June 24, 2009 -- 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.
State Health Care in Tennessee Breaks Down
In 1993, the state of Tennessee was able to hastily implement sweeping health care reform legislation by discouraging close evaluation of the proposal and its costs. Sound familiar? Tennesseans have paid a high price for that little-scrutinized legislation.
The public was told at the time that anyone who needed insurance, regardless of health condition, would be accepted. And proponents claimed the state would save so much money by closely managing the care patients received that costs, even for comprehensive coverage, would actually go down. Again, sound familiar?
Yet year after year subsequent governors and the legislature struggled to pay for a program. Mr. Bredesen was recently quoted by the Associated Press as lamenting the program "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."
That's because the savings never emerged. By the time Mr. Bredesen took office in 2003 -- only 10 years later -- TennCare was a third of the state budget, forcing regular discussions of how to raise taxes to cover the program. And it never reached the ultimate goal of universal coverage. So the governor decided it was time for a change; he took a lot of political heat for downsizing TennCare by some 170,000 adults in 2005, and reduced benefits for many more.
The 'Bredesen Model'
Eventually, the governor worked with health insurers to create a minimum-coverage plan called Cover TN in 2006. The plan has a maximum payout cap of $25,000 a year. Premiums are split three ways between employer, employee and the state (self-employed people pay two-thirds and the state one-third). Current rates range from $38 a month (that's the individual's one-third) for a non-obese, non-smoker under age 30 to $79 a month for someone age 60 to 64.
Such plans can be structured to provide several physician visits a year (12 under CoverTN), ample preventive care with physicals and mammograms, low co-pays on generic drugs, and still have funds left over to cover some hospital care if needed.
To be sure, $25,000 isn't much if you need a major operation. But only eight people have exceeded that maximum in-patient cost.
'Bredesen Model' Means Small and Affordable
But the most important point is the plan is affordable for individuals, employers and the state. The program only cost the state $11 million last year -- less than a rounding error in the trillion-dollar-plus cost estimates Congress is considering.
The better approach for Congress -- and one that would likely draw wide bipartisan support -- would be to follow the Bredesen model.
First, there is general bipartisan agreement that low-income uninsured workers need a subsidy -- along with tax fairness, but that may be too big a step for this Congress -- to help them afford coverage.
And if employers want to chip in for a portion of the premium, let them. It would likely be much less costly than the Democratic-backed "employer mandate" that forces employers to provide health insurance or pay a penalty.
Second, Congress shouldn't put limits on what people can buy with that subsidy. If people want to use their money for more-comprehensive coverage, they should be allowed -- but not forced -- to do so.
Third, Congress shouldn't pick winners and losers. Let any and all health insurers compete for the uninsured.
Finally, there's little need to be concerned about insurer "cherry picking" (i.e., when insurers selling to individuals refuse to issue a policy to a sick person). Since the maximum payout is low, so is the financial risk.
Congress Should Heed Bredesen
In a time of exploding federal budgets, Congress should listen to Governor Bredesen. Start small … and affordable. Don't saddle the country with a federal version of TennCare.
Merrill Matthews is executive director of the Council for Affordable Health Insurance and a resident scholar with the Institute for Policy Innovation.