HillaryCare Chickens Come Home to Roost in Tennessee

The WSJ reports real-world experiences with HillaryCare in Tennessee. Yikes, look out below. As always, this type of program always ignores supply-demand, how people's behavior adapts to anything given away free, etc.

We think it was Justice Brandeis who said the states should be laboratories for reform. Regarding health care, Tennessee tried a decade ago and the price is now coming due. Hillary Rodham Clinton should call her pollster if she plans on carrying the state in 2008.

In 1994, Tennessee passed what was then a very hot New Democrat idea -- call it government managed care -- a version of the reform the former first lady was also pitching nationwide. TennCare promised the impossible dream of politicians everywhere: Lower health-care costs while covering more of the 'uninsured.' They got the impossible, all right. After 10 years of mismanagement and lawsuits, TennCare now eats up one-third of the state's entire budget and is growing fast. Governor Phil Bredesen, a Democrat, is preparing to pull the plug and return the state to the less lunatic subsidies of Medicaid.

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.

The skyrocketing costs led previous Governor Don Sundquist, the Republican who had inherited the program, to try to impose a state income tax. His efforts failed, fortunately, but in 2002 Mr. Bredesen was elected promising to cut TennCare's costs.

That, too, has been impossible. Left-wing legal activists have sued the state with impunity to underwrite the cost of nearly unlimited care. A Nashville non-profit called the Tennessee Justice Center has hamstrung reforms for years by suing to enforce a series of consent decrees, some of which predate TennCare.

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.

Mr. Bredesen has proposed numerous reforms to reduce costs by limiting care, and the legislature overwhelmingly endorsed them earlier this year. But they sit in limbo while the Governor negotiates with the Tennessee Justice Center to end its lawsuits. With the talks at an impasse, Mr. Bredesen has instructed state officials to start thinking about dismantling TennCare. "It makes no sense for one facet of our responsibilities -- health care -- to be able to come to the table first and eat and drink all it wants, and then if there is anything left over, we then can consider our other responsibilities," he told the Tennessee School Board Association recently.

Good for Mr. Bredesen for recognizing that the entitlement mentality inevitably leads to fiscal perdition. Has he told Mrs. Clinton, not to mention certain Republicans in Washington?