Plan Focuses On Affordability, Portability For Working Tennesseans
posted March 27, 2006
Saying it is the next step in the future of health care in the Volunteer State, Gov. Phil Bredesen on Monday unveiled a new strategy he called Cover Tennessee to provide affordable and portable health insurance to more than 600,000 uninsured Tennesseans.
In a 30-minute speech to a joint session of the Tennessee General Assembly, Bredesen outlined the initiative based on two simple principles: Affordability and portability. At an average monthly cost of about $50 for an individual, and with no high front-end deductibles, the plan is affordable. Meanwhile, it can follow working Tennesseans no matter where they work, making it portable.
“When it comes to accessing health care in Tennessee and across our country, lack of affordability keeps too many people on the outside looking in,” the governor said. “Cover Tennessee represents a logical approach for making affordable health insurance available to as many Tennesseans as possible. The key is focusing on the fundamentals, not the extras that drive up the cost of health care.”
With respect to portability - the concept that an individual, not a government or employer owns the insurance - Bredesen said Cover Tennessee will be unique among health insurance programs. “We live in the land that values the individual above the government or any corporation, and we need to reflect that core American value in our approach to health care,” the governor said.
Gov. Bredesen plans to travel the state on Tuesday to begin selling the new health program. He will be at the Chattanooga Airport at 3 p.m.
Cover Tennessee, which is a voluntary program, has three main components:
CoverTN -- This initiative, the heart of Cover Tennessee, is a partnership between the state and small businesses to help working Tennesseans buy affordable health insurance. The average cost for an individual is expected to be about $50 a month. The state and employer each will kick in about $50 a month as well, for a total monthly cost of $150. In cases where an employer doesn’t participate, the individual will have the option of paying the employer’s share.
He said unlike other health insurance plans, CoverTN will not require high deductibles on the front end. Instead, participants will have modest co-pays - about $25 for a doctor’s visit and $10 for a generic prescription - and can carry CoverTN with them regardless of where they work. Initially, the focus will be on workers earning $24,000 a year or less and small businesses such as restaurants, retail shops and landscaping firms. It could be expanded to allow broader participation.
· CoverKids - This initiative will provide health insurance to uninsured children in homes with incomes up to $50,000 a year for a family of four. Families with higher incomes will be allowed to buy into the plan. CoverKids will put Tennessee among the top 10 states in the nation in terms of the percentage of children covered by health insurance.
· AccessTN - This initiative will provide health insurance to adults who can afford to buy it but who may not be able to obtain it due to pre-existing medical conditions. The state provided a health insurance plan like this more than a decade ago, but discontinued it after launching TennCare.
Bredesen also unveiled a new public-health initiative, Project Diabetes, to combat the explosion of diabetes and obesity in our state. The prevention plan, initially to be funded at $15 million a year for the next three years, will work through local schools to help children and young adults improve their exercise and eating habits.
To that end, the National Institute of Health has agreed to include Tennessee in a new national study to research different approaches to prevention in high schools. Also, the University of Tennessee Health Science Center, Memphis, will launch two “diabetes malls” - one-stop centers to provide treatment, clinical counseling and educational resources to residents in urban and rural areas of the state.
Moving forward in Cover Tennessee, Bredesen said he will keep an open dialogue with the U.S. Department of Health and Human Services to explore options for future federal dollars. He said HHS Secretary Mike Leavitt has agreed to consider funding outside of the rigid Medicaid rules that led to pressures in TennCare.
“Once we prove our concept, we will be in a strong position to seek a partnership with Washington,” the Governor said. “If we can bring in the federal government as a partner, it would be a big win indeed.”
Here are his remarks:
COVER TENNESSEE:
A BLUEPRINT FOR AFFORDABLE, PORTABLE HEALTH CARE
GOvernor Philip n. Bredesen
MARCH 27, 2006
Governor Wilder … Speaker Naifeh … Speaker Pro Tem DeBerry … Members of the 104th General Assembly … Justices … Constitutional Officers … Friends and Guests … and My Fellow Tennesseans.
Let me begin by recognizing a distinguished fellow Tennessean. He has touched millions of lives in his long career, he has been a mentor and friend to me, and he is back in this chamber for the first time since he left office over a decade ago, Gov. Ned McWherter.
Thank you once again for the opportunity to address you. I appreciate your allowing me to delay this occasion a couple of weeks so that I could visit our troops in Iraq and Afghanistan. I visited them at Al Saleem, in Taqqadam, in Ramadi, in Bagdhad and Kabul, and at Bagram airbase. These men and women are working under very difficult and dangerous conditions, and yet they’re in good spirits and proud of what they’re accomplishing.
To Rep. John Mark Windle, I now have a much better understanding of the conditions under which you worked, and we are all glad that you are home safely. On behalf of our troops who are still there I ask all who hear me to pray for their safe return home. Please take a moment and join me in honoring these Americans.
= = =
This evening’s subject is health care, and about how the General Assembly, the Governor and individual Tennesseans can work together to improve it. I want to begin on a very personal note. I think you know that I keep my family very private — you rarely hear me speak about Andrea or Ben in any overtly personal way. I want to break that privacy and start out this evening by telling you about my brother.
Many of you know that I had a younger brother, Dean, who passed away just before Christmas. Dean died of liver disease, brought on by the abuse of alcohol. In the final weeks of his life he couldn’t communicate, but I spent a lot of time talking with his children. One of the things I found out was that he had twice in the past few years sought medical help, but because he didn’t have health insurance, a large cash deposit — $10,000 — was demanded before anyone would treat him. That was far beyond an amount he could come up with, and he tragically but understandably didn’t reach out to me or anyone else in his family.
I don’t know if having health insurance would have saved him — he waited a long time to seek any help, he was already quite ill, and addictions are very difficult. But it might have — health insurance might have saved him; I do know that I believe he deserved a shot at it. He had a 14-year-old son — Adam — and he deserved a chance at seeing Adam grow up and go to college and get married.
Dean was one of those Americans standing outside and looking in through the window at the health care system we have in America, we have in Tennessee. If you’re inside, it is warm and comforting; if you’re outside with your face pressed to the window looking in, it’s cold and scary. Dean didn’t have health insurance through an employer, and he didn’t qualify for Medicaid. In the world of medical care, he spent much of his life outside looking in, and it cost him.
As I speak, we have several hundred thousand people in Tennessee who are outside looking in as well. Just like their more fortunate neighbors who enjoy Blue Cross or TennCare or Medicare, they too have high blood pressure, they too get cancer, they too develop heart disease.
I can no longer help my brother, but there are plenty of others who still need our help. I made myself a promise last Christmas: I’m determined to fix this and I’m here tonight to ask you to join me.
= = =
How do we begin?
Let me start with what I don’t want: I don’t want us to launch another big government entitlement program. We found with TennCare that those have become over the years too expensive, too rigid and too hard to control. No Tennessean should ever again have to go through what has been endured this past year with TennCare.
My proposal is not rooted in a 1960s entitlement program; it is a modern, fiscally cautious, down-to-earth approach. It’s a starting point; we begin cautiously and grow step by step as we are able. We don’t throw the barn doors wide open at the beginning. We use partnerships. We don’t mandate. We put a priority on Tennesseans who work for modest wages, for small businesses, for themselves. This is a health insurance plan dressed up, not in 60s bell bottoms and beads, but in the clothes of today’s working men and women.
I call this effort Cover Tennessee. Let’s talk specifics.
The heart of our plan is a partnership between the state, individuals and small business. Frankly, it’s high time that we provided individuals and small business with the same economies of scale enjoyed by large businesses and their employees. At the outset, we’ll limit participation to those small businesses with substantial numbers of lower- and middle-income workers — this insurance right now is for retail shops and restaurants, not small consulting or professional firms. The idea is simple: Small business is the heartbeat of our economy, and it can be the heartbeat of our solution to health care as well.
Now, remember these two words: Affordability. Portability. These will be the core principles behind our approach.
My definition of affordable is no more than a hundred dollars a month for an individual. We plan a benefit package that has a total cost on average of about $150 a month. Of that, the state will pay $50. Where an employer is willing to contribute, a $50 contribution on their part will leave the employee to pay $50. If an employer won’t or can’t participate, and the individual has to pay it all, it will still be no more than a hundred dollars.
The prices I’ve used are the average; we’ll adjust the premiums for age — older people simply have higher health care costs. We’ll also adjust for whether a person is a smoker, and for whether a person is substantially overweight. People who take care of themselves should not have to pay extra for those who don’t. It’s time to move past political correctness and instead to reward personal responsibility.
In order to achieve these prices, we obviously can't do everything and some benefits will be limited. For example, we may have to exclude coverage for certain pre-existing conditions for a limited period of time - say six months. However, this is practical insurance that would provide a generic drug benefit for $10, routine doctor visits for $25, and emergency room and hospital care with limits. And no one would be turned away for medical reasons.
Some commercial and public plans — Healthy New York, for example — try to use large deductibles to help keep the costs down. In other words, you might have to spend a thousand dollars out of your pocket before you get any benefit at all. We want to do it just the opposite: we insure doctor visits or prescriptions from the beginning, and keep costs down with other limitations. It’s important to encourage preventive care and early treatment, not discourage it.
As this is a state initiative, we’ll have the ability to impose enforceable residency requirements. There will be initially a requirement that this be offered to people who don’t currently have health insurance so that we don’t encourage employers to terminate existing plans.
This is practical, down-to-earth insurance to help working Tennesseans who are today outside the window looking in.
The second principle of Cover Tennessee is portability. Here’s what I mean by that — I want the individual, not the employer not the government — to own this policy. This proposal represents a fundamental rethinking of the way health insurance works. Health insurance should follow the individual.
To give an example: If you work for a small business that offers Cover Tennessee, and you join up, it is then your policy and not the employer’s. If you are laid off, you take it with you and pay $100 instead of $50. You don’t have to agonize over whether you can afford extremely expensive and time-limited COBRA insurance. If you join another company that offers Cover Tennessee, it is a seamless transfer: the policy hasn’t changed, just who is writing the check. If you join a company that doesn’t offer Cover Tennessee or any other health insurance, you can still keep the insurance going by paying the very affordable premium yourself.
This is important for the Tennesseans we’re trying to reach: They work for restaurants and retail shops and landscaping companies, and they are very mobile. It’s not at all unusual for someone to work in construction for the summer and in a restaurant during the winter. Owning the policy gives you stability and control; you know how it works, you don’t have to change doctors because you’ve changed insurance.
This ownership also gives the ability to design ways for individuals to build up equity in their plan. If you have kept your insurance in force for a certain number of years, for example — even through changes in employers or perhaps a layoff — you might get additional benefits or reduced copays.
Cover Tennessee starts out as a Tennessee initiative, but there is the possibility of later federal participation as well. I’ve described what we’re seeking to do to Health and Human Services Secretary Leavitt — we’ve talked as recently as last Friday — and he is encouraging and actively considering how the federal government might join the partnership. He understands and agrees that Cover Tennessee would not work if put under the current TennCare constraints. But once we prove the concept, we will be in a strong position; if we could bring the federal government in as another partner without all the Medicaid rules and the legal baggage, it would be a big win indeed.
Let me add one other thought here as well. The portability of Cover Tennessee — that principle that the individual owns the insurance — is a microcosm of where I believe our nation needs to go. We need at least a core benefit to travel through life with the individual, with consistent rules, with common records. At different points in that person’s life there may be a different mix of how much he or she pays, how much the government, how much an employer, how much a pension plan. But each person has the continuity and certainty of ownership. We live in the land that values the individual above the government or any corporation, and we need to reflect that core American value in our health care.
= = =
To implement this, we need to look to the private sector.
There are many things that government does well, but the last three years have taught me that running a complex health insurance program in a changing environment is not one of them. Huge bureaucracies, difficult competition with the private sector for talent, the inclination of the courts to deeply involve themselves — these are all poison to the modern efficient system we need.
The General Assembly and the Governor need to be the board of directors in this, not the vice presidents and the managers and the workers. We are submitting legislation to set up Cover Tennessee; we need to leave the details and the execution to the experts.
What I plan to do is to set major requirements along the lines I’ve described, and then bid this out to the private sector. We expect to let bids in the fall, and enroll our first Tennesseans around the first of the year. We’ll have strong prequalification requirements to allow only established companies with financial strength and management experience to bid. We’ll award not one but two contracts to keep competition on the front burner. We’ll set the major requirements, but leave it to the private companies to flesh out the package; tap into the creativity and market knowledge that these companies have built up over the years.
This effort will be strengthened with outside expertise looking over our shoulders. The gold standard of expertise in health care policy is the Robert Wood Johnson Foundation and Academy Health. We have talked with them, they are intrigued and interested, and considering lending their support.
Now let me move this discussion of Cover Tennessee to its costs and how we propose to pay for it.
A basic design principle has been to not only identify the costs up front, but to make sure that they remain firmly under our control in the years ahead. We’re using what we’ve learned this past decade and common sense: we have not set up an entitlement program; we can set limits on the number of people who can enroll, we can modify the benefits if we need to, we can change the eligibility requirements, we can change the law.
At a subsidy of $50 per month — that is $600 per year — it will cost us about $60 million a year in today’s dollars for each 100,000 people who buy this insurance. We propose to start by paying for this for the first three years with existing TennCare reserves. These are not savings in TennCare — there’s nobody being disenrolled or any benefit cuts to fund this idea. These reserves are state tax dollars that had been set aside to cover claims against the program and which we have freed up either through successful negotiation or legal victories.
After that first three years, if we’re successful, we’ll need to provide for continuing funding. Let me be clear that Cover Tennessee is not setting up an excuse for an income tax. Nothing remotely of that magnitude is necessary. If our experience tells us down the road that we need an additional revenue stream, I would then suggest looking to the tobacco tax at that time. A modest increase in that source would raise the money that might be required by Cover Tennessee in the future. It’s a fiscally conservative approach that only raises revenue if we need it later on, and then only looks to an appropriate source for funding this kind of healthcare initiative.
To keep everything in perspective: If this were highly successful and five years from now we had 150,000 people signed up, the cost to the state would be about 3% of what we spend on TennCare.
Before I move on, let me summarize this affordable and portable plan for working Tennesseans:
A voluntary basic health insurance plan for employees of small business and the self-employed with limited incomes — no mandates.
A total cost of about $150 a month, shared 1/3 the state, and ideally 1/3 or more the employer, 1/3 or less the employee.
The cost to the individual and employer varies with age, with whether the person smokes, and with whether the person is substantially overweight.
For this you’d get $25 doctor visits, $10 generic prescriptions, and hospitalization, outpatient and emergency room coverage with limits.
There’s no large deductible for routine coverage; we encourage prevention and early detection.
You are guaranteed to be able to buy it at the posted rate; you may have some exclusions in coverage during the first months.
You own it and can carry it with you.
It’s fiscally conservative: We’ve incorporated plenty of ways to keep the costs where the legislature wants them. We decide how much we are able to put in, and then Cover Tennessee is tailored to fit.
= = =
The core of what we need is a plan for small business and their employees. But there are two other groups of Tennesseans we need to help — other Tennesseans who are standing outside looking in the window as well.
First, in my State of the State address to you, I asked us to complete our coverage for children; to put into place a so-called S-CHIP federal program — I call it CoverKids. I ask you tonight to move forward with this. The free coverage would be limited to children in homes up to a federally-defined income level, around $50,000 in income for a family of four. Above this income level, if and where there are still uninsured children, I ask you to allow these higher income families to buy into the program by paying an appropriate premium. In that way, we offer a reasonable approach to covering every child in Tennessee.
It’s time to do this; and in so doing you’ll place Tennessee comfortably in the top ten states in the nation in coverage for children.
Second, we need to re-implement and modernize the high risk pool we once had to enable Tennesseans to purchase coverage who have sufficient income but can’t buy insurance because of their pre-existing health conditions. We’ll provide a limited subsidy but require that the majority of the inevitable losses in this pool be borne by the insurance carriers and self-funded plans themselves, as is done with similar high risk pools in other states. It has worked before in Tennessee, and it can work again with a modern approach.
With Cover Tennessee, we’ll have a solid and innovative foundation for the future. We have embedded the principles of affordability and portability for the individual, and we have embedded the principles of fiscal conservatism and careful step by step growth for our state and its taxpayers. We have a plan for working people without insurance, we have a plan for children, and we have a plan for those who can’t get insurance because of their health. Cover Tennessee is a plan for the people of Tennessee.
= = =
I would like to talk with you now about another aspect of health care in Tennessee: prevention. As a state, as a nation, we have got to move beyond simply struggling to find ways to fund the treatment of disease and concentrate more on ways to prevent it.
I spoke with you in February about the epidemic of Type II diabetes — the kind that is not solely genetic but linked to eating habits and weight, and I want to expand on that tonight. This disease used to be called “Adult Onset Diabetes” and was a disease of one’s 40’s and 50’s for seriously overweight people. The medical community had to change the name to “Type II diabetes” because with the growing weight problems in our young people, this disease is starting to affect children in their teens and even before.
Tennessee children are very much at risk from this epidemic. You already know about the growing prevalence of unhealthy snack foods and sugar-filled drinks. When you combine these with TV and video games and a diminishing attention to physical activity in our schools — many of them have dropped physical education under the pressure to perform on standardized tests—then you have the conditions for a perfect storm.
If a child today is diagnosed as a pre-teen with Type II diabetes, here’s what the future likely holds for them: they’ll have vision problems in their 20’s; they’ll have heart disease in their 30’s, they’ll be on kidney dialysis in their 40’s; they won’t see 50.
Here’s something else to think on: because of these lifestyle issues, experts think that today’s generation of young people is on track to become the first generation in American history to have on average a shorter life expectancy than their parents. This is not like cancer; we know absolutely how to prevent this. We just need to put our heads down and do it.
I ask you tonight to make a major commitment to preventing Type II diabetes; I’m asking you to commit $15 million annually for each of the next three years to prevention. This is not new appropriation, it is money that you’ve already committed to health care through the safety net, and which is surplus to our needs there.
I’m asking three things to be done; a program of grants or “venture capital” to local school districts, and two high impact pilot projects:
First, I propose a series of competitive grants to K-8 schools to develop sustainable approaches to prevention that work in their community. Diabetes prevention is about changing behavior, and what works in inner city Memphis is probably not the same thing that works in Bristol. Some schools may want to work with body mass indexes and how to effectively use them, others may find ways to use their cafeterias as a classroom — perhaps they can teach that macaroni and cheese, however comforting, is not the state vegetable.
Second, the National Institute of Health is starting a large research project to study different approaches to diabetes prevention in high school, using eight high schools across the nation. We have asked to be included because of the seriousness of the problem in Tennessee. They have agreed and two of their eight schools will be in Tennessee.
Third, we all recognize that prevention won’t always work, and we’ll always have some Tennesseans who are struggling with this disease. I challenged the UT Health Sciences Center to find ways to improve treatment, and they have responded with an innovative proposal — to pilot two “diabetes malls;” one stop centers where we bring together the resources to offer the best possible treatment. They have proposed that one be located in an urban area, Memphis, and the other in a more rural area, the Upper Cumberland.
Prevention is one of the big frontiers in health care, and I want Tennessee to be a pioneer and a national leader. Much more than that, I want us to take the steps now that will improve the health and quality of life of our children both now and throughout their lives.
= = =
I’ve presented to you here this evening a set of proposals. I understand that health care is complex, that many states and communities are struggling with it, that there are a lot of constraints and obstacles. But I believe with all my heart that that is no excuse whatsoever why we shouldn’t strive for and achieve an island of excellence right here in Tennessee. I ask and implore you tonight to quickly approve these proposals; I ask you tonight to work with me to create that island of excellence.
Let me here at the end come back to my brother. He and his experience taught me a lot. Especially it taught me in a very personal and brutal way just how much perfect is the mortal enemy of good. Please keep that thought in mind: perfect is the mortal enemy of good.
Are these plans I’ve laid out tonight perfect? Do they cover every contingency? Will they answer every need? No.
But is this a lot better than what is happening now? Does it help a great many people who truly need the help? Would it have helped Dean? Is it a new foundation we can build on over the years? Absolutely yes.
In the end, once again it comes back to personal responsibility. We don’t have it in our power to promise everyone free health insurance without limits. But we do have it in our power to offer them access to affordable and portable health insurance, and then the choice is theirs.
Starting tonight, working together, the General Assembly and the Governor, we can and will offer them the opportunity that my brother didn’t have; to choose for themselves if they want to back away from that window and come inside where it is warm and much, much safer.
Thank you and Godspeed.
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