TennCare No Model

We learned some lessons that would be helpful for national health plan

Some years ago I swore I would never write another column about TennCare. I had been hip-deep in the issues throughout the Sundquist years, when the program was out of control and threatening to eat the entire state budget. But given the current debate about national health-care reform, I think it is constructive to look back at lessons learned from our revolutionary experiment.

Gov. Phil Bredesen, who had to choke down the excesses and bring the TennCare budget under control, recently warned that a national health-care plan could be the mother of all mandates for the states. Congressmen Marsha Blackburn and Philip Roe wrote an op-ed expressing similar concern.

Gov. Ned McWherter initiated TennCare at a time when there was a national health-care plan being formulated by First Lady Hillary Clinton. But when the Clinton plan failed, it left Tennessee, and McWherter's successors, to deal with a one-state public health insurance plan.

The first thing we discovered is that private insurance companies dumped the sickest among us onto the taxpayers. The "pool" of the chronically ill, with pre-existing medical conditions, were shifted from private plans to TennCare. The past practice of apportioning out the chronically ill among private insurers was scrapped. The chronically ill paid high premiums, but most were glad to get coverage of any kind.

We also discovered that many businesses stopped offering health insurance and threw their employees onto the TennCare rolls. In many cases, the businesses had no choice. If you operated a motel and offered health insurance for employees and the motel across the road had employees on TennCare, how are you supposed to compete? The state is also home to many small manufacturing plants who have wage scales so low even the working poor with children were eligible to sign up for TennCare. The rolls exploded and soon one in five Tennesseans were enrolled in TennCare. Over a million people on TennCare in a state of five million residents.

Businesses who have to answer to stockholders have to look at cutting costs. If the government taxes health-insurance benefits, as has been suggested, how long will most businesses continue to offer health insurance as a benefit? That shifts more Americans from private plans to a public plan.

We also discovered with TennCare that prescription drugs with no co-pay and no limit was a prescription for disaster. The per capita rate of prescriptions per patients was almost twice the national average. Reports of widespread prescription fraud angered the populace, reduced support for the plan, and enraged legislators. A special unit of the TBI was formed to investigate TennCare fraud.

There was anecdotal evidence of people moving to Tennessee from other states in order to get onto TennCare. There were reports of people in neighboring states driving to Tennessee for medical care and using box numbers to get prescription drugs. Throw in illegal aliens on TennCare and you had a recipe for public outrage and dwindling public support for the program. I think these stories were overstated—they were not numerous enough to account for the huge TennCare deficits—but these reports, along with fraud claims, undermined the program and made it easier for politicians to demonize it and eventually reduce funding.

If there is a public alternative insurance program in the health care reform Congress passes, how can the problems with TennCare be avoided?

How do we prevent private insurance from dumping all the chronically ill onto the public plan? How do we prevent businesses dropping ever-increasingly costly health insurance plans and shifting employees to the public plan? Given the widespread fraud in prescription drugs in TennCare, how can we expect a national plan to be policed?

It is not likely anyone will listen to Republicans on this bill. But perhaps the Blue Dog Democrats in the Tennessee delegation will be able to share our experience with their colleagues. Assuming, of course, anyone reads the bill.