State Senate strikes blow to Cover Tennessee
By Tom Humphrey
Knoxville News Sentinel
May 16, 2006
As proposed by (Gov. Phil) Bredesen, Cover Tennessee would provide a $50 per month state subsidy toward group health insurance for people who have no coverage now and who earn less than 2.5 times the federal poverty level, which works out to $24,500 per year for a single person and $50,000 for a family of four.
The plan would be available to small businesses – those with less than 50 people – that do not offer coverage to employees now. Under the plan, the average employee would pay $50 per month, the state would pay $50 a month and willing employers would pay $50 per month. If employers decline, the individual would pay $100.
The state would solicit bids from major insurance companies and select the one offering the best available insurance package for $150 a month.
The Republican-controlled Senate voted 17-14 along party lines for (Sen. Jim) Bryson’s amendment, which declares that insurance companies would bear all risk of financial losses in operating the program.
“This plan is going to be risky,” Bryson said. “This amendment says we’re not going to take on the risk. (Without it) we run the risk of having another TennCare situation. This will force the plan to be self-sustaining.”
(Finance Commissioner Dave) Goetz said major insurance companies have told him that making them liable for any and all losses means they will not bid on the contract. That will be true especially in the startup year, he said, since there are some uncertainties in going with a new program of limited coverage at relatively low cost.
“It kills Cover Tennessee,” said Goetz after the vote. “Insurance companies will not bid and will not participate if they have to cover all the risk.”
http://www.knoxnews.com/kns/politics/article/0,1406,KNS_356_4701509,00.html
An update from The Tennessean (5/18/06):
A compromise was reached when a House amendment put 2010 as the date when contractors would assume any risk – giving state officials and insurance companies time to see how the plan evolves.
http://www.tennessean.com/apps/pbcs.dll/article?AID=/20060518/NEWS0201/605180408
Comment:
By Don McCanne, M.D.
There are two important policy issues here.
This proposal perpetuates the fiction that making health insurance premiums affordable will make health care affordable. A $150 monthly premium cannot begin to cover comprehensive services and would leave the beneficiary exposed to unaffordable out-of-pocket expenses if a significant medical need were to arise. Even a $50 to $100 per month premium would be a hardship for those earning under $24,500 per year.
The second issue is that private insurers quite understandably no longer want to accept the risk of catastrophic health care losses. They do so only if they can control spending through contracting of provider rates, limitation of benefit coverage, and shifting more out-of-pocket expenses to the beneficiaries. But then they do so only if the premium structure is actuarially sound. Asking an insurer to bear all risk for a $150 premium that is to cover primary care, hospitalization and modest specialized services is a total non-starter.
One of the most prevalent proposals today would be to establish a government-funded reinsurance program to protect insurers against catastrophic losses. For that to work, it means that all major acute problems and all significant chronic diseases would have to be funded, at least in part, by the government. That is close to 80 percent of health care costs today.
If we are going to shift most of the risk of paying for health care to the government, then why should we continue to tolerate the profound administrative waste of the private insurers which direct their greatest efforts to devious means by which they can duck out of their responsibility to pay our medical bills?
In fact, the taxpayers are already paying 60 percent of the health care tab.
The insurers don’t want to insure our risk pools, and we don’t want to waste our funds on their administrative excesses. The solution seems obvious. Throw them out and establish our own publicly-funded and publicly-administered health insurance program.
In an equitably-funded public insurance system we would never again have to ask how a person with a $24,500 per year income could afford either health care or the insurance to pay for it.
