UPDATE: The House Blue Dogs stormed out of the committee meeting saying that Henry Waxman is lying to them. I guess they just found that out about Henry. It doesn’t look good for the House bill (and thus it looks better for us).
TennCare was an effort by the state of Tennessee to provide health insurance for the poor and to improve the state’s Medicaid program. How has it turned out 14 years later ?
Not so good. Why ?
Here are a few examples.
A government-run health insurance plan is enacted on the promise of increasing competition and bringing down costs, but over the years, as more people leave their private insurance to take the “public option,” the cost to operate the government plan skyrockets.
Sound familiar ?
TennCare, the managed care Medicaid program that began in 1994, now serves about 1.2 million people in the state and has a $7 billion budget. That’s after cuts were made.
Rep. Marsha Blackburn (R-Tenn.) was a Tennessee state senator through much of the TennCare problems and believes it is a forecast of what would happen under federal health care “public option” plan. While supporters of the Tennessee program said it would save money, it wound up eating 38 percent of the state’s budget, she said.
“As a result of this, insurance rates for those who have private coverage were going through the roof,” Blackburn told a gathering at the conservative Heritage Foundation last week.
“There is no example that you can point to that shows where having private insurance in competition with the public option brings the costs down. It leads to exploding costs,” she said.
What happened ?
“They were tired of insurance companies denying people universal access, and thought they could save so much money with a public plan to cover not only the people on Medicaid but all uninsured. Sound familiar? Costs began to explode immediately,” Matthews said.
Hospitals were paid about 40 cents on the dollar, which eventually rose to 64 cents, while Tennessee became the number one state in the country for consumption of prescription medications because of TennCare, according to Craig Becker, president of the Tennessee Hospital Association.
One of the first steps a troubled health care plan takes is to underpay providers. They are not as well organized as patient advocates and politicians so they have far less power in a political setting. What do they do ? The good ones, especially doctors who have more choice, drop out as providers. This has happened in California’s MediCal program. The result is to leave the program with marginal physicians and “mills” which maximize revenue by excessive testing and prescribing, often dispensing medications instead of writing prescriptions to be filled by pharmacies.
A March 1999 review by PriceWaterhouse Cooper found that TennCare paid providers 10 percent below what would be considered “actuarially sound.”
A state audit in July 1999 reported that the state had spent $6 million to insure 14,000 dead people. Meanwhile, 16,500 enrollees actually lived out of state and 20 percent were found ineligible to be in the program. Further, 450 of those who were ineligible had access to the state’s help insurance plan.
Fraud explodes in these government programs, especially as they drift away from ethical providers and begin to depend on the marginal and the mills. Also, the bureaucracy expands and does less and less. When I was on the board of California Medical Review, Inc (CMRI), the state Medicare peer review organization, we were looking for new business outside the Medicare program. The company, which supervised the federal program in all of California, submitted a proposal to the state Department of Health to take over supervision of the MediCal program. This would be an example of privatization. The state was not interested even though we learned that they had 5000 employees for the MediCal program, more than the entire staff of HCFA, the national Medicare administrator.
TennCare sounds very similar and the implications for Obama’s program are troubling.
UPDATE: I guess we are not allowed to say Government run healthcare. The Congress is now censoring franked mail by GOP Congressmen.
“As a result of this, insurance rates for those who have private coverage were going through the roof,”
Mike is this a case of public insurance shifting part of the true costs onto private? I hear that the shift is about 12% currently.
That “Franking” bit is very troublesome.
Yep. Americans like comparisons. Americans understand winners vs. losers. Americans DON’T like to be lied to.
If “GovCare” opponents keep on pounding at the backfires of TennCare and MA Commonwealth Care in addition to reminding folks what they already know about Canada and the UK, what do “GovCare” proponents respond with?
Sure, they can point to the inequities and flaws of the existing system, but as I keep reminding people, the EXISTING system is largely a creation of government tax policy and regulation – the federal government PLUS each single state out of 50.
BILL
The public plans, like Medicaid and Medicare, under pay and the providers try to make it up by raising fees on private plans. In California that got to be almost impossible and so the doctors are shunning even Medicare. A practice management firm that advises primary care docs suggests 11% as the optimal share of an internist’s practice for Medicare. Of course, the Medicare population is the natural ecosystem for general internists. The distortion of the system by the reimbursement program has gotten so bad that more and more good primary care docs are leaving and starting
retainer” practices where a patient pays a monthly subscription fee and, in return, has access to the doctor for all issues for no additional charge. The ones I’ve heard of charge from $100/ month to around $250. I have a post on this elsewhere.