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FRIDAY, JANUARY 30, 2004

NATIONAL REPORT CRITICIZES TENNESSEE

FOR FAILURES IN ITS TENNCARE PROGRAM

WASHINGTON, D.C. (January 30, 2004) – An assessment of health care in the 50 states, released here today, finds that Tennessee’s managed care approach to expanding health coverage for its citizens has been riddled with managerial problems that have left the program careening toward insolvency. The report appears in the February 2004 issue of Governing magazine.

“There’s no question that TennCare was begun with the best of intentions,” says Katherine Barrett, the report’s co-author. “In fact, its goal was to cover Tennesseans whose incomes reached as high as 400 percent of poverty, and that’s way beyond what any other state was offering. Even now, Tennessee has the lowest rate of uninsured of any of the Southern states. Unfortunately, its costs are skyrocketing and if nothing is changed it will essentially devour almost all new state tax appropriations in just a few years.”

The problems in TennCare, which was inaugurated in 1994, cropped up early. Governors changed a year after the program began; it had unrealistic assumptions about costs and a very high rate of managerial turnover. But, the author’s note, the biggest problem was “the state’s reliance on unstable and untried managed care organizations. At the basis of the program’s philosophy was the use of capped fees, but following negotiations with the federal government in 2000, Tennessee leaders reverted to a partial fee-for service system. Expenditures escalated by 15 percent a year in 2001 and 2002 and 13 percent in 2003.” The report quotes a McKinsey & Co. study as saying that “TennCare as it is constructed today will not be financially viable.”

Governing’s analysis of state-funded health care is part of the Government Performance Project, a six-year-old effort, funded by the Pew Charitable Trusts, to evaluate a wide range of state government management and policy functions. This year’s special report focuses on six critical health care problems facing states: long-term care, public health, mental health, prescription drugs, access to care for the uninsured, and care for children.

The Government Performance Project found and documented the inability of the 50 states’ health care system to deliver improvements in medicine fairly and consistently to many of their citizens. Health care in most states is not just inadequate, the study concluded--it’s deteriorating. “After exhaustive analysis and hundreds of interviews,” says Peter Harkness, Governing’s publisher and editor, “it became clear that there is a health care crisis in America. But it is in no way a medical crisis. It is a fiscal crisis.”

Governing is a policy and management magazine aimed at high-level state and local government officials. An online version of this report will be available at http://www.governing.com/gpp/2004/intro.htm as of January 29. Press releases for each of the 50 states can be found at http://www.governing.com/gpp/2004/press.htm.

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