Growing a successful TennCare takes time, money, realistic expectations

TennCare policy-makers need patience if they want managed care to bring about the structural changes they hoped for when the program was begun six years ago, say researchers in the current issue of Health Affairs.

"Managed care systems do not evolve overnight’ even if basic infrastructure and contracting arrangements are put in place," say Marsha Gold and Anna Aizer in the journal’s January/February issue. Moreover, expecting managed care to produce enough savings to fund the expansion toward universal coverage is problematic, to say the least.

"Policy-makers choosing this route need to be prepared for limited savings, at least initially, and for a very long period of development," they say.

The lessons of TennCare are "exceedingly relevant" to other Medicaid programs, say the authors, pointing out that 12 states had more than 75% of their Medicaid populations in managed care as of 1997, with several others moving in that direction.

As the Blues contemplate leaving TennCare (see "Not yet singing the Blues," p. 1), state officials must first decide whether to hang on to a managed care model for Medicaid. Neither the establishment of a state-run managed care organization nor a transition of the Blues’ enrollees to another plan would necessarily solve TennCare’s problems, Ms. Gold tells State Health Watch. The experience of existing plans might scare off possible replacements, and the prospects for a successful state-run plan seem dim.

"I think that the experience of TennCare that we documented in our article would seem to make that a rather dubious proposition," says Ms. Gold, a senior fellow in the Washington, DC, office of Mathematica Policy Research. "For one thing, any managed care plan takes a long time to get set up. It’s not like they can get around problems that other plans are having. They would just have to do it and you would be starting from scratch. On top of which, they haven’t had a very stable state staff, so the question is who would do it."

Of course, Ms. Gold points out, the state could revert back to a conventional Medicaid strategy, in which it merely paid the bills as in a self-insured plan, and retreat from its efforts to expand eligibility.

"To me, that would be a pity. That to me is what makes TennCare different from anything else. It’s certainly a feasible option and may even be an affordable option consistent with the state’s financial requirement, (but) it basically would mean that TennCare failed."

Contact Ms. Gold at (202) 484-4227. See Gold M, Aizer A. Growing an industry: How managed is TennCare’s managed care? Health Affairs, 1999; 19:86-101.