Health reform: Three states, two basic approaches

Now Vermont has entered the statewide healthcare reform arena, with a perspective remarkably similar to that of its neighboring state, Massachusetts. The announcement of the Green Mountain State’s efforts to curb Medicare costs, while promoting “full insurance” for its citizens, comes on the heels of the Bay State program recently approved (with some reservations) by the House, Senate and Governor in the Commonwealth below Vermont geographically. Alongside these two attempts is the program currently being considered in Tennessee, which has a lot farther to go in recovering from its disastrous TennCare mistake. This column seeks to compare and contrast the three approaches, in hopes of defining what is and is not likely to work in each of them.

What they all have in common is a focus on insuring everyone, rather than on providing low-cost medical care per se. They also seek to convince everyone to sign up, as employer and as individual, choosing among whatever options they and the insurance companies devise for allegedly baseline healthcare coverage, and in some way or another, they seek to penalize members at least one of those categories if they do not obey. However, there are two aspects of Tennessee’s CoverTN plan that set it aside from the other two: the emphasis on portability, and the shared cost of the coverage by the working person.


Vermont, following the lead of its neighbor to the immediate south, is focused on REQUIRING everyone to get insured. Somehow the state that prides itself on having self-defined socialist Bernie Sanders as its Independent Congressman would seem likely to take that route of forcing compliance rather than offering incentives for it, as Taxyourwhatsis has already blazed the pathway for. Although Mass. Governor Mitt Romney complained about the fines for small companies who did not comply (though not about similar requirements for individuals to sign up for the insurance), he did end up signing the bill as it was written, and it will go into effect very soon.

In all three states, the primary goal is to bring at least most of those residents who are not currently covered by health insurance, and who are working for a living (and thus are ineligible for the handout programs), so that they don’t become a greater burden on the taxpayers when some emergency arises. The Vermont and Massachusetts plans, as a Boston Sunday Globe editorial editorial notes, share many other aspects, including expansion of Medicaid, subsidies for people with low incomes and a fine (called a “fee”) for employers who don’t buy into some insurance system for their workers. (However, at $365 in Vt. and $295 in Mass., these annual penalties are a pittance compared to what the companies would be paying to insure someone even at the lowest level, so they are unlikely to deter much non-compliance.)

However, unlike the Bay State plan (which requires any individual resident to become insured by July 1, 2007, or pay a hefty fine), Vermont will not mandate that everyone buy into the program, at least not as individuals; instead the state is setting up Catamount insurance policies through private insurers, designed to attract individual subscribers with subsidized low rates and bare-bones coverage. It is hoped that this will encourage both preventive care and early detection, before problems become serious and require more extensive care.

They also plan to bankroll their program with a boost in cigarette taxes, to as much as 80 cents more per pack over the next couple of years. (Massachusetts legislators think they can make their plan go with cutbacks on existing programs and revenue growth, as well as cost savings overall by containing excessive use of emergency facilities. In a state which has seen property taxes capped via Proposition 2-1/2, and nearly saw its income tax repealed via another referendum a few years ago, finding ways to trim costs and find hidden money is becoming much more familiar to those legislators.)

Meanwhile, down [here] in Tennessee, the first challenge has been to rollback and replace most of the elements of the atrocious and overblown TennCare debacle. Started in 1994, and initially intended to provide blanket coverage for those who needed the care the most (the disabled, the elderly, chronic-pain and disease sufferers, the uninsurable and the indigent), it rapidly expanded and overflowed all of its boundaries. It was abused by out-of-staters establishing false residency, by able-bodied workers who chose the dole over productive endeavor, and finally even by medium and large companies, who saw a way out of paying for their employees health (or paying them more so they could do so themselves?), and became a large part of the problem instead of an aid to solution.

So the first step was the dismantling of the worst parts of TennCare; only then could its replacement, with subsidiary and targeted programs to attack specific aspects of health and wellness, be addressed. And now, after a somewhat ruthless slashing of that behemoth (many aspects of which seemed more politically driven than they were based on common sense!), Governor Bredesen has produced a three-part strategy for fixing the roof and the foundation of the structure. His Cover Tennessee program has been previously commented on in this space, but comparison with the efforts in the two New England states are still in order.

Generally speaking, Cover TN, the portion focusing on the working poor and middle class, is the most innovative here, since it actually encourages a working person to sign up, at relatively low cost, for a policy that is then attached, not to an employer, but to that individual person. The policy, a relatively low-level coverage with significant co-payments required for both doctor visits and prescriptions, is intended to cost about $150 a month, one-third of which would be absorbed by the taxpayers (and be paid for at least in the short term by TennCare budget savings or tobacco-settlement funds). The remaining $100 a month would be paid by some combination of the employer and the employee, or entirely by the individual. Under the plan as it is written, that would be literally a $50/$50 split, though one might expect a smart employer to offer a better deal as an incentive to keep a good worker.

The advantage of this is, the policy could be transferred from job to job, with the next employer assuming some portion of the policy-cost. Or it could exist entirely independent of an employer, allowing a self-employed consultant to afford decent healthcare coverage, instead of having to either budget for a high-cost individual policy, or go with insurance, as many do at present. (It would also phase out the archaic concept of COBRA insurance, whereby an employee leaving a job may continue coverage under a prior plan, for a limited time, but often at five or ten times the cost of the previous policy.)

Right now, while the Massachusetts plan has already been signed into law, and the Vermont one is likely to pass very shortly, the Tennessee one is still being held up, over some subsidiary issues, according to some proponents. While there is very little opposition to the plan as it is presented, there are some battles being waged on its periphery: a recent attempt to tie medical malpractice suit limits to the bill had to be defeated last week, and now the push is on to address the issue of an estimated 67,000 uninsurable Tennesseans (with pre-existing medical conditions), who were dropped from TennCare and are still now without assistance.

One does feel for their plight, and the issue should be addressed (perhaps with the first piece from those extra TennCare funds, which should continue to grow as this CoverTN program takes hold); however, it is to be fervently hoped that this experimental new paradigm in health coverage does not get derailed by this side-issue. The possible ramifications of freeing workers from their somewhat willingly accepted chains, moving away from “healthcare benefits too good to lose,” and chasing their own individual dreams … are just too wondrous to imagine!

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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