From the beginning of the national health care debate, President Obama made major Medicaid expansion—already a rapidly growing entitlement—a core element of his health policy agenda. Fortunately, results of this approach already exist from the state of
Enacted in 1994, TennCare was Tennessee’s attempt to reduce the number of uninsured individuals through a major expansion in Medicaid. The TennCare experience provides ample evidence of the impact of Medicaid expansion on costs to taxpayers and on quality of care.
Down This Road Before in
The massive House and Senate health bills would put tens of millions of Americans onto Medicaid. In an analysis of the House bill, the chief actuary at the Centers for Medicare and Medicaid Services (the federal agency that runs Medicare and Medicaid) claimed that almost three-fifths of the increased coverage from the House bill would come through Medicaid expansion with a projected 10-year cost of nearly $80 billion. Likewise, in the Senate bill, Medicaid expansion would be responsible for about 50 percent of the reduction in the uninsured population at a projected 10-year cost of $395 billion.
This approach was already tried in
The idea was that the state would squeeze savings out of its traditional Medicaid program through the use of managed care and this would offset the cost of this vast expansion in coverage. In essence,
Within months of the implementation of TennCare, enrollment swelled by half a million individuals so that more than a quarter of the state’s population was enrolled. While there was significant crowd-out of private insurance by government insurance—and thus increased burden on the taxpayers—the rate of uninsured individuals in
But at the same time, costs exploded. While inflation-adjusted per capita Medicaid spending across the rest of the states increased an average of 71 percent between 1994 and 2004, the corresponding increase in spending on TennCare was 146 percent.
No Health Improvements
Even though TennCare failed to control costs, if the increased rates of insurance coverage translated into improved health outcomes for the targeted population, then it may be possible to call the program a success. Of course, health insurance coverage is quite different from access to quality health care. The evidence on quality of health improvement would be found in a comparison of health outcomes for Tennesseans to those of individuals in similar states that did not vastly expand their Medicaid programs. A Heritage Foundation analysis contrasted trends in the mortality rates in
While the mortality rate does not capture the full meaning of health status, it is likely that healthy individuals have lower mortality rates. The following table lists the change in state mortality rates from deaths resulting from diseases and medical complications in the four years prior to TennCare and the four years after TennCare was enacted. The following figures show the mortality rates by state between 1990 and 1998 with a demarcation when TennCare was enacted in 1994.
The essence of the mortality rate trends is that
A Case for Skepticism
Instead of improving health care quality, the mortality data indicates that TennCare may have resulted in a decline in the quality of care for Tennesseans. The evidence certainly suggests that health outcomes in Tennessee did not improve after TennCare. Medicaid expansion seems to be a dubious way to increase quality health care. Certainly for Tennessee, the substantial cost from TennCare in the form of higher taxes and reduced spending for other state priorities apparently far outweighed any health benefits achieved in the targeted population.
Tennessee’s experience with TennCare demonstrates that the free lunch now promised by President Obama of increased coverage with reduced costs is likely a pipe dream. But more importantly, as Democrats attempt to change
Brian Blase is the Health Policy Graduate Fellow at The Heritage Foundation.