|
||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
|
INTERVIEWTennCareA Failure Of Politics, Not Policy: A Conversation With Gordon Bonnyman
Gordon Bonnyman is the indefatigable advocate who has spent the past dozen years both championing and challenging TennCare, Tennessees controversial Medicaid program. As the executive director of the Tennessee Justice Center, Bonnyman has advocated for TennCare during three gubernatorial administrations; this advocacy reached new levels of intensity in 2005, when Gov. Phil Bredesen introduced major cutbacks to the program. Bonnymans prominent role in shaping TennCare and, according to some, stymieing changes to it publicly pitted him against Governor Bredesen in the battle to "save" TennCare.
Robert Hurley: I believe in one of our first conversations about TennCare several years ago, you took umbrage with my reference to the program as the "Mir space station of Medicaid managed care"an innovation that had outlived its usefulness and should be brought back to earth. Is that what has finally happened to TennCare? Gordon Bonnyman: I actually agreed with you somewhat. TennCare was like Mir in that it was clunky and imperfect. But it was the best and only space station we had then. Yes, TennCare did ultimately collapse. But I dont think it was because there was something fundamentally wrong with its designit was state politics.
Hurley: In recent public remarks you said that despite no official name change, the waiver expansion program known as TennCare has ceased to exist. Can you tell us what you meant by that, and what the current state of affairs is? Bonnyman: The hallmarks of TennCare were wall-to-wall capitated managed care and coverage expansion to a broad population of uninsured Tennesseans. Both of those are now gone. Plans no longer carry risk, and we have cut off all of the expansion population, except for a group of children who would be covered by SCHIP [the State Childrens Health Insurance Program] in any other statewe dont have SCHIP here. This is the largest single reduction in coverage ever in the nations history, over 200,000 people. Now we are left with a sparse Medicaid program and the most limited pharmacy benefit in the country. We eliminated a medically needy spend-down program after three decades, although there is a pending waiver to restore that. Tennessee has gone from among the top-ranked states to the bottom on many measures in a very short time. Hurley: How did something that was greeted with such enthusiasm a decade ago, that positioned Tennessee to have a remarkably low rate of uninsurance, and that brought hundreds of millions of new federal dollars into the state become so equated today with controversy and failure? Bonnyman: It is important to understand that within the state, TennCare was always an ugly duckling. This was primarily because it imposed managed care cost discipline in a state with little managed care penetration. Resistance of organized medicine to managed care in general got focused on TennCare as a kind of lightning rod. There were medical association lawsuits and public relations campaigns to discredit the program from the beginning. It was a godsend to the uninsured, but political influentials saw it as always controversial. Although the program has collapsed, it is key to make a distinction between policy failure and political failure. By any fundamental measures of success, as a policy initiative it exceeded expectations. It saved money. It represented the most dramatic reduction of the uninsured of any single state program I am aware of. And it actually was beginning to affect health outcomes, as documented in Health Affairs and elsewhere.1 Hurley: But what about the alleged savings? What is the basis for them, given that so many more people were being covered and state spending increased? Bonnyman: We had to show savings as part of the cost-neutrality requirement of the Section 1115 waiver application, and I think we met accepted standards in doing so. Recognize that it was savings against projected growth in traditional Medicaid spending. Because we started in 1994, we did indeed get the benefits of a dip in medical inflation, which helped us demonstrate savings. The amount of savings has been disputed, but estimates range from a couple hundred million to over a billion dollars. TennCare was able to achieve expansions and some savings without any serious dislocation of providers.
Hurley: You were a key player in the launch of TennCare. Was it really largely a budget solution for the states Medicaid program, as the CEO of Blue Cross and Blue Shield of Tennessee said in her recent Health Affairs interview?2 Bonnyman: Yes, it did start life as a budget solution, and Im proud of that. I think that the most serious problem in health care is the high rate of medical inflation. That is the underlying root of uninsurance and underinsurance. Anybody who is serious about covering the uninsured has to be a budget hawk. I have lived through these struggles for twenty-five years, and if the federal or state government does not do a good job of controlling cost increases, the consequences are always felt by the folks at the bottom of the political food chain. Its no accident that the uninsured and underinsured are marginal working families. The people who designed TennCare genuinely wanted to cover the uninsured and reduce cost shifting, but they understood that they had to make it economically sustainable. Hurley: But didnt the original waiver proposal contend that savings from implementing capitated managed care would be the major source of funds for financing expansion? Were the estimates of those savings disingenuous in order to sell the program? Bonnyman: One of the big questions was, and still is, What are the one-time and the long-term gains from aggressive managed care? The problem in TennCare was that the political wheels started to come off about five years after the program started. Initially there was a substantial saving, as days of inpatient care plummeted after the conversion from traditional Medicaid to capitated care. We also redirected DSH [disproportionate-share hospital] payments by recycling dollars away from hospitals and using the funds to cover individuals rather than subsidize facilities. That, too, was a major means to expand coverage. Hurley: Dont you think Tennessees reach exceed its grasp in the coverage expansions TennCare achieved? Doesnt the states inability to find and commit resources to finance TennCare mean, by implication, that the state really cannot afford the program? Bonnyman: I dont think the problem was an affordability issue. It was a program management issue and a political management issue. If you look at when TennCare became politically destabilized in 2000, it didnt really have anything to do with TennCare itself, and this development actually preceded the changes that made the program financially unstable. Hurley: Are you referring to the state income tax debate? Bonnyman: Yes. This is what makes the story so sad for TennCare and for the whole country. TennCare was like the guy standing on the curb minding his own business, being crushed against a lamp post by an errant drunk driver. Gov. Don Sundquist concluded that he wanted to embrace a state income tax before he left office, something a conservative Republican governor was not supposed to do. And just about at the same time, the second-largest health plan in the state cratered. Although these were totally unrelated events, to many people they seemed to be connected. For all the people who felt an income tax was a bad idea, they were handed an issue when the governor married the two events and said that we needed an income tax because TennCare is too generous, bloated with corruption and fraud, and too many people wait till they get sick to get on it. The antitax people argued that we didnt need a tax, we needed to get rid of TennCare. Ironically at that point, good evidence was just beginning to show that TennCare was making a positive difference for the people covered by it. Hurley: But Tennessee did have a number of problems with financial instability among plansmore so than other states. Why was that? Bonnyman: A number of reasons. One of them is that the designers of TennCare wanted Blue Cross to be the anchor tenant in their shopping center, but they did not want Blue Cross to have them over a barrel. So they chose to invite in more plans, most of which had to be startups. The original management might have concluded in time that the way to deal with a dominant player like Blue Cross was not to create pseudo-competition for them, but in late 1993, it seemed necessary. As would be expected, a number of these new plans were badly undercapitalized, and the state tried to nurture them along, with limited success. In December 1993 all it took to start a TennCare plan was a leased BMW, a cell phone, and a silver tongue. By the time the HMO [health maintenance organization] collapsed, Tennessee had lost NAIC [National Association of Insurance Commissioners] accreditation for its insurance regulatory apparatus. The state was infamous for inept regulation of risk-bearing entities, including TennCare plans. Major failures were inevitable. Hurley: The alternative explanation captured in the interview with [Blue Cross and Blue Shield CEO] Vicky Gregg was that the program as designed was simply too rich, but efforts to pare it back or reduce it were stymied by consumer advocates. She did not name you, but its a safe bet she had you in mind. Bonnyman: Of course I advocated for a rich benefit package for my clientsbut Im also a budget hawk. Medicaid serves very sick, indigent patients who commercial insurers generally manage to avoid, so the benefit plan has to be designed to meet their needs, or it wont work, and you are just going to shift costs to other payers. There is considerable revisionism around TennCare now. The reality is that the program became unaffordable when the state started to take risk back from plans. TennCare had a very tightly wired design, and if you started altering one part of it, you could expect that there would be consequences elsewhere in the system. You can think of it as being like a bridge to span a large body of water. First, you take out the truss of capitated, aggressive managed care. Then remove the truss of federal funding for coverage expansions, as Governor Sundquist agreed to do when the waiver was renewed in 2002. Then, when the bridge inevitably collapses, you blame it on the guy who had warned you not to remove the trusses. That is the story that got written about TennCare: The advocates brought this down with all of their litigation and consent decreeswhich I would say is demonstrably wrong. The same consent decrees the current governor blames for preventing him from making constructive changes in 2004 were ones he personally helped draft in 2003, when he touted them as enabling the state to better control costs. Hurley: But wouldnt you expect the state to have to take back risk if it had plans going belly-up? Bonnyman: Well, this goes to Blue Cross. They were the bellwether of whether the program overreached or was underfunded, not their weak, undercapitalized competitors. Blue Cross should have been the canary in the coal mine if plans were being underpaid, but their filings showed that they were making money in TennCare while losing money in their commercial HMO, which, incidentally, they subsequently dropped. In about 2000, Blue Cross and Governor Sundquist got into a name-calling contest, and Blue Cross sent a letter to its commercial accounts suggesting that losses in TennCare were preventing Blue Cross from continuing at least some of its commercial business. It demanded that the state take back risk, and it cited the failure of the second-largest plan as proof that capitation rates were not adequate. That was a pretext, in my opinion, not a reason. Blue Crosss own insurance department filings showed that they were making money, not losing money. Do I think BC was in error in demanding to get risk taken back? Not at all. The ideal world for an insurance company is to collect premiums and not pay claims. And if you have to pay claims, then pay the claims out of your customers checking account. So it was a totally rational thing for them to want to do. Hurley: So essentially they wanted to convert to an ASO [administrative services only] arrangement with the state? Bonnyman: Righta reasonable business strategy by the Blues, met by a politically inept response. Precisely the sort of strong-arm tactic the original designers feared could happen if they became overly dependent on a single plan, and why they had created the now-failing HMOs to try to prevent. In fact, the failure of these HMOs was used to leverage the state into giving up any financial discipline. This led our current governor to say, when he was campaigning, that in TennCare we had ended up with the worst of all worlds: highly paid intermediaries way overcompensated for only processing claims. Because they did not manage care, especially the drug benefit, the state took back risk. That reveals the failure of political will that has befallen the program in recent years. In my opinion, what should have done was to be firm with the Blues, and tell other HMOs that if they couldnt meet muster, the state would move the lives over to Blue Cross and acknowledge that they have a monopoly. By taking the risk back, TennCare was put in the position of being the politicians cookie jar, and the governor would accede to providers demands to get support for his income tax proposal. It didnt work.
Hurley: Based on my reading of the newspapers here, it seems as though Gordon Bonnyman and the Tennessee Justice Center are the only people willing to fight the good fight to save TennCare, which you contend is such a desirable program. Bonnyman: The program never got the support of political influentials in the medical or hospital association. But in time, organized medicine became more reconciled to the program until the HMOs started to founder. That left them angry and reminded them that they didnt like the program to begin with. Then if you throw in the income tax issue, it was to the ramparts. The tax fight persuaded many people that TennCare was bad, period. Now, fast-forward to the current administration. This governor [Phil Bredesen] very effectively reduced an extraordinarily complex policy debate to a mano a mano fight, with the governor in a white hat and an aggravating lawyer in a black hat. Hurley: Watching your fierce war of words with Governor Bredesen in the past year reminds me of Émile Zolas definition of a tragedy as a dispute in which both sides have a certain amount of justification, but both consider themselves to be completely right. Wasnt there common ground for compromise? Bonnyman: There was, but it is hard to discuss this without making me looking defensive. The governor has described me with epithets like "crazy, irresponsible, silly, living in fairyland," but Ive always said of the governor what I believe: He is extraordinarily gifted, he means well, he knows a lot about health policy, and he is profoundly mistaken. I have had to address him personally because hes made it a personal issue, by saying to me, You are either for me or against me. People say to me, Hes so smart, and he knows all about managed care, so how do you explain that? All I can say is that I give him credit for all of those things, but smart, gifted people make mistakes, tooparticularly if they are misled by life experiences that seem relevant to, but are very different from, the situation they now confront. Hurley: What do you mean by that? Bonnyman: The governor has often said he would run TennCare like his own HMO. He has said that the decisions he would make would be the same as if he were running a private business. That is profoundly mistaken. He started and sold a very successful HMO company at a particular time in history. The business decisions that made his firm successful are, in my view, very different from the decisions to be made as governor. There are misleading similarities that have led him astray. With all due respect, he was misled by the fact that a CEO accountable only to his investors is in a very different position from the job description of the chief executive of a state, in which you are responsible not only for the states budget but also for the citizens of the state, including those who will be rendered uninsured and who will become wards of the health care delivery and insurance systems whose costs will be shifted to others. It has implications for fighting communicable disease. It affects a states ability to deal with mental illness and substance abuse and the sequelae that has on the criminal justice system. We will feel the implications of these decisions for years to come. Thats very different from an HMO deciding to drop sick members and improve its bottom line with no larger responsibility to society. Hurley: Dont you think Governor Bredesen understands this? Bonnyman: I think the governor doesnt want to accept this. He told me just as he entered office that he wanted to get his arms around TennCare and hold its growth to the rate of revenue growth in the stateto keep the percentage of state budget going to TennCare [26 percent] constant. I told him: If you could do this, you should get your plan patented and copyrighted, because this is the problem every other governor in the country has had with Medicaid for the past thirty years: Medical care costs are outstripping everything else. The only thing you can really do, since you cannot control this cost trend, is temporize and try to shift costs any way you can to the federal government. There is room to improve the management of TennCare, especially in pharmacy, with DUR [drug utilization review] and PDL [preferred drug list], and if you do, you can muddle along for a few years. But ultimately, youre just like every other state governor: You are bound and gagged, rattling around in the trunk, and somebody else is driving the car. And he said, "I wont settle for that." He subsequently set out to "tame" and "fix" TennCare. You can see what hes done in just this year: We have seen the largest single increase in the number of uninsured Americans in the nations history; the largest single reduction in public funding for health services in the country; and, according to University of Tennessee Medical Center researchers, we will see quantifiable increases in mortality in the state because of these developments.
Hurley: Did Tennessee ever have real managed care? Many outside of Tennessee wondered how in the world you could get legitimate savings from managed care without experienced managed care organizations with which to contract. Bonnyman: We saw pieces of managed care. We knew that Blue Cross, for one, could offer a discounted network. And going in, the plans knew that the rates were too high because useespecially inpatient usewas so high in fee-for-service Medicaid. What we got was very crude utilization management in big-ticket items like hospitals, which picked the low-hanging fruit quickly and effectively. I believe that the expectation that we could get real managed care was a rational one, especially if plans would begin to mature over time. Given that TennCare stopped around 2000 and the rest has been a slow demisea death throewould we have gotten to real second-generation managed care? Thats an existential question, because I never saw it really being deployed. State government made it easier for the players to make money the old-fashioned way: looting the public fisc rather than working for efficiency. Hurley: Does TennCare tell us anything about the role private plans can play in a Medicaid program? Bonnyman: I agree with Uwe Reinhardts notion that private government contractors are bounty hunters. Industry contractors capture government agencies, and therefore you need to farm out at least a part of their work to organizations that can fend off political pressure as they look to their bottom lines. That conjures up images of Palladin and Shane, who, after they got rid of the bad guys, generously got on their horses and rode off into the sunset, rather than simply taking over the racket. Blue Cross kind of took over the racketquite predictablyby shifting the risk for TennCare back to the state and just administering the program on the states behalf. Dont get me wrongI still believe that it could not have been done without Blue Cross initially. No one else had the political or the financial clout to get it done. One of the success stories was the "cram-down," where they actually used market forces. Hurley: Tell us about the notorious "cram-down." Bonnyman: This was a rare example where state leadership said, We are the largest purchaser in the state, and were tired of paying fairly good rates to providers and getting lousy service for our enrollees. So they said, If providers are going to treat state employeesa lucrative populationthen, by God, youre going to treat our other folks as well. There was a short-lived boycott. When it collapsed, provider participation rates in Medicaid went up dramatically. It was a real success, and I say that as a reformed push-the-money-through-the-government price-fixing supporter. Im not saying I believe that markets work in health care, but certain market forces like using purchasing clout can be effective. Tenn-Care was only possible because it was able to use risk contracting with private organizations to do some things that the state could not. Hurley: How is it that providers became so hostile and negative toward a program that brought millions of additional dollars into the state and paid many of them for care that they previously had had to donate? Is the governor willing to give up these federal funds and not engender resistance from providers? Bonnyman: You have to realize that there was a unique confluence of events that made Tenn-Care possible in the first place. A damn smart, politically shrewd, popular lame-duck governor [Ned McWherter]. A brilliant state finance director [David Manning], who as an outsider came into health care unburdened by the dominant paradigm of people in the field. A very skilled Medicaid director [Manny Martins], who knew how to fix almost everythingkind of like Humphrey Bogart on the African Queen. TennCare was ugly; it belched and smoked, but these guys could get it going. And you had Bill Clinton with close ties with Southern governors. The current cast of characters at both the state and federal levels is very different, with very different goals. Our current governor likes nice intellectual solutions. The TennCare reform package fixed state funding at 26 percent of revenues for all time. We have a very high level of intellectual abstraction that is very divorced from a whole realm of human, medical, social, and political realities. Hurley: Why havent the hospitals, in particular, been able to persuade the governor not to give up federal dollars, without which presumably some are going to face severe hardship? Bonnyman: You mean, How can the governor get away with this? He comes out of the health care entrepreneurship coterie in Nashville, which styles itself as the "Silicon Valley of health care." These people specialize in spinning straw into gold, using the rhetoric of the marketplace and building private wealth out of that sector of the economy that is heavily fueled by public dollars. So our governor, as one of them, could go to all these folks and say, I have a means of fixing TennCare. Youve been underpaid and mistreated by the program, and Im going to stop that. No one else could have sold this storyline. Moreover, his real shrewdness came in how he portrayed advocates like me as Osama bin Laden. He started describing me as this really powerful guy. Me? You can see, Im working out of the basement of a parking garage and have never elected a single state official. By making me the adversaryand I freely confess to a long history of challenging providers in this state on a bunch of issueshe gained more allies. Hurley: So the enemy of my enemy is my friend? Bonnyman: Exactly. What is really ironic is, with all deference to those who invented TennCare, through my advocacy first for matching funds for drawing down DSH dollars and then for TennCare, Ive probably been responsible for bringing more federal Medicaid dollars to providers in this state than nearly anybody else. From what I can see, the fact is that here in Tennessee and elsewhere, you can make an awful lot of money in health care by just showing up. You dont have to be real astute, because the industry is insulated from true competitive dynamics. So the hospital industry and organized medicine here have conventional, narrow, and very reflexive positions on political issues. Hospital margins were the highest ever in the first four years after Tenn-Care was introduced. So the story in TennCare is the dog that did not bark. There were two dogs that didnt bark: one is the silence of the congressional delegationincluding the Senate majority leader [Bill Frist]on this massive loss of federal dollars, and the other is the folks in the "Silicon Valley of health care," who believe too firmly in their own myths.
Hurley: Does what has happened with Tenn-Care and the Oregon Health Planthe mothers of all superwaivers in the 1990ssuggest that ambitious, massive state-level expansions sooner or later will become unsustainable? Bonnyman: I fear that the lessonas implied by Vicky Gregg in her interviewwill be a facile one: Dont even try bold strategies. Tenn-Care failed not because the original design and operations were flawedthey were successfulbut because political decisions made by the state ultimately made it unsustainable. Weaknesses in Tennessees tax structure are neither here nor there in the final analysis, because there is a gap between medical care inflation and the revenue streams in all states, regardless of their tax structures. The positive lesson of TennCare on the policy side is that it is possible to do what has been previously assumed impossible: namely, that you can cover the uninsured without adding a huge increment of costs to the health care system. Anyone with even passing familiarity with international statistical comparisons knows that simply cant be true. You cant spend twice the OECD [Organization for Economic Cooperation and Development] median, with poorer outcomes and with more uninsured people than many of those other countries have, and say that what we have in the United States is somehow a state of nature. It is notit is a function of our policies here. There is enough money already in the system to cover everyone. Our choices about leaving the uninsured uninsured are political choices. The story of TennCare is about political will. First and foremost, this is a moral choice, because budget decisions are value decisions. But we have now tried to strip these budget decisions of their human consequences. Hurley: Are there lessons from the TennCare experience for some of the new generation of waivers from Florida, Kentucky, and South Carolina? Tennessee had its share of flexibility for a long time; should we feel sanguine about states ability to use it? Bonnyman: Well, in 1993 people were very angry about TennCare for two reasons. One was fear that it would let the air out of the "national solution," a.k.a. the Clinton health plan strategy, but that faded, as we know. The other was the fate of the uninsured, or what Id call health justice more broadly: 1115 waivers giveth, and 1115 waivers taketh away. Sure, we in Tennessee were able to blow past a lot of these concerns through a crassly political exchangedone for the good, in my mind. Unfortunately, we are now left with the apparent legacy that we should not bother trying to cover all of the uninsured, because we simply cant afford it. Our own Senator Frist has been on record as saying that. Today we can see how Section 1115 waivers can cut both ways, as our current governor and legislature asked for and received permission to withdraw coverage from those already having it. I assume that the Bush administration was delighted that this came from a Democratic governor with a Democratic legislature rather than, lets say, from Florida. Remember, also, that when the 1115 waivers of the early 1990s were given out, they were true demonstrations. Since HIFA [Health Insurance Flexibility and Accountability] was announced in 2001, 1115 waivers have become a fig leaf, with tokenistic expansions to cover substantial reductions in benefits. Hurley: Some would say that you advocates want to have it both ways: flexibility from conventional Medicaid to do expansions, but the same guarantees that Medicaid affords. Have you been speaking out of both sides of your mouth on the value of these waivers? Bonnyman: Look, in the first five years of this program, we brought no new litigation and only tended to old court orders and consent decreesnot because the state was doing a bang-up job and not violating the law, but because they were really trying to do the best they could for the existing Medicaid and expansion populations. We all understood not to shoot the piano player when he was playing as fast as he could. We understood the quid pro quo offer of Governor McWherter: If you help us control the budget, we can maintain the expanded coverage. Only when the management of the program got diverted into a political piggybank for the income tax, and no longer held plans accountable, did we feel we had to act. Consumer advocates use the courts hesitantly because we are concerned about the budgetary effects, because our folks in the lifeboat are always the ones who go over the stern first. Litigation is expensive and inefficient, and we have resorted to that only in cases where we had to sound an alarm to protect our clients. I dont think we have been inconsistent. When the program ceased to be Tenn-Care, that was when advocates had no choice but to intervene.
Hurley: What comes next in Tennessee? Ive read that there are proposals to shift dollars to local health departments to provide some stopgap primary care for people losing coverage, and the governor has proposed SCHIP for low-income kids. Bonnyman: I think that these are mostly political showmanship and part of the intentional political calculations to over-cut, over-save, and do some tokenistic add-backs. Thats what were seeing now, and I have no illusions that they will materially affect my clients. The changes are designed to create a political safety net and make other people feel good about the cuts made in TennCare. One of the things that has been most tragic and hurtful about this whole experience is that these political calculations have been right on the money. They didnt have to make the safety net work for its ostensible beneficiaries, the politicians just had to make the privileged, insured population sleep easy and have a good feeling about the governor because they are not going to need the real safety netwhile the people who will need it did not count. This is whats so horrible about this: The calculation is that my clients dont count. Their lives dont count. Their votes arent needed. Their suffering doesnt count. That, in a microcosm, is the story of the uninsured in this country, and the reason why we continue to make budget choices that are value choiceschoices that devalue the lives of folks who are predominantly people of color, predominantly people who are poor, predominantly of the "wrong" class. Thats the truth, and the rest of it is all political showmanship. Hurley: What is left for Tennessee Justice Center at this point relative to TennCare? Bonnyman: If youve been reading our newspapers, youve seen that the state has used a couple of large show trials to tell their story and to vilify us, and it has spent huge amounts of money on private law firms clearly intended to exhaust our resources and our capacity to resist. The only thing my colleagues and I have to offer is the independence of not being in the health care industry or running for office. We are only attempting to see that the needs of the 1.2 million people we represent are met, and to hold public programs accountable to the taxpayers. All we have is our intellectual honestywere the only folks without a thumb on the scale. Now we see our primary mission to be witness to the fall, and to tell the story of what happens next to people who no longer have essential coverage. At least everybody now knows, thanks to the governor and others, that we are the folks to call if they have problems with TennCare.
Gordon Bonnyman (gbonnyman{at}tnjustice.org) is executive director of the Tennessee Justice Center in Nashville. Bob Hurley (rhurley{at}hsc.vcu.edu) is an associate professor in the Department of Health Administration, Virginia Commonwealth University, in Richmond.
Related Blog Posts:
| ||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||