Republican Tennessee Gov. Bill Haslam has found a part of Obamacare he loves

1. Republican Tennessee Gov. Bill Haslam wants to expand Medicaid — and has called a special session of the state legislature do so.
2. The Tennessee plan would be unique in that it would use Medicaid dollars to help low-income Tennesseans buy coverage at work.
3. Both the Tennessee legislature and the Obama administration have to sign off on Haslam's plan before it would become law.

Haslam's approach to expanding Medicaid is unique

Lots of Republican governors have used the Medicaid expansion as a moment to ask the Obama administration for more flexibility in how they run their Medicaid programs — and Tennessee's Haslam is no exception.

His proposal would rely on two separate plans for anyone above 20 (those younger would stay in a traditional, public insurance program): the Volunteer Plan and the Health Incentives Plan.

The Volunteer Plan is what is especially different about Haslam's proposal: it would use Medicaid dollars to help low-income workers who qualify for Medicaid buy private coverage through their employer instead. Instead of having the worker contribute a premium, the state would step in to cover all or part of the monthly premium.

Tennessee estimates that 54 percent of Medicaid-eligible residents are working or have worked within the last year, making them potentially eligible for the new program.

This is not something any other state has proposed to the Obama administration, and it could be controversial. It's probable that the employer plans would cover fewer benefits than Medicaid typically does (Medicaid, for example, often covers transportation to the doctor, a benefit that does not turn up in private coverage). Tennessee says it wants permission to put Medicaid enrollees in plans, then, that do not cover all Medicaid benefits. It's not clear that the Obama administration would be on board with this.

The second program, the Health Incentives Plan, tries to make the public Medicaid program look more like private insurance. It adds in co-payments and premiums (the lowest-income Tennesseans would be exempt, and there are caps on how much an enrollee could spend). Plan members could also lower their costs by participating in "healthy behaviors." The plan doesn't yet specify what these healthy behaviors would be, but a similar Medicaid program in Indiana rewards members for getting an annual health screening.

Haslam needs two key sign-offs

Haslam backing the Medicaid expansion is the first step towards moving forward, but he needs the approval of both the state legislature and the Obama administration too.

Republicans control both the House and Senate in Tennessee, and they need to sign off on bringing the state into a major Obamacare program.

If the legislature does sign-off, Tennessee will also have to get the Obama administration's approval to run its Medicaid program differently than other states. While the White House has generally granted waiver requests to Republican governors who participate in Obamacare's Medicaid expansion, it hasn't signed off on everything. The Associated Press reported Wednesday, for example, that it rejected a Utah proposal to require Medicaid enrollees to be either working or job searching in order to qualify for coverage.

Haslam's proposes new ideas, so it's not totally clear where the administration will land.

Fourteen Republican governors now support Medicaid expansion

(Source: The Advisory Board)

This still isn't a majority of the 33 Republican governors currently in office, but it's a significant increase from just a year ago. Since this time in 2014, governors in Utah, Indiana, and Haslam in Tennessee have all announced their support for expanding Medicaid. Even newly-elected Texas Gov. Greg Abbott is reportedly flirting with the idea. A Texas Medicaid expansion would be hugely significant and cover an estimated 2.3 million residents.

All of the governors coming into the fold on Medicaid expansion now are doing so with demands: give us more flexibility in how we run the program, and we'll participate. They realize that they have great leverage, given that the Medicaid expansion is crucial to making the Affordable Care Act work.

"The administration is working very hard to come to agreement with Republican governors where they can," says Tevi Troy, president of the American Health Policy Institute and a former Health and Human Services official in the Bush administration. "Because they want people to sign up for the expansion....they're working pretty hard to make compromises."

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