insights (2006-12)

Bredesen’s Health Care Initiatives

Gov. Phil Bredesen will have to be a Houdini to carry out the initiatives he’s been heralding to make health insurance more affordable to small employers and low-income workers who are presently uninsured.

The governor is to unveil the specifics of his plan in an address next Monday evening. But in pondering the lofty goals he’s been espousing, it’s hard to fathom how he can come up with enough money to achieve them in a state that’s strapped for funds. It’s also perplexing why he’s bent on subsidizing health-care costs for the working poor purely with state dollars when several other states have recently obtained federal matching funds for what appear to be similar initiatives.

Bredesen’s stated resolve to extend health-care coverage to at least 200,000 of Tennessee’s 600,000 uninsured adults comes on the heels of his draconian cuts in TennCare that lopped 191,000 uninsured adults off the rolls and cost the state upwards of $500 million in federal matching funds. But there’s no denying that TennCare costs were spiraling out of control, and Bredesen deserves some credit for achieving another goal: namely, holding increases in TennCare outlays to about 25 percent of the state’s annual revenue growth (i.e. a little over $100 million out of some $400 million for the fiscal year ahead).

Attempting to turn the focus away from the disenrolled and toward addressing the needs of all uninsured Tennesseans is certainly good politics. But at least at first blush it looks like voodoo economics. Consider:

A New York State program called Healthy New York has been held out as a potential model. Under that program, health insurers are mandated to offer state-subsidized coverage to employers with no more than 50 employers and to workers with incomes lower than 250 percent of the federal poverty line (FPL). But even with state subsidies totaling $50 million a year, only 100,000 workers have enrolled, which Bredesen has pooh-poohed as representing only a tiny fraction of New York’s uninsured population.

A big reason for the low uptake is that even with the state subsidy, Healthy New York premiums average more than $200 per month. With a typical 50/50 split between employers and employees, that’s upwards of $100 each, which is apparently beyond the reach of many low-income workers and unattractive to their employers as well.

New Mexico has recently launched a similar initiative that holds the monthly premium to employers to $75. The cost to workers with incomes up to 200 percent of FPL is on a sliding scale not to exceed $35. Of an average subsidy of $260 per enrollee, $51 is borne is by the state and $209 by a federal match under a program known as the Health Insurance Flexibility and Accountability Act. Yet even with these low premiums, after nine months of operation, the New Mexico plan only has 4,117 enrollees out of an estimated 174,000 eligible.

How Bredesen intends to achieve his stated goal of covering at least 200,000 uninsured Tennessee adults remains a mystery. But if the coverage amounts to more than a fig leaf, the cost would appear to be astronomical. Using New Mexico’s annual subsidy of $3,120 per enrollee as a benchmark, Cover Tennessee, as Bredesen’s initiative is known, would cost the state upward of $600 million.

Bredesen’s aversion to seeking federal matching funds stems from the onus he placed on strings attached to them as his reason for decimating TennCare coverage. The strings primarily took the form of court orders obtained by TennCare enrollee advocate Gordon Bonnyman that constricted the state’s ability to limit enrollee benefits, especially their prescription-drug entitlements.

Yet, in court proceedings last year, the state got out from under most of the constrictions. Indeed, in a recent submission to the federal judge in these proceedings, the state proclaimed that “the court’s order granted substantially all the modifications that the state requested.”

At the same time, Bredesen is seeking federal matching funds for a laudable separate initiative aimed at extending health care coverage to all 150,000 uninsured Tennessee children whose family incomes exceed TennCare/Medicaid limits. It’s true that the program, known as SCHIP, under which the matching funds are being sought, is separate from Medicaid and will be administered in a way that steers clear of what’s left of the federal court orders that Bredesen made the whipping boy for most of TennCare’s woes.

Since I’m not privy to all the facts, I won’t go as far as Bonnyman in branding the governor a control freak who can’t stand to have federal regulations or the federal courts impinging on his freedom of action. But a much fuller exposition of his reasons for not seeking a federal HIPA match for Cover Tennessee is needed than his press secretary Lydia Lenker’s spin line that, “The consent decrees [i.e. the court orders] have tied TennCare in knots and have truly been a detriment of good management and quality care. We don’t want to go down that road again.”

The need for more explanation is all the greater because there’s no funding for Cover Tennessee in Bredesen’s budget as matters stand. He’s told groups of employers with whom he’s met to encourage their participation that he expects to cover the first year with TennCare reserve funds that have tripled over the past year to more than $300 million. Beyond that temporizing, he’s expressed an inclination to increase the state’s cigarette tax if the revenues can be “targeted for benefiting lower-income people in this state.” But in renouncing available federal funding, he’s clearly limiting his ability to do so.