MYTH #5:
“Consent decrees, which were agreed upon by the state in the 1990s, prevented the state from implementing TennCare reform, and left the Governor with no choice but to cut the program.”1 

REALITY

A consent decree is a contract between the parties to a lawsuit, who ask that their agreement be made an official order of the court. In the case of the TennCare consent decrees, it was Governor Bredesen himself who negotiated the agreements over a five-month period in 2003. In each of four separate lawsuits, the Governor either negotiated new orders or personally reaffirmed earlier agreements made by his predecessors. In all four cases, Governor Bredesen pledged on behalf of the state to end violations of federal law and requested the federal court’s approval for the agreements. Governor Bredesen claimed at the time that the consent decrees would “clear the way for some important reforms that we need to make” to the TennCare program.2 In requesting approval for the decrees, the Bredesen Administration specifically represented to the federal court that the decrees “enable the State to achieve substantial savings, thereby obviating other TennCare reductions in benefits and/or eligibility that would be harmful to [TennCare enrollees]”. So, if the consent decrees are an obstacle to reform, they are of the Governor’s own making.

In reality, though, the consent decrees had the positive effects that were intended. In court documents filed in February 2005, a Bredesen Administration official acknowledged that the consent decrees had produced for the state a one-time saving of $114 million, plus recurring annual savings of $175 million.3 

It was after the Governor realized that his own reform plan was a failure that he made scapegoats of the consent decrees and the public interest attorneys with whom he had negotiated the decrees. When running for office in 2002, Governor Bredesen had promised the public that he could save TennCare without new taxes through better management of the program. In 2003, he promised the federal courts that, if they would approve the consent decrees, he would reform the program without cutting services or eligibility. In February 2004, the Governor unveiled a reform plan that he claimed would not only save TennCare but be a model for the nation. 

In late September 2004, only a few days after submitting his proposal to CMS for approval, Governor Bredesen was informed by his staff that the plan would not reach the Governor’s budget targets. It was this recognition of failure that drove the administration to its decision to disenroll large numbers of people.4 In trying to deal with the political consequences of the reform plan’s failure, the Administration decided upon a public relations strategy designed to place the blame on the consent decrees and advocates.5 

The Tennessee Justice Center started writing letters and seeking meetings with the Bredesen Administration within days of the Governor’s February 17, 2004 announcement of his plans to cut TennCare. The Center offered to negotiate changes to the consent decrees that had been finalized only months before, and the Center offered detailed technical suggestions for policy alternatives that would achieve cost savings without harming TennCare patients. When the Administration spurned these proposals, the Center acted on its own and asked the federal courts on November 15, 2004 to amend the decrees as necessary to permit the Governor to implement any changes authorized by CMS, provided that the state maintained coverage for those on the program. The Administration rejected the offer within 48 hours without analyzing its fiscal impact. The Center continued to write letters to state officials proposing alternatives and seeking negotiations. The Administration has found it more useful politically to use the consent decrees and the Tennessee Justice Center as scapegoats than to respond to those offers.