Bredesen warns cost to state could exceed $3 billion

Bredesen warns cost to state could exceed $3 billion

October 14th, 2009 by Andy Sher in News

NASHVILLE - Gov. Phil Bredesen warned Tuesday that pending federal health care legislation could cost Tennessee far more than the $735 million "best estimate" his administration previously has cited.

The $735 million would stretch over five years, but "in addition, there are huge unknowns for the states in this reform," Gov. Bredesen said, estimating that those costs, if realized, could exceed another $3 billion from 2014 to 2019.

The governor's comments, made during a health care forum at Belmont University, came hours before the U.S. Senate Finance Committee approved a $829 billion health care overhaul sponsored by Sen. Max Baucus, D-Mont. The plan relies in part on state Medicaid programs such as TennCare to extend health insurance coverage to millions.

"I'm glad they're trying to do it without increasing the federal deficit, that certainly is important," said Gov. Bredesen, a Democrat who has been critical of the plan's impact on states. "But to turn around and increase the state deficits as the way to handle it that does not seem a very appropriate way to do that."

The Baucus plan and other congressional proposals require Medicaid, a state and federally funded program that largely covers low-income single mothers and children, to begin covering people under 65 whose incomes are at or under 133 percent of the poverty rate.

Contributed Photo by Wes Aldridge Gov. Phil Bredesen speaks at today's healthcare forum event, Diagnosing Our Future, at Belmont University.

Contributed Photo by Wes Aldridge Gov. Phil Bredesen speaks...

U.S. Rep. Jim Cooper, D-Tenn., a forum attendee who has his own issues with the Baucus bill and other measures, noted that, under Medicaid, Tennessee pays one-third of the cost. Under most of the proposed overhauls, including Baucus' plan, Rep. Cooper said, the federal government would be paying 90 percent.

"There's some fundamental changes going on here," Rep. Cooper said. "Whether it's a 90/10 split or a 95/5 split, there's ways to minimize any burden on the state."

Closer to home, Dr. Collin Cherry, an internal medicine specialist with Beacon Health Alliance in Chattanooga, said the Finance Committee's bill fails to limit rising premium rates.

The bill also does not impose a large-enough penalty for those who refuse to obtain insurance, he said. If premiums continue to rise, the $750 penalty would be an easy choice over paying thousands annually in insurance premiums, he said.

"If the intent of this is to insure everybody, I'm not sure that's going to be realized," he said.

Craig Becker, president of the Tennessee Hospital Association, said that while the committee's action on the Baucus bill is a "good step," he hopes the final version revamps the current fee-for-service payment system. Gov. Bredesen raised similar points.

Mr. Becker said insurers should pay providers for an entire set of treatments instead of individual procedures. He noted that the Senate Finance Committee's bill still must be reconciled with a Senate Health Committee bill, so the final legislation still is far off.

"I am 100 percent sure something will pass. The question is how comprehensive will it be," he said.

Gov. Bredesen said the state's $735 million analysis assumes that, while TennCare will pick up new enrollees, the program will not have to boost payments to doctors and hospitals in order to maintain TennCare's current provider network.

"When you bring in substantial new numbers of people, there certainly is the danger, certainly is the concern, that an awful lot of providers will say, 'This is not the deal I signed up for. You're going to have to pay me more money for substantial additional numbers of people,'" he said.

With regard to prescription drugs, the governor, who slashed an unlimited TennCare drug benefit to no more than five drugs per month, acknowledged the Baucus proposal does not specifically require states to boost prescriptions.

But it does contain a provision requiring proposed insurance cooperatives to offer benefits identical to those under Medicare, a health care program for the elderly. That's likely to generate "enormous" pressure on states covering people at up to 133 percent of the poverty level to expand drug coverage, he said.

"It doesn't apply to Medicaid today," Gov. Bredesen said. "But the situation of somebody at 134 percent of poverty getting this vast drug benefit and somebody at 132 percent of poverty (on TennCare) getting three generics and two brand names ... is not a stable situation."

He estimated the possible cost impact of the drug benefit at $2.5 billion over five years and increased Medicaid provider payments at $1 billion.

Staff writer Emily Bregel contributed to this story.