by Joe Sullivan
Before TennCare swept Tennessee ahead of every other state in providing health care coverage to anyone who couldn’t otherwise get insured, the state had a much more limited but meaningful program for covering these uninsurables.
Now that TennCare has cut off access to all but the poorest among them, it’s time for the state to re-establish such a program to allow those with the means to pay for health insurance to obtain it. We’re talking here about middle-income people who are denied private insurance because they have a health problem.
Thirty-two other states have what are known as high-risk pools for covering these individuals whose conditions range from diabetes, hypertension and multiple sclerosis to a host of other chronic ailments. Participants in these state-run pools typically pay premiums that are 50 percent higher than the cost of private health insurance, but even so the pools are subsidized. In most states, though, the subsidies don’t take the form of public funds at the expense of taxpayers. Rather, they are derived from assessments on health insurers proportionate to the number of people each of them covers in a state.
Prior to TennCare, a program known as TCHIP (Tennessee Comprehensive Health Insurance Pool) operated along these lines. It by no means made health insurance affordable to lower income uninsurables. Indeed, no more than 6,000 individuals were enrolled. But for a relatively poor state in a nation where universal health insurance remains beyond the realm, that may be all the fiscal realities would bear.
With the advent of TennCare in 1994, Tennessee went beyond the realm by opening up its rolls at little or no expense to everyone who could show evidence they had been turned down by an insurance company. The ranks of uninsurables on TennCare swelled to more than 100,000 including a mass migration from TCHIP, which was disbanded.
But this growth was unsustainable, and, well before Gov. Phil Bredesen came along with his recent set of TennCare benefit reductions, the state had already imposed constraints on eligibility for uninsurable coverage. Beginning in July 2002, only individuals with incomes below the federal poverty line (about $9,000) could enroll. And while those already on the rolls were grandfathered, a stringent eligibility reverification process weeded out nearly half of them.
Many of those who were culled were found to be eligible for coverage under their employer’s group health plans. Unlike applications for individual coverage, which insurers may reject, federal law prohibits excluding an employee from a company’s group plan regardless of their health.
While states could require insurers to cover all individuals as well, this has proven to be impractical. When Kentucky tried to do so in the 1990’s, for example, insurance companies stopped offering any individual health insurance in the state. Hence, a high-risk pool has been about the only means to assure coverage—albeit at a high price—to individuals who are self-employed or whose employers don’t offer health insurance.
Lest they appear draconian, insurers have generally looked with favor on such pools and been prepared to subsidize them within limits. The extent of the subsidy varies from state to state, but premiums paid by participants typically cover more than half of a program’s cost. In Texas, for example, the 23,360 participants in that state’s pool in 2002 paid premiums totaling $93 million while assessments on insurance companies totaled $54 million.
One can quickly derive from these figures that the average premium per participant was about $4000 for the year or $333 a month. A rule of thumb among health care advocates is that premiums in excess of 10 percent of income are unaffordable. So they tend to look askance at coverage that’s only deemed affordable by people earning $40,000 a year or more. But that’s just about a median income, and people who are making somewhat less can probably manage to dig deeper for protection when they’ve got a chronic disease.
Sen. Mark Norris, Republican from Shelby County, is sponsoring legislation that would establish a high-risk pool in Tennessee, patterned after the one in Texas. Since Tennessee is much smaller, and since many of its uninsurables remain covered by TennCare, the Norris bill would only benefit a small number of people. But any step toward making health insurance accessible to more Tennesseans at no cost to taxpayers is a step in the right direction.
One drawback of the legislation, from a prospective participant’s standpoint, is that it excludes coverage of a pre-existing condition for 12 months. That’s defined as “any condition for which medical advice, care or treatment was recommended or received during the six-month period preceding the effective date of coverage.” That vitiates its benefit for someone who is diagnosed with cancer and needs immediate surgery followed by expensive chemotherapy.
However, high-risk pool proponents invoke the “fire insurance after a fire” maxim to justify the need for such exclusions to make the pools viable. Moreover, they contend that TennCare’s lack of a waiting period perversely deterred people from getting insured when they were healthy because they were assured of coverage whenever they got sick.
The Norris bill represents the one form of safety net the state can provide at this time that is neither unaffordable or perverse.
March 4, 2004 • Vol. 14, No. 10
© 2004 Metro Pulse
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