Tennessee passes health insurance reform package

The legislation includes a new insurance initiative, a high-risk pool and Tennessee's first State Children's Health Insurance Program.

By Elaine Monaghan — Posted June 12, 2006

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Doctors said they like the goals of the just-passed Tennessee legislation aimed at covering a chunk of the state's approximately 600,000 uninsured residents. But they're worried about the lack of details.

It's understandable that Cover Tennessee is thin on specifics, given that it was just given the green light on May 23, said Tennessee Medical Assn. Senior Vice President Russ Miller.

"Our hope is that this summer, the governor will openly consult with the physicians in Tennessee who will be responsible for actually providing the care," he said. "That was a major stumbling block with TennCare over a decade ago, and we would hate to see a repeat of that."

Tennessee Gov. Phil Bredesen, a Democrat, cut 200,000 adults from TennCare, the state's alternative to Medicaid, last year due to ballooning costs. The managed care program, which covered one in four residents, was the most generous state program in the nation but had a troubled history.

Bredesen has given the medical society only "the 30,000-foot overview" of the newly passed program, Miller said. "Hopes and dreams, we have found, can come up a little short once implemented. But if we work together, Cover Tennessee can be a very progressive chapter in health care here."

Tennessee is the third state this year to pass sweeping reforms aimed at covering its uninsured residents, after Massachusetts and Vermont.

The governor, who lobbied hard for the plan after presenting it in March, celebrated the Legislature's approval of the $300-million, three-year health insurance package. Exact enrollment figures are not available, but initial forecasts by Bredesen's office show about one-third of the uninsured being covered in three years. "It's clear that Tennesseans want to provide affordable and portable coverage for most needed health services, and I'm glad we're now able to move ahead toward implementation," he said.

Helping the working uninsured

Cover Tennessee, the main component of the reform package, is an insurance program aimed at uninsured workers and is expected to cover 100,000 people. Bredesen promised that the program was "not another TennCare" and said insurance companies, having bid for the business, eventually would have to pay for losses if they ran the program poorly.

Cover Tennessee's $100-million price tag for the state will be paid by existing funds that had been set aside for Medicare Part D but became unnecessary after federal changes to the drug program. The governor's plan aims for premiums of $150 a month, though they are expected to vary depending on enrollees' weight, age and tobacco use. Costs will be contained by limiting numbers of visits, rather than excluding services. The program will be voluntary, with costs split between the state, employers and individuals. The legislation calls for at least two plans to be available statewide to ensure competition.

The program, due to launch in January 2007, will be available to residents earning below 250% of the state poverty level, or $50,000 for a family of four. Co-pays will be about $25 per doctor visit and $10 for prescriptions. Deductibles will be low or zero, and preventive care and wellness programs will be emphasized.

The law also provides comprehensive coverage to children and pregnant women, modeled on the state employee health plan. This new program is Tennessee's version of a State Children's Health Insurance Program. Its adoption makes Tennessee the last state to implement an SCHIP. Tennessee was late to SCHIP because it previously offered better benefits through TennCare. The new program is expected to cost $63 million and sign up 75,000 people over three years, or half the uninsured children.

The state also will throw a lifeline to seriously sick residents by creating Access Tennessee, a high-risk pool. It aims to help 10,000 people who can afford coverage but have been rejected by insurance companies because of medical conditions. The premium will be 1½ to 2 times higher than standard market rates, with the cost shared between individuals, the state, federal funds and an insurance assessment. The budget is awaiting final approval but is targeted at $13 million, which would put Tennessee ahead of other states in commitment to high-risk pools, the governor's office said.

The state also approved a prescription drug program that will give people earning below 250% of poverty access to generic drugs at a cost to the state of $57 million over three years.

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