[Congressional Record Volume 140, Number 145 (Friday, October 7, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 7, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
          HEALTH CARE REFORM THAT WORKS: A TRIBUTE TO TENNCARE

 Mr. MATHEWS. Mr. President, as I look toward the end of my 
service in the Senate, one of my few regrets is that we were not able 
to pass a measure that assures high-quality and cost-effective medical 
care for all Americans. However, there is one fortunate side effect of 
our inaction, and it is that we have another chance to study state-wide 
health delivery programs that achieve what we are attempting to create 
nationally. And one of the most effective of those programs is at home 
in my native Tennessee.
  Last year, Tennessee was in a predicament common to many families and 
businesses: Medical costs were soaring out of control. Cost increases 
associated with Medicaid had outstripped inflation, the growth of 
Tennessee's economy, and the growth of any revenue source that could 
fund the program.
  At the same time, Tennesseans needed Medicaid more than ever. Besides 
nearly 1 million enrolled in Medicaid at some time during the year, 
nearly 500,000 Tennesseans were uninsured or uninsurable--most of them 
working poor and middle-class Tennesseans.
  Constitutionally prohibited from deficit spending, Tennessee had only 
three choices in dealing with the Medicaid dilemma: huge tax increases, 
major reductions in service, or fundamental change.
  Tennessee tried the approach followed by many States--taxes. Between 
1987 and 1993, taxes on health care providers produced nearly $500 
million in annual revenues. However, smaller, rural hospitals lacked 
the revenue base to pay those taxes and stay in business. This 
endangered care in counties already underserved by the medical 
community, and still there was not enough money to continue ``feeding 
the Medicaid bear,'' as Governor McWherter put it.
  Fortunately, the State was developing a model for reforming its own 
employee health insurance program. This program utilizes a statewide 
managed care network of hospitals, doctors, pharmacists, and other 
providers put together by Blue Cross and Blue Shield of Tennessee. 
Initial implementation problems and resistance to the system were 
resolved in its first 3 years. A statewide network in place served 
urban and rural areas, employees were happy with their coverage, and 
costs were being controlled. In fact, Medicaid costs rose 15.3 percent 
in fiscal 1993, but State employee health care costs declined more than 
1 percent.
  President Clinton pledged cooperation in allowing States to become 
``laboratories of experimentation'' for health care reform and his 
policy has given States like Tennessee flexibility in providing health 
care for their citizens. Tennessee used this flexibility to create a 
program that works. It is called TennCare, and it is based on two chief 
principles.
  First it assumes there is enough money in the system to provide 
health care for all who need it if we use resources wisely. 
Policymakers long observed that the amount spent on Medicaid in 
Tennessee could buy private insurance at corporate rates for the 
Medicaid population and the uninsured. Success comes from group buying, 
competent management, and incentives to control costs.
  Second, TennCare believes market forces are more effective than 
government control and intervention. By letting managed care 
organizations negotiate rates and provisions with health care 
providers, Tennessee provided incentives for efficiency and innovation.
  Bolstered by these beliefs, Governor McWherter requested legislative 
authority to replace Medicaid with TennCare. His request was approved 
by a bipartisan majority in the Tennessee legislature. The Governor 
directed staff to prepare a section 1115 waiver request from the Health 
Care Financing Administration.
  Organized medicine and others who benefited from the Medicaid system 
opposed TennCare--unlike the majority of Tennessee's physicians, 
nurses, pharmacists, dentists, hospital personnel, and health care 
providers who worked to resolve problems and serve patients. Before the 
waiver was granted, the Tennessee Medical Association 
launched an unprecedented lobbying effort at HCFA to have it delayed or 
denied. They insisted that more and more money would have to be spent 
on health care to satisfy them.
  Mr. President, they are wrong. TennCare serves more than 800,000 
people formerly on Medicaid plus 350,000 Tennesseans who were 
previously uninsured or uninsurable. It has survived every political 
and legal challenge. It is a remarkable success story being written 
every day in hospitals, doctor's offices, and the lives of working 
taxpayers.
  By the end of 1994 Tennessee will achieve 95-percent insurance 
coverage for its citizens, the highest rate of any State. It puts 
Tennessee 7 years ahead of the ambitious timetable currently discussed 
in Congress to reach 95-percent coverage by 2002. And the money is 
already appropriated in the program to cover the State's remaining 
300,000 uninsured individuals.
  TennCare now covers about 350,000 people who were formerly uninsured 
or uninsurable. Nearly half of those Tennesseans are the working poor 
with incomes below poverty level.
  TennCare is the cornerstone of Tennessee's efforts to reform welfare. 
TennCare uses a sliding scale of premiums, deductibles, and copayments 
for those who are working their way off welfare. They can maintain 
coverage for their family without quitting their job when someone 
becomes sick.
  TennCare has enabled Tennessee to enact the largest tax cut in its 
history--a $500 million elimination of hospital service taxes that 
threatened the existence of many rural hospitals--while letting 
policymakers redirect savings to education and other programs. The 
budget for TennCare this year is about $3.3 billion, about $700 million 
less than projections for continuing with Medicaid.
  The number of paid emergency room claims among Blue Cross' TennCare 
patients, which make up 40 percent of total enrollees, declined 90 
percent in the first 5 months of TennCare. By paying for emergency room 
use only in real emergencies and charging nominal fees for nonemergency 
cases, TennCare creates an incentive for patients to use less expensive 
primary care physicians as their first point of contact with the health 
care system.
  TennCare is meeting all Federal requirements for access to care and 
for maintaining quality of care. In the Blue Cross TennCare network 
alone, the percentage of physicians seeing TennCare patients is almost 
double those who formerly would see Medicaid patients. Every Tennessee 
hospital now participates in TennCare, as do a majority of the State's 
doctors.
  To the greatest extent possible, TennCare has preserved an 
individual's right to choose his or her own doctor. About half the 
Medicaid population and all the uninsured took advantage of the 
opportunity offered by TennCare to select the managed care organization 
they wanted to represent them when the program first began. Every 
enrollee will have the opportunity again this year to redesignate his 
or her choice of MCO's after determining which MCO his or her doctor 
has joined.
  Maybe the best news about TennCare is that participants like the 
program, believe they are getting quality medical care, and have access 
to care. Those were the findings of a survey conducted among 5,000 
Tennesseans by the University of Tennessee.
  The bottom line, Mr. President, is that TennCare is working for 
Tennessee, thanks to the efforts of Tennessee Governor Ned McWherter 
and Commissioner of Finance and Administration David Manning. TennCare 
can teach many lessons as the Senate continues to study national health 
care reform. And I add that the efforts of President Clinton and the 
First Lady will do much in building a base for our Nation's continuing 
deliberations. I believe that the example of TennCare will serve as a 
worthy case to consider as those deliberations go forward in the 104th 
Congress.

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