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Medicaid, SCHIP, & Federal Authority

  • Section 1115 Waiver – In 1994, Tennessee received approval from the Centers for Medicare and Medicaid Services (CMS) for a Section 1115 demonstration program, TennCare, to provide Medicaid benefits to an expanded population of uninsured residents with low incomes or with medical conditions which make them uninsurable. After several extensions, Tennessee began a new 1115 waiver program entitled TennCare II in 2002. TennCare II utilizes a managed care delivery model to provide most state plan benefits to enrollees. Due to budget deficits in 2005, the waiver was amended to reduce services for certain populations and close enrollment for medically needy adults and all expansion population adults and children.  Ultimately, 170,000 people were cut from the program.  The waiver was amended again in 2006 to transition individuals dually eligible for Medicare and Medicaid into the demonstration from the existing 1915(b) waiver program and to add a new demonstration population of medically needy adults.

    CoverKids Tennessee established a separate, stand-alone State Children’s Health Insurance Program (SCHIP) in 2006 for uninsured children under the age of 19.  The program, entitled CoverKids, combines state and Title XXI funds from the federal government to cover children and pregnant women with family incomes up to 250 percent of the federal poverty level (FPL). Eligibility is layered over current TennCare levels.  CoverKids also offers a buy-in program for children who do not qualify for the subsidized product. Enrollment reached 22,570 children in May 2008.

State Specific Strategies

  • Cover Tennessee- In March 2006, Tennessee Governor Phil Bredesen (D) proposed several coverage expansions to the legislature. On June 5, the Governor signed into law Senate Bill 3895 which contains several coverage components including: CoverKids (SCHIP, described above), CoverTN, AccessTN (high risk pool) and CoverRX.

    The CoverTN program aims to provide new, portable, and affordable coverage for the working uninsured in Tennessee who earn less than $55,000 per year, as well as for small businesses that do not currently offer insurance. The state issued a request for proposals for an insurance plan administrator for CoverTN. The state set guidelines that require carriers selected to include a choice between two benefit packages. The benefit plans must emphasize preventative care and premiums must average $150 per member per month. Of the five responses received, the state awarded both benefit packages to Blue Cross Blue Shield. Both plans provide first dollar coverage. They have a yearly limit of $25,000 per person along with limits on prescription drugs and physician visits. It emphasizes preventive care and healthy lifestyles. As of February 2009, about 18,000 individuals were enrolled in the program and there were more than 6,500 firms participating.[1],[2]

    After the state and the employer each contribute about one-third of the total premium, individuals pay between $37 and $109 per month depending on age, tobacco use, and body weight. In order to participate, the employee must work an average of 20 hours per week and have been without coverage for at least six months. Alternatively, an individual who is self-employed or working for a non-offering firm and who is willing to pay two-thirds of the premium can participate as long as he or she earns below $55,000 per year and has been uninsured for at least six months. Once purchased, the coverage is portable and can even cover the individual during periods of unemployment. Plus, starting January 1, 2009, the plans are offered to “Tennesseans Between Jobs” who are recently unemployed or who have recently had their hours reduced. 

    1 For more information on the CoverTN program, see
    2State of the States, State Coverage Initiatives, January 2009, available at