2004 Legislature: TennCare, TennCare, TennCare
NASHVILLE (AP) — Of all the issues facing Gov. Phil Bredesen and the Legislature when the 103rd General Assembly resumes Tuesday, one overshadows everything else.
It’s TennCare, the state’s health care program for the poor. A recent independent study by the consulting firm McKinsey & Co. offers this almost coy observation: TennCare, it says, ‘is proving to be a costly venture.’
No one was surprised to hear that. TennCare now takes $7.1 billion of the total state budget, about a third; and $2.2 billion in state dollars, about a quarter of state tax income.
But the biggest problems could be in the future.
The McKinsey study estimates that with average economic growth, TennCare will eat up more than 90 percent of the state’s normal tax growth within five years. At that point, it would starve everything else the state does.
Bredesen has promised a major reform plan, which can’t come too soon for lawmakers who have been frustrated by TennCare — often for differing reasons — virtually since its inception 10 years ago.
‘My job now is to constrain that growth,’ Bredesen said. ‘In a choice between social programs and education, I’ll go with education every time. I can’t do the things I want to do in K-12 and higher education without getting TennCare and some of these other things under control.’
But some of the costs of TennCare are beyond the state’s control. Every state is struggling with its Medicaid program because of skyrocketing health care costs.
‘The only government out there that can sustain this level of health care spending growth is the federal government, and that’s only because they can print money,’ said state Comptroller John Morgan.
‘What any state can do by itself is very limited. There really has to be a national solution to the problem.’
That said, he added: ‘That doesn’t mean we shouldn’t try as hard as we can to make the TennCare program more realistic in terms of its financial burden on the state government.’
That’s where Bredesen comes in. Part II of the McKinsey study, due later this month, will outline possible solutions. Bredesen, a former health care executive, will take those and his experience and propose something.
But he cautions it will be more evolution than revolution.
‘We’ll certainly see some benefits cuts just to get through this year,’ he said. ‘But we have screwed up so often with these half-baked solutions. There are things you do a step at a time over a long period of time, and this is one of them. I don’t see it as something we solve with a new waiver or a piece of legislation.’
The idea behind TennCare when it was created was that managed care would save money. Lawmakers believed putting managed care organizations at risk of losing money would give them incentive to control costs.
But just before Gov. Don Sundquist left office, his administration removed all the financial risk from the managed care organizations, getting rid of their incentive to hold down costs.
Advocates for the poor want the governor to put the managed care groups back at financial risk. But Bredesen has publicly doubted whether that would work, noting three of 10 MCO’s went bankrupt under the at-risk arrangement.
‘The fundamental problem, not only for TennCare but for every other health care program in the country, is that health care inflation is far outstripping economic growth,’ said Sen. Roy Herron, D-Dresden.
‘If general inflation is moving at the speed of a car, health care inflation is moving like a rocket. There’s just no way this state or any other state can keep up without a national solution and federal assistance.’
Morgan said the challenge is not simply to reduce costs next year, but to control the growth from year to year.
‘We can’t sustain a program where costs increase with medical inflation rates, no matter what the program looks like. You just can’t do it.’
Bredesen concurs, up to a point.
‘Ultimately, only the federal government can solve the larger problem of how you take care of people without health insurance,’ he said. ‘But if you’re waiting for the federal government to bail you out, you’re being foolish. Waiting for that and not dealing with the issues at hand is destined to fail.’
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On the Net:
TennCare: www.state.tn.us/tenncare/