Glenn Reynolds over at Instapundit notes that Tennessee Governor Phil Bredesen announced today that he is pulling the plug on TennCare, the state's expanded Medicaid program to cover the poor, disabled, and uninsured.
Since it's inception, TennCare has served as a perfect example of why goverment-run health insurance is such a lousy idea. Although it initially was targeted to cover those unable to afford their own health insurance the plan now covers nearly a quarter of all Tennesseans.
As this physician's post points out, one of the fundamental problems with government health insurance programs such as Medicare and Medicaid is that the amounts paid to physicians are insufficient to cover their costs. As a results, doctors are reluctant to treat patients with coverage through a plan such as TennCare because they will lose a substantial amount of money. That forces patients to be treated at state-run clinics and university hospitals that are required to provide care regardless of the patient's ability to pay for it. As a result, that puts a greater financial burden on the state.
The other unintended consequence of TennCare is it gave employers a way to shift the burden of paying healthcare costs of employees with costly medical bills to the state rather than having them covered under their own group insurance policies.
Not long ago I worked as an insurance agent selling health insurance in Tennessee. The premium for any group health insurance program is based in large part on the overall health of the employees. It's not uncommon for employers with employees that have expensive, chronic illnesses to look for other coverage besides their own group policy to limit their insurance premiums. TennCare simply offered Tennessee employers the opportunity to shift the burden back to the state. As a result, TennCare became a huge financial black hole for the state.
I believe Governor Bredesen is making a courageous move to pull the plug on this program. Whether he decides to replace TennCare with a more fiscally sound program remains to be seen. However, the demise of TennCare should serve as a warning to politicians who have been endorsing the idea of government-run health insurance. Tennessee's failed experiment should show them the costs are too great even for the government to handle.