NASHVILLE -- TennCare will end the stateâs budget year next June with at least a $258 million shortfall despite the largest tax increase in Tennessee history, the programâs director told legislators Wednesday.
The shortfall is expected largely because reforms failed to generate the expected savings, and payments to managed care organizations (MCOs) and for drugs are higher than expected, TennCare Director Manny Martins told House members during the second day of their organizational session.
âWeâre looking at a $258 million problem,â Martins said.Worst case: an additional $300 million shortage. Martinsâ appearance was the first of three days worth of presentations to House members by officials dealing with the stateâs three biggest -- and most immediate -- financial headaches: TennCare, teacher pay equity and setting up a state lottery.
Sponsors of the lottery legislation made their case in the Senate on Wednesday and will discuss the matter in the House on Thursday.
State Attorney General Paul G. Summers will make a presentation on teacher pay equity in the Senate on Thursday and in the House on Friday.
In his presentation to House members, Martins noted that medical services account for about half of the $6 billion TennCare program. âIn the first six months of this year, weâre going to spend $593 million more than we budgeted in dental, $43 million more in pharmacy and $4 million more in supplemental provider payments,â Martins said.
Aggravating the problem is a severe difference between real and anticipated savings expected from TennCare reforms, such as the reverification of who is eligible and who is not.
TennCare spends an average of $158 per enrollee every month. But the enrollees booted from the program were largely a healthy group, leaving the state to pay an average of $200 a month for most of its enrollees, who are a sicker group, Martins said.
âIt was quite an eye-opener,â House Speaker Jimmy Naifeh said later during his weekly news conference.âWe have a real problem with TennCare, (but) if something is doing good, it
ought to survive.â
Naifeh said he wants to wait for a TennCare solution from incoming Gov. Phil Bredesen, who made millions of dollars in health care, mainly in managing health maintenance organizations. âI hope to manage our way out of this mess,â Naifeh said. âI think it was an innovative program. Itâs something thatâs needed.â
House Speaker Pro Tem Lois DeBerry, D-Memphis, said TennCare has been underfunded, an argument made by health care providers who say theyâre underpaid, since its inception in 1994.
âThe bottom line is we need a miracle,â she said.