2005 TennCare Cuts

Nothing better reflects TJC’s commitment to integrity than the organization’s defense of the 1.2 million Tennesseans who depend on TennCare for vital – sometimes lifesaving – medical care.

In the years leading up to 2003, TennCare was plagued by mismanagement at the hands of the private HMOs that ran the program, by rising costs and by persistent violations of federal laws. In order to protect the vulnerable children and adults who depended on the program for lifesaving medical and mental health care, TJC had to turn repeatedly to the courts. TJC won a string of important class action victories that enabled it to hammer out detailed agreements, known as consent decrees, in which state officials pledged to comply with federal laws. The cases governed different aspects of the TennCare program, including appeal rights for patients, health care guarantees for children (with special safeguards for children in Tennessee’s troubled foster care system) and protection of people with disabilities.

In 2003, Tennessee Governor Phil Bredesen took office after having campaigned on a pledge to use his expertise as a former HMO entrepreneur to save the ailing TennCare program. His administration immediately began what turned into six months of intense negotiations with TJC in an effort to revise the consent decrees to give the state more flexibility. In August 2003, Governor Bredesen held a press conference to announce a “global settlement” involving renegotiated agreements in four statewide class actions that TJC had won. The Governor lauded TJC for its constructive role and said the new agreements he had negotiated enabled him to manage TennCare going forward. The settlement would save the state $350 million, in return for new pledges to protect the program’s beneficiaries and curb costly contractor mismanagement and abuses.

Within a matter of months, however, Governor Bredesen repudiated the agreements. He attributed the agreements to former governors and vilified TJC and its staff for having imposed terms that he claimed made it impossible to manage the program. Using TJC, the federal courts and the 2003 settlement as justification, he pushed through drastic cuts in the program in 2004-2005.

The cuts meant that 170,000 Tennesseans, most of whom suffered from serious disabilities and chronic illness, lost their health coverage. An analysis from the University of Tennessee Center for Health Services Research projected that cuts of that magnitude would result in an additional preventable death every thirty-six hours among the group that lost their coverage. Over the next five years of the Bredesen Administration, the state eliminated coverage for another 100,000 people with disabilities, including over 10,000 medically fragile children. The initial cuts combined with further eligibility restrictions ultimately meant that over 350,000 people were cut. TennCare also cut services for those remaining on the program to the lowest levels of any Medicaid program in the nation. Those cuts include reducing prescription drug coverage to five prescriptions per month, far below the requirements of TennCare’s many patients with multiple chronic illnesses.

Many clergy leaders, doctors, state legislators, editorial writers and community leaders opposed the cuts. Numerous organizations, from the Children’s Defense Fund to AARP, supported a set of TJC proposals that would have preserved patients’ coverage by increasing the HMOs’ accountability for containing TennCare costs. The Governor, though, contended that TJC stood nearly alone in raising what he claimed were irresponsible objections to his policies. Internal state documents that later came to light during litigation showed that the Bredesen Administration:

In conjunction with the TennCare cuts, the Governor took the unprecedented step of hiring five national law firms to assist the Tennessee Attorney General’s Office in setting aside the consent decrees negotiated in 2003. In intense and costly litigation starting in 2004, TJC was forced to defend against a broad effort to strip TennCare’s 700,000 children and 500,000 adults of the legal protections guaranteed to them by federal law. The courts rejected state efforts to have TJC removed as counsel for TennCare patients. In a two year period, when TJC’s annual budget was less than a million dollars, the state paid the private firms $10 million to, as one cabinet-level email put it, “significantly lower [TJC’s] ability to stop us by draining resources.” A national religious journal aptly compared TJC to David battling Goliath.

TJC weathered the loss of funding, threats, widespread vilification and resulting isolation to keep faith with the children and families whom it represented. At great cost, and despite the loss of several legal battles, TJC won major victories and preserved most of the patient protections that the state had challenged. More than those victories, however, we are proud that TJC’s work, when tested in a political and legal crucible, consistently reflected the high levels of integrity and fidelity that are our core values.

For more information and resources about the TennCare cuts, please visit our TennCare Myths page; our section covering the timeline surrounding the cuts is a good starting point. Also, the prestigious policy journal, Health Affairs, interviewed TJC attorney Gordon Bonnyman about TennCare and the 2005 cuts, and you can read that interview here.