THE LATEST ON TENNCARE

A decade after Tennessee inaugurated a health care plan for the state's most vulnerable residents that was hailed as a model for the nation, the program is once more being held up as a model - of failure in an era of soaring medical costs and voters' aversion to higher taxes. Today the plan, TennCare, which sought to improve health care for Medicaid recipients while covering those who fall through the federal program's cracks, is on the ropes. Gov. Phil Bredesen, a conservative Democrat and former health maintenance organization entrepreneur, has threatened the program with extinction, saying that rising costs and generous benefits - TennCare consumes nearly a third of the state's $25 billion budget - make it unaffordable unless it can be radically restructured to save money and limit benefits.

In the coming year alone, the program faces a potential deficit of $650 million. After more than a week of tense negotiations between the governor and advocates for TennCare's 1.3 million users - nearly a quarter of the state's population, including an estimated 430,000 who would not be covered by Medicaid if TennCare disappeared - the two sides decided to "step back from the brink," as Mr. Bredesen put it. "Before I go down the road of taking 430,000 people off the rolls - more specifically, before I can face even one of them, individually, and tell them that it is over, that I can no longer help - I need to be clear in my own heart that I've done everything that I know how to do to solve this," the governor said. Rather than immediately kill TennCare, as he was poised to do, the governor agreed on Wednesday to one more round of talks after Thanksgiving, though he said saving the program was still a long shot.....

The fate of TennCare has profound national as well as personal implications. Other governors, also under pressure to stem rising health insurance costs, are watching to see whether Tennessee will provide a model for how to trim their own programs.... Created by former Gov. Ned McWherter, TennCare replaced Medicaid for those Tennessee residents not covered by other health insurance on Jan. 1, 1994. As costs for health care and prescription drugs rose steadily in subsequent years, TennCare became a larger and larger portion of the state's budget and a frequent political flashpoint.....

By the time Mr. Bredesen, a former Nashville mayor, ran for governor in 2002, TennCare had become the state's sharpest political thorn, and he won partly by promising to overhaul it. In 2003, the state began phasing in a preferred drug list to cut the cost of prescriptions. On Feb. 17, citing a recent report that TennCare would be $650 million in the hole in 2005, Mr. Bredesen offered what he called a "last chance" to save the program. "We need to face the facts," he said. "We have too many people with too many benefits for the money we have." He said he could come up with a new, permanent TennCare fix that was affordable and fraud-free without cutting benefits for children, pregnant women and the disabled. In May, the Legislature approved the broad outlines of his plan, including a limit of 10 doctor visits per year (later raised to 12) and six prescriptions per month (recently, the governor said that might have to be lowered to four). "What began as a grand vision had become a political scramble to cut the program as fast as possible," said Gordon Bonnyman, head of the Tennessee Justice Center and the leading legal advocate for TennCare recipients.

The program's advocates fought back. In June, Mr. Bonnyman went to federal court to argue that the changes violated four consent decrees he had won over the years that forced TennCare to abide by federal standards in certain crucial areas, like eligibility, home health visits and medical screening for children..... The lines were firmly drawn. On one side was the governor, the Legislature and representatives for doctors, hospitals and drug companies. On the other side were Mr. Bonnyman and other advocates for TennCare's users, like AARP, the Children's Defense Fund and dozens of charities and associations like the Alzheimer's Foundation and the National Mental Health Foundation.

In September, Mr. Bredesen officially requested federal approval of some of the changes he had sought, providing fresh specifics that further troubled the program's advocates. Meanwhile, the governor has grown increasingly vocal about what he calls the advocates' intransigence, and ratcheted up his rhetoric, comparing the health care program favored by Mr. Bonnyman to "a dictator in a glass coffin" and declaring the program he was proposing as "more American." The advocates have also shown a willingness to appeal to emotions. "Certainly, some people will die who would not otherwise have died," if the program is killed, Mr. Bonnyman said. On Nov. 10, attacking the advocacy groups for their persistent lawsuits, Mr. Bredesen said he was ready to give up his overhaul efforts and pull the plug on TennCare.

Mr. Bonnyman asked for more time and the governor said he would continue talking. On Wednesday, just when it appeared that negotiations were stalled for good, Mr. Bredesen invited Mr. Bonnyman to his office for their first one-on-one meeting and, that evening, made his unexpected announcement. "These talks have not gone well, and we are at an impasse," the governor said. "By any reasonable measure, I should say, 'it's over,' and move on." Instead, the governor promised to give it one more try after a vacation and a Thanksgiving holiday.

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation.

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