11 November 2004

Bredesen begins to dissolve TennCare: Barring an agreement on benefit cuts, state will revert to Medicaid

NASHVILLE -- Gov. Phil Bredesen set in motion Wednesday the process of ending TennCare and returning Tennessee to the federal Medicaid program. But he gave advocates for TennCare a week to accept benefit cuts that would allow the troubled program to continue.

It can't go on as is, he said, because it would cost an additional $650 million next year. That's at least $200 million more than projected new tax revenues.

If no accord is reached by next week, the governor said it would likely mean the end of tax-funded health coverage, by mid-2005, for up to 430,000 of TennCare's 1.3 million enrollees statewide. That includes at least 25,000 of its 233,000 Shelby County recipients.

Up to 120,000 of those potentially affected statewide are children.

The gulf between the state and public-interest lawyers representing TennCare enrollees remained deep and wide Wednesday night. "We understand the governor needs to blame someone. These are radical proposals that would put the state into the most restrictive health care of any state in the nation," said Tennessee Justice Institute managing attorney Michelle Johnson.

Bredesen said the week's reprieve for more talks offers "a faint glimmer of hope, not a bright light."

Under Medicaid, about 900,000 of Tennessee's poor, elderly and disabled would retain coverage but with potentially fewer benefits than TennCare. Although details still must be worked out and the federal government must approve, the 430,000 who could lose coverage are the working poor who have no insurance through their employers, people with chronic illnesses whom private insurers won't cover and the "medically needy" -- people whose income and assets make them ineligible for Medicaid but whose medical bills are more than their assets.

The governor and TennCare officials reassured enrollees that no loss in coverage will occur immediately. The state would begin notifying recipients in January if they are losing coverage, and benefits would not end until mid-2005, Bredesen said.

"Enrollees should not do anything today. There is no reason to cancel doctors appointments. There is no reason not to get prescriptions filled. Nothing changes until people are notified and there will be plenty of notice given," said TennCare spokeswoman Marilyn Elam.

Wednesday's announcement subjects TennCare's fate to the outcome of the last-ditch talks between the Bredesen administration and Gordon Bonnyman, lead TennCare attorney for the nonprofit, public-interest Tennessee Justice Center, which has blocked the governor's attempts to trim TennCare benefits through federal court lawsuits.

Both sides denied trying to call each other's bluff in a game of high-stakes brinkmanship.

"When I left the office last night, I thought this is where I would say, 'TennCare is dead, rest in peace,' " Bredesen said Wednesday morning in an announcement at the Capitol packed with representatives of Tennessee hospital and medical associations and other groups.

Without the benefit cuts that he has proposed, the governor said TennCare will cost up to $650 million more in state tax dollars in the fiscal year starting next July 1 than it does this year. During that time, state tax revenues are projected to increase by $400 million-450 million, meaning that TennCare would consume every new dollar the state takes in, leaving none for education and other services, and still be up to $250 million short.

"You don't need to be a health care expert or an economist -- you only need common sense -- to recognize that this is not a stable situation," Bredesen said.

The reforms the governor has proposed would place new limits on hospital stays, doctors office visits and prescription drugs for some TennCare enrollees and require co-pays and increased premiums for others. He has favored those cuts to bring the $7.8 billion program under control and to avoid having to cut recipients from the rolls. Two-thirds of the program's costs are paid by the federal government.

Johnson said the federal court orders that the Justice Center has won are not to blame for TennCare's problems. "We are going to 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," she said, adding that ending TennCare would cost some recipients their lives.

The reversion to Medicaid also would have widespread effects on doctors and the health industry that treat large numbers of TennCare patients, like the Regional Medical Center at Memphis and Methodist Hospitals, Tennessee Hospital Association president Craig Becker said.

State Rep. Kathryn Bowers, D-Memphis, chairman of the legislature's TennCare Oversight Committee, called an emergency meeting of the committee for next Wednesday and will ask Bonnyman and TennCare recipients facing cuts to testify.

"I am realy concerned about these 430,000 people who will be left with no insurance at all. Most of them have prior conditions and they will not be able to get commercial insurance," Bowers said. She said the cuts could result in higher local property taxes to bolster The Med when it is flooded with uninsured patients.

By Richard Locker

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