The Tennessee Health Care Campaign

The Tennessee Health Care Campaign POSITION STATEMENT REGARDING TENNCARE CUTS

The proposed cuts to the TennCare program announced by the Governor on September 28, 2001 are harmful, will not save money, and should be reconsidered for the following reasons.

• The immediate closure of enrollment to uninsurable adults will deny health coverage to 2,100 people each month. This is an especially vulnerable population, comprised of people who private insurance companies will not cover because of pre-existing medical conditions. These conditions range from cancer and asthma to mental illness, and cover the range of serious conditions that can afflict all people. Besides endangering these people's health, closure of enrollment to the uninsurable will shift the cost of their care to other payers. It will deprive the state of premiums and federal matching funds. The TennCare Director testified on 10/10/01 to the legislature's TennCare Oversight Committee that the policy will cost the state more than it will save and leave the state worse off. 

• In a few months, the state also proposes to eliminate coverage altogether for 180,000 people now on TennCare, and drastically reduce the scope of benefits for additional hundreds of thousands of children and adults who remain on the program. These changes will jeopardize the health and safety of thousands of vulnerable Tennesseans, damage the state budget, and weaken the health care sector of the state's economy. Officials hope that the cutback will achieve savings of $150 million for the state budget. These "savings" come at a steep price, officially estimated at $435 million in lost federal matching funds, and another $100 million in lost premiums and premium taxes. On 10/10/01 before the TennCare Oversight Committee, the Commissioner of Mental Health and Developmental Disabilities estimates that her department alone will require a $100 million in state dollars. Taking these factors into account, on 10/15/01 the Chair of the TennCare Oversight Committee estimated the real added cost at closer to $800 million in state dollars. 

• These federal subsidies have a crucial financial impact. Federal TennCare funds are expended throughout the state, wherever TennCare enrollees live and receive health services. These funds support thousands of jobs, ranging from entry level support positions in health care facilities, to the salaries of highly trained health care professionals. The loss of such subsidies will have a particularly serious impact during a weak economy. The resulting reduction in economic activity will ultimately affect state tax revenues. The financial stability of inner city and rural hospitals, as well as other community providers, will be jeopardized. The financial burden of providing indigent care will increase for local governments. 

• The proposed reductions in TennCare are not only costly and damaging to the health of many Tennessee children and adults, but weaken the TennCare program. The Tennessee Comptroller of the Treasury in an Oct. 2001 report has recently reaffirmed that TennCare has saved the state money, and that Tennessee has an important stake in maintaining the program. Restructuring and reducing the program undermines the ability of TennCare to produce such savings, and jeopardizes an effective federal matching rate that is the most favorable enjoyed by any state in the country. The supposed financial advantages of restructuring the program simply do not withstand scrutiny. 

Here are some of the Tennesseans who will be hurt by the proposed changes:

• 4,000 children in working families who lack access to employer-sponsored group insurance coverage will become uninsured.
• 200,000 children in poor and working families will lose Early and Periodic Screening, Diagnosis and Treatment (EPSDT) coverage, to be replaced with a reduced benefits package. This means a loss of vision, dental and therapy services and, most importantly, mental health care. Children with special health care needs who do not meet SSI eligibility will be the hardest hit, along with the specialized providers who treat them.
• More disturbed children will enter state custody, as the loss of mental health coverage makes it impossible for their families to care for them at home.
• Chronically ill adults, or individuals with catastrophic illness, who lack access to health insurance will have no alternative for care. There once were programs that provided some help for these populations. Those resources included a high risk insurance pool, and programs for people with such disorders as hemophilia, renal disease, HIV, and mental illness. The state eliminated or reduced those resources because of the availability of TennCare, but now proposes to eliminate TennCare coverage for many people in these groups, leaving them worse off than ever. 
• Severely ill adults who remain on the program face the withdrawal of needed treatments, as a result of the reduction or elimination of some benefits.
• People with severe, chronic mental illness will find it difficult or impossible to maintain coverage. Those who manage to do so will suffer major reductions in mental health benefits covered.
• 38,000 Social Security pensioners will lose prescription drug coverage with the loss of their TennCare. These are people who are not Medicaid eligible and who cannot get Medicare Supplement insurance, and whose medications often cost as much or more than what they receive from Social Security.
• Any uninsured child or adult who is the victim of a sudden catastrophic illness or injury, and who will have to wait as much as fifteen months before being allowed to sign up for the program. The closure of enrollment except for a few months each year will inflict financial ruin and needless suffering on many individuals and their families. Some may not survive until coverage becomes available.

The proposed changes do not address the core problems of TennCare. These are the failure to hold the state and its contractors accountable for paying providers and treating TennCare beneficiaries. Audits have repeatedly documented the state's management shortcomings. Officials now propose to divide TennCare into three parts. By fragmenting coverage through contracts with many different insurers, and types of insurers, accountability for the use of public funds is further weakened. The state must learn to manage a single program before taking on the management of three programs, involving three separate, extremely complex designs. 

State officials should:

• Not go forward with these or other changes until they have compiled and thoughtfully analyzed sound data upon which to base important policy decisions;
• Adopt changes only if they address the TennCare program's management problems;
• Adopt changes only if they do not cause further harm to enrollees and taxpayers;
• Include beneficiaries, advocates, providers, and policymakers in the planning process in order to design changes that will address the issues and are viable.

For more information visit the THCC website: http://www.tenncare.org