Myths and Facts about TennCare

Myth: We need to go back to Medicaid – TennCare does not work
FACT: Even though everyone is frustrated with the management and financial problems of TennCare, it makes much more sense --in terms of health AND money-- to fix the program rather than scrap it altogether. Any program that provides health care to almost 1.3 million people is bound to cost money, but better management and policy reforms can make it possible to provide the services at a reasonable cost.

Further, it would likely not be cheaper for the state to go back to a Medicaid-only program. People are still going to get sick and need medical care. State officials estimate that there would still be about 1.1 million people eligible for Medicaid. Local governments would have to find funds to pay for emergency health services for about 300,000 more people, and state and local governments would have to increase funding to public health departments to provide health care which they stopped doing when TennCare started in 1994. The uninsured who would lose access to TennCare preventive care would wait until they were very sick before getting help, placing a burden on hospitals and other safety-net providers who would have to provide more costly care. 

Myth: TennCare is more expensive than other Medicaid plans
FACT: TennCare is the least expensive Medicaid health plan in the U.S. A study by the U.S. Dept. of Health and Human Services compared the per person cost of Medicaid in all 50 states and found that Tennessee’s per person cost was the lowest of all the states. The TN Comptroller of the Treasury has documented that TennCare (because of its reliance on managed care) has saved the state hundreds of millions of dollars over its 9-year history. It is important to note that health care (and especially pharmaceutical) costs are increasing everywhere. More than 40 states have budget deficits and increased health care costs. A nationwide study found that Medicaid costs have increased 25% over the past two years. 

Bad waiver agreement decisions between Tennessee and the Bush administration have also played a role in the fiscal crisis: according to the February 27, 2003, Nashville Tennessean, almost half of the shortfall in the state’s TennCare program this year can be traced to an agreement the Sundquist administration made with the Bush administration last year to set a cap on federal matching funds. Much of the rest of the shortfall can be accounted for by the double-digit increase in prescription drug cost which is a national problem, not unique to Tennessee.

Myth: TennCare has been destroyed by fraud and abuse 
FACT: During redetermination, all recipients have to prove residency in Tennessee, citizenship, income and access to insurance. While anecdotes regarding fraud and abuse have received a lot of media attention, investigations have generally concluded that fraud and abuse are not the major problem facing the TennCare program. Allegations that people in need of organ transplants move to Tennessee so Tennessee will pay for them have proven to be false. While any fraud and abuse is too much, these are essentially management problems and a strongly managed program with strong reverification is the best way to address these problems. 

Myth: TennCare is a free ride-- even for the rich 
FACT: It is not a free ride. People who are eligible for Medicaid (children, elderly, disabled, and caregivers with very low income) and TennCare enrollees who are below 100% of poverty (an uninsurable person who makes less than $749/month) do not pay premiums. Everyone else pays premiums that are based on gross income and are comparable to (and often higher than) private insurance plans. For example, take a family of two making a gross of $3,535 per month who are eligible for TennCare because private insurance would not cover them—their monthly premium would be $625/month or 18% of their monthly income, plus co-payments for prescription drugs, doctor visits and many other services. The people who pay premiums are actually helping to fund some of the program. It is not a free ride. 

Myth: TennCare costs cannot be controlled except through cutting benefits and cutting people off the program
FACT: TennCare costs can be contained through important structural changes. TennCare costs have risen dramatically in the past year because it has returned to paying providers through a fee-for-service system (with the state at risk and the MCOs at no risk), rather than using market forces to determine prices through MCOs. (There is no incentive for MCOs to hold down costs if they are not at risk.) In pharmacy, TennCare could also save millions of dollars by implementing a single formulary and by entering into a pool with neighboring states to negotiate with pharmaceutical companies for significant drug rebates. We also need our elected officials to persuade the federal government to increase the amount of federal matching funds available for all Medicaid programs.

Another way TennCare could recoup some of its costs is by opening enrollment to premium-paying uninsured people. Prior to July 1, 2002, TennCare received about $70 million in premiums each year from enrollees whose income exceeded the federal poverty level. These premium payers (along with premium taxes paid by MCOs) were actually supplementing the whole program. Under the new reverification rules beginning on July 1, 2002, many of these healthy premium payers have been terminated.

Myth: Lawsuits and court orders are keeping the state from managing the costs of TennCare
FACT: The state has been sued for repeatedly failing to comply with federal laws and agreements as well as its own policies. People were being terminated without notice and reason for termination. They were also being terminated without being informed of their appeal rights. In many cases, workers conducting the reverification gave people wrong or conflicting information. And all too often, people were given toll-free 1-800 numbers and they could not get through.

While it was the Sundquist administration’s willful disregard for federal law and agreements that got them into the court orders, the Tennessee Justice Center (who brought both the Rosen case and the Grier case to court) has repeatedly stated that they are open to negotiation. The Sundquist administration was unwilling to come to the negotiating table to try to find cost effective solutions that would not adversely affect the health of TennCare consumers. 

Myth: People who don’t have insurance will be taken care of no matter what
FACT: Hospitals are required by federal law to treat only emergency conditions and only long enough to stabilize the person. Hospitals are not required to provide chemotherapy or radiation to those with cancer, nor to provide heart medicine and high blood medicine to uninsured people with congestive heart failure, nor to provide insulin to uninsured diabetics, nor to provide treatment and medicine to those with MS, AIDS, kidney or liver disease, people with serious mental illness, or any other serious disease. 

Myth: People on TennCare could get health insurance somewhere else
FACT: Ninety-eight percent of people on TennCare are below or near the poverty line and are working. Most work low-wage jobs in fast food restaurants, hotels, or small companies that do not offer health insurance. “It is a common misperception that many uninsured workers are offered insurance but turn it down, either because they don’t need or don’t value it relative to other types of compensation. In fact, 60 percent of uninsured workers are not offered insurance by their employer, and another 11 percent are not eligible for their employer’s plan because of their part-time status or a waiting period. Twenty-two percent of uninsured workers decline their employer-offered coverage, mainly because of cost.” Karen Davis, Testimony before the Senate Special Committee on Aging, March 10, 2003.

Save Lives Save TennCare Coalition
Tennessee Health Care Campaign
1103 Chapel Ave., Nashville, TN 37206
615-227-7500 in Middle TN • 1-800-280-8682 • www.thcc2.org