TennCare is a budget-busting black hole for state revenues. You know that. Now let's see why and what can be done about it.
Governor Bredesen is off to a spectacular start in addressing the budget problem. Salute! He is searching for ways to trim TennCare with the least pain.
First, remember that TennCare includes Medicaid (poor and handicapped) and the uninsured/uninsurable. Medicare is a separate program for the elderly.
TennCare was born as a transition program leading into national healthcare - Hillary Care. But Hillary Care died when the Congressional Budget Office warned that it would cause "a shortfall of several hundred billion dollars in the years ahead" (Nashville Banner 8-19-94). Prescient, almost psychic. That's the budget disaster Tennessee blundered into.
Here's the fatal flaw: Insurance companies are dumping their sickest and most expensive cases onto TennCare - just what the CBO expected. So the big insurance companies grow fatter. Tennessee's businesses and other states are adding to the burden by dumping their toughest cases on TennCare. In just five years TennCare costs have soared by almost 50% -- by $1.5 billion (Fact Books, Finance, Ways and Means Committee).
Before TennCare, Tennessee did quite well. The state provided the Tennessee Comprehensive Health Insurance Plan (TCHIP) for 4000 uninsurable citizens. TCHIP cost $20 million/year. Now our uninsurables have skyrocketed to 130,000. Did we suddenly grow sickly? Or are we absorbing every insurer's risky cases?
Tennessee's Comptroller, John Morgan, otherwise a sensible man, dreams the impossible dream to keep TennCare intact, even though it is running twice Virginia's per capita cost, and the highest in the Southeast (Knoxville News-Sentinel 2-24-03). We simply can't afford that.
Getting the uninsured out of TennCare will be tougher than bringing them in. There will be some troubling cases since many have dropped other insurance to join TennCare. But surprisingly, there are now many alternatives (Pitching Plans to the Uninsured, Modern Healthcare, 2-24-03).
Mid-West National Life Insurance Company of Tennessee offers "affordable [health insurance] coverage options to the uninsured, specifically 'the hardworking entrepreneur' and those employed by companies that don't provide benefits." They are after some of the 41.2 million Americans who lack health coverage. This group grew by 1.4 million in 2001 as many businesses dropped their employee coverage. More than half of the newly uninsured have annual incomes over $75,000!
John Goodman, president of the National Center for Policy Analysis says, "It's a very common misconception that most of the uninsured simply can't afford the cost of health insurance. In fact, many of the newly uninsured are from moderate- to high-income families who are mainly uninsured by choice." Most of these are healthy and insurable. So many insurers are now entering the market: Discount medical card provider, Pinnacle Choice, Humana and others. Pinnacle claims the need is greatest for middle-class uninsured who don't have other programs (Medicaid) and clinics available to them.
Tennessee has more state revenue than ever before. In fact, between 1990 and 2001 Tennessee revenues have exceeded population growth and inflation by $467 per household (States Face Fiscal Crunch after 1990s Spending Surge, www.alec.org).
That's over $1 billion!
The giddy days of the '90's are over. Business and home budgets are strained. The S&P stocks are back to their level in May '97. State government budgets are more restrained, too. TennCare changes are essential to restore fiscal control.
Governor Bredesen is on the job and on the right track.