Uncovering CoverTN

I’ve been waiting until Cover Tennessee was actually ready to be voted on by the State Assembly, before commenting on this latest attempt by a state to promote universal health insurance. No, I take that back: I’ve actually been waiting to see if any major improvements took place, before slamming down on yet another socialized medicine ploy, disguised as a “fair and just reform” of the existing morass. But nobody has shown the initiative as yet to begin tweaking this newest monstrosity, so I guess I declare that time is up, and begin with my own scalpel-work.

The plan actually consists of three programs, including one for children (Cover Kids) and another focused on Tennesseans who have incomes, but have been denied health insurance due to prior conditions (AccessTN). For the purpose of this editorial, however, I will focus solely on the third branch of the plan, addressing “low-income workers” and known as CoverTN. Let’s start with the good news:

Unlike the folks in Massachusetts, Gov. Phil Bredesen seems actually to be seeking a mostly voluntary involvement with his proposals. Gov. Romney’s plans for the Bay State were based largely on forcing people to take on health insurance, while his Senate and House cronies added the provision of essentially fining any employer who would not buy into the program. (The penalty is small, compared to the actual cost of providing decent annual coverage for employees, but the principle is still forcing compliance, rather than offering incentives to do so willingly.) Romney vetoed this provision (although he did not reject the compulsory insurance for individual citizens), but the legislature overrode that veto in the final analysis.

Bredesen, on the other hand, is seeking to divide the cost of a modest healthcare plan among employees, employers, state government … and the insurance companies. Under CoverTN, an employee would purchase health insurance at a reduced rate (estimated at $150 a month), and then pay one-third of that amount ($50), with the employer ($50) and the state ($50) picking up the remainder. If the person was either self-employed, had an employer who refused to play along, or even got laid off or fired, the total cost would still be only $100 a month, and the policy would be yours to continue paying for, regardless of your job-situation. (There would be some additional costs, based on age, smoking habits or obesity factors.)

One concern about the plan is that it contains no deductible provisions; the fear is that without such baseline incentives for frugality, patients may overuse minor services and lead to just another TennCare fiasco, but on a far broader scope. However, Bredesen hopes to mitigate this at least somewhat, by including small yet significant co-pay provisions, to include doctor-visits as well as prescriptions. (Similar problems arose in the state of Washington, which has had a statewide healthcare program since 1987, but finally added both deductible and co-pay provisions during the last half-decade, to provide disincentives for wasting resources.)

The insurance company, meanwhile, would have to be content with the $150 a month per person. This would place the main burden for cost-containment on the insurance industry, which also makes this program significantly different from those elsewhere. Meanwhile, with the focus shifted to defined contributions ( rather than benefits), insurance companies would mostly define what benefits would ensue from the $150 program.

If that industry makes smart choices, providing a basic set of preventative and screening services to those who choose to purchase the no-frills program, this might lead to a real cost-savings, and promote more self-responsibility among the subscribers. (If you know you’ll have a co-pay each time you use the services, and you’re limited in the number of visits and degree of treatment for the most part, wouldn’t that encourage you to make an annual physical your first priority, and then take the advice of the physicians, nutritionists and other advisors, and improve your own health habits – so you might avoid coming back six months or a year later, with something seriously wrong with you?)

There is also word that CoverTN might encourage Medical Savings Accounts, as well as similar measures, to be chosen by individual citizens or their families. Moreover, and perhaps most significant, is the portability factor: since the insurance policy would be attached to the employee, it would be transferred from job to job, rather than dissolving with a job-change, or being connected to a government program. (This compromise solution may not please libertarians much, but it is a small step toward individual self-responsibility, and might even provide a pathway to transition this program entirely out of government hands one day!) The largest concern among critics of the program is that the projected funding only extends out about three years, using one-time money to fund the estimated $15 million annual cost to the taxpayers during that time.

The claim of CoverTN supporters is that the program needs to resemble the kind of mechanism for healthcare that a small business might choose to set up for its employees, seeking both their health and productivity, and containing costs wherever possible by minimizing use of the system unless it was necessary. Of course the direction this editor favors, like the one being pioneered by companies like Whole Foods Market, is not being explored in any way; there’s no encouragement here for employees paying their high-deductible policy premiums (in exchange for their employer giving them the deductible amount as a no-strings bonus, to spend or save as they choose), or being rewarded for saving on their own, rather than buying an insurance policy they might barely use, were they to live healthful and prudent lives themselves.

However, as an attempt to answer both rising healthcare costs and the “free rider” factor in hospital and clinic use, Bredesen’s plan has much to recommend in it. If CoverTN can offer an affordable alternative to those who do not truly need public assistance in order to conduct their own lives, it would at least take some pressure (economic as well as social) off the blighted TennCare mess.

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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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