Involuntary Consequences for the Volunteer State: Tennessee's TennCare Experience with Healthcare Reform
Now that federal healthcare legislation has been signed in to law, I hope that the fiscal impact of the legislation does not imitate that of other reform efforts made at state and regional levels. What appeared to start as an expressed effort to contain rising healthcare costs now appears to expand access while failing to include enough remedies to contain costs. Increasing access is an admirable and worthy goal; failing to recognize and prepare for the total financial impact can be hazardous to fiscal health.
In 1994, the state of Tennessee enacted TennCare as a Medicaid waiver program to expand access to Medicaid coverage to total approximately 1.4 million Tennesseans while controlling rising state healthcare expenditures. It was a commendable goal, but an action that led to massive increases in state healthcare funding obligations. The resulting budget crisis jeopardized the State’s bond rating. The crisis was a catalyst that forced bipartisan efforts to contain costs by slashing enrollment and reducing benefits. Leadership by Tennessee’s current governor, Phil Bredesen, a former managed care health insurance company executive, was instrumental in defusing the crisis. Some who closely observed that crisis wonder if our federal branches, executive, legislative and judicial, will be facing similar challenges within this decade.
Immediately upon passage of TennCare, numerous efforts were made through the judicial system to expand benefits. Such efforts were surprisingly successful, causing providers to face legal risks if they denied any form of care as medically unnecessary. Utilization of services, including emergency rooms and inpatient hospital facilities, exploded. Physicians “closed” their practices to new patients to avoid the escalating legal and financial risks. Evidence of the inability for providers to manage utilization was Tennessee’s quick ascension to first in the nation in prescriptions per capita for psychotropic drugs. One provider network, established to be a “model” program was initially successful in balancing the management of care and resources while increasing quality and member satisfaction scores. It promoted public health initiatives such as increased vaccination rates and annual checkups while establishing “medical homes” for its membership through a strong primary care network. It was enormously successful in its first two years as it addressed many of the challenging and perplexing issues of balancing provider resources with patient needs. However, a federal judge’s ruling regarding TennCare program benefits and coverage made it apparent that it would be impossible to manage utilization of resources without being exposed to enormous financial and legal risks. The “model” network soon elected to shut down operations as it foresaw the inevitable financial collapse it would face if it attempted to meet unrestrained demands for medical services.
One definitive difference between the current federal initiative and Tennessee’s program is the federal government’s ability to pay for its legislation by borrowing through budget deficits. By constitutional mandate, Tennessee must balance its budget annually, as must most states. That “limitation” probably saved the economic well being of the state. Legislators could not reportedly “kick the can” down the road for the next legislative session or administration to fix. Thus, the funding crisis never grew to an overwhelming magnitude. Our federal government has no such imposed discipline.
Some may say, “This time it’s different.” Some have even pointed to the Massachusetts’ initiative, a state much different than Tennessee. Massachusetts’ universal insurance program was adopted in 2006 at an expected annual cost to taxpayers of $88 million annually. Timothy P. Cahill, State Treasurer of Massachusetts, recently wrote in The Wall Street Journal that the program “has been a fiscal train wreck.” Massachusetts’ governor has just recently announced a $294 million shortfall related to healthcare costs. In his editorial letter to The Journal, Mr. Cahill wrote:
If not for federal Medicaid reimbursements and commitments from Washington to prop up this plan, Massachusetts would be broke. The only reason MassCare has survived is that we have been repeatedly bailed out by the federal government. But that raises the question: Who will bail America out if we implement a similar program?
Many who have worked on various state and regional reform efforts also ask that question. We desire meaningful, affordable reform. Some, like me, fear those who have crafted this federal reform do not grasp the frightening enormity of possible unintended consequences. Our national leaders would not be the first to make such a mistake. Just ask Massachusetts. Just ask Tennessee. The scale of the federal initiative is exponentially larger than those of Tennessee and Massachusetts combined. Unfortunately, and frighteningly, so are the possible unintended consequences.
So, what’s my point? The need for healthcare reform is irrefutable. Even the leaders of both parties agree on that! Now that we have a starting point, the just passed legislation, let’s demand bipartisan efforts to effectively implement the plan. When problems arise, and they will, don’t stand on the sideline pointing out the issues. Jump in and be part of the solution.
Learn from Tennessee’s experiences. TennCare has trod a rocky road, but our state and its residents are better for it having been implemented. Its evolution has been painful at times. However, Tennesseans now have an affordable program that does provide much needed coverage for 1.2 million residents. Children have benefited enormously. TennCare, and now CoverKids, effectively serves kids at greatest risk. I do not know how one “puts a price”on that. It seems priceless to me.
I think we all should follow the example of Tennessee Governor Phil Bredesen, who deserves praise for his effective leadership in transforming TennCare to the program it is today. Governor Bredesen, who opposed the federal reform legislation that just passed recently, said he’s “going to get on with the business of figuring out how to make this work.” Sound advise for all, both those who supported the federal reform legislation and those who opposed it. When unintended adverse consequences arise, all should try to address and mitigate such. And when unforeseen benefits for our country appear, let’s gratefully acknowledge those as well.
