I underestimated the Kochs: How Medicaid expansion was killed in Tennessee for no reason

Tennessee was poised to get a free ride on expanded Medicaid -- but here's how you-know-who stepped in to stop it

Published February 9, 2015 7:12PM (EST)

David Koch                                  (Reuters/Carlo Allegri)
David Koch (Reuters/Carlo Allegri)

I’m going to subject myself to a little bit of Pundit Accountability™ and go back to a piece I wrote back in November – the day before the election – arguing that the prospects for Obamacare’s Medicaid expansion were pretty good, even if Republicans governors were to have a good election night. “The governors of Tennessee, Wyoming, and Utah – Republicans all – are working on plans that would allow their states to accept Medicaid expansion funds,” I wrote, exhibiting a degree of optimism that is largely out of character for me. That optimism, at least as it pertained to those states, derived from my failure to take into account one critical factor: the intractability and general dickishness of Republican-controlled state legislatures and the Koch empire.

In Utah, Republicans in the state legislature are resisting governor Gary Herbert’s plan to accept Medicaid expansion funds, which would cover 146,000 people at a cost to the state of $236 million over five years. Instead, state Republicans are backing a plan that costs slightly less ($203 million over six years) but covers only 16,000 people. Thus, the Medicaid expansion in Utah is stalled because the state legislature is hell bent on throwing away money. In Wyoming, the legislature voted down the governor’s expansion plan on Friday.

But that’s nothing compared to what just happened in Tennessee. Gov. Bill Haslam, following the lead of several other Republican governors, worked out a compromise with the Department of Health and Human Services that would allow the state to accept expanded Medicaid funds while implementing some conservative policy tweaks. Haslam’s plan, Insure Tennessee, would cover residents up to 138 percent of the poverty level, require small monthly premium payments (up to two percent of income), and impose a six-month disenrollment for failing to pay. It’s obviously not the liberal ideal, but we’re talking about Tennessee, for god’s sake – this is the best they were going to get.

Anyway, the way the Medicaid expansion works is that the federal government pays 100 percent of the cost at the outset, dropping to 90 percent after a couple of years, leaving the state responsible for the remainder. It’s a good deal any way you slice it, but state Republicans have used this cost burden to argue against the expansion, claiming that state budgets are tight as it is and that the federal government can’t be trusted to live up to its end of the bargain. In Tennessee’s case, though, the state’s portion of the cost was going to be paid by the state’s hospitals. (Hospitals tend to be big fans of expanded Medicaid because it drastically reduces instances of uncompensated care.)

Tennessee was poised to get the best possible deal on the Medicaid expansion – conservative policies added to it, and the state’s financial obligation paid by someone else. It was as close to a free lunch as the state was going to get, with the benefit of nearly 300,000 low-income Tennesseans gaining access to health coverage. All it had to do was clear the state legislature. Then the Koch brothers happened.

NBC News had all the gory details of how Americans for Prosperity, the Kochs main outlet for political activism, stepped in to the Tennessee Medicaid debate and blew everything up:

The state's chapter of Americans for Prosperity, the national conservative group whose foundation is chaired by controversial billionaire David Koch, argued Haslam was just trying to trick conservatives into implementing Obamacare in their state by giving it a new name. AFP campaigned aggressively Haslam's plans for the next six weeks, even running radio ads blasting GOP state legislators who said they might vote for it.

On Wednesday, Haslam's bill died in a committee of the Tennessee state senate. The vote was one of the clearest illustrations of the increasing power of AFP and other conservative groups funded in part by the Koch brothers.

Others factors were at play, to be sure. The aforementioned distrust of the federal government to make good on its Medicaid payments, plus the absurd fear that agreeing to the expansion meant that the state was committed to it in perpetuity, combined to torpedo Haslam’s measure. The whole episode served to highlight how powerful the resistance to the idea of “Obamacare” is. The price tag of a policy doesn’t matter, nor do the potential benefits to the state. If it’s “Obamacare,” it’s a dead letter.

And the Tennessee example is a demonstration of the power of Kochs, but it has to be pointed out once again that the Kochs are somewhat selective in their battle against big government socialism. AFP went to war against both Bill Haslam and Michgan’s Rick Snyder for their efforts to expand Medicaid. Meanwhile, Mike Pence, the conservative governor of Indiana and favorite son of the Koch empire, caught only a light reprimand from AFP Indiana for his efforts to expand Medicaid.

Anyway, I’m 0-3 on those states and Medicaid, which will teach me to remain firm in my cynicism from here on out.

By Simon Maloy

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