By Tom Humphrey,
June 28, 2012

NASHVILLE — A nod toward states’ rights within the U.S. Supreme Court’s health care decision Thursday raises the possibility that Tennessee’s state government may not need millions of dollars stashed in the budget to cover potential costs of implementing the new federal law.

While the court held that most of the Affordable Health Care Act was constitutional, it declared that a provision requiring states to expand Medicaid coverage — known as TennCare in Tennessee — is invalid.

The $32 billion state budget for the fiscal year beginning July 1, enacted by the Legislature in May, leaves about $225 million in surplus revenue from the current year unspent. Gov. Bill Haslam and Finance Commissioner Mark Emkes said they wanted the money in case it is needed to cover increased costs for states because of the federal law.

Though cautioning that they still need to fully review the ramifications of the Supreme Court decision, Haslam and Emkes said Thursday it appears the prospective mandate, which Emkes had estimated would run $200 million per year or more, will not materialize.

“What was unanticipated is the section of the opinion that says states cannot be forced to expand their Medicaid program. This particular portion of the ruling is significant, but it is premature to know the exact ramifications,” the governor said in a statement.

Emkes said in an interview that, while the decision is still being analyzed, “We do feel a little bit better about the fact we’re going to have more control over the Medicaid piece.”

He said there will be a “thoughtful process” of “finding the right balance” between using more state dollars to enhance TennCare coverage for Tennesseans and using the stashed funds for “a lot of other great causes out there.”

Republican lawmakers, meanwhile, said the high court’s decision should spur further consideration next year of a “Health Care Compact” that envisions the federal government turning over to states all operations of Medicaid and Medicare — along with the federal funding that goes with it. The state Senate approved compact legislation in the past session, but the bill failed in the House.

“The court’s remarkably expansive read on the federal government’s authority to tax is alarming. But the Court also recognized states’ rights to resist a further reach into our pockets,” said Senate Majority Leader Mark Norris, R-Collierville. ” Perhaps next year our efforts to enact the Health Care Compact will finally succeed.”

Otherwise, reaction to the ruling in Tennessee generally fell along partisan lines — Democrats hailing the decision and Republicans lamenting it. Republicans, including Haslam, also declared the decision emphasizes the need to defeat President Obama in November.

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