The Tragedy Of TennCare

The Wall Street Journal notes the passing of Tennessee’s state-run TennCare system and how that disastrous program almost became a nationwide pheonmenon:

The TennCare concept was for the state to operate like an HMO, providing health insurance to those who needed it and paying the premiums for those who couldn’t afford it. The idea was even sold as a cost savings because it would provide “managed care” (volume discounts, preventative care, etc.). TennCare opened enrollment to hundreds of thousands of people who did not qualify for Medicaid, even to some six-figure earners. Costs quickly exploded, and despite attempts to tighten eligibility rules the program still covers 1.3 million of the state’s 5.8 million people.

…Prescription drug costs alone increased 23% last year, as there are effectively no limits on the number or types of drugs the system will pay for. If a doctor prescribes aspirin, TennCare pays for it. Ditto for antacids for heartburn and other over-the-counter products. If TennCare denies a claim for a drug or any other type of care, an appeal can be filed for next to nothing. Fighting each appeal costs the state as much as $1,600 in legal fees. With 10,000 appeals filed every month, it’s often easier and cheaper to pay a claim, regardless of the merits.

TennCare is now in worse shape than it was a decade ago. Three of the 11 privately run Managed Care Organizations that insured TennCare patients and administered the program have fallen into receivership. Amid the legal wrangling, Blue Cross Blue Shield all but pulled out of the program. Today the state has assumed all the insurance risk and pays most of the premiums.

The problem with TennCare, or any state-run health system is that it just doesn’t work. The cost of healthcare is always going to be high because the cost of training doctors isn’t cheap. The costs of medicines is always going to be high because the costs of creating them is high. The government cannot simply wave a magic fairy wand over the entire healthcare system and reduce costs by fiat. The only way to reduce healthcare costs is to A:) either empower consumers to make their own choices the same way in which they do for everything else or B:) start rationing care. Most socialized medical systems have gone with option B, which is why the chances of getting anything like advanced cancer treatments or the like in Canada is about nil. It’s why Britain’s National Health Service has patients waiting in advance of a year for basic tests forcing the British to return to the private sector to reduce wait times.

The fundamental problem with socialized medicine is that the worst form of spending is when one spends someone else’s money on someone else. There’s no incentive towards cost-effectiveness or quality in such a system. The more abstracted economic decisions become from the people who are effected, the worse the system will get.

No other product or service is treated like health care is, which is why the costs of health care have skyrocketed over time. Rather than try to reform the system, the government continues to try to take over large swathes of the health sector. The new Medicare prescription drug benefit is a perfect example of that — there were already programs in existence that could have taken care of the problem without adding more to the national debt, but motivated by a host of disingenious sob stories about seniors forced to chose between drugs and food, the government enacted a program that will cost hundreds of billions of dollars and has so far satisfied almost no one.

As the failure of TennCare has shown, government-run health care doesn’t work. It inflates costs and reduces the availability of services, costing billions of dollars and thousands of lives. The solution lies in making sure that individuals have the ability to make choices for themselves. Someone who has the ability to pay for their own health costs has an incentive both to get the best quality care, but to do so at the best possible price. Already systems like Medical Savings Accounts or MSAs are empowering the people to make decisions for themselves rather than allowing a government bureaucrat or an HMO to make medical decisions for them.

So long as the individual is not empowered to make their own decisions, the costs of healthcare will continue to increase. If the government adopts a socialized model of healthcare along the TennCare or NHS lines, the healthcare system in this country will implode in an unprecedented manner. The bigger a system like that becomes, the harder it falls, and applying the failed model of socialized healthcare to a nation of nearly 300 million is simply asking for another tragedy.

14 thoughts on “The Tragedy Of TennCare

  1. “The fundamental problem with socialized medicine is that the worst form of spending is when one spends someone else’s money on someone else.”

    With this statement, you discredit government’s role in doing everything from building roads to defending itself from enemies (and yes, that includes space exploration projects in suburban Houston). Everything government does involves spending someone else’s money on someone else. A more case-specific example of the kind of thing you are attempting to denunciate with socialized medicine is financial for higher education or vouchers for primary and secondary education. In both cases, the open market is usurped and the injection of government money raises tuition rates exponentially and will eventually price education out of existence.

    With that in mind, does your “laissez faire even if it kills us” worldview extend to college financial aid and school vouchers? Considering that you have now graduated from your private college, presumably with at least partial assistance from the government, I wouldn’t be at all surprised if you are now an opponent of college financial aid programs. After all, every dollar currently going to students could (and should) be going to the oppressed overtaxed class of upper-income Americans. However, I’m more interested to see how you apply the “spending someone else’s money on someone else leaves no accountability and inflates costs” doctrine to the GOP-backed voucher concept? Or are you willing to apply a different standard in this situation either because of blind allegiance to partisanship or a bloodlust to destroy teachers unions?

  2. Back on the subject of government health care, it would not exist if the private sector was capable of fulfilling the needs of the population. The ranks of the uninsured are growing by more than a million per year, and hyperinflating costs from our system of “corporate socialized medicine” ensures that fewer and fewer employers will have the capacity to provide health insurance in the future. Essentially, we’re experiencing the exact same nightmare scenarios today under quasi-private health care as Phil Gramm bellowed about during the HillaryCare debate.

    The pending alternative is that insurers will only cover those who need health insurance least….the young who live “healthy” lifestyles. Considering our demographic shift to a nation of fat, old people, that’s a system doomed to fail.

    Furthermore, our culture of fluid immigration and systemic poverty is likely to seriously test this country’s “health care is not a right” dogma. The vastly growing cesspools of urban and rural poverty that consume nearly 20% of our overall population are not consistent with the living standards of a civilized society. As we pipe in immigrant workers to fill poverty-wage food processing jobs and allow $6 an hour working moms (mythological creatures according to you, aside from the fact that there are hundreds of thousands of them particularly in rural areas) to remain uninsured for a lifetime, we are living on borrowed time awaiting the kind of pandemic commonplace in Third World societies. If we are to sustain and expand the Third World subculture in this country (as every indication suggests we will), the unintended consequence is that it will continue to creep its way up the social ladder. It’s funny how tuberculosis doesn’t care what side of the tracks you come from….a lesson the privileged in this country may have to learn the hard way before they suddenly reach an epiphany that health care is indeed a right!

  3. Jay, I’ve posted on this issue as well. It is my belief that Health-care savings accounts are the definitive answer. This shifts the benefit:cost ratio back into the minds of the consumer. Some companies (ie Whole Foods) have already started using these plans to curb the increasing rates with tremendous success. Everyone is happier with these plans. Here’s a link to my post, which has a link to an article on this plan.

    Best, Kelli

    Now to Mark, I went to college with the assistance of Federal aid and I am a proud member of the GOP. I believe in investing in our human capital for those who wish to persue those aspirations because it makes for a much better society. You see, when you pay someone’s rent for a month, it only takes care of them for about 30 days, but when you educate them for viable employment you’ve helped pay for a lifetime of rent. That is the GOP way – equipping folks to raise themselves out of poverty and to a better sustained life versus maintaining the month to month nanny state that is, without a doubt, the most destructive program that we will be paying the price for for a few more generations to come.

    With healthcare, people do need the incentive to see the money going in and out or the system will be abused. As a health-care professional I’ve seen it with my own eyes and it is not just poor folks who abuse free services. EVERYONE does it.

    But to compare educational financial assistance to Government-run healthcare is not accurate.

  4. I can’t provide an informed opinion on health care savings accounts since I don’t know specifics, but the generic argument against them is that they provide health insurance to those who need it least. I can’t validate or dispute that charge with my current level of knowledge, but I do take issue with the “benefit: cost ratio” argument for a few different reasons.

    First of all, if my employer’s health insurance costs are directly related to my frequency of illness, what will stop America’s employers from continuing the current frightening trend waged by nanny-state politicians to micromanage the lifestyle choices of the peasants? If I am overweight, will my employer be able to dictate that I go on a diet or be fired? If I smoke cigarettes, will my job be on the line based on imaginary “smoking-related costs to society”? Will I have to identify the number of sexual partners I’ve had on my job application so that my employer can decide whether my personal life is “high risk”?

    I also take issue with the whole premise that “healthy lifestyles” present a guaranteed cost savings to society. They certainly do for insurance companies who benefit from having non-smoking employees with healthy body weights up until their retirement at age 65. It’s after retirement, when health care costs are deferred from insurance companies to Medicare, that the question of cost savings related to lifestyle become murkier. The very lifestyle choices that make for healthy employees who enjoy their “health care savings accounts” will turn heroes into villians once we become 90 year old nursing home patients draining Medicare coffers. The expansion of life expectancy that will come from “healthy lifestyles” will, if anything, bankrupt our health care system sooner than a culture of chain-smokers and Fat Alberts would.

    Kelli, as for your “health care and education can’t be compared” argument, it sounds as though you’re suffering from a classic case of situational ethics. “Government programs that undermine market forces but benefit me–>good….government programs that undermine market forces but benefit the guy across the tracks–>bad”. It’s the privileged perspective of somebody whose had health insurance their whole life that could suggest that a government investment in health care does not amount to an investment in “human capital.” Here on Planet Earth, the ability to treat one’s ailments, particularly in their early years, is just as relevant to their “achieving aspirations” as is binge drinking four nights a week with one’s sorority sisters in college.

    It seems that what they say is true. Modern conservatism is merely an expanded exercise in rationalizing selfishness.

  5. A:) Educational loans don’t distort the market. They can be used wherever the consumer choses to use them. The same applies for school vouchers. Furthermore, most of them are paid back with interest — believe me, I know this all too bloody well. Unlike government-run healthcare, they let the end-user decide where their money will go.

    B:) You clearly don’t know anything about MSAs. The whole point of an MSA is that you have your own account for medical expenses. If you want to smoke or eat Monster Thickburgers every day, fine. But your MSA money is what pays for your healthcare rather than an HMO or your employer.

    MSAs work because they give an incentive to economize. You’re not draining some invisible account that you never see. You are responsible for making your own choices. It’s small things, like getting a brand-name prescription rather than generic that costs hundreds of thousands of dollars to employers.

    Paired with supplemental catastrophic care, MSAs are by far the best way to keep the costs of healthcare down. Adding more government control and further removing people’s choices will only make the situation worse.

    Of course, the only choice Democrats want you to make is to have an abortion – the rest of your life will be run by the state.

  6. Mark, Here is a link from a guest blogger that explains in detail about health savings accounts:
    I think after you read this you will understand my cost:benefit ratio statement. No one is trying to tell anyone how to live or what to eat, however, I see nothing wrong with encouraging healthy lifestyles. This is better for everyone. I totally disagree with your statement: “I also take issue with the whole premise that “healthy lifestyles” present a guaranteed cost savings to society.” I’ve seen firsthand the cost to society that smoking alone causes. Any disease that causes repeated hospitalizations doesn’t just cost the insurance company, but everyone. Study after study shows how healthy diets can prevent or even reverse diseases, ie diabetes. I lived in San Antonio for 4 years and it was so sad just to go to Wal Mart and look at the kids in that city. SA has one of the largest problems in the country with childhood diabetes, the type of diabetes that use to be found exclusively in adults. But now that kids get so obese, they too get this form of diabetes. Walk around a medicine floor in Anywhere, USA and see the multiple amputations, non-healing wounds, renal failure, and heart disease just from diabetes and you’ll change your mind. And I’m really just getting started. We have not even touched on alcohol yet.

    And I’m sorry, we totally disagree on the healthcare vs educational opportunity analogy. All persons have access to healthcare. Anyone can walk into an ER and get emergent help. It is illegal for ER’s to turn people away if they have a true emergency. Not to mention the many indigent programs available. In my home state of LA, I use to staff an HIV clinic in the early 90s. That state had a program that if you simply had the diagnosis of HIV you got all free medical care, including the infectious disease specialists who staffed the clinic, a dietician, and I was there to fill every prescription. Free of Charge.

    People make choices in their lives, which leads to what kind of life they live and the opportunities that they have. The government paid for my college education, but since then I have worked for much lower pay for charity hospitals and teaching hospitals. I’ve intervened in the care of numerous patients as part of the medical team. I believe society has benefited in their investment in me.
    I completely agree with Jay’s assessment of what a mess healthcare would be in and how hard it would fall if the government controlled it. We see what a dismal job they do with education. I’d hate to see what would happen with healthcare.
    Sorry Jay for plugging an old post.

  7. Jay….”educational loans can be used wherever the consumer chooses to use them. Same with vouchers.” Huh?? Things must have really changed since I was in college. I certainly wasn’t able to withdraw my student loan dollars and spend the money on hot tubs and pinball machines. If this is the case today, I think there’s definitely a need for reform…and definitely a need NOT to expand this practice into primary and secondary education if parents can use their kids voucher money on pull tabs and malt liquor.

    Assuming that your talking point is not rooted in reality, the presence of government dollars financing higher education NECESSARILY equates to a distortion of market forces in the same way that TennCare equates to a distortion of market forces in the health care. If not for financial aid, market forces would not allow Gustavus to charge $28,000 per year (or whatever the going tuition rate is there now). Nor would market forces allow the inflation rate of Gustavus tuition to exceed the overall inflation rate at the dizzying current pace that it is. There is simply no accountability to control costs when the government is financing most of the tuitions of Gustavus students rather than the students parents or personal bank accounts. Ultimately, the hyperinflation of tuition will be the demise of post-secondary financial aid as it will price higher education out of existence in a time of bruising impending budget cuts. The same scenario will doom elementary and secondary-school vouchers before they ever get off the ground.

    As for health care savings accounts, the concept has the potential to be beneficial for many, but its basic premise hinges upon a stressed-out population reversing its current course and adopting puritanical lifestyle choices. Even if this plays out, I’m far from convinced that the outcome will produce a health care cost benefit for anybody but the insurance companies. More about that in my response to Kelli….

  8. Kelli, even though your link was a propaganda piece rather than an informative point-counterpoint, it did answer a few of my questions about health care savings accounts….but not all. First of all, what happens in the event of a serious accident in your first or second year on the program, when even a healthy person would have only a few hundred dollars in their account by considerably more in doctor’s bills? Would the employer then have to pick up the tab for the rest of the medical bill? And if an employee with a sick family member regularly exhausts his or her stipend every year, does the employer have to pay the difference?

    Assuming this is the case, is it not inevitable that older and/or sick prone employees will be discriminated against given that they would be less cost-efficient than 25-year-olds regarding health care costs? Is it not inevitable that insurance companies will pressure employers to dictate unrealistic puritanical lifestyles for all workers? When it comes to workers most likely to need health care, I don’t see health care savings accounts being able to overcome any of the hurdles plaguing the current system, but see tremendous potential for additional problems and constraints on personal freedom to arise.

    As for the cost savings of healthy lifestyles, I am deeply skeptical. A three-pack-a-day smoker who dies at age 65 represents the worst nightmare for the insurance company that represents him and his employer. However, he or she is the best friend to the Medicare program who has one less senior to finance. That’s the long and short of the logistical conundrum here. Under a health care savings account, I am rewarded for being a thin, non-smoker, but when I turn 102, stricken with a decade-long bout with Alzheimer’s and sitting in my bed at the nursing home, I am rapidly accelerating the pace of Medicare’s demise. In other words, the same healthy lifestyles that are great for insurance companies will devastate taxpayers.

    I recently heard that we can expect a quadrupling of Alzheimer’s patients in the next half century. A culture that artificially extends life expectancy by celebrating the healthy lifestyles of non-smoking vegans is a culture that won’t be able to build nursing homes fast enough to care for all the people whose bodies have outlasted their minds.

    Now I’m not opining on whether government has an ethical role in promoting “length of life” over a “quality of life” that includes personal freedoms to engage in self-destructive behavior, but I will always balk when people try to discuss the “cost to society” in monetary terms brought on by smoking and obesity because these statistics ignore the costs to society brought on by the geriatric care needed to treat those who are still drawing Medicare 20 years after their chain-smoking neighbors passed on.

  9. Mark, I’m tired and my 2 boys need a bath, so this propagandist will leave it as this: You’ve completely converted me. Tomorrow when I go to work on the internal medicine floor I will immediately begin advocating smoking, drinking (& heck go ahead and drink and drive), and endless Big Macs with super sized fries. Hopefully, with hard work, we’ll be able to get rid of a good percentage of the population before they reach their Medicare Golden Years. My new mission will to be to prevent the overloading of the Medicare system and save those tax dollars.

    See ya on another thread on another date. 😉

  10. Mark, I’m tired and my 2 boys need a bath, so this propagandist will leave it as this: You’ve completely converted me. Tomorrow when I go to work on the internal medicine floor I will immediately begin advocating smoking, drinking (& heck go ahead and drink and drive), and endless Big Macs with super sized fries. Hopefully, with hard work, we’ll be able to get rid of a good percentage of the population before they reach their Medicare Golden Years. My new mission will to be to prevent the overloading of the Medicare system and save those tax dollars.

    See ya on another thread on another date. 😉

  11. Mark, I’m tired and my 2 boys need a bath, so this propagandist will leave it as this: You’ve completely converted me. Tomorrow when I go to work on the internal medicine floor I will immediately begin advocating smoking, drinking (& heck go ahead and drink and drive), and endless Big Macs with super sized fries. Hopefully, with hard work, we’ll be able to get rid of a good percentage of the population before they reach their Medicare Golden Years. My new mission will to be to prevent the overloading of the Medicare system and save those tax dollars.

    See ya on another thread on another date. 😉

  12. Kelli, you’re certainly free to recuse yourself from this debate, but you and the other social engineers relentlessly lobbying for “healthy lifestyles” are doing everybody a serious disservice by failing to address my very valid points about the financial consequences that will emerge from these lifestyles being realized. Your sarcasm disguises an inability to answer how the medical care of seniors will be funded a generation from now, particularly as we have substantially higher numbers of seniors living longer than those of previous generations.

    So you can continue mocking those who discredit the thesis that longer lifespans equate to robust cost savings to society if you like. However, sooner or later, you and others in the health care field are gonna be forced to drop the attitude about the issue and actually provide some answers as to how you intend to fund the rapid rise of Alzheimer’s patients and other diseases related to old age that will bankrupt the current health care system far sooner than smoking and obesity ever will.

  13. Mark,

    I really did have two boys to bath and put to bed. Furthermore, I feel this debate is futile. The Healthcare savings account method is the only proven way to keep costs down and it helps most people. You come up with situation after situation….well no plan is perfect for everyone and no plan will probably ever be. I will never be willing to trade the best available healthcare in the world for a very poor government run dinosaur for everyone. Canada is in a horrible situation with their healthcare system and Americans will never stand for it to be frank.

    So for now we deliver proven medical treatments to improve everyone’s life. And to be quite honest I don’t know where you are headed with this statement: “you and the other social engineers relentlessly lobbying for “healthy lifestyles” are doing everybody a serious disservice by failing to address my very valid points about the financial consequences that will emerge from these lifestyles being realized..”

    America is no where near the point of too much of a healthy lifestyle being a problem. Though an epidemic of children with type II diabetes is a problem. I’m ethically bound to promote wellness, so whatever you’re selling in the other direction, I’m just not buying. That’s all.

    Have a good evening.

  14. Kelli, I never doubted that you had kids to bathe and put to bed. I merely challenged the oft-repeated premise that healthy lifestyle directly correlate to cost savings for the health care system when in many cases the exact opposite is true. I think you understand the point I’m making and I’m surprised you haven’t heard the argument before. The fact that you refuse to even acknowledge the fact that the extension of human life expectancy will result in a ruinous lack of revenues necessary to treat a culture of old people is frightening. It tells me that like the federal government, the medical community is living entirely for the moment and is hostile to the mere thought of bracing itself for the crisis that demographic shifts will present. Bottom line….fewer smokers and obese people WILL create massive new health care expenses due to the ensuing rise in the number of seniors living longer lives. I implore you to first accept this fact and work with your colleagues towards a solution.

    We spend more on health care than any other civilized society yet have the lowest percentage of people covered. The only people who believe we have the best health care system in the world appear to be upper-income Republicans, who unlike those living on Main Street, have no fear of seeing their coverage taken away. You are right that there is no perfect system, but a system that kicks a million of its current players off every year is patently unsustainable.

    Your statement that “Americans won’t stand” for Canadian style care again applies only to affluent Americans. Certainly the 16% (and growing) who lack health insurance would love the Canadian system. You mention your “ethical duty to promote wellness”. It strikes me that by embracing our current train wreck system and refusing to acknowledge that health care is a right rather than a luxury, you’re basically applying this “ethical duty” to as few of people as possible. Sorry, but I can’t accept the notion of selective medical ethicism based on social class.

    I’m open to experimentation with health care savings accounts, but my fear is that their likely success with young and healthy workers will be broadcast as stunning universal achievement and the accounts will thus be crammed down the throats of older workers or workers with sick family members who clearly will NOT benefit from such a system. I suppose anything is worth looking at compared to our current system, but I’m highly skeptical.

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