Posted on 01/27/2003 10:27:46 AM PST by GailA
Blowing fog away from TennCare
By Guest columnist Cyril F. Chang is a professor of economics at the University of Memphis. January 27, 2003
To some Tennesseans, TennCare is a shining example of government fulfilling its duty to ensure needy citizens have access to health care. The program has expanded medical coverage to more than 500,000 previously uninsured and uninsurable Tennesseans, and has improved the quality of care for one-fourth of the residents of this state.
To others, TennCare is the source of all sorts of problems. In this view, it is the cause of unmanageable budget deficits and has disrupted the state's health care delivery and financing systems.
How can we disagree so much about such an important program? There are several explanations.
Tennessee spends $5.9 billion a year on TennCare. Among the states, that is the 12th highest amount of spending on health care for low-income residents.
TennCare expenditures per $1,000 of state tax revenue are second highest in the nation for low-income health care, and expenditures per $1,000 of overall personal income are fifth highest among all states. Thus, it appears Tennessee overspends on TennCare relative both to the size of its population and its ability to pay.
However, Tennessee spent only $2,583 for each TennCare enrollee in 1998 - a figure significantly lower than the U.S. average of $3,822 per Medicaid enrollee - according to statistics reported by the reputable Kaiser Family Foundation. Only California spent less than Tennessee per enrollee. Thus, TennCare provides care at a very low cost per person compared to other states' Medicaid programs.
The high overall costs of TennCare reflect the large number of its enrollees. This distinction is key to the claims and counterclaims by providers and government officials about TennCare's costs.
Doctors and hospitals react to TennCare's very low spending per person, which determines provider payment levels. They say we are not spending enough.
Many taxpayers and elected officials, by contrast, react to TennCare's total costs, which are high compared to other states and, possibly more important, to the state's fiscal resources. They say we are spending too much.
A second major factor that contributes to disagreements about TennCare is our tendency to rely on hopeful but unrealistic expectations for the program. The initial plan for TennCare was based on the belief that a managed care model would result in substantial reductions in health care costs that would be sustained over long periods of time. These savings would pay for expanding coverage to the uninsured and uninsurable, according to TennCare's model.
The recent history of managed care, however, has proved that it produces only modest initial reductions in overall costs, and leads to only limited and short-term reductions in the rate of growth of health care costs. Thus, TennCare might more realistically have been expected to moderate cost growth than to produce long-lasting stabilization or actual reductions in spending.
Another unrealistic expectation is that TennCare can be fixed by running it more efficiently. Tennessee's new governor, Phil Bredesen, and his Republican opponent, Van Hilleary, expressed that view during last year's gubernatorial campaign.
TennCare operations surely can be improved. But the projected savings from such efficiencies will not cut the cost of TennCare enough to trim substantially the financial burden it imposes on state and federal taxpayers.
High-quality health care is expensive and the needs of TennCare's clients are great. The annual percentage growth of health care costs nationwide has returned to double digits; it is not reasonable to expect TennCare to defy this trend.
Finally, many taxpayers do not fully understand how TennCare works, nor do they appreciate its interlocking relationships with the rest of Tennessee's health care system. For example, many Tennesseans believe the state effort to remove a large number of previously uninsured and uninsurable individuals from TennCare's rolls will save money without hurting people.
The federal government pays two-thirds of the TennCare bill. Thus, for every dollar the state saves on TennCare spending, it loses more than two dollars of federal matching funding. To save a dollar in state expenditures, the state must withdraw three dollars from health care services.
In addition, many of the Tennesseans the state wants to remove from TennCare rolls will become uninsured. They will still need and get health care, but without insurance coverage.
Uninsured patients use, on average, about 60 percent of the health care services that insured patients use. In Tennessee, the costs of these services will simply be shifted to other payers, such as private insurance companies and their customers, to local communities, and to health care providers.
The reduction in TennCare coverage will lead to more cost shifting than cost cutting. Most significantly, a lack of adequate insurance coverage leads to less preventive and acute health care. That results in greater disability, higher death rates from common conditions, and higher long-term health care costs.
TennCare is a bold experiment with noble objectives that has produced significant achievements. It is also an imperfect managed care trial, based on unrealized expectations about the cost of the program and the ability of managed care to save money.
TennCare requires substantial changes. But true reform begins with good information, so voters can sort myths from realities.
Mr. Chang is right you have to be informed.
The Oak Ridger.
The state Comptroller's audit of the Department of Finance and Administration, which oversees TennCare, listed 47 findings, including "many serious internal control deficiencies that have caused or exacerbated many of the TennCare program's problems."
"For the past seven years, TennCare has failed to implement effective eligibility procedures for uninsured and uninsurable enrollees," said the audit released Thursday. It included many of the findings listed in the state's comprehensive Single Audit Report March 28 to the federal government, as well as problems listed in previous years' audits.
The audit found that TennCare paid more than $48 million during the 2001 fiscal year to cover 19,959 enrollees who did not live in Tennessee -- some with addresses in other countries.
TennCare officials say they are now checking all people with out-of-state addresses to ensure they're properly enrolled -- such as college students or Tennesseans institutionalized in other states. Some 1,727 ineligible non-residents have been removed from the rolls.
During 20001, the program also paid $465 million to insure more than 130,000 people who violated the TennCare bureau's rules and ignored instructions on the TennCare application by listing P.O. boxes instead of street addresses.
TennCare officials say post office box addresses often are used by homeless enrollees, those in mental institutions, children in state custody, people in rural areas without home mail delivery and those under court protective orders.
TennCare director Mark Reynolds said the bureau has since trained workers who determine eligibility to get an address whenever possible.
Additionally, auditors said TennCare also paid almost $7 million to provide health care to people in jail, although the state and not TennCare is responsible for inmates; $750,000 for state employees who have access to state health care benefits; and nearly $2 million in improper benefits for children in state custody.
A new process was implemented in May 2002 to ensure that full-time state workers were removed from TennCare rolls, and some 1,194 state employees and their family members have been dropped since June, officials say.
Apparently, we taxpayers in the rest of the country are paying for twice as much of TennCare as the State is paying. This must be Hitlery's revenge!
Is not that the number to look at? By their logic, if we spent $10 per person for 20 billion people the program would be a rousing success. Although the state would financially collapse. Woo Hoo!
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