Guest commentary: TennCare lessons for health care reform

Monday, July 27, 2009 at 12:00am

Tennessee was home to a failed attempt at universal single payer care, and has lessons to teach a President who has promised that in pursuing his goal of universal health care, he will learn from the policy failures of the past.

In 1994, Tennessee implemented managed care in its Medicaid program, creating a system known as TennCare. The objective was to use the anticipated savings from Medicaid to fund and expand coverage for children and the uninsured. The result was a program that nearly bankrupted the state, reduced the quality of care and collapsed under its own weight.

The genesis of TennCare has many parallels to the situation in which we find ourselves today. It was a public option plan designed to save money and expand coverage. In the early 1990s, Tennessee was facing rising costs in its Medicaid program. TennCare was designed to replace Medicaid with managed care and use the promised savings to expand coverage.

By 1998, TennCare swelled to cover 1.2 million people. Private business dropped coverage for employees and forced them onto state rolls. By 2002, enrollment had swelled to 1.4 million people and forced Tennessee’s governor to raise taxes and ultimately propose an entirely new state income tax to cover the unforeseen costs.

Gov. Phil Bredesen was ultimately forced to dramatically restructure a program he has since called "a disaster." By 2006, he had dis-enrolled nearly 200,000 people and slashed benefits.

TennCare lessons challenge the Obama Administration's thinking on the benefits of a "public option" solution to assuring Americans have the care they deserve. As a Tennessee doctor who provided care under TennCare and a state legislator who had to find ways for the state to pay for it, we learned these lessons the hard way. They shaped the way we both approach health care policy. With Democrats promising to pass a similar system in the House by August, those lessons are worth sharing with the country now.

– ‘Free’ care is expensive: No matter how forthright the administration's cost estimates are; no model accounts for the rational decisions that push people to over-utilize the "free care" a public option offers.

TennCare's gold-plated coverage included every doctor's appointment and prescription. As such, patients with a cold opted to charge the state hundreds of dollars for doctor visits and medicine instead of paying $5 out of pocket for over-the-counter cold medicine. Overuse caused TennCare's anticipated savings to evaporate and its cost to explode. While TennCare consistently covered between 1.2 million and 1.4 million people, costs increased from $2.5 billion in 1995 to $8 billion by the time of TennCare's restructuring. It consumed a third of the state budget including nearly all state revenue growth.

– Employers prefer ‘free’ care to private care: If the government offers universal health care, why wouldn't businesses move employees to the plan as a sound business decision?

In Tennessee, this behavior dramatically expanded the public burden as people who had once been on private insurance migrated to the "free" option of public care, adding to the state's unanticipated cost. Studies indicate that only 55 percent of those added to TennCare came from the uninsured population, while the rest came from a decline in private coverage.

– There’s a difference between access to care and availability of care: Government-run health care advocates must over-promise on benefits to gain support for their plan, only to renege on those promises when the bill comes due. It’s a classic bait-and-switch.

To pay the TennCare bill, benefits were slashed and reimbursement rates for doctors and hospitals were reduced. Ultimately, 170,000 people were cut from the program. Since they weren't being paid; fewer physicians could afford to accept TennCare patients. So while a TennCare card guaranteed you access to care, it did not guarantee the availability of care.

– Government control puts more people in the exam room than you and your doctor: Because government health care can only provide what it can afford, a determination of cost-effective care becomes more important than doctor-recommended care.

Doctors become intermediaries between the government and patients, only able to offer suggestions on treatment. Tennessee physicians often spent more time arguing with government bureaucrats over care than they did providing it to their patients. Other actors soon inserted themselves into the process, including trial lawyers and advocacy groups who stepped in to sue the state.

The President’s new health care czar was a critical link in the TennCare story. Serving as Human Services Commissioner in Tennessee and then as a key health staffer in the Clinton Administration, Nancy DeParle should be well aware of Tennessee's health care saga. We hope that she lists the kind of universal care that TennCare embodied in the “don't try again” column.

We want to provide access to affordable basic health care for all Americans, and we're actively seeking a solution to do this. But creating a plan like TennCare is not the right answer.

Blackburn (R-Brentwood) represents Tennessee's seventh Congressional district. Roe (R-Johnson City) represents its first.

9 Comments on this post:

By: Kosh III on 7/27/09 at 6:51

"Doctors become intermediaries between the government and patients, only able to offer suggestions on treatment. Tennessee physicians often spent more time arguing with government bureaucrats over care than they did providing it to their patients."

This is the case with private insurance as well. Ins. cos. deny coverage, the doctor appeals, the bean counters deny it. The private companies want to limit costs, not provide for health care.

By: Kosh III on 7/27/09 at 6:55

"In Tennessee, this behavior dramatically expanded the public burden as people who had once been on private insurance migrated to the "free" option of public care, adding to the state's unanticipated cost."

Yes, because the plan, under Sundquist-R, allowed companies to discontinue coverage at will, which they did since it cut their expenses. Do not allow companies to eliminate coverage and force people onto the rolls.

btw, Sundquist did finally act to get TC under control but then Bredsen came along, undid the beneficial reforms that Sundquist had done. Sundquist began purging the rolls of out of state members, initiated annual reviews for all, began copays.

Bredsen put everyone back on the rolls, took them off again, put them back on, took them off again. Bredesen, eliminated copays AND premiums and only has annual reviews for SOME.

By: bfra on 7/27/09 at 8:20

Bredesen nor Sunnyquirk worried about Tennesseans. They just ruled! Why should they? Them and their co-horts had good insurance.

By: Jeremiah_29-7 on 7/27/09 at 8:54

Seems like you forgot the part about Bredesen refusing the suggestions of advocates to reform the program. Bredesen must not have WANTED the program to work, based on the way he acted.

By: seeworthy on 7/27/09 at 11:12

Some of the examples Reps. Blackburn & Roe give of TennCare failures seem like failures of oversight rather than an indictment of the program itself. For instance: "patients with a cold opted to charge the state hundreds of dollars for doctor visits and medicine instead of paying $5 out of pocket for over-the-counter cold medicine." But patients couldn't do this without their doctors' approval, could they? Where was the oversight?

Another problem they pose is: "If the government offers universal health care, why wouldn't businesses move employees to the plan as a sound business decision?" Why not indeed, if there are no penalties for doing that, or benefits to keeping them on. But as I understand it, the latest reform plan will actually increase the number of people covered by employer-provided insurance. This from the Washington Post:

"July 26, 2009, 10:06 pm
Wider Employer-Provided Coverage Projected Under House Plan
By David M. Herszenhorn
The Congressional Budget Office, answering questions by Republican critics of the health care legislation proposed by House Democrats, said on Sunday that the bill would drive 9 million people off of employer-provided insurance plans but that 12 million people who do not have such coverage now would get it — a net increase of 3 million people insured through their employers by 2016."

By: Saveusall on 7/27/09 at 11:31

Marsha Blackburn is among the "Republicanest" of Republicans, i.e. no interest in providing for the needs of working people, and most likely strong vested interest in providing what Bid Pharma and the Insurance corporations want: NO REFORM, at all costs! Meanwhile, millions of Americans go without adequate health care; many lose even their homes trying to pay astronomical bills. The shame of America! Europeans and Canadians can do it -- why are we so incapable?

By: pswindle on 7/27/09 at 1:01

It took someone that knew what to do to make TN Care work. Thanks to Gov. Bredesen, he took care of business., and got rid of most of the fraud. President Obama can do the same thing. It can work, but we have to keep greedy hands out of it.

By: brrrrk on 7/27/09 at 2:14

The problem with Blackburn and Roe is that they think that everyone thinks as they do... that it's ok to walk around without your hand out, because if you don't do it, someone else will. Reminds me of a very typical Tennessean/Republican friend of mine who went out and used government funded coupons to buy HD converters even though he had cable in his house; hoping that there would eventually be a shortage and he could turn around and sell them on Ebay for a profit. I asked him why he would do something like that to which he replied, "If I don't do it someone else will. Aren't you going to get one?" To which I replied, "No, because I don't NEED one". This friend shortly became an ex-friend. My point is that Blackburn and Roe believe with all their hearts that it's absolutely impossible for someone to care enough about another to make a small sacrifice, and since they don't believe it, for them it will never be. And this is also why Republicans have never been able to successfully manage social programs, because you can't manage what you don't believe in.

By: pandabear on 7/27/09 at 2:17

Take away the sweet, public paid (you and I pay...) health care
that Rep. Marsha Blackburn and Rep. Phil Roe are on, make them
pay for the ones that we have to choose from, and you'll see a rapid
change that defies the speed of light.

...until then, expect a lot of talk and no change.