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MYTH #17: REALITY While it is true that Tennessee spent more on Medicaid than other states, total state spending on health and mental health services was actually less than many other states, including such neighbors as Georgia and North Carolina.1 When TennCare began in 1994, the state folded almost all state and local funding of health and mental health services into the new program. The purpose was to use those funds to leverage more federal Medicaid matching payments. The strategy was shrewd and worked to the state’s financial advantage, for by maximizing federal funds, Tennessee was able to buy more services than other states that spent more of their own money. But it meant that Tennessee put almost “all of its eggs in one basket”, with an expanded Medicaid program but few services outside of Medicaid to meet health and mental health needs. That left Tennessee uniquely vulnerable to cuts in its Medicaid program, because there was little in the way of a safety net for people to fall back on.2 1 Compare total state spending on health and mental health programs, including Medicaid and other programs: Georgia: Total expenditures ($27.981B) minus federal funds ($12.333B) = $15.648B Source: National Association of State Budget Officers, Milbank Memorial Fund and Reforming States Group, 2002-2002 State Health Expenditures Report (June 2005) Table 46, p. 59: Total State Expenditures – Capital Inclusive, Fiscal 2003; Table 14, p. 25: Total State Health Expenditures – Fiscal 2003. 2 Governor Bredesen acknowledged that, in the shadow of TennCare, the state’s health care safety net had “atrophied”. See Governor’s Press Office, “Bredesen’s Statement on Executive Order Establishing the Governor’s Task Force on the Health Care Safety Net”, Jan. 24, 2005. |