SB 1356 - HB 1393
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
March 12, 2025
Fiscal Analyst: Chris Higgins | Email: chris.higgins@capitol.tn.gov | Phone: 615-741-2564
SB 1356 - HB 1393
SUMMARY OF BILL: Directs the Governor, acting through the Commissioner of Finance
and Administration, to submit an application for a new waiver to the federal Centers for Medicare
and Medicaid Services, no later than 180 days after the effective date of the legislation, that provides
medical assistance coverage for individuals whose gross annual income does not exceed 138 percent
of the federal poverty level.
FISCAL IMPACT:
STATE GOVERNMENT
REVENUE General Fund
FY26-27 & Subsequent Years $128,382,900
EXPENDITURES General Fund
FY26-27 $234,686,300
FY27-28 & Subsequent Years $233,686,300
Total Positions Required: 169
FEDERAL GOVERNMENT
EXPENDITURES
FY26-27 $2,057,164,800
FY27-28 & Subsequent Years $2,048,164,800
OTHER FISCAL IMPACT
Passage of this legislation could result in a decrease in state expenditures for the Uninsured Adult
Healthcare Safety Net. The extent of any change in expenditures is dependent on the number of
individuals who will receive healthcare services from Medicaid, rather than the Uninsured Adult
Healthcare Safety Net, and cannot be reasonably determined.
SB 1356 - HB 1393 2
Assumptions:
• It is assumed that the eligible population will be individuals age 19 to 65 whose household
incomes are below 138 percent of the federal poverty level, in accordance with the
expansion population under the federal Patient Protection and Affordable Care Act (ACA).
• According to the Kaiser Family Foundation (KFF), approximately 11 percent of
Tennesseans were uninsured in 2023.
• The KFF also estimates that approximately 82,000 individuals were in what is known as the
coverage gap, because they do not qualify for traditional Medicaid but their incomes are too
low to qualify for assistance through the ACA.
• Another 79,000 individuals were estimated to be ineligible for financial assistance because
their income is too high or they have what is considered affordable employer health
coverage.
• In addition to these new populations becoming eligible for medical assistance coverage, it is
also assumed that some individuals that were previously or currently eligible for Medicaid
will enroll in TennCare as a result of the proposed legislation.
• During the federal public health emergency, the federal government temporarily paused
required annual renewals for Medicaid coverage resulting in TennCare membership
increasing by more than 25 percent. The majority of this population has now been
disenrolled since the resumption of annual renewals in April 2023.
• According to information provided by the Division, there are approximately 340,000
individuals who will be eligible to receive medical assistance coverage as a result of the
proposed legislation.
• It is assumed that the waiver application will be approved and that the program will become
effective on July 1, 2026.
• Based on an actuarial analysis by the Division, the average cost per participant is estimated
to be $524.44 per month, resulting in a recurring increase in expenditures of $2,139,715,200
(340,000 x $524.44 x 12) in FY26-27 and subsequent years.
• The federal government provides matching funds at a rate of 90 percent federal to 10
percent state for states that expand Medicaid eligibility pursuant to the ACA.
• There will be a recurring increase of $213,971,520 ($2,139,715,200 x 10%) in state
expenditures and a recurring increase of $1,925,743,680 ($2,139,715,200 x 90%) in federal
expenditures, beginning in FY26-27.
• The Division will experience a one-time increase in expenditures of approximately
$10,000,000 in FY26-27 to implement new systems to facilitate the program.
• These expenditures will also receive matching funds at a rate of 90 percent federal to 10
percent state. There will be a one-time increase in state expenditures of $1,000,000
($10,000,000 x 10%) and one-time increase in federal expenditures of $9,000,000
($10,000,000 x 90%) in FY26-27.
• In addition to the cost of system implementation, the Division will require 169 additional
positions (163 TennCare Program Coordinator positions, 6 Associate Counsel positions)
beginning in FY26-27 to handle the increased workload associated with the new enrollees.
• The recurring increase in expenditures associated with the new positions will be as follows:
SB 1356 - HB 1393 3
Title Salary Benefits # Positions Total
Program Coordinator $60,336 $18,038 163 $12,774,962
Associate Counsel $132,912 $30,078 6 $977,940
Total: $13,752,902
• These expenditures will receive matching funds at the administrative rate of 50 percent
federal to 50 percent state, resulting in an increase of $6,876,451 ($13,752,902 x 50%) in
state expenditures and a corresponding increase of $6,876,451 in federal expenditures in
FY26-27 and subsequent years.
• Pursuant to Tenn. Code Ann. § 56-32-124(a), there is currently a six percent tax on gross
premiums collected by health maintenance organizations.
• For TennCare plans, the state pays this tax and receives federal matching funds. It is
assumed that the state will receive the enhanced 90 percent federal match for these
premiums.
• The estimated revenue and corresponding break down of state and federal expenditures for
new enrollees in the temporary program in FY26-27 and subsequent years is:
Enrollees Total Cost
Premium
Tax Rate
Premium Tax
Revenue State Cost
Federal
Cost
340,000 $2,139,715,200 6.0% $128,382,912 $12,838,291 $115,544,621
• The total increase in state revenue will be $128,382,912 in FY26-27 and subsequent years.
• The total increase in state expenditures will be $234,686,262 ($213,971,520 + $1,000,000 +
$6,876,451 + $12,838,291) in FY26-27, and $233,686,262 ($213,971,520 + $6,876,451 +
$12,838,291) in FY27-28 and subsequent years.
• The total increase in federal expenditures will be $2,057,164,752 ($1,925,743,680 +
$9,000,000 + $6,876,451 + $115,544,621) in FY26-27, and $2,048,164,752 ($1,925,743,680
+ $6,876,451 + $115,544,621) in FY27-28 and subsequent years.
• The Department of Health (DOH) currently operates the Uninsured Adult Healthcare
Safety Net Program (Safety Net), which delivers access to healthcare for uninsured adults
ages 19- 64 in Tennessee utilizing state funds contributed by the DOH, the Division, the
Department of Mental Health and Substance Abuse Services, and the Department of
Finance and Administration.
• According to the 2024 Uninsured Adult Healthcare Safety Net Annual Report, in FY23-24
the DOH administered a total of $29 million in state funding to support the Safety Net, and
the Safety Net provided care for approximately 183,127 unduplicated patients.
• Some of the individuals utilizing the Safety Net may do so because their income level is too
high to qualify for Medicaid, but they not have another form of health insurance. These
individuals would be likely to seek coverage under the Medicaid expansion waiver.
• Passage of the proposed legislation could result in a decrease in state expenditures from the
Safety Net. The extent of any change in expenditures is dependent on the number of
individuals who will receive healthcare services from Medicaid, rather than the Safety Net,
and cannot be reasonably determined.
SB 1356 - HB 1393 4
IMPACT TO COMMERCE:
OTHER COMMERCE IMPACT
The precise impact to commerce and jobs in the state cannot be reasonably determined due to a
number of unknown factors. The proposed legislation would create an estimated $2.2 billion dollars
in state and federal funds be paid into the healthcare system. The majority of these funds will be
paid to insurance companies that will then pay claims to health care providers.
Assumptions:
• There could be varying degrees of economic impact to the health care industry as a whole
in the state of Tennessee including, but not limited to, health insurance companies,
hospitals, clinics, individual health care providers, and pharmacists.
• An approximant 340,000 new individuals would now be enrolled in health insurance and
could receive healthcare services that they are not currently seeking which could result in
increased business for healthcare providers within TennCare's MCO networks.
• Healthcare providers could incur economic impacts depending on the medical care that is
obtained by these individuals after receiving coverage versus the type of care the individual
is receiving as an uninsured individual.
• Individuals may experience improved health outcomes due to increased access to health
care services, resulting in savings from total health care usage over time.
• Due to a number of unknown factors which include, but are not limited to, the health status
of those individuals obtaining health insurance through the program and the variation in
costs for healthcare services, a reasonable estimate of the impact the proposed legislation
may have on commerce and jobs cannot be determined.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director