HB 18 - SB 164
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
February 6, 2025
Fiscal Analyst: Chris Higgins | Email: chris.higgins@capitol.tn.gov | Phone: 615-741-2564
HB 18 - SB 164
SUMMARY OF BILL: Requires the Division of TennCare (Division) to submit a
waiver application to the Centers for Medicare and Medicaid Services (CMS) by December 31,
2025, to establish a temporary TennCare benefits program for individuals who are otherwise
ineligible for enrollment in medical assistance on the basis of income. Requires the program be
funded at a rate of 90 percent federal funds and 10 percent state funds.
Establishes that individuals under age 21 may receive medical assistance through the program
for no more than 12 months out of a 24-month period and no more than 60 months of medical
assistance prior to the individual's 21st birthday. Individuals age 21 or older may receive no
more than 12 months of medical assistance in a 24-month period up to a cumulative maximum
of 60 months during the individual's lifetime. Establishes that if an individual is enrolled in the
program prior to their 21st birthday, the 60-month cumulative limit resets on the individual's
21st birthday.
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.
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Assumptions:
• It is assumed that the eligible population will be primarily individuals age 19 to 65 whose
incomes are below 138 percent of the federal poverty level.
• According to information provided by the Division, there are approximately 340,000
individuals who will be eligible to receive coverage under the temporary TennCare program.
Enrollment is assumed to remain consistent during the course of the program.
• It is assumed that the necessary waiver 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 proposed legislation requires that expenditures for the temporary program receive
matching funds at a rate of 90 percent federal to 10 percent state. This estimate assumes
that CMS will approve a waiver to grant matching funds at such rate.
• 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 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:
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, as required by the legislation.
• 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:
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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 temporary TennCare program.
• 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.
IMPACT TO COMMERCE:
OTHER COMMERCE IMPACT
The precise impact to commerce in the state cannot be reasonably determined due to a number of
unknown factors. The proposed legislation would create an estimated $2.1 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.
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• An approximant 340,000 new individuals would now be enrolled in health insurance and
could receive health care services that they are not currently seeking which could result in
increased business for health insurance companies contracted with the state and health care
providers within the MCO networks.
• Health care providers could incur economic impacts depending on the type of insurance
and the medical coverage 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 health care services, a reasonable estimate of the impact the proposed legislation
may have on commerce cannot be determined.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director