Curing TennCare Remedies are at hand; they just aren't being prescribed. by PATRICK S. POOLE oliticians and advocacy groups have sparked considerable debate over the past six months attempting to find a solution to the financing crisis of Tennessee's Medicaid program, TennCare. The primary concern is that TennCare has become an ever-expanding black hole in the state's budget. But a re-examination of the program's structure and purpose may lead to a better diagnosis of the problem. The TennCare crisis is partially built upon our failed employer-driven health system. Presently, 84.5 percent of the population receive their health insurance through an employer. With bad federal laws, employers are the only ones who qualify for a 100 percent tax deduction on insurance premiums. This results in a disconnect between the patient and the cost of care. Employers have been forced to insert HMOs and PPOs into the mix in an effort to contain their costs, thereby distancing the consumer from the cost even further and making the HMO/doctor relationship more important than the patient/doctor relationship. Congress could correct some of these distortions by extending the same insurance tax benefits to individuals as to employers, which would result in empowering the health-care consumer. But TennCare has structural problems of its own. The program's high-income eligibility has allowed many employers to drop costly coverage on employees and their dependents, swelling the rolls with healthy workers and limiting plan availability to the uninsurable. Currently, one-quarter of the state's population -- 1.3 million -- is on TennCare. Another associated problem is that TennCare does not define what medical conditions qualify as "uninsurable." It also doesn't require a doctor's report to validate an uninsurable claim, just a denial letter from an insurance company that is easy to obtain. At least one managed-care organization (MCO), Blue Cross, has created a cottage industry by selling denial letters for $25 each. Another structural flaw is that TennCare is a one-size-fits-all solution to several different problems. The problems associated with the uninsured are quite different from those of the uninsurable. However, TennCare treats these separate groups the same by lumping them all into an inefficient social insurance program. For the uninsured, affordability is typically the primary issue. The state could save hundreds of millions of dollars by issuing an income-pro-rated insurance bond to individuals, allowing them to purchase their insurance on the open market. Since these would be healthy individuals, insurers would scramble to enroll them by lowering the rates and providing other incentives to attract these individuals -- lessening the burden on TennCare. The state could also maximize its federal "pulldown" by setting up a separate uninsured children's program under the State Children's Health Initiative Program (S-CHIP) passed by Congress in 1997. The rules regarding uninsurable status clearly need to be revised. There will still be many who legitimately need TennCare coverage to assist them in paying their medical expenses, but lax rules on what is classified as uninsurable and on income eligibility invite abuse of a program that ought to be available only to those who genuinely need it. The state has exacerbated these problems by using one program model to address a wide range of health-care and insurance issues. By separating the uninsured problem from the uninsurable crisis, TennCare could serve the need it was designed for and significantly reduce program costs. There are a lot of TennCare critics, but what is needed are concrete answers, some of which are staring the TennCare administration and state legislators straight in the face, but are nonetheless ignored. (Patrick S. Poole is a research and policy analyst with the Tennessee Family Institute in Nashville.)