As Congress wrestles with the need to trim spending, attention has turned to Medicaid, and to a lesser extent, Medicare.

These are hardly new issues. Within seven years of the 1965 enactment of Medicaid, for those eligible for federal income support (largely those in poverty), and Medicare, primarily for those eligible for Social Security, Congress in 1972 turned its attention to concerns about containing costs in those programs.

Tennessee has been a pioneer in managing its Medicaid costs, and Congress might benefit from the Tennessee experience with TennCare, the state’s Medicaid program.

About 30 years ago, Tennessee faced unsustainable annual increases in its Medicaid program. A popular Democratic governor, Ned McWherter, called the state’s Medicaid program the Pac Man of the state’s budget. He sought to find a way to pay for the Medicaid increases through a state income tax (Tennessee does not have one) but failed. The TennCare program was designed to address the issue by containing the rate of increase in costs.

Tennessee received a waiver so that it could implement a universal and mandatory managed care program. Tennessee had no managed care in Medicaid, and a move to 100 percent managed care was projected to reduce costs by 20-25 percent on a recurring basis. Support from patient advocates was secured by agreeing that cost savings would be used to increase access to Medicaid to previously uncovered persons.

The mandatory Medicaid managed care program was deemed such a success that, in 1997, Congress allowed states to implement Medicaid managed care without a waiver. Managed care introduced economic considerations into the process of medical decision-making. While the cost savings projections were pretty much on........

© The Hill