Front Page

The 'Zine

Sunsphere City

Bonus Track

Market Square

Contact us!
About the site

Secret History

on this story

TennCare's Murky Future

by Joe Sullivan

TennCare has survived the crisis that threatened to destroy it earlier this year, but its future remains full of uncertainties.

Getting Blue Cross Blue Shield to rejoin the ranks of managed-care organizations that run the program and enlisting two new ones has enabled TennCare to maintain the capacity to cover its 1.4 million enrollees. But keeping enough doctors and hospitals in its MCO networks to serve these patients has come at a steep price.

Atop $200 million increases in TennCare outlays in each of the past two years, an additional $160 million is budgeted for the fiscal year ahead. That will bring total state funding for the program to more than $1.8 billion, contributing mightily to the $800 million deficit that is now staring beleaguered legislators in the face.

This year-end has long been heralded as a turning point for TennCare. That's because it is the expiration date for the waiver from the federal Health Care Financing Administration under which TennCare has been operating since its inception in 1994. The waiver allowed the state to place its federally mandated Medicaid program for the indigent on what was believed to be a more cost-effective managed-care footing but also required coverage of individuals without access to employer health insurance. The ranks of those on the rolls quickly swelled from the 800,000 eligible for Medicaid to nearly the 1.4 million present level. And it would have grown even higher had not then-incoming Gov. Don Sundquist succeeded in 1995 in capping enrollment of the uninsured, except for those whose conditions make them uninsurable. (Children were later excepted from the cap as well.)

Unless the waiver is extended, only the costs of covering the Medicaid population will qualify for the roughly two-to-one federal matching of state dollars without which TennCare would sink like a rock. How to keep it afloat while somehow containing its escalating cost is the question that needs to be resolved between now and year's end.

Last fall a Commission on the Future of TennCare appointed by Sundquist recommended an alternative approach to providing state-subsidized health care coverage to lower-income Tennesseans not eligible for Medicaid. If their employer offers health insurance, then the state would pay the employee's share of the total premium (up to 50 percent on an income-based sliding scale.) If they don't have access to employer coverage, they could sign up for a state-sponsored health plan separate from TennCare and offering more limited benefits at presumably lower cost.

Up to now, however, no plans have been developed for implementing the commission's recommendations or any other 2002 alternatives. One reason, according to TennCare spokesperson Lola Potter, is that its officials have been preoccupied with keeping the program from collapsing in the meantime. Another is that the state is resolved to let health care providers have a major voice in shaping TennCare's future. Affording them a greater sense of involvement has been crucial in reversing an erosion of provider participation that would have spelled disaster.

In June, TennCare's overseer, Deputy Commissioner of Finance and Administration John Tighe, is planning a series of public meetings across the state. The commission's recommendations will serve as a point of departure for these hearings. But Tighe can also expect to get an earful about perceived excesses and abuses in the program.

When it comes to achieving cost containment let alone curtailment, though, the prospects don't look good. Consider, for example, the fate of the state's one previous attempt at limiting benefits for non-Medicaid enrollees. (Those for the Medicaid population are federally prescribed.) In 1999, the Sundquist administration proposed placing a cap of seven per month on the presently unlimited number of prescriptions that TennCare covers. But the leadership of the Legislature's TennCare Oversight Committee spoke out in opposition, and the proposal died.

"Having an arbitrary limit on prescriptions does not help anyone," asserts the committee's chairman, Rep. Gene Caldwell of Clinton, himself a retired pediatrician. "It's very difficult to cut down the benefits when you've got cerebral palsy victims, diabetics and people with a host of catastrophic diseases on the rolls."

Similarly, the state's efforts to curtail enrollment by eliminating people who are no longer eligible aren't likely to produce any lasting reduction. Over the past year, the state has identified about 100,000 enrollees who are ineligible, mainly because they now have access to employer health insurance. A court order that has prevented their removal is due to be lifted shortly. But under the terms of a court agreement, as soon as they are off the rolls, TennCare must reopen its rolls to the uninsured until enrollment is back up to 1.4 million. That figures to happen pretty quickly.

Nor does the commission's health insurance premium subsidy proposal represent a way to hold down costs. Indeed, since individuals with access to employer coverage aren't eligible for TennCare, any premium subsidies paid on their behalf would be in addition to, not in lieu of, TennCare outlays.

Perhaps the best hope for budgetary relief lies in generating new revenues to offset costs that seem destined to rise inexorably with the overall costs of health care. The governor's senior health policy advisor, Nancy Menke, suggests that enhanced federal matching funds might be obtainable for the most rapidly rising of these costs: namely, drugs. There are also several "play or pay" bills pending in the Legislature that would require health insurance companies to participate in TennCare or pay for the privilege of not doing so.

"We have got to have insurance reform," insists Caldwell. "Companies that don't participate must pay." He acknowledges that not enough time remains for enacting such a measure in the waning days of this year's legislative session but says a special session may be needed in the fall.

"We cannot wait another year to write another waiver. It would be the doom of TennCare and that would be disastrous."

May 10, 2001 * Vol. 11, No. 19
© 2001 Metro Pulse