The complex evolution of TennCare is documented here:

On Sept. 17, Tennessee Gov. Bill Lee released a proposal that would convert most of the federal component of funding for TennCare, the state's version of Medicaid, to a block grant. The General Assembly had earlier mandated submission of a block-grant proposal for federal review by November. If approved, Tennessee would be the first state to adopt such a model.

On July 30, 1965, President Lyndon Johnson signed legislation that established Medicare and Medicaid.

Medicaid provides health insurance for low-income Americans not eligible for Medicare and for some low-income seniors who qualify for both programs. These "dual-eligible" individuals, many of whom are dependent upon inpatient or home-based, long-term care, comprise 15% of Medicaid enrollees but account for more than one-third of Medicaid expenditures.

From its inception, Medicaid gave each state broad authority to determine both eligibility and benefits. Some states include dental, vision and expanded mental health services. TennCare is one of the leaner programs. Federal funding covers more than 60% of each state's Medicaid program.

TennCare began in 1994 under a five-year federal waiver, which has been subsequently renewed. Gov. Ned McWhorter promoted cost controls and increased access as the principal benefits of the new program. All recipients of TennCare benefits were enrolled in 12 managed care organizations, which replaced the traditional, fee-for-service model for payment. Several MCOs failed financially in the early years of TennCare. Currently, four MCOs participate in TennCare.

Controlling costs has been a persistent challenge for TennCare. In 2001, then-Gov. Don Sundquist proposed a state income tax, partly to fund the program's sharply rising costs. Protests led to the withdrawal of the proposal. In 2005, 190,000 beneficiaries were dropped from the program because of cost overruns. Benefits were reduced.

Currently, TennCare's $12 billion annual budget ($7.8 billion in federal money) provides health insurance coverage for 1.4 million residents, including half of the state's children. An estimated 450,000 non-elderly Tennesseans lack health insurance.

The block grant proposal is based on the premise that the state can save money through more efficient administration of TennCare, while not reducing eligibility or benefits. No changes would occur in programs for outpatient prescription drugs, long-term care of dual eligible persons, and supplementary funds for "safety net" hospitals, such as Erlanger hospital.

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Clif Cleaveland

The block grant would increase if the number of TennCare beneficiaries rose.

Gov. Lee's proposal anticipates savings, which would be split equally between state and federal governments. Savings that accrued to the state would be directed to improving health care.

Critics of the proposal question its legality. They worry that in the absence of federal oversight the state could make arbitrary changes in enrollment and optional benefits. How would competing demands between urban and rural safety-net hospitals be balanced? How could financing be assured for therapy and rehabilitation of a growing population of drug-addicted individuals? Is it reasonable to anticipate large savings in a state with large pockets of poverty and chronic diseases?

To these concerns, I add my own. The text of the block grant is inadequate to make an informed judgment. At best, it is a sketch.

Significant savings for a program that has always struggled financially seem unlikely.

During the 30-day period for public comment, only three public hearings have been set. None will be in Chattanooga, Memphis or the Tri-Cities area.

Should the block grant be approved, there must be outside monitoring of TennCare's finances. Tight, public oversight must be in place to assure access to care, quality of clinical services, and fairness in allocating services to a large, diverse clientele.

The plight of hundreds of thousands of uninsured Tennesseans must not be forgotten. Health care is a right that must be protected and expanded.

Contact Clif Cleaveland at