Wednesday, July 22, 2009

Rep. Marsha Blackburn: Lessons From TennCare on its Failed Universal, Single Pay System That Almost Bankrupted Tennessee


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 Mediaid 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.

Governor Bredesen was ultimately forced to dramatically restructure a program he has since called "a disaster". By 2006 Bredesen had disenrolled nearly 200,000 people and slashed benefits.

TennCare lessons challenge the Administration's thinking on the benefits of a "public option" solution to assuring American's 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. Over-use caused TennCare's anticipated savings to evaporate and its cost to explode.

While TennCare consistently covered between 1.2 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. When the illusion of "free" care is fostered, it is always over-utilized.

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% of those added to TennCare came from the uninsured population, while the rest came from a decline in private coverage.

There Is a Difference Between Access To Care and Availability Of Care: Government-run health care advocates must overpromise 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 Just 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 (predatory) trial lawyers and advocacy groups who stepped in to sue the state. Efforts to rationalize the program, pay doctors, and heal the sick became frustrated by repeated consent decrees and lawsuits that turned the system into a bureaucratic morass that itself could not be healed.

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. We understand the magnitude of the task ahead and we are dedicated to this debate and seeing reform come to our health care system.

Blackburn and Roe are Republicans representing Tennessee in the House of Representatives.


Nellie said...

I was a patient on TennCare for several years. It was due to a financial upheavel and a pre-existing condition, and no where else to turn.

Let me tell you, it was the worst health care I've ever had in my 67 yrs. on this earth. None of the good doctors would accept it and I was stuck with inferior script writers with overcrowded waiting rooms with only 1 or 2 caucasians in the entire building. Tests were never done on anyone, too expensive we were told. Another script was written, "take this twice a day and you'll feel better." Standard line.

Oh, and I was paying TennCare $350 a mo. for this crap.

I'm glad I lived thru it. Never again!

Webutante said...

Nellie, Thank you so much for this comment from hard-learned experience. I'm going to post it at the top of my scroll this morning and welcome any other insights you may have on this and any other subject.

God bless.

Nellie said...

I have much more I would like to tell but I think I'll put it in an email to you and you can take it from there, if you wish.

It will take me a little time to recall some of the specifics -- but it's important and everyone needs to know how terribly inadequate (and expensive) this FREE program was.

Webutante said...

Nellie, that would be wonderful. Please send me anything and everything you know in and email. I hope you also know how to get to my home page where I published your comment, not just here, but also on my can always get to my freshest post by clicking "home" on my right sidebar and also by bookmarking me at

Thank you for your input and please continue.

Best wishes