Governor's plan does not repair the damage of his TennCare cuts and does not make up the loss of over $1 Billion federal dollars because of mismanagement.

March 27, 2006: Tonight the Governor addressed a General Assembly and revealed his Cover Tennessee plan:

The Governor's health care reform is going through its full election cycle. Before his election, he promised to reform TennCare. After his election, he successfully cut off the sickest and most expensive people and is now proposing to replace those people with younger and healthier people. This is the dream of any insurance company: Cover young, healthy adults and children and let older and sicker adults fend for themselves. It is also the dream of any politician: Expand coverage during an election year.

In August 2005, the governor began cutting off over 200,000 adults (your mom, dad, aunt, uncle or grandparents). They were primarily adults, who were very sick and, you guessed it, expensive to care for. Now, over the next three years, he is proposing to offer half the number of uninsured adults in Tennessee the opportunity to buy a plan that is much cheaper and of course provides much fewer benefits. And he is going to do this with the $300 million in TennCare savings from the older and sicker adults whom he terminated.

The Tennessee Health Care Campaign and the TennCare Saves Lives Coalition have also been working on plans to cover children and adults. We feel that any approach has to be based on three principles: Maximizing state funds, affordability and accessibility.

1. Drawing Down Maximum Federal Matching Funds: Are we drawing down maximum federal funds to assist Tennessee and its citizens? It does not matter what one calls it (TennCare, Covering Tennessee, CoverKids, S-CHIP,), the question is, "Does the plan draw down the maximum amount of federal funds?" With Tennessee being a low per capita income state and with Tennessee being one of the lowest tax revenue states, Tennessee needs additional funds to provide affordable insurance. That is what TennCare did. For every $1 the state spends, it receives and additional $2. Does the Governor's plan to do this? For children? YES. For adults? NO, but MAYBE, if the governor can ignore people's rights that come with federal funding.

2. Affordability: Is the plan affordable for the people? When other states experimented with premiums for low income working people, they found that for people below poverty or near poverty, a monthly premium was detrimental to them being able to maintain coverage. This was Oregon's experience. Low income families have financial crisis' like everyone else (car repair, leaky roof), and there may be several months when they cannot make that monthly premium payment of $50 because they do not have the reserves that middle and upper income people have. They are also smart shoppers. They know that Cover Tennessee is an empty promise. BlueCross BlueShield has had a low-cost, reduced benefit plan in the market for several years and there have been very few takers. This proposal is out-of-touch with the people in Tennessee. Does the Governor's plan allow for individual coverage for people who work for an employer who will not offer insurance or for people who are disabled, cannot work and are not eligible for Medicare? NO!

3. Uninsurable - Access Tennessee: Is his plan accessible for people who have pre-existing medical conditions? He is proposing the re-establishment of the high risk pool that existed before TennCare: The high risk pool in Tennessee was dissolved in Tennessee because it was only serving about 3,200 people with high incomes and it did not receive any federal assistance for funding the pool. Most state pools operate with state subsidies. At one time the pool in Tennessee was operating with no state subsidies. When the pool closed in 1994, it was being funded 1/3 by enrollee premium, 1/3 by state subsidy and 1/3 by assessment to the insurance industry. The pool as it was structured then had a maximum premium of 150% of the average market premium. The Governor is proposing a high risk pool that will charge premiums between 150% and 250% of the average market premium. How many people will be able to afford a monthly premium of over $500/month? VERY FEW! Of the 200,000 who were terminated from TennCare only 15,000 had incomes of twice poverty.

Additional review of the Governor's plan:

4. Covering children: Every state, except Tennessee, is covering children who are above the Medicaid standards. Tennessee has the lowest insurance eligibility standards in the country for school age children. Recently, the Governor says that there are 150,000 uninsured children in Tennessee and that he wanted to cover all uninsured children through a S-CHIP program, State Child Health Insurance Program. The advantage of this program is that it will be able to draw down federal dollars at the rate of $3 federal dollars for each $1 state dollar. We support this effort and hope that these children will have the same benefits as children covered by Medicaid and cover dental and vision services for children. Why is it OK to draw down federal funds for children and not for adults?

5. Cover Tennessee: Will the benefits be worth the price? We do not know the details on what medical benefits are covered or all the cost sharing responsibilities. Research shows that premiums that are more than 7% of a families income are not affordable for families above twice poverty. For families with incomes below twice poverty, 7% is much too high. The amount charged for co-payments for low income families are more critical. The proposed co-payment of $25 for low-income families for each office visit and $10 for generic drugs and $25 for brand drugs is much too high. These folks will be forced into going without care and/or seeking inappropriate and more costly care. This is bad medicine. It has not been tried any where. It is likely that the insurance companies that will administer this program will do this only on a fee-for-service bases which is not a very effective way for holding down costs.

It is disappointing that this plan is out of touch with the real needs of the people who are uninsured and uninsurable in Tennessee. And it is painful to see so many people who have been hurt by the TennCare cuts suffer while TennCare is sitting on a reserve of over $300 million dollars and refuses to use these dollars to draw down an additional $700 million in federal matching funds.

I will have more as we get more details. Right now, it doesn't look too good for adults. It appears that uninsured children will benefit.

Our challenge now is to work to make Cover Tennessee better.

Take care,

Tony Garr, Executive Director, TN Health Care Campaign