State finance director discusses study showing TennCare too expensive for state

By Abby Morris
Star Staff
amorris@starhq.com

   TennCare, the state's health care system for the uninsured, is in worse shape than originally expected when Governor Phil Bredesen hired an independent firm to evaluate the system, said Tennessee Commissioner of Finance and Administration David Goetz when he spoke to Johnson City Rotarians Tuesday afternoon.
   Goetz spoke about the recently completed first part of a two-tiered study being conducted by McKinsey and Company, an independent consulting firm Bredesen hired to perform an objective analysis of the TennCare system and identify options to reform the program.
   The first part of the study concluded that TennCare, as it is currently set up, is not viable for the state due to high cost and the percentage of the state budget it consumes.
   "There is a lot about this (the conclusion) that you knew in your heart, maybe not to the extent or in as much detail as McKinsey has laid it out, but the reaction has been 'I didn't know it was that bad'," Goetz said.
   One underlying problem that makes the system not viable is increased cost for medical care, according to Goetz, including inflated prices for prescription medications. According to the study, between fiscal year 2004 and 2008, prescription drug costs will account for 56 percent of the program.
   One reason prescriptions cost the program so much, according to Goetz, is the sheer number of medications that are prescribed to Tennesseans under TennCare. "One of the things that amazes me is the amount of prescriptions given out by doctors in Tennessee," he said. "We are number one in the country (for number of prescriptions per resident), averaging a little less than 16 prescriptions per person per month and that is in general. With TennCare it is 22."
   TennCare covers diabetic supplies such as lancets and test strips, according to Goetz, which account for many prescriptions. Also, the fact that patients often receive prescriptions from doctors for over-the-counter medications such as aspirin, which TennCare ends up paying for, is another reason prescription prices for the program are through the roof.
   One of the main areas the state will look at when deciding how to reform the program will be the costs incurred from prescriptions. "You can't address this problem without addressing that," Goetz said.
   Many lawmakers are frightened about the current TennCare system, according to Goetz, because of the amount of new revenue which will be devoured by the program by the fiscal year 2008.
   According to the McKinsey study, by 2008, TennCare will eat up $1.7 billion of the approximately $2 billion in new revenue, leaving only $240 million in new revenue for education, economic development and other such departments and projects.
   "This is what makes legislatures gasp when they see this," Goetz told Rotarians at the meeting. "We have got to find another way to make this program work."
   Goetz said the McKinsey study pointed out several areas which need to be evaluated and reformed. "There are no simple things to do," he said. "It's going to take a significant restructuring to get it to do what we need it to do."
   The second part of the McKinsey study is slated for completion in January.