The Potential Impact of Eliminating TennCare and Reverting to Medicaid: A Preliminary Analysis

Publication Date: November 2004

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Victoria Wachino; Leighton Ku

Research Area: Health

Keywords: State budgets; Economic inequality; Economic projections; Health care costs

Type: Report

Abstract:

On November 10, Tennessee Governor Phil Bredesen announced, “I have set in motion a process to dissolve TennCare and replace it with a traditional Medicaid program.” The governor estimated that 430,000 low-income Tennesseans could lose TennCare coverage if the state eliminates the eligibility expansions instituted under its TennCare waiver and reverts to a more traditional Medicaid program. This plan to curtail eligibility is the most recent development in an ongoing debate over the future of TennCare. In September, Tennessee submitted a waiver request to the federal government to restructure TennCare substantially, stating that the proposed changes were necessary to save the state money.

Last week, the Governor asked the federal government to table the waiver request, contending that pre-existing court orders under which the state is operating make it necessary to eliminate coverage for about 430,000 Tennesseans instead, nearly one-third of those now enrolled. About 120,000 of the 430,000 Tennesseans who would lose coverage are children. The Governor said he is not yet committed to eliminating coverage for these people but will move to do so if the court orders are not removed or substantially modified. This paper analyzes the potential effect of the proposed coverage elimination on Tennessee’s budget, the state economy, and health care providers in the state. Providers would incur increased costs for uncompensated care if coverage is terminated for several hundred thousand state residents. The analysis provided here is a preliminary assessment of the impact of eliminating TennCare, based on documents currently available.