TennCare

In the midst of the health care debate that raged in the early years of the Clinton Administration the state of Tennessee decided to launch a health care insurance program of its own. Known as TennCare, the program was designed -- according to wikipedia -- to "solve of the state’s biggest problems: access to affordable health care insurance and a Medicaid budget that was fast consuming the largest portion of the state’s budget."

Anyone paying attention to the current health care debate, in which more government intervention is being justified in order to help control costs, should find such rhetoric rather familiar.

So how has TennCare been working out? As wikipedia says:

That same year, with Governor Don Sundquist ending his second term in office, TennCare continued to be a statewide topic. The governor’s race featured “fixing TennCare” as the central focus of the campaigns of both frontrunners. Democrat Phil Bredesen won the election, voters confident that with a successful health care background, he would be able to reform TennCare. Not only was the program’s budget once again consuming all the state’s new revenues, but despite the more stringent agreement with the federal government, the perception continued across the state that people not eligible for TennCare were finding ways to get on the program illegally.

By the time Bredesen took office in 2003, the MCOs were doing little more than processing claims from providers, with the state absorbing any managed care risk.

Bredesen almost immediately hired McKinsey & Co., an international consulting firm, to provide a comprehensive assessment of the financial stability of TennCare and to provide options for reforming the program. McKinsey reported that the program, as structured, was not viable and threatened the fiscal health of the state. Their recommendations ranged from returning to a traditional Medicaid program to placing both enrollment and benefit limits to save costs – or offering smaller benefits to everyone while maintaining the size of the program. However, Bredesen chose to ignore the recommendation from McKinsey that returning to a Medicaid-only program would in fact cost the state more money overall. The McKinsey report soon vanished from the state's official Web sites as the administration chose actions in direct contradiction with the recommendations of the report.

Bredesen faced another challenge with the TennCare program: lawsuits filed by advocacy attorneys and subsequent court orders that would prevent many of the changes recommended by McKinsey and attempted by state policy groups. After failing to make reasonable attempts to reach agreement with legal advocates, Bredesen moved to return to traditional Medicaid while preserving coverage for all children on the program.

By 2005, approximately 160,000 people who were not Medicaid eligible were removed from TennCare. In addition, the program’s benefits were trimmed. At the time, Tennessee was one of less than a half-dozen states in the nation with no limits on pharmacy benefits. The state set the limit at five prescriptions per month for most enrollees, with exclusions for children, pregnant women, nursing homes and emergency care. Limits were also placed on doctor visits and hospital stays, but the greatest expected savings would come from limiting access to prescription drugs. Tennessee had the notoriety of being the top state in the nation for per-capita prescription drug use – and like many of its neighbors, the state had a huge bill for prescription painkillers.

Meanwhile, Massachusetts, which also implemented a program three years ago to provide universal insurance, is likewise struggling with huge costs.

These examples would seem to offer little hope that the current approach being advocated by the Obama Administration will either increase the quality of health care or succeed in reducing costs.

Update: Economist Robert Samuelson:

It's hard to know whether President Obama's health care "reform" is naive, hypocritical or simply dishonest. Probably all three. The president keeps saying it's imperative to control runaway health spending. He's right. The trouble is that what's being promoted as health care "reform" almost certainly won't suppress spending and, quite probably, will do the opposite.

Ouch.

Update: Gov. Mark Sanford and Dr. Scott Atlas get it right:

We believe there's benefit to decoupling employment from health insurance coverage by ridding the system of tax preferences for health care. This single change would reduce health expenditures hundreds of billions of dollars while easing the burden of health costs on businesses. A great unspoken truth is that health benefits from employers come at the expense of employees' take-home pay. Raising lost wages would be the first of many benefits to American workers and their families from delinking health insurance and employment.

The whole thing is worth a read.