Tennessee Governor Proposes $1.1B Increase in TennCare Spending

Tennessee Gov. Phil Bredesen (D) on Monday proposed a spending increase of $1.1 billion for TennCare, the state's Medicaid managed care program, as part of the $23.8 billion state budget that he presented to a joint session of the state Legislature, the Memphis Commercial Appeal reports. About two-thirds of the spending increase would come from the federal government, according to the Commercial Appeal. The proposed increase comes just two weeks before Bredesen is set to unveil his plans for "sweeping reforms" for the program, the Commercial Appeal reports (Locker, Memphis Commercial Appeal, 2/3). A study conducted by McKinsey & Co. and released Dec. 11 found that TennCare costs too much to continue operating in its existing form. According to the study, TennCare's total cost will increase to more than $12.2 billion by 2008 from $6.9 billion currently and will make the program Tennessee's single largest expenditure, accounting for as much as 40% of the state's budget, up from 25% currently (Kaiser Daily Health Policy Report, 1/8). TennCare is expected to consume about $200 million in new tax dollars next year, the AP/Knoxville News reports (Sharp, AP/Knoxville News, 2/2). Last month, Bredesen said he favors reducing benefits instead of cutting beneficiaries from the program as a way to control costs (Kaiser Daily Health Policy Report, 1/8). The budget proposal also includes an $80.1 million spending increase for the state Department of Human Services, $10 million for a Memphis biotechnology jobs initiative, a new $56.5 million hospital at Western Mental Health Institute in Bolivar and other projects. Bredesen also proposed about $31 million in cuts to other human services programs. State lawmakers are expected to make only "relatively minor alterations" to the proposed budget before approving it, according to the Commercial Appeal (Memphis Commercial Appeal, 2/3).