MYTH # 9:
“Governor Bredesen had the right idea when he said he was going to manage TennCare just as he would his private HMO. TennCare should look more like commercial insurance.”

REALITY

For an HMO executive, excluding the sickest and most costly people is good business. For a public safety net program, such as TennCare, such a policy is poor management and defeats the purpose of the program.

There are good reasons for the differences between TennCare and commercial insurance.  Medicaid is designed to serve as the safety net that fills the gaps in the commercial insurance system.  TennCare therefore covers patients and serves needs that no commercial insurance plan will touch.  For example, TennCare spends $1.25 billion on nursing home and other long term care, an item that no commercial health plan covers.1 TennCare provides mental health services that few private insurers cover, enabling the state to use federal matching funds to relieve the burden on state-funded psychiatric facilities.  The pharmacy benefits in TennCare are more generous than many private plans, because Medicaid covers a much sicker population.  The sickest enrollees who account for most prescription drug costs cannot pay for the medications out of their pockets, and it is cheaper to maintain them on medication than to pay the high cost of hospital and nursing home care that they would incur if they went without their medicine.  75% of TennCare’s expenditures go to the sickest 15% of enrollees.2 Almost none of them would be eligible for commercial insurance, because their age and medical conditions prevent them from working and make it impossible for them to buy individual insurance coverage. These are the very people whom the Governor has eliminated from TennCare.

 

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