Freedom of Health Care Act Advances in Tennessee

Last week the Commerce committee of the Tennessee Senate approved SB3498, the Tennessee Health Freedom Act. The measure still has a long ways to go before it becomes law, but this is an important first step. The vote was 8-0, with one abstention.

According to the official summary, “This bill provides that it is the public policy of this state that every person within this state is and will be free to choose or decline to choose any mode of securing health care services without penalty or threat of penalty, and this bill provides that with this bill the state is exercising its sovereign power to declare this public policy.

Vulnerable to Government Budgets

Some people think that the mark of an advanced society is an extensive welfare state. A better alternative is to create laws and a climate such that few people need public assistance.

When you’re on the government dole, you’re vulnerable to the ups and downs of the political budget cycle. Tennessee, for example, has now stopped adding new people to its SCHIP program, even though most of the funds for it come courtesy of taxpayers in other states, via Congress.

Government Health Care Rationing in Tennessee

Tennessee is cooking up trouble for some of its residents by following a classic recipe:

1. Tell people that you’re giving away something (or at least at a deep discount), in unlimited quantities.

2. Discover that you can’t afford to keep giving that thing away.

3. Start limiting the freebies.

In this case, we’re talking about health care. TennCare, Tennessee’s health care miracle program of the 1990s, plunged the state into fiscal trouble before it got scaled back.

Turns out they may not have scaled back enough.

TennCare officials said that they could impose a new $10,000 annual cap on hospital coverage for the 1.2 milli20n state residents enrolled in the program.

They said they might also eliminate coverage for occupational, speech and physical therapy, and limit enrollees to no more than 15 outpatient procedures and 15 lab procedures in a year.

The limits, which would not apply to children and pregnant women, would reduce TennCare spending by $380 million, even as the cost of treatment is expected to rise and the number of enrollees is expected to increase by 63,000 during the next fiscal year.

When government can’t deliver what it promises–which is inevitable when it offers a free lunch–it resorts to rationing.

States Can Reform Health Care

While everyone is focused on Congress, there are some significant steps that states can take towards health reform. The Tennessee Center for Policy Research says that Tennessee shouldn’t wait for Washington. It should:

1)    Give individual Tennesseans control of their healthcare decisions by moving away from employer-based insurance.
2)    Allow Tennesseans to obtain health insurance from companies in other states.
3)    Eliminate unnecessary mandates that require individuals to purchase coverage for certain treatments, especially for young adults.
4)    Reform medical licensing laws to encourage greater competition among providers.
5)    Permit public employees and TennCare recipients to utilize health savings accounts
(HSAs) in lieu of conventional health insurance plans.

It’s all in a policy brief titled Implementing State-Based Healthcare Reform in Tennessee.

Learning from TennCare

What else do we know about TennCare?

The Weekly Standard says "Tennesseeans are especially skeptical of Obamacare-and with reason."

[TennCare's] track record goes back to 1994, when TennCare was launched by Democratic governor Ned McWherter on the promise that it would save the state money, reduce costs, and increase coverage. Instead, in a decade, the program went from a budget of $2.5 billion to nearly $8 billion, became mired in litigation, and was forced to make major cuts.

TennCare most obviously parallels the "public plan," which is now dead on the national level. So you might think that TennCare isn't relevant. Then again, the "public plan" is still alive, in the form of co-ops.

The Weekly Standard article reviews some of the factors that caused TennCare to implode: the contractors who ran the program were not allowed to review the eligibility of enrolled patients, leading to fraud, waste, and abuse; it did nothing to reduce the amount of uncompensated care that hospitals provided; projections showed that TennCare would eventually capture 90% of the state tax growth.

No wonder four "blue dog" Democrats has opposed the "public plan."

Tennessee Gov. Says “Don’t Cost Shift to Me”

Gov. Phil Bredesen (D-Tenn.) is leading the nation's governors against any health reform that shifts the bill to state budgets.

As I noted the other day, Bresdesen inherited a mess in TennCare when he came to office, and then made dramatic cuts to Tennessee's effort to make sure that everyone in the state had insurance.

Sen. Max Baucus (D-Mont) has told governors to expect to add 11 million people to their Medicaid programs. Bredesen calls it "the mother of all unfunded mandates."

Does TennCare tell us much about the dangers of a universal coverage plan? The Tennessean article about Bredesen plays up the "Democrat said, Republican said" angle by drawing a contrast between the governor and Rep. Marsha Blackburn, a Repubican member of Congress from Tennessee.

But even if he is "neutral" about a "public plan," he certainly issues enough warnings: "With TennCare, a part of what happened was, you open up eligibility broadly, and you have lots of plans — underlying plans — about how you're going save the money to pay for those people. You are balancing absolutely certain short-term expenditures against, maybe, longer-term savings." (Emphasis added.)

And since the state ends up giving away a valuable service free of charge or deeply subsidized, that's overstating the cost savings.  

Lessons from TennCare: Unsustainable Spending, Cost-Shifting: Is this a model for the nation?

What can we learn from Tennessee's ambitious health reform, called "TennCare?" Today's Wall Street Journal reports that people are looking for lessons.

Here are some facts from the article:

• The initial budget was $2.6 billion in 1994, and it enrolled 500,000 people;
• By 2000, it cost $5.4 billion, and in 2004, $8.5 billion
• It underpaid providers, which made private insurance more expensive (a classic case of cost-shifting in a government health program);
• It resulted in a massive shift from private coverage to public coverage, as 45% of people in TennCare had left employer-sponsored insurance
• It left many people having to scramble for a physician, as the low reimbursement rates led many doctors to refuse seeing new TennCare patients;

Tennessee dropped 170,000 people from the program in 2005, with "the state's solvency in jeopardy."

U.S. Index of Health Ownership 2nd Edition Is Here

Pacific Research Institute has published the 2nd edition of the U.S. Index of Health Ownership, the only ranking of health care in the states that uses criteria of individual choice.

Americans lack the basic freedom to make their own health care decisions. The Index measures the degree to which individuals, be they patients, health professionals, entrepreneurs, or taxpayers, “own” the health care in their states.

The lack of health ownership is a real problem. Almost half of the country’s health care spending is in the hands of the government, instead of patients themselves. The other half is governed by regulations inflicted upon doctors, health plans and patients.

The Index uses 24 variables to quantify how state laws and regulations affect the liberty of citizens involved in state government health plans (primarily Medicaid), the private health-insurance market, and the provision of medical services. It also assesses the effect of medical tort on people’s freedom to engage health services.

Alabama, Montana, Nebraska, North Dakota, and New Hampshire finished in the top five, as the states that allow their citizens the highest degree of health ownership. Alabama leads the pack primarily because of a lightly regulated private insurance market, and good control of state government programs. Also, the state performs well on medical tort indicators. Alabama’s regulatory environment for providers favors competition, and government health programs run more effectively than in most states.

New York, Massachusetts, Rhode Island, Vermont, and North Carolina rounded out the bottom five, as the states in which the government has taken the most undue control of health care from its citizens. This is the second year that New York was in last place. The state suffers from government health-care programs that are out of control, a grossly overregulated private-insurance market, and almost completely uncompetitive provider markets.

A full listing of all 50 states and their rankings is contained in the Index.

The Index will give concerned citizens a good basis to demand reforms from their state politicians that will put American families in charge of American health care, instead of government and special interests.

Matthews on Reform: Keep It Manageable, Make It Affordable, Don’t Mandate It

StateHouseCall contributor Merrill Matthews, director of the Council for Affordable Health Insurance, has an opinion piece for ABCNews today lauding health coverage reform efforts in the Volunteer State. He says the rest of the country — Washington, D.C. included — ought to take note.

Tennessee Governor Phil Bredesen, a Democrat, probably understands the challenges of maintaining and financing a universal health insurance system better than any Democrat in Congress. So why aren't the Obama administration and the congressional leadership listening to him?

Health care reformers received the first major setback in their reform efforts when the Congressional Budget Office (CBO) "scored" (i.e., estimated the financial cost) of Senator Max Baucus's D-Mont., health care reform proposal at $1.6 trillion over 10 years and Senator Edward Kennedy's D-Mass., bill at $1 trillion — and neither senator had handed CBO the complete legislation.

While most people agree that we need ways to make health insurance more affordable and reduce the number of 46 million uninsured, the public is also concerned that the country can't keep piling on more debt. That's where Mr. Bredesen comes in.

Read the rest…

When Does Reform Work?

Tennessee Gov. Phil Bredesen was recently interviewed regarding his innovative but modest plan to get more residents covered following the unraveling of the controversial TennCare program enacted in the 1990s.

According to Bredesen, TennCare "got totally out of control. It was growing at 15 percent a year. Tennessee had the most expensive Medicaid program in the country… Our experience with trying to do universal coverage ended up being a disaster."

When Bredesen took office in 2003, he inherited soaring state health care spending. In 2005, he cut 170,000 adults from TennCare and reduced benefits for thousands of others. His new initiative, CoverTN, takes "baby steps" toward covering more people. It targets workers at small businesses, the self- employed and the recently unemployed. The cost of monthly premiums is shared by the state, the individual and employers.

Typically, the state, an enrollee's employer and the enrollee each contribute $50 to monthly premiums. No one is forced to participate. Bredesen said the plan design reflects what Tennesseans want — primary care, not catastrophic care, as part of a lean, affordable benefit package. Despite concerns about the plan's $20,000 benefit cap, only eight people have exceeded the annual maximum for inpatient hospital costs since the program began.

At a cost of less than $11 million last year, the program has come in under budget and at a fraction of the cost of the Massachusetts reform law coverage subsidies, which swelled to $628 million in 2008. CoverTN has about 19,000 enrollees.

"I've dreamed about 100,000," Bredesen said. "I'm always amazed, however, when you actually charge someone for health insurance, how many fewer people are willing to sign up for it, than are willing to demand affordable health care."

(Via CAHI's JP Wieske and Kevin Wrege)