Debt, Legal Problems Plague Obama-Touted Healthcare Reforms in Mass., Tenn.

Wednesday, August 19, 2009 1:14 PM

By: David A. Patten


State Healthcare Reforms Touted by Obama Plagued by Debt, Legal Problems

If you're curious what life would be like under Obamacare, experts suggest that you consider reforms instituted in Massachusetts and Tennessee that have left Massachusetts residents deeply dissatisfied and threatened to bankrupt the Volunteer State.

It's hard to imagine two more divergent testing grounds for government-subsidized healthcare reform: Massachusetts, a northeast corridor commonwealth with the fourth-highest per-capita income in the nation, and Tennessee, a proud Southern state with the nation's 36th-highest per-capita income.

For both, however, the push for universal coverage followed a familiar pattern: noble goals and initial optimism, followed by mounting bills and legal problems, and finally, a disenchanted electorate wondering if the whole enterprise was ill-conceived from the very start.

"As soon as I heard about this public option, I thought, 'I know how this works,'" said GOP Tennessee Rep. Phil Roe, a physician who has labored under that program. Roe recently told The Wall Street Journal he's been warning congressional colleagues to stay away from public-option healthcare reform "until I'm hoarse."

Initially, the TennCare public insurance system in the Volunteer State got rave reviews. It planned to cover all uninsured, essentially by expanding Medicaid coverage to all those who presented a letter showing a private insurer had rejected them. It spent its initial budget of $2.6 billion signing up half-a-million uninsured people. In some ways, it seemed a model program. The Wall Street Journal has reported it had "the lowest per capita cost of any Medicaid program in the country." And it covered the additional cost by squeezing savings out of the inefficient healthcare infrastructure, just as President Obama has promised to do.

But the ranks of uninsured just kept coming, as did the medical bills. Soon, it had enrolled 1.4 million.

By 2000 annual costs had skyrocketed to $5.4 billion. By 2004, they reached $8.5 billion — and the state's solvency was in serious jeopardy.

In 2005, state officials had no choice: They took a scalpel to the program and enacted major cuts and changes to keep the state budget from going into cardiac arrest. Tennessee is no longer a model of universal care, but it's able to balance its budget.

In the case of Massachusetts, the financial complications stemming from the healthcare reform law former GOP Gov. Mitt Romney pushed through are just beginning to emerge. During the last presidential primary season, Romney presented his healthcare measure, which provides subsidized coverage and mandates that all adults purchase healthcare insurance, as the perfect prescription to cure what ails the nation's healthcare system.

At first, it was immensely popular. A poll by the Harvard School of Public Health and the Blue Cross Blue Shield of Massachusetts Foundation, conducted in July 2008, showed that 69 percent of Massachusetts residents supported the reform.

That popularity would fade quickly, however. In fact, about one year later, a Rasmussen Reports survey indicated that only 26 percent of Massachusetts voters thought the state's healthcare reform was a success. Thirty-seven percent labeled it a failure. Only 21 percent thought it had made healthcare more affordable, and just 10 percent felt healthcare quality had improved, compared with 29 percent who complained it had gotten worse.

The frustrations that led to that quick about-face in public opinion are manifold. Although Massachusetts succeeded in covering close to half a million previously uninsured individuals, it paid for it by shunting state payments away from hospitals, which were left to struggle with high treatment costs.

Boston Medical Center has slapped a lawsuit against the state, trying to get it to pay up. And once again, the bottom line in healthcare reform has become the bottom line: Who will pay for it?

Whether Massachusetts can correct a reform that appears to have gone awry remains to be seen. But the specter of costs ballooning to the point that tax hikes and greater subsidies become inevitable has been one of the concerns protesters have voiced as they descended on town hall meetings around the country.

The cost of trying to insure everyone has affected other states, too. Long-term concern about red ink was one reason California legislators, struggling with massive financial problems, rejected compromise legislation that GOP Gov. Arnold Schwarzenegger supported last year. It would have provided for near universal coverage but did not reach the full state senate.

Similarly, in New Mexico, Democratic Gov. Bill Richardson's plan for universal healthcare coverage failed in 2008.

Among the other major healthcare reforms under way on the state level, as reported by the Kaiser Family Foundation:

Oregon — In June, legislation was passed expanding healthcare coverage to children and some low-income adults. The measures will add 80,000 children and 50,000 adults to the state's insurance plan.

Minnesota — GOP Gov. Tim Pawlenty signed legislation in May 2008 that broadens healthcare coverage by expanding eligibility for adults, reduces premiums for the state MinnesotaCare plan, and encourages all employers with 11 or more full-time employees to offer insurance.

Wisconsin — Launched Badgercare Plus in February 2008, which the Kaiser Family Foundation said aims to "provide universal healthcare coverage for children and expand coverage to adults below 200 percent of the federal poverty level." Over 130,000 new members have been enrolled.

New Jersey — In July 2008, Democratic Gov. Jon Corzine signed into law a reform bill intended to be a first step toward universal healthcare coverage for the state's 1.25 million uninsured — about a quarter-million of whom are children. It required all children to have private or public coverage within one year.

Vermont – In May 2006, GOP Gov. Jim Douglas signed the 2006 Health Care Affordability Act. It provides financial assistance with premiums for individuals and families. Individuals with incomes below 200 percent of the poverty level pay $60 per month.

Of course, advocates of the public-option simply point to the difficulties the states have encountered as evidence that it's time for a bigger player — the federal government — to step in to bring private markets under control.

Those who have experienced healthcare reform on the state level, such as GOP Rep. Marsha Blackburn, R-Tenn., aren't buying it, however.

"The promise of TennCare has gone unrealized," she wrote in July correspondence to her fellow members of Congress intended to serve as a cautionary tale. "Many of the concerns we have expressed about the proposal before us today are the stark realities of a system that went terribly wrong in Tennessee."

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