Valentine: Public option not the way to go

Friday, July 24, 2009

As I've been preaching for months, if you think a "public option" health plan is the way to go, one only needs look as far as Tennessee to learn the folly of such a scheme. TennCare was designed not only to take the place of Medicaid but to provide insurance for the uninsured and the uninsurable. The concept was that TennCare would partner with the private sector to bring down costs. The exact opposite was the case.

Eventually, TennCare sucked in 1 in 4 citizens of Tennessee. Employers found it cheaper to dump employees on TennCare rather than provide insurance themselves. Hospitals were paid 40 cents on the dollar early on, according to a recent article by That inched up to 64 cents on the dollar. Tennessee became the top state in the union for consumption of prescription medications, according to Craig Becker, president of the Tennessee Hospital Association.

If you think the Obama Administration doesn't have a TennCare plan for the rest of the country, think again. Nancy-Ann Min DeParle was the commissioner of human services when TennCare was launched. Obama has made her his health czar.

In the first nine months of the program TennCare lost $20 million. A year later enrollment had ballooned from 800,000 to 1.2 million. The reason for the massive increase was that employers quickly discovered it was cheaper to use TennCare than go with private insurance.

The program was wrought with fraud and abuse. An audit in 1999 found 14,000 dead people on it. Another 16,500 lived out of state and 20 percent were deemed ineligible for the program.

The program, almost as soon as it began, was spiraling out of control. Annual costs went from $2.5 billion to $8 billion just nine years later. Tennessee's Republican governor, who had run on a no-state-income-tax pledge, quickly embraced the income tax in order to pay for TennCare. His efforts were rebuffed by the citizens.

The new Democrat governor, Gov. Phil Bredesen, removed 323,000 adults from the program in 2005. That led to massive litigation as citizens who were bumped believed health care was a right. Sound familiar?

After a setback or two from activist judges, the Bredesen Administration managed a victory in January of this year. A federal court ruled that the state could review the eligibility of enrollees, something one would think would be a given. TennCare now estimates that the state has 150,000 people on the program of questionable eligibility costing the state around $1.2 billion per year. If only 10 percent are kicked off that could save the state $42 million for its portion of the federal/state partnership.

"Tennessee is a primary example of government interference in markets," Dennis Smith tells Smith is the former director of the federal Center for Medicaid and State Operations and senior fellow in health care reform at the Heritage Foundation. "When government promises too much," Smith added, "it can't possibly fulfill all those promises so it resorts, as TennCare did, to more and more of a budget issue."

We have seen the future of socialized medicine in Tennessee and it is not pretty. This was supposed to be a public/private partnership, not an entity competing with private insurers. Even that blew up in our face. Imagine a program specifically designed to compete with the private sector. With employers opting for public insurance in droves because, with subsidies, it will naturally be cheaper, private insurance will be a thing of the past in short order.

It's best we never head down that road. We've been down it before and it leads to financial ruin.