Stateline Story

Tenn. retools its health coverage

After slashing funding last year for a costly but groundbreaking Medicaid program, Tennessee is considering a new plan for covering thousands of uninsured families.

Gov. Phil Bredesen, a Democrat who once led one of the nation's largest health maintenance organizations, unveiled his "Cover Tennessee" initiative last month. He said the program would offer no-frills health insurance to 185,000 working Tennesseans, mainly by having companies, employees and the state each chip in to cover the costs of private insurance.

Bredesen's move this spring to bolster health coverage comes a year after he made headlines nationwide by dismantling the state's TennCare initiative. In the last year, Tennessee dropped some 225,000 people from TennCare , a perennially over-budget Medicaid program designed to provide coverage for children and for people who couldn't get insurance on the private market because they were either too sick or had a preexisting condition that barred them from coverage.

For the most part, those cut from TennCare represent a different demographic than the working families who would benefit from Cover Tennessee, if it passes. Gordon Bonnyman, executive director of the Tennessee Justice Center , a public interest law firm that advocates on behalf of the poor, said Tennesseans formerly covered under TennCare were the "highest cost and sickest" people in the state. Cover Tennessee would offer insurance primarily to those with more financial resources, he said.

In a March 27 speech introducing Cover Tennessee to lawmakers , Bredesen said the TennCare program was "too expensive, too rigid, and too hard to control." He said the state needed to take a different approach to insure its residents.

"We're using what we've learned this past decade and common sense. We have not set up an entitlement program," Bredesen said. "We can set limits on the number of people who can enroll, we can modify the benefits if we need to, we can change the eligibility requirements, we can change the law."

Like the Republican governors of Florida, South Carolina and neighboring Kentucky, Bredesen called for state health programs to integrate "personal responsibility" values, where citizens play a role in financing and directing their healthcare.At the same time, his push for increased coverage echoes a recurring theme among Democratic governors from Illinois to New Mexico this election year.

The chief component of Bredesen's new plan would be a joint effort by the state, private companies and workers to buy basic insurance for the employees. Each of the three partnerswould contributelow monthly premiums (starting at $50 a piece) for the coverage. Self-employed people or workers at companies that don't join the program can still buy insurance if they cover the employer's third of the premium. Because the insurance is not company-specific, people could keep their coverage if they switch or lose their job, provided they have the means to cover the company's share.

"It's not all that unusual for someone to work in construction for the summer and in a restaurant during the winter," Bredesen said. "Owning the policy gives you stability and control. You know how it works. You don't have to change doctors because you've changed insurance."

Not everyone would get the cheapest rates. Older workers, smokers and overweight employees would all have to pay more.

Once covered, participants would make a co-payment of$25 for doctor visits and $10 for generic prescriptions and hospital care. They could use preventative services without paying a fee, though, in order to promote healthy living.

Bredesen estimated Cover Tennessee would cost the state some $100 million for its first year of operations. By comparison, last year's cuts to the TennCare program totaled $1.7 billion in state and federal funds, said Bonnyman, the advocate for TennCare recipients. The lower expenditures associated with the Cover Tennessee proposal shows how little the governor's new plan would achieve, he added.

TennCare was launched in 1994 as a landmark experiment to expand Medicaid to working families who could not afford private insurance. The idea was that, by aggressively managing their care, TennCare could cover far more people for the same dollars spent on Medicaid. But the program covered the sickest people, making them more expensive to insure.

The program encountered large overruns from the state and grew to consume a third of the state's budget. Its costs also became a flashpoint in a fierce debate over whether to institute an income tax in the state, a proposal that ultimately failed.

As part of Cover Tennessee, Bredesen proposed measures that would cushion the blow for at least some of those formerly covered by TennCare. He wants to set up a high-risk pool to help people with pre-existing conditions find insurance. And Bredesen suggested launching a State Children's Health Insurance Program, which every other state in the country already has. Tennessee does not, because it implemented TennCare before Congress created S-CHIP in 1997.

Bonnyman said those steps would only offer marginal assistance . He said Tennessee used a high-risk pool before creating TennCare, but few people stayed in it because the premiums were so high.

Enrique Martinez-Vidal, the deputy director of the State Coverage Initiatives , which monitors state efforts to expand insurance coverage, said Bredesen's proposals include some ideas used in other states.

New Mexico and Arkansas have used their Medicaid programs to encourage small businesses to offer insurance, but Bredesen's plan would operate independently of the state-federal insurance plan, Martinez-Vidal said.

The success of the Cover Tennessee plan would likely depend on details that haven't been spelled out yet, especially because many decisions would be left to the private insurance companies that administer the program, he added.

Bonnyman said the governor's policies will leave the sickest patients out in the cold: "This is not going to make any appreciable dent in the problem of people who are not only uninsured, but who are also at a high risk" of becoming sicker.