Mismanaged Care

Mismanaged Care

Tennessee once had a visionary health care plan for that left only 14 percent of residents uninsured. But with federal cuts and a governor’s misguided attempt to privatize Medicaid, Tennessee is just another state unable to protect its citizens.



Every day this summer, a couple of dozen folks staged a sit-in outside the office of Tennessee’s Democratic governor, Phil Bredesen, to protest drastic cuts in TennCare, the state’s Medicaid program. The protest was “the best thing I’ve put effort into in my life,” says TennCare enrollee Glen Barnhill, a 45-year-old from Nashville who stocked grocery shelves at Kroger before he was rendered a quadriplegic from a gunshot wound to his brain. “If we don’t keep fighting,” Barnhill says between puffs on his ventilator, “these people are going to die.”

Nearly 200,000 Tennesseans lost their health insurance in July, while 379,000 others now have limited prescription drug coverage and face more benefit cuts this winter. Until this summer, these mostly poor residents had comprehensive health coverage under the boldest, most visionary expansion of Medicaid the United States had ever seen. TennCare covered two groups that have trouble buying insurance in every state: low-income adults whose employers do not provide medical benefits, and people with health conditions that make them uninsurable. At its peak, TennCare covered almost 1.4 million people. By the late 1990s, only 14 percent of the state’s population was uninsured–while in states like California and Texas, one-quarter of the population had no insurance.

Today TennCare is $60 million in the red, and Tennessee is just another state struggling to keep poor and terminally ill people insured. All across the country, Medicaid offices are reducing benefits, freezing provider payments and kicking people off the rolls. But the outcry has been loudest in Tennessee–both because its program was once the best and because no other state has slashed Medicaid so deeply. Governor Bredesen, who made his fortune in managed care, has refused to meet with the protesters in public, as they’ve requested. He has also ignored calls for a special legislative session to reconsider the TennCare cutbacks. The state’s senior senator, Republican majority leader Bill Frist, has not been helpful either. Before he was elected to the Senate, Frist championed TennCare; now he says the program’s troubles are a state matter, and he can’t get involved. “It’s ironic how Senator Frist stands up for Terri Schiavo,” says protest organizer Lori Smith, “yet denies medical care to his own people in Tennessee.”

The ironies don’t stop there. At its conception in 1994, TennCare looked like a national model for expanding Medicaid coverage. Born in the days of Lyndon Johnson’s Great Society as a way of covering the poor, Medicaid has evolved into the nation’s largest health insurance plan, now covering 53 million Americans. The federal government matches the money a state puts up for the program, but states have broad latitude to add benefits and enroll more residents as they see fit. As President Clinton’s plan for national healthcare collapsed and the number of uninsured continued to mount in the mid-1990s, Tennessee leaders came up with a creative solution: Redirect money that hospitals were already spending on care for the uninsured into a unified program that would cover more people and better control costs.

Crafted at a time when policy experts believed managed care was the antidote to rising medical costs, TennCare relied on HMOs to provide benefits. The theory was that if the state did managed care right, it could cover a good chunk of the uninsured. But TennCare’s HMOs did little managing. First Health Services Corporation, owned by a company that Bredesen founded, failed to implement federal requirements designed to insure that drugs are prescribed properly–but never lost its contract with the state. The state allowed two HMOs to “cover” residents even though they were undercapitalized and could not pay providers for care their patients received. Eventually the state assumed the risk and responsibility for all patients’ medical expenses. But Tennessee continued to pay the managed care companies handsome fees–simply for processing claims. For the HMOs it was a sweet deal: fees but no risk.

Former Governor Don Sundquist, a Republican, sped along TennCare’s slide into insolvency. In 2002, during routine Medicaid renegotiations with the federal government, Sundquist agreed to give back some federal matching funds–even though the program was already running into financial trouble and starting to trim residents from its rolls. Until 2002 anyone who was uninsurable could join TennCare, regardless of income, in return for paying premiums; those with higher incomes paid more. That changed dramatically in 2002, when the state closed TennCare to anyone with an income above poverty level–and stopped enrolling people who could not buy insurance because of bad health.

That same year, Tennessee voters rejected an income tax that could have helped pay for TennCare. The governor has refused to support subsequent proposals for new sales taxes on alcohol and tobacco. “There’s no political appetite in this state for new taxes,” says TennCare spokesperson Michael Drescher.

If Tennessee can’t, or won’t, pay for medical care, it’s fair to ask a stark question: How can the thousands of people thrown off the rolls–including heart-transplant patients and people with lupus, diabetes and severe mental illness–survive?

Kathy Chamberlain would like to know. The 46-year-old, who used to play acoustic guitar at Nashville blues cafes, fights back tears as she describes an incessant ringing in her ears, the result of slipping on a puddle of water in a local supermarket and hitting her head on the floor. She has never been the same since, and she relied on TennCare to pay for her treatment and for antidepressants–drugs she didn’t need before the accident. Those drugs now cost $639 a month; a discount card from the state, sent to TennCare enrollees who lost their coverage, pares her bill to $463. Chamberlain still can’t afford it; she has to use her mother’s credit card to buy her prescriptions.

“I have never encountered anything that I could not change until this,” Chamberlain says. Even if she could afford to buy insurance, her illness would prevent her from getting a policy. She can’t change that, either.

The thousands of Chamberlain’s fellow Tennesseans who have been kicked off TennCare haven’t seen the worst of it yet. The Center on Budget and Policy Priorities estimates that the massive loss of TennCare coverage will lead to an increase in uncompensated care that will cost “safety net” hospitals and clinics in Tennessee as much as $450 million annually. Waiting lists will grow longer, and the lost revenue could force some hospitals and clinics to close. Mary Bufwack, director of Nashville’s United Neighborhood Health Services, says her budget is not big enough to serve all the newly uninsured who are showing up at her five clinics for the indigent. Forty percent of UNHS’s budget had been coming from TennCare payments.

Some former TennCare patients are turning to drug-company assistance programs for help, but the wait for free drugs is six to eight weeks–if their incomes are low enough to make them eligible. Others are begging doctors for medication samples left by sales representatives. Hickman County healthcare activist Cindy Clark says doctors are running out of free samples. “They are overwhelmed,” says Clark. “We see a disaster taking place in this state.”

A disaster indeed. The Center for Health Services Research at the University of Tennessee-Memphis estimates that TennCare cuts will result in the deaths of as many as 3,311 people over the next fifteen years. Fifty-two-year-old Diane Wood can only hope she’s not one of the casualties. Wood, who lives in the rolling hills east of Nashville, calls herself “fortunate” to have breast cancer; so far, women with breast or cervical cancer have been allowed to stay on TennCare. But this past summer’s remake of TennCare instituted severe caps on prescription drugs, limiting recipients to two brand-name prescriptions and three generics per month. That has forced Wood to choose which of her other illnesses–diabetes, osteoporosis, failing kidneys–she will treat. Wood, who earns $50 a week baby-sitting her grandchildren, has decided to treat her cancer and kidney disease and say “to heck with” the diabetes and osteoporosis.

“Caps are the crudest cost-containment policy I can ever imagine,” says Dr. Stephen Soumerai, a professor and drug-policy researcher at Harvard University Medical School. “What caps do is completely counter to everything we know based on research in the field.” They certainly don’t save money in the long run. When people like Wood can’t get the medicines they need, they get sicker and end up in nursing homes and other institutions where the cost of care is greater than the savings generated by the caps.

A growing number of Tennessee doctors, particularly specialists and those in rural areas, refuse to take TennCare patients. Doctors grumbled from the start that the state paid them too little to treat these patients. Like doctors everywhere, they prefer to serve those insured by commercial carriers like Aetna or Blue Cross, which pay more than Medicaid. In a recent survey of its members, the Tennessee Medical Association found that although 88 percent said they still work with TennCare, 20 percent are not taking new TennCare patients and 27 percent are considering ending their contract with the program. The main reason, says association senior vice president Russell Miller, is that cuts in benefits are compromising the care doctors want to give–and increasing the legal liability they are exposed to.

Doctors who still accept TennCare patients know what’s going to happen. “We kept a lot of people from dying for over a decade,” Nashville gastroenterologist Robert Herring said recently, after a long day of performing colonoscopies on people about to lose their coverage. “It’s a shame we couldn’t provide a bridge until we have national health insurance,” the doctor said. “Now I am going to cry.”

Outside of Tennessee, the most radical response to the nationwide Medicaid crisis has unfolded in Missouri. Earlier this year legislators axed 104,213 people from Missouri Medicaid–and ordered the state to get out of the Medicaid business altogether by 2008. Where Missouri was once one of the dozen states with the lowest number of uninsured residents, it will become one of the dozen with the highest number after all its cuts take effect. Already, the state has stopped paying for feeding tubes and nutritional formula for thousands of residents with brain damage and other disabilities. It won’t pay for other lifesaving items, like breathing machines, either.

In October, the federal government gave Florida permission to radically transform its Medicaid program into a “defined contribution” arrangement instead of an entitlement. Recipients will get a set amount of money for medical care, and private insurers will make many of the decisions about coverage–with no public scrutiny. If Florida’s plan becomes the model for other states, as some healthcare activists fear, it will mean that poor people will get less and less medical care over time.

While the states chop benefits, the federal government is also aiming to cut its share of Medicaid funding. Congress has ordered a commission–chaired by former Tennessee Governor Sundquist–to recommend ways to slash $10 billion from the federal government’s Medicaid budget. While the cuts will devastate thousands of Americans, they will do little to address the real financial problem facing the US healthcare system: how to create a new revenue source that will provide coverage for everyone and spread the risk of illness, much the way Social Security spreads the risk of citizens having no income in old age.

While Tennessee once aspired to be a leader in expanding health coverage, its current governor wants to make it the national model for retrenching and privatizing Medicaid. A confidential document called “Back to Medicaid Kick-off,” prepared by TennCare’s deputy commissioner and the state commissioner of finance and administration, not only outlines steps for gutting TennCare but also vows to “set the stage to allow the Governor a broader healthcare reform platform.” In the view of Michele Johnson, a lawyer with the Tennessee Justice Center, Bredesen’s “political future depends on transforming Medicaid into a market-based system, and he believes he can ride the market-based approach to the national stage.”

Bob Corney, the governor’s communications director, says the governor has no plans to run for any office except his current one; Bredesen will seek re-election next year. But the governor’s stand on Medicaid has already brought him national attention. At a University of North Carolina “emerging issues” forum in February, and again in June at the National Press Club in Washington, Bredesen gave his vision for what he called Medicaid 2.0. The governor called for all Medicaid recipients to pay “something”–i.e., higher deductibles and co-payments. Medicaid, Bredesen declared, should pay only for treatments that work and for “things that are important.”

While few experts would quarrel with paying only for “what works,” it’s far easier said than done. No drug company or medical-technology firm peddling ineffective treatments will give up its business without a political fight. And shifting costs to those who can’t pay for treatment only increases long-term costs to the state.

Bredesen has steadfastly refused to seek new money to insure those who are being booted off TennCare. Indeed, his staff’s “Back to Medicaid Kick-off” document sets a goal of stifling any alternative proposals for new revenue. Bredesen has also declined to dip into the state’s $200 million surplus funds. “You can’t revenue your way out of this problem,” insists TennCare spokesperson Drescher.

However noble the TennCare experiment was, it ultimately demonstrated the futility of states’ efforts to solve a national problem by themselves. In late July, protesters at the state capitol hauled a bell from the Edgehill United Methodist Church onto Nashville’s legislative plaza. They rang it to represent every Tennessean affected by the TennCare cuts. It took four days to complete the roll call.

The tolling of that bell is the real lesson of TennCare for people all across America: The bell tolls for thee.

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