Thursday, May 18, 2006

"Cover (part of) Tennessee"

Posted By on Thu, May 18, 2006 at 4:56 PM

When Governor Bredesen summarily kicked 190,000 uninsured and uninsurable people off TennCare last year, he knew that he would need political cover against charges that he had betrayed many of the most needy TennCare recipients. "Cover Tennessee," just passed by the legislature, is the result. It is being ballyhooed as a great step forward for the working poor, but the actual result may be much different. It's not smoke and mirrors exactly, but there are lots of devils in the details. One thing is certain, though: it is not going to take care of the people just slashed from TennCare. The basic plan is for a pool of $150 per month to be generated by equal contributions of $50 from the plan enrollee, the state, and the enrollee's employer. That $150 will be applied toward the purchase of insurance from one of two competing private health insurers, under terms that the insurance companies themselves will choose. Enrollees have to be actively employed at the time of enrollment and for the six months previously-- i.e. the unemployed and those too sick to work need not apply. Employers don't have to participate if they don't want to, and in such a case the enrollee will have to pick up the employer's $50 share as well, raising his premium to $100 per month. It is not clear whether this money would purchase family or only individual coverage.

The initial problem with "Cover Tennessee" is that the monthly premium of $150 is not going to buy much coverage. $150 is just a fraction of what health insurance premiums normally run, so the participating private insurers will be free to design their coverage plans as they please (with some exceptions mandated by the state). In health insurance, just like anything else, you get what you pay for. One can expect severely limited coverage under the plan, though the state will impose mandates for preventive care and low co-pays.

The premium for many people, moreover, will exceed $50 (or $100) per month, since the plan can require higher premiums for people depending on age, tobacco use, and obesity: the advertised $50 (or $100) figure, therefore, is largely meaningless. It is not clear how high the premium might go, or how it will be calculated, but at least half of the potential participants in the program are more than 40 years old, so the premiums for perhaps half of the participants may far exceed the announced $50 (or $100) per month.

Eligibility for Cover Tennessee will be capped at 250% of poverty-- i.e. households of four with incomes above $50,000 per year will not be eligible. The uninsurable over that limit-- and there are thousands of them-- are theoretically eligible for the governor's new high risk pool called "Access Tennessee," but the premiums for that plan will run even higher, probably twice as high, as private health insurance plans. Access Tennessee will probably draw few participants.

The insurers under Cover Tennessee will be free to limit coverage for pre-existing conditions, perhaps for as long as a year after enrollment. Since virtually all uninsurable people will have pre-existing conditions-- and will probably be the sickest of the potential enrollees-- they will not be covered by the plan for a significant period of time after enrollment, giving them essentially no access to critically required health care while they dole out their monthly premiums. Those with pre-existing conditions may be barred from the plan anyway, since they must have been actively working for six months prior to enrollment, and many of the uninsurable are unable to work at all.

One wonders too if employers will be tempted to drop insurance coverage which they already provide in order to switch to Cover Tennessee's pared down, bare-bones plan. The state has made plans to prevent this, but the effectiveness of these measures is not yet clear.

The state will bear all the risk of loss to the plan for the first year, and then shift it gradually to the insurers by 2010. Basically what the shift to the insurers will come down to is whether the plan can turn a profit. And since there is no "experience rating" data for a set of coverages which haven't even been drafted yet, the state and the insurers are in the dark about whether the plan will work. In the meantime, the insurance companies are getting a free ride.

Worst of all, there will be no federal matching funds for the program. TennCare, as long as it existed for the uninsured and uninsurable, earned a 2-1 match from federal funds under a waiver hammered out with the feds when TennCare was created. The state has made vague statements about seeking another waiver or possibly other matching funds, but that is strictly an unknown at this point.

The one bright spot in the governor's plans-- and it's not real bright-- is with the "Cover Kids" program which will ostensibly provide coverage for children up to 250% of poverty ($50,000 for a family of four). See the prior entry in this blog, "Uninsured Children," dated 5/10/06.

Otherwise, don't hold your breath that Tennessee has solved its health care crisis.

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