Bredesen set to unveil uninsured health plan

By Scott Shepard
Nashville Business Journal
Updated: 7:00 p.m. ET Jan. 29, 2006

Tennessee Gov. Phil Bredesen is working on a statewide health care reform program as audacious as TennCare but that's designed to offer stripped-down medical coverage to the uninsured at a steep discount.

Bredesen so far has been quiet about the plan, even withholding it from obvious members of the General Assembly, though he and his subordinates have hinted at it during meetings with industry groups such as the Health Underwriters Association and the Memphis Medical Society.

Bredesen likely will make the program, dubbed Cover Tennessee, the centerpiece of his State-of-the-State address, tentatively scheduled for Feb. 6. The date was moved from Jan. 30 because of the legislative special session on political ethics. Should that session linger, the State of the State could be moved again to keep it out of the shadow of the ethics debates.

This is an election year and sources say Bredesen would like to make Cover Tennessee the center of his re-election campaign and the dominant subject of the legislative general session.

"I'm familiar only with some rumblings," says Sen. Mark Norris, R-Memphis. "It looks like his ploy is to set up a big dog-and-pony show. Those of us who have worked for many years to improve access in Tennessee would look more favorably at a team effort."

Norris is an attorney at Armstrong Allen in Memphis who focuses much of his practice on health care. In the General Assembly, he's often one of the key health care people.

"Where we've gotten into differences in the past is when the governor crams down (his) dream plan," he says. "It happened with (Ned) McWherter and we got TennCare. I don't want to see that happen again."

Bredesen is a native of Shortsville, N.Y. Before being elected mayor of Nashville in 1991, he made his fortune in Nashville developing managed care plans.

Cover Tennessee is patterned after Healthy New York, a program aimed at small employers and the self-employed who can not afford private insurance.

Debuting in 2000, it is a sister program to Child Health Plus and Family Health Plus, two other New York state programs designed for other, specific needs.

Its roots go back to 1995, when New York Gov. George Pataki chose to separate different pockets of the uninsured and deal with each directly. He found that most small employers would like to offer health benefits to employees, but they faced the hurdle of cost.

New York regulations have larded health plans with mandated benefits that priced many small businesses out of the market, so dealing with mandates was part of the strategy.

Enrollment has steadily grown in Healthy New York, and suddenly doubled in 2004. Last year, the program's premiums were 28 percent below the market rate for comparable small-group and individual health plans.

Bredesen last year started looking at Healthy New York as he was excising 323,000 residents from TennCare, mostly people with serious, chronic ailments who cannot qualify for other coverage. At the time, there was talk of reviving the old high-risk pool for this population.

A high-risk pool would likely be funded with an assessment on all health insurance carriers in the state, based on their market share. That money would be combined with premiums to provide coverage.

High-risk pools are invariably money losers because they attract the most expensive people in the state. The assessment is, in effect, a hidden tax on everyone with health insurance, and a high-risk pool does not address the needs of others who cannot buy coverage.

Cover Tennessee would be designed to solve both of those problems. Healthy New York started by eliminating the most expensive mandated benefits that are not life-threatening, including: outpatient alcohol and substance abuse treatment, 40 days of home health care, chiropractic, infertility treatment, and prostate screening. Most of these services are also available through nonprofit agencies.

"New York, like most states, has continued to add mandates," says Wayne Cotter, spokesman for the New York Department of Insurance. "It's very good from a public policy perspective, but it adds cost."

Mandates creep into state regulations when a group of providers lobby for their specialty to be covered. It's a no-lose proposition for politicians, who can claim credit for providing a benefit, while the burden of paying for it falls on the employer.

Companies with more than 100 lives can slip the snare of mandates by self-insuring their group and hiring a third-party administrator to shuffle the paperwork.

New York also assesses a service fee on hospital services, with the money distributed to several public health programs. In 2005, Healthy New York was subsidized from that fund at $69.2 million. Employers also gain state tax credits for signing on.

To prevent employers who already provide coverage from bailing out and joining Healthy New York, groups have to go for 12 months without coverage to be eligible.