TennCare To Return to Traditional Medicaid Program With Many Losing Coverage Unless Compromise Is Reached on Benefits Reduction, Governor Says

Tennessee Gov. Phil Bredesen (D) on Wednesday announced that he will dissolve TennCare, the state's Medicaid managed care program, and return it to a traditional Medicaid program, unless "last-ditch" talks between the state and advocates for TennCare beneficiaries result in an agreement about program reforms, the Memphis Commercial Appeal reports (Locker, Memphis Commercial Appeal, 11/11). TennCare, which was launched in 1994 to expand traditional Medicaid benefits, provides health care coverage to 1.3 million low-income, uninsured and disabled Tennessee residents -- about 22% of the state's population (Gouras, AP/Newark Star-Ledger, 11/11).

Program Costs
The program's "mounting costs" -- particularly for prescription drugs -- coupled with a reduction in federal funds, have made the program insupportable financially, according to Bredesen (de la Cruz et al., Tennessean [1], 11/11). Two-thirds of the program's costs are funded by the federal government (Locker, Memphis Commercial Appeal, 11/11). However, Tennessee still spends about one third of its total budget on TennCare (AP/Newark Star-Ledger, 11/11). Without changes, the state's TennCare spending is expected to total $650 million more in the fiscal year starting July 1, 2005 than it does this year, according to the Commercial Appeal. State tax revenue is expected to increase by $400 million to $450 million during the same period. As a result, TennCare's budget would consume all new tax revenue and would still fall about $250 million short, the Commercial Appeal reports.

Bredesen Reform Plan Blocked
To reduce TennCare spending, Bredesen earlier this year proposed a plan that would keep enrollment at 1.3 million state residents but reduce benefits. For some beneficiaries, the plan would have imposed limits on coverage for hospital stays, physician visits and prescription drugs, established copayments and increased premiums (Locker, Memphis Commercial Appeal, 11/11). However, the plan was challenged by advocates for beneficiaries, represented by the not-for-profit Tennessee Justice Center, because they opposed a reduction in benefits, and the group won a number of federal court decrees that blocked the governor's plan (de la Cruz et al., Tennessean [1], 11/11).

New Plan
Changing TennCare -- which has operated under a federal waiver -- to a traditional Medicaid program would eliminate coverage for about 430,000 Tennessee residents, including as many as 120,000 children. Residents who would lose coverage include people with chronic illnesses who cannot obtain private health plans, people considered medically needy and working residents who do not have employer-sponsored insurance. Some 900,000 state residents still would be covered under a traditional Medicaid program. Bredesen on Wednesday said that any loss of coverage would not occur immediately, and the state plans to begin notifying beneficiaries in January if they are to lose coverage. TennCare benefits would end in mid-2005. Bredesen's plan must be approved by the federal government (Locker, Memphis Commercial Appeal, 11/11). Bredesen also said there is a required 60-day notification period to dissolve the program (AP/Newark Star-Ledger, 11/11). State lawmakers who "were generally receptive to Bredesen's plan of last resort," will discuss the proposal during an emergency meeting of the joint Legislature TennCare Oversight Committee on Wednesday, the Tennessean reports.

'Glimmer of Hope'
The Tennessee Justice Center "in an 11th-hour letter" to Bredesen on Tuesday requested a seven-day continuance of "good-faith" discussions on the court decrees and TennCare's future, the Tennessean reports. Bredesen, who agreed to the weeklong grace period, said there is a "20% chance" that a compromise on benefits reduction could be reached, adding, "I want to be clear this is a faint glimmer of hope, not a bright light." Gordon Bonnyman, the group's executive director, said he believes it is still possible that he and Bredesen could come to an agreement on TennCare. Bredesen and the group could begin meeting as early as Thursday, according to the Tennessean.

Remarks
In his announcement Wednesday, Bredesen said, "TennCare was, and is, a wonderful dream. It appears this morning that the dream is over" (de la Cruz et al., Tennessean [1], 11/11). He said, "It pains me more than I can describe to take this path. This is not what I planned for or what I dreamed about doing as governor" (AP/Newark Star-Ledger, 11/11). Bonnyman said, "I understand that this is a public program, and it has got to live within a budget. No one more passionately desires this program to survive and to be reformed than me and the other people I work with. But you don't do it with finger-pointing" (de la Cruz et al., Tennessean [1], 11/11). TJC Managing Attorney Michelle Johnson said that the group's attorneys will "work as hard as we can in the next week to get the governor and his folks to focus on the real problems and the real solutions." State Rep. Kathryn Bowers (D), chair of the TennCare Oversight Committee, said, "I am really concerned about these 430,000 people who will be left with no insurance at all." Craig Becker, president of the Tennessee Hospital Association, said that reverting to a traditional Medicaid program would have a widespread effect on doctors and the health industry (Locker, Memphis Commercial Appeal, 11/11).

Editorials

• Memphis Commercial Appeal: Bredesen's decision to continue talks with TJC for one week represents the one "hopeful note" in his announcement, and it is now Bonnyman's turn to move in the ongoing negotiations over the fate of TennCare, a Commercial Appeal editorial states. Although TennCare's consultants "have presented a persuasive case" for the financial risks of continuing the program in its current state, reverting to a traditional program would mean that at the very least, "many more Tennesseans would find medical care beyond their reach," according to the Tennessean. The editorial concludes, "We hope both parties will look at [the weeklong negotiations] as an opportunity to be seized, as lives are in the balance" (Memphis Commercial Appeal, 11/11).
  
  
• Tennessean: Bredesen is "right about the slim likelihood of reconciliation at this late date," but "Bonnyman wouldn't have asked for seven extra days just to prolong the inevitable," a Tennessean editorial states. Bredesen and Bonnyman "are the only two people who can save" TennCare, and "given the stakes in human lives, and given the economic consequences," they "need to try to find a solution," the editorial says. The editorial concludes, "Some 430,000 Tennesseans are counting on them to work together, and to succeed -- together" (Tennessean, 11/11).
  

Other Coverage

• "TennCare Talk Has Industry Reeling" (Burnham, Memphis Commercial Appeal, 11/11).
  
  
• "TennCare News Alarms Local Patients" (Powers, Memphis Commercial Appeal, 11/11).
  
  
• TennCare Timeline (Memphis Commercial Appeal, 11/11).
  
  
• "How the Loss of TennCare Will Affect ... Taxpayers" (de la Cruz et al., Tennessean [2], 11/11).
  
  
• "Some TennCare Recipients Vent Anger on Advocate" (Hamburg, Tennessean, 11/11).