DAY TWENTY-EIGHT: Bredesen’s Plan Costly to Tennessee.

Governor loses federal money, jobs, and Tennessee business with his proposal.

By Tim Wheat

(BOULDER COLORADO, July 17, 2005) Governor Bredesen’s replacement for TennCare will cost the state over a billion-and-a-half dollars each year, put a minimum of 14,500 Tennesseans out of work next year, significantly decrease the healthcare in the state and expand the cost of uncompensated care $230 to $450 million each year.

When the governor and his lawyers talk about saving Tennessee $93 million, they are speaking only of the myopic state budget savings. Because the state is compensated by the federal Medicaid program at a rate above two-thirds, the governor’s plan will see an enormous fall of revenue into the state. The Center on Budget and Policy Priorities reported the impact of the reduction of federal funds “would lead to a reduction in business activity in the stat of at least $1.6 billion and a loss of at least 14,500 jobs in fiscal year 2005-2006.”

The governor will not meet publicly with protestors about his plan and he has not addressed the economic impact of his proposal, although he has been aware of the problem of a drop in federal money for more than a year. McKinsey and Company reported this huge loss of federal funding in February of 2004. Governor Bredesen responded by making J.D. Hickey, a former manager for McKinsey, the head of TennCare, and the administration has become silent about the loss of federal matching funds.

The progressive nature of TennCare is that is makes use of the high federal match to make a Tennessee tax-dollars work more for the state and the state economy. Each Tennessee dollar draws two more from the feds and can only be spent in the state; the economic impact is more jobs, more service and better healthcare.

Rather than make the system less burdensome on the state budget as proposed by activists, Bredesen has chosen to compress the whole system: less state money and much less federal money. The result of the governor’s proposal is loss of jobs, less service and poor healthcare.

To save money from the state treasury, however, will mean healthcare costs will be shifted to local taxpayers. Tennessee taxpayers will see an increase in their tax-burden as the governor reduces the state portion of healthcare coverage and local governments pick-up more of the uncompensated care. The Center on Budget and Policy Priorities found that “newly uninsured patients would seek uncompensated medical care from health care providers equal to about $230 million to $450 million in value each year.”

Bredesen and Hickey have attempted to portray TennCare coverage as disproportionate in the Medicaid system, that other US states are “less generous.” Hickey, in announcing that Tennessee will cut ventilator services sending citizens into expensive institutions to get assistance notes, “Thirty other states in the country do not pay for these services at all.” 

Other states however, use home and community services as a way to decrease state costs. Colorado, for example, has a nursing home population of less than 10,000 while Tennessee’s is over 40,000. By providing non-institutional alternatives Colorado is able to avoid expensive and undesirable institutionalization while providing better service to citizens. Colorado does not offer private duty nursing because citizens have less expensive Medicaid services in the community, not, as Hickey implies, other states are cheap.

In fact, Tennessee has identified 6,458 individuals that are in nursing homes that wish to live independently. Providing these citizens with services in the community typically costs one-third of the cost of institutionalization. That translates into a savings to the state of over $150 million. If Tennessee cut its nursing home population in half, the savings could be $2.6 billion. 

Instead of learning from other US states of ways to cut Medicaid costs, Tennessee continues to carry the bloated, corporate-welfare dependent, nursing home industry on the state’s back. Although over 60% of their profits come from public sources, the nursing home industries lobby is the fourth largest in the state. They supply funds for candidates in every county, and every county has a nursing home. Cost-saving desirable alternatives are ignored to keep feeding the institutional behemoth in Tennessee.

Outside the governor’s office Stan Davidson says that there are some “scraggly guys” but that it has been a relatively calm weekend. Since Monday there has been no new supplies of food and water for the demonstrators, but Stan said they have all has some food to eat but they don’t require a lot.

Governor Bredesen is reportedly in Iowa today at the National Governor’s Association meeting. Stan imagines what he would say to the governor if he were in Des Moines today:

“What is it going to take to get you to do the right thing and put on the breaks?” Stan Davidson hypothetically asks Bredesen, “or either, what will it take to get you to stay there in Iowa and not come back?”

- Tim Wheat