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'Downstream cost' is not just on the balance sheet

Any decision-maker knows that every important action risks unintended consequences. Those unintended outcomes can exact terrible "downstream" costs. Part of the art of management is to assess options honestly, and then act to mitigate the cost effects of your ultimate decision.

In TennCare, the ‘downstream costs’ of Gov. Bredesen’s cuts are mounting, both for the 191,000 cut off and for the more than 400,000 adults who have arbitrary limits on their care.

There are human costs: People have died, others have seen their health deteriorate to that point that they can no longer hold jobs or care for family members.

• Janice Beck of Nashville, 58, has had to sell her car to obtain medicines to stay alive since she lost her TennCare. She could not afford the knee-replacement surgery she needs, or her asthma and bronchitis medicines. ``I can’t drive, I can’t walk, I can’t breathe,’’ she told the Justice Center.
  
  
• Hospitals, clinics, doctors and pharmacists are facing the ethical dilemmas entailed by having to deny needed care to longtime patients. Physicians are straining to fill out the long, complex forms for free medicines for their patients through drug company programs – programs that are limited in scope and won’t approve all applicants or all medicines.
  
  
• Mental health providers are watching their severely ill clients deteriorate – many do not meet the state’s criteria for `safety net’ services they clearly need. Some will ultimately become sick enough that they will require inpatient treatment at state expense.

There are economic costs: TennCare’s cuts mean the state has given up $1.2 billion in federal matching funds that would have come to Tennessee to pay for health care.

• Uncompensated care by hospitals is rising, and that cost is passed on to paying customers and private insurers.
  
  
• Tennessee Hospital Association estimates that 20 hospitals will be at risk of closure because of these cuts, many of them in rural areas where health care is already scarce. For rural communities, the economic loss from a hospital closing has devastating lasting effects.
  
  
• A September, 2005, study by the UT Center for Health Sciences Research estimates the following economic impacts resulting from an actual state spending reduction of $100 million:
  
  • 2,685 Tennessee jobs lost
  • $289.5 million in economic loss to the state

There are greater costs to taxpayers:

• Almost all adults remaining on TennCare have a fixed, five-prescription limit, regardless of their medical needs. This "hard" limit – as medical experts have testified in court – could end up costing TennCare more money than it saves. Enrollees will become sick and require hospitalization, or worse, as a result of not having their medicines. Governor Bredesen has the ability to put a "soft" limit into place – one that would allow doctors to appeal for additional medicines if needed – but has not done so.
  
  
• Already, local jails are reporting an increase in the numbers of mentally ill crowding the jails – usually because of the commission of minor offenses. County governments generally pick up the expense of mental health drugs and services for those incarcerated. Most, however, will decompensate quickly upon release because they have no help at all outside the justice system.
  
  
• In rural areas, sheriffs deputies frequently end up being the ones transporting severely mentally ill Tennesseans to mental health inpatient facilities. This cost is borne by county governments as well.
  
  
• As enrollees and disenrollees decline in health, some will become eligible for nursing home care, ultimately coming onto Medicaid rolls at an average cost of $36,000 per year. In many cases, the caregivers of fragile disabled people have lost their TennCare, and become unable to care for their disabled relatives at home, again forcing people into more expensive nursing home settings.
  
  
• In court testimony, Finance Commissioner Dave Goetz admitted that there will be significant "downstream costs" to the TennCare cuts, but said that the Governor’s staff never researched them in order to quantify their effect or mitigate those costs.
  
  
• And yet, the Governor continues to insist that the TennCare cuts are budget-driven – an attempt to rein in costs so that the state can afford to invest in areas like education. If that’s the case, the Administration clearly failed the basic requirements of management.