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Stable for Now, TennCare Demands Future Attention

by Mike Morrow on June 12, 2010

Gov. Phil Bredesen has no illusions about the longterm manageability of TennCare, saying this week, “I think the stuff we did with TennCare bought the state a decade but not more than that.”

The governor’s take on the state’s version of the Medicaid program may come as a surprise to those who assumed TennCare’s major problems were over as a result of major reductions Bredesen made in the program that slowed what had become a runaway train.

But Bredesen, now nearing the end of his term, said the fundamental issues involving health coverage remain.

Apart from the cost pressures already involved in health care, another enormous storm is headed the state’s way with the expansion of Medicaid in the new federal Patient Protection and Affordable Care Act, the law that has become known, for better or worse, as ObamaCare.

Bredesen famously referred to the expansion of Medicaid as “the mother of all unfunded mandates” on states when the bill was being debated in Congress. Now that the bill has become law, Bredesen has taken a different tack, basically saying it’s the law and must be followed, somehow.

Yet through all the concern about what the future holds on the state health care program, for the moment a consensus appears to have formed that the current leadership at TennCare has adroitly managed the operation. Bredesen says so, and so do some people currently running for Bredesen’s job.

“I think one of the issues the new governor is going to have to deal with is basically how do you deal with Medicaid,” Bredesen said. “You know my feelings about using Medicaid as part of President Obama’s expansion. I don’t think it’s the right thing to do. I think it will put a huge amount of pressure on states in the future.

“But that’s something the governor’s got to do. It’s done. It’s the law. It’s over. It’s something the future governor is going to have to deal with.”

The new law calls for establishing health insurance “exchanges,” which will serve as a government-regulated marketplace for buying health insurance. While some aspects of the law have a more immediate impact — such as helping fill the “doughnut hole” in coverage of the Medicare prescription drug plan or extending coverage of children under their parents’ plans until age 26 (due to go into effect in September) — the bulk of the law is scheduled to kick in in 2014.

The time delay has given some who dislike the law an expectation that the law can be changed, so its full impact won’t be known for awhile. But as it stands, the burden will be falling on states to figure out how to follow through on the new law.

“This is not something the federal government can execute. They’re going to need the states to set up the exchanges,” Bredesen said. “Obviously a lot of new people will be coming into Medicaid, and that produces a whole bunch of issues, from rates we’re paying to physicians to other things. So I think there is a whole set of things to be dealt with in terms of implementing the act.”

Bredesen feels good about TennCare’s current leadership, which includes director Darin Gordon.

“We have some good expertise in the state right now, particularly in the form of Darin and his staff over there,” Bredesen said. “I think we’ll get through it but that’s going to take a lot of work.”

One of the candidates for governor, U.S. Rep. Zach Wamp, a Republican from Chattanooga, said this week he, too, is impressed with TennCare’s current leadership, and Wamp gives Bredesen credit for managing the state budget in broad terms, as well as specifically on TennCare.

“Darin Gordon has done an excellent job,” Wamp said. “In fact, the last 24 months at TennCare the program is trending better than it has at any time in its existence. When I had my full briefing with him and asked a slew of questions, I was highly impressed. I think they’re focusing now on more preventive care and wellness, which is something I’m really strong on.

“Frankly, short of the Obama mandate kicking in, I believe TennCare is going in a good direction, but if the Obama mandate kicks in without some relief, if we can’t change that, TennCare is going to get buried with federal mandates. We don’t have the money to pay for those mandates.”

The days of total upheaval at TennCare seem to have subsided, for now.

“We’ve got a good team at TennCare now. It’s been stable,” Bredesen said. “They know what they’re doing. They’re doing a good job. They’re making their budgets. In fact they’re helping us solve some of our other budgets. But that’s going to be a real issue.”

Bredesen was elected in 2002 in great part on his perceived management skills, just as TennCare was spiraling out of control. A key report by consultant McKinsey & Company showed TennCare putting the state on a path to financial ruin. Bredesen responded by cutting more than 170,000 people from the TennCare rolls in 2005. He also put limits on the amount of prescription medications that would be covered, a politically controversial move.

Now, the concern has become that with strides made over a number of years, Medicaid expansion in the new federal law threatens to wipe out previous gains.

Bredesen’s point, as he moves through his final year in office, is that while the state bought time with its changes, the problem of health care costs has not been solved. The new governor will find that waiting for him.

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