have to start throwing recipients off the rolls in a few years when the federal government cuts back its funding to the states for the expansion.

Instead of expanding TennCare, Haslam says he wants to leverage the same amount of federal assistance to purchase private health insurance for Tennesseans who are without health insurance and who can't afford it without assistance.

So far, the governor's approach has not been approved by federal authorities.


This situation leaves the state's hospitals -- and businesses -- with an uncertain financial future, Becker said.

A new independent study released Wednesday by Jackson-Hewitt Tax Service estimates that, nationwide, not expanding Medicaid under the Affordable Care Act could cost employers nearly $1.5 billion each year in penalties in the states that have not yet expanded Medicaid for adults.

The report estimates that Tennessee's failure to expand Medicaid would cost employers between $48 million and $72 million each year in such penalties, beginning in 2015.

The tax penalty is somewhat hidden in the language of the Affordable Care Act, said the study's lead author Brian Haile, Jackson Hewitt's senior vice president of health policy.

Haile was quoted in an article by The Tennessean newspaper, of Nashville.

"The Affordable Care Act was written under the assumption that all states would expand Medicaid, meaning that the state-backed health care program could cover people who earn up to 138 percent of the federal poverty level, instead of topping out at 100 percent of the federal poverty level," the article says.

"The federal poverty level is $11,490 per year for an individual," the article says.

"With Medicaid expansion in mind, the law includes a 'shared responsibility' tax which penalizes employers if one of their employees qualifies for a subsidy, called a Premium Tax Credit, to purchase insurance on the federal exchange," the article says.

"The shared responsibility rule was written, in part, to prevent employers from abruptly dropping health care coverage for low-income employees. Employers will not be penalized if employees sign up for Medicaid," the article says.

But in 2012, the Supreme Court ruled that states did not have to expand Medicaid unless they chose to do so.

"In states that didn't expand Medicaid, employees earning between 100 percent and 138 percent of the federal poverty level will not qualify for Medicaid, but some will qualify for tax credits on the [federal] exchange.

"Employers will be fined between $2,000 and $3,000 per qualified person who signs up for insurance on the exchange," the article says.


In the next 10 years, Tennessee hospitals will be seeing $5.4 billion going out of the State of Tennesse in the form of hospital taxes, Becker said.

That tax money is leaving Tennessee and going to other states such as California and Massachusetts -- all because those states were willing to expand their Medicaid programs, Becker explained.

"We're getting taxed, but we're not getting any of those benefits back into the state," he said.

"On top of that, another $2.3 billion during that 10-year period will be taken out through sequestration," Becker added.

"That is $7.7 billion over 10 years [that] is coming out of the hospitals," Becker said.

In 2019, it is projected that $1 billion will come out of Tennessee hospitals, he said.

"I frankly can't get my head around those numbers," Becker said.


Chuck Whitfield, president and CEO, of Laughlin Memorial Hospital, said that when the Affordable Care Act was being negotiated, "the hospital industry gave up significant dollars in return for what we thought would be more individuals and families covered by health insurance.

"Laughlin specifically gave up about $36 million in reduced Medicare reimbursement over the next 10 years," Whitfield said.

"We did that with the belief that more individuals and families would have health insurance coverage," he said.

"This expanded coverage was intended to reduce our levels of Medicaid funding shortfalls, our charity care and our bad debt," he said. "However, without the TennCare expansion, this is not happening."

Whitfield said that Laughlin's unreimbursed TennCare costs have actually risen from $1.8 million in 2010 to over $3 million in 2012.

This means, he said, that in 2012, Laughlin Hospital was paid $3 million less than what the hospital spent to provide care to its TennCare patients.

Bad debt at the hospital during that same three-year period has risen from around $1 million to $4.5 million, he continued.

Additionally, the hospital's charity care has gone from $1 million to $2 million.


Daniel Wolcott, president and CEO of Takoma Regional Hospital, said that Takoma provides about $4 million annually in uncompensated care to patients who are underinsured or uninsured.

Takoma is expected to lose about $22 million in reduced Medicare reimbursement over 10 years, Wolcott said.

The expansion of the state's Medicaid program would reduce some of the financial losses being experienced by hospitals, Whitfield said.

It would also provide much-needed health-care coverage to our neediest residents, he added.


Laughlin Hospital is currently the second largest employer in Greene County, with 796 employees, Whitfield said.

"Our total wages, salaries and benefits last year totaled over $40 million," he said.

This meant an economic impact in the local community of about $69 million, he said.

"These [anticipated] cuts have the potential to lead to the loss of hundreds of jobs in our community," Whitfield said.

The total number of jobs at risk -- between both Laughlin and Takoma -- totals around 500 hospital-based positions, he said.

This could result in a loss of at least $45 million from the local economy just from the loss of hospital jobs, Whitfield said.

"In order for Laughlin to be able to continue its current level of patient services our community deserves and expects, we need, as a hospital and as an industry, for the continued funding reductions to stop and to receive fair reimbursement for the care we provide," Whitfield said.

"We currently receive 83 cents in reimbursement for every $1 spent in caring for Medicare patients, and 78 cents in reimbursement for every $1 spent on TennCare patients," he said.


"To add insult to injury," Whitfield stated, "the most recent proposal being floated in Congress is to reduce Medicare reimbursement even further so that they can continue to fund the unemployment benefits," he said.

"As a business-owner, how long could you stay in business with these kinds of reimbursements for your costs?" Whitfield asked the audience.

Whitfield urged those present to encourage local state legislators to inform the governor and encourage him to expand TennCare.


Another step that citizens can do, he said, is to support their local hospitals by staying in town for their care.

Without a volume of patients from a wide spectrum of the community, hospitals cannot support themselves, he stated.

Wolcott echoed Whitfield's sentiments.

"About 40 percent of patients [from Greene County] are discharged from hospitals outside of our market, receiving care that they could have received in Greene County," Wolcott said.

"The things that we are doing - at both hospitals - are very high quality," he emphasized.

"We have great physicians who give great care and good outcomes. You can have confidence choosing providers in Greene County to provide your health care."

For more information and stories, see The Greeneville Sun.

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