Saturday, November 22, 2008

What the feds can learn from Tennessee

Showing once again that he is not bound by Democratic Party orthodoxy, Tennessee's governor designs a health plan that would pass a benefit-cost test in an economics class:

CoverTN, which began in 2006, is a health-insurance plan for those who are self-employed, or who work for small businesses that can't afford a traditional policy.

It is not free health care. Rather it is a limited plan with shared costs. In devising this plan, we didn't start out the usual way -- by defining what benefits we wanted -- but instead set how much we wanted to pay. And then we began a competitive-bidding process to see how much health care we could buy. We initially set the amount we would pay at an average of $150 a month, and split the responsibility for that premium three ways. The company would be responsible for $50, the individual for $50, and the state for the final $50.

The bidding was vigorous. It was ultimately won by BlueCross BlueShield of Tennessee with a benefit package that meets a great many -- not all -- of the real needs of the uninsured at a cost far below conventional plans.

At these premium levels -- less than half of what a conventional plan might cost -- the benefits are limited. But the benefit structure is also different than in a conventional plan. Most limited plans achieve their savings with high front-end deductibles, requiring a person to spend often thousands of dollars out-of-pocket before benefits kick in. But when we asked our customers -- uninsured Tennesseans -- what they actually wanted, we found that they were most interested in some help with the more common things; a doctor's visit, prescriptions, a short hospital stay.

CoverTN emphasizes covering these front-end costs. It features free checkups, free mammograms and $15 doctor visits without deductibles, for example. And it achieves its savings on the back end, with relatively low limits on hospital stays and an overall $25,000 benefit limit in any one year. It does not cover truly catastrophic events.

Note to President-elect Obama: Bredesen would make a great secretary of HHS.


  1. I think the best point Governor Bredesen makes is grossly understated and probably overlooked by most readers. He says, "What I realized was this: Everyone proposing solutions or criticizing unfairness was doing so from the comfortable vantage point of having good health insurance." Until the pain of lacking affordable health care coverage is felt by Congress, it has little incentive to take action to rectify our country's dismal health care system. We should take away the Congressional entitlement to health insurance. Let them purchase insurance on their own -- the way small business owners do. Let them spend their valuable time looking through the fine print of insurance policies (and government regulations) to find an affordable plan that fits the diverse needs of their staff. Let them feel the financial pinch of annual premium increases that dwarf the increase in gas prices over the last 10 years. Let them feel the sorrow of dropping a benefit knowing full well that it means their loyal receptionist will have to take a second job to make up for that lost benefit.

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