Governor Phil Bredesen recently announced CoverTN as a program designed to offer coverage to the uninsured. Workers employed by participating small businesses - those with no more than 25 workers, at least half of whom earn less than $41,000 per year - are eligible for the CoverTN program. CoverTN provides first dollar coverage for preventative and primary care, provides coverage for most needed services and contains cost through annual limits.
Participants can choose Plan A that limits physician visits to 5 per year, $250 per quarter in prescription drug coverage and $10,000 of inpatient hospitalization benefits.
Plan B limits physician visits to 6 per year, $75 per quarter in prescription drug coverage and $15,000 of inpatient hospitalization benefits. Both options include an annual maximum benefit of $25,000 and apply a 12-month waiting period for pre-existing conditions.
The most attractive feature of CoverTN for employers and employees is the price, estimated to be around $150 per employee. The state pays one third of the cost, the participating employer pays one third and the employee pays one third, making the cost within reach for those currently uninsured.
Unlike TennCare, CoverTN doesn't receive federal money to support the program with an estimated annual price tag of $34 million to start.
Gov. Bredesen should be commended for his efforts to reduce the number of uninsured. That being said, participants and potential participants should be aware of two major CoverTN shortcomings.
First, the program is designed so that enrollment is on an individual basis. This allows plan portability for the participant should they leave their employer or become unemployed. It also means that each participant must qualify. One of the qualifications is that the participant must not have had insurance coverage for six months prior to enrollment. If they have coverage, they will have to drop it and coverage will become effective after six months of being uninsured.
The six-month lapse forces the participant to forfeit his HIPAA portability rights that protect him from pre-existing conditions. If the objective is to decrease the number of uninsured, why would a program force someone to go without coverage prior to being eligible, force those who need it the most to forfeit their HIPAA rights and subject themselves to 12 months of non-coverage for pre-existing conditions?
Second, health insurance was originally designed to provide "major medical" coverage for catastrophic events. HMOs and PPOs resulted in copays, small deductibles, etc., and are gradually moving back to higher deductibles. CoverTN is designed to cover "minor medical" procedures, leaving participants "under" insured. The benefit limits as described in Plans A and B above of $10,000 or $15,000 benefit will only provide coverage for the small procedures and will not cover the full cost of heart bypass surgery, cancer, etc. Gov. Bredesen's response to the limit is that "hospitals will receive $10,000 or $15,000 whereas today they are receiving little or nothing."
Gov. Bredesen is assuming that the uninsured is comprised of people without the ability to pay. However, the states own research shows that 42 percent of the uninsured have family incomes above $30,000 and could pay more than the $10,000 or $15,000 in medical claims. Any payment reductions to providers will place heavier burdens on employers and employees of businesses providing comprehensive coverage.
Radio and TV commercials have already started promoting CoverTN and interest among businesses is high. Gov. Bredesen has plans to expand the CoverTN program to businesses with 50 or fewer employees within two years.
It is my understanding that more than 80 percent of all businesses in Tennessee have 50 or fewer employees, making them eligible for CoverTN. While the state may decrease the number of uninsureds, it may end up replacing them with an even greater number of "under" insureds. With medical claims being one of the primary reasons for bankruptcy, CoverTN may have results that extend beyond health care.
There is no doubt that health insurance is very expensive and many would argue that it is an entitlement. The number of growing uninsureds is a problem, but is it the problem or a symptom of the problem? CoverTN's price tag of $34 million per year is expected to increase to over $50 million per year once the program is expanded to employers with 50 or fewer employees. In my opinion, this money should be spent on health care reform to make health insurance more affordable which will result in fewer uninsureds. I will address suggested areas of health care reform in future articles. As far as CoverTN, be careful, you may get what you didn't intend to pay for.