TennCare - the state Medicaid program that pays the medical bills of 1.4 million low-income Tennesseans - is seeking a $975 million budget boost next year driven in large part by rising medical costs.
The two biggest drivers of the expected costs are an estimated $165 million in price hikes for medical care and $41 million tied to the high price tag of new classes of drugs used to treat obesity, heart disease and diabetes - drugs such as Ozempic.
This year's budget request follows steep cuts in TennCare enrollment: 300,000 people lost coverage last year in an error-ridden process that violated the rights of thousands of Tennesseans and ran afoul of the Constitution, Medicaid law and protections for people with disabilities, a federal judge ruled in August.
It also follows the announcement by Gov. Bill Lee that $100 million in TennCare funding will be distributed in the form of no-interest loans to East Tennessee counties that suffered extensive hurricane damage in September.
(READ MORE: Federal court: TennCare illegally terminated health coverage for thousands)
In presenting the proposed new budget to Lee earlier this month, TennCare Director Stephen Smith said the agency is operating on a more sound fiscal footing and offering more services than at any point in its 30-year history.
Hundreds of people on waiting lists for home-based care - some waiting for decades - have been able to get care. Agreements with the managed care insurance companies that run day-to-day TennCare operations have improved efficiencies, ensuring patients have a primary "medical home" - a clinic, hospital or doctor's office - has cut costs and improved health outcomes, Smith said.
The state has also accrued $900 million in so-called "shared savings," based on a unique arrangement with the federal government that allows Tennessee to keep half the funding it does not spend on TennCare patients.
Those funds have been invested in rural health care programs, pregnant women and children - and the $100 million in disaster loans, Smith noted.
Smith defended using Medicaid funding for disaster loans, noting that the dollars will help fix water and wastewater infrastructure essential to the health of 180,000 TennCare patients living in counties that experienced Hurricane Helene damage.
"Since its inception, (there have been) more investments in TennCare than at any point in the state's history. That is simply a fact, and it is indisputable," Smith said.
(READ MORE: Governor taps funding intended for TennCare patients for Helene disaster loans)
The budget request does not appear to include funding to cover the health care costs of Tennesseans who may be reinstated to TennCare after a federal judge ruled they had wrongly been kicked off the program.
A TennCare spokesperson on Friday did not respond to a request seeking clarity on how large numbers of reinstatements could impact the program's budget next year.
Brant Harrell, legal director for the Tennessee Justice Center, said tens or even hundreds of thousands of adults and children who lost TennCare since 2020, could be returned to the program.
It was the Tennessee Justice Center's class action lawsuit, filed in March 2020, that resulted in a judge's August ruling against TennCare.
TennCare failed to properly evaluate the eligibility of thousands of families, intentionally withheld information those families needed to have their coverage reinstated, and "sat on its hands for months before it fixed system-wide errors that ... resulted in wrongful terminations of disabled individuals," U.S. District Judge Waverly D. Crenshaw ruled.
The case is now in mediation to determine potential reinstatement of coverage for those who wrongly lost TennCare, Harrell said.
Read more at TennesseeLookout.com.