TennCare was started in the early 1990s under Governor
Ned McWherter as a
health care reform initiative that had the twin goals of controlling rising Medicaid costs and increasing public access to affordable health care. Tennessee sought and obtained waivers from the federal
Health Care Financing Administration that allowed the state to conduct a five-year demonstration program. Plans called for eliminating the Medicaid fee-for-service payment method by instead enrolling the state's Medicaid recipients in managed care programs administered by
private-sector organizations. Additionally, other state residents who lacked healthcare coverage, particularly those who could not obtain medical insurance because of
pre-existing medical conditions, could pay sliding-scale premiums to enroll in the same programs; the cost of their coverage would be subsidized by savings from the Medicaid program. The program was launched January 1, 1994. In its first year of operation, TennCare enrollment quickly grew, leading to concern that it would exceed the number for which the federal government would share cost. In 1995, after enrollment reached 1.2 million, the state closed eligibility to uninsured adults. In 1996, the state separated
behavioral health services from the basic managed-care program, contracting with a separate set of behavioral health organizations for
mental health and
substance abuse services to TennCare participants. The initial five-year Medicaid waiver was eventually extended through July 1, 2002, when it was replaced by a new program waiver called "TennCare II" that was extended until June 30, 2010. Under TennCare II, program eligibility for "uninsured" and "uninsurables" was tightened. New applicants in the "uninsurable" category (now called "medically eligible") were required to have an income below a specified threshold and their ineligibility for standard insurance was required to be verified through a medical
underwriting process. A follow-up report in January 2004 identified options that ranged from returning to the original Medicaid program to setting limits on enrollment and benefits. In response to these reports and to stem the growth in costs, in 2005 the state implemented several program changes, including removing about 190,000 participants, imposing limits on the number of
prescription medications each participant could receive, and reducing some other benefits. ==Services==