How the bill impacts Tennessee, other states,

The Senate’s health care proposal repeals taxes, restructures and caps Medicaid funding, while immediately giving state insurance commissioners leeway to change plan benefits.

At its core, the proposal works to reduce the federal government’s health care expenditures by giving states more autonomy — and thus financial exposure — to craft insurance regulations and how Medicaid works in their states, experts said.

Changes to subsidies that help people buy insurance and how states receive Medicaid funding will put Tennessee lawmakers, its hospitals and clinics, on guard in the coming years about who is covered and whether they can afford the out-of-pocket expenses under insurance plans.

Many of the changes phase in starting in 2020 — a timeline that aims to give governors time to implement changes and take the politics of health care out of the 2018 and 2020 election cycles, said Paul Keckley, a longtime health care researcher and editor of The Keckley Report.

“They kind of pushed it off the federal plate to the state, and they are softening it a bit in the near term to get through the 2018 cycle, but this thing is a deficit reduction plan,” he said. “The intended result is to put more pressure on the states, and it’s likely to be scored as reducing the numbers of who are insured and increasing bad debts for hospitals and clinics.”

The House bill is projected to leave 23 million more people without insurance by 2026. A rating on the Senate bill from the nonpartisan Congressional Budget Office is expected early this week.

NO INDIVIDUAL MANDATE

The Senate bill removes Obamacare’s individual insurance mandate but does not include the American Health Care Act’s penalty that insurers can charge someone for going a stretch without insurance.

There’s no imperative to buy coverage unless it’s needed, which is a costly scenario for insurers when people buy a plan around the time expenses start to add up.

But it also could lead to more underinsured residents, said John Graves, assistant professor of health policy at Vanderbilt University School of Medicine.

The bill essentially eliminates the so-called coverage gap in Tennessee and other states that didn’t expand Medicaid under the Affordable Care Act by allowing anyone to buy an individual insurance plan.

For one person, the federal poverty line is $12,060 in 2017. For a family of four it’s $24,600.

By contrast, under the Affordable Care Act, individual insurance is available on the exchange to people who make upward of 138 percent of the federal poverty line.

In Nashville, an insured family of four making $97,000 is considered underinsured by the Faith Family Medical Center and eligible for sliding scale payments so they can afford care.

Yet, significant changes to the tax credits and how plans are structured — which would be up to the state — could mean low-income people are buying catastrophic-type plans primarily used for expensive emergency situations, Graves said.

“My big takeaway, viewed from 100,000 feet, is it’s basically a vehicle to move people into catastrophic high-deductible health plans. Low income, high income and everywhere in between.”

The bill increases the yearly maximum allotment to health savings accounts from $4,500 to an amount determined by someone’s deductible and outof-pocket requirement.

The bill could punt immediate flexibility and responsibility to the

“My big takeaway … is it’s basically a vehicle to move people into catastrophic high-deductible health plans. Low income, high income and everywhere in between.” — JOHN GRAVES, ASSISTANT PROFESSOR OF HEALTH POLICY AT VANDERBILT UNIVERSITY SCHOOL OF MEDICINE

Tennessee Department of Commerce and Insurance for making changes to plan design and benefits for calendar year 2018.

Sen. Lamar Alexander, R-Tenn., said one hallmark of the bill is that, if passed in its current form, insurance commissioners could make benefit changes based on what their consumers want or need for next year, thereby increasing the number of people enrolled in a plan.

Tennessee Department of Commerce and Insurance spokesman Kevin Walters said the agency needs the details of the Senate bill before commenting on a timeline for establishing Tennesseespecific health benefits.

EFFECTS ON TENNCARE?

Tennessee will be facing trade-offs under either the Senate or House bill when allocating funds and deciding benefits for people covered by TennCare, said Laura Berlind, executive director of the Sycamore Institute, a Tennessee-focused nonpartisan research institution.

The Senate bill institutes a per capita cap — or a lump-sum payment per enrollee — that would be coupled with follow-up congressional action to give the state more flexibility to restructure TennCare.

The bill also includes a financing mechanism that ties Medicaid funding to an index of consumer goods instead of medical inflation starting in 2025. The federal government is essentially capping how much it is obligated to contribute.

Medical inflation outpaces inflation of consumer goods — the out-of-pocket costs of prescription drugs grew more than two times faster than other goods.

Depending on TennCare benefits and its enrollee makeup, expenditures could surpass the federal and state allotments. Under a per capita cap, the state would be on the hook to make up the difference.

The Senate bill proposes to let the federal government alter its funding contributions to states based on spending. If a state spends more than 25 percent more than the national average, the federal contribution could fall. If a state spends considerably less than the national average, the contribution could increase.

Medicaid programs vary wildly across the country, and the financing mechanism — along with its template approach to assessing how efficient the program is working — is going to be a contentious issue for governors who see potential financial risk for their states, Keckley said.

“This one is going to be debated,” Keckley said. “That number is going to stick out to governors.”