Report Calls Tennessee's Barebones Health Plan a Bad Model for Other States to Follow

A first-of-its-kind report released today by the national consumer health organization Families USA analyzes the Tennessee health care plan CoverTN, spotlights numerous problems with the plan, and calls CoverTN a bad model for other states to follow as they seek to assist their own uninsured residents.

The report goes on to conclude that all such so-called "barebones," "limited-benefit," or "defined-benefit" plans, as exemplified by CoverTN, are far from the quality, affordable health coverage that people need. As outlined in the report, the problems with CoverTN include the following:

* Consumers' health needs may quickly exceed restrictive coverage or service limits;

* Consumers may face high costs due to a lack of caps on out-of-pocket spending;

* Plans may fail to meet the needs of targeted low- and moderate-income, high-risk populations;

* Enrollment may be low due to consumer skepticism; and

* Provider participation may be inadequate.

"The CoverTN plan is part of a continuing health care disaster for Tennessee residents who struggle to find health care coverage," Ron Pollack, Executive Director of Families USA, said today. "In 2005, the state purged its Medicaid rolls, literally cutting some residents off from life support. Now the state is offering a facade of a health care plan that is so skimpy that BlueCross BlueShield of Tennessee, the plan's administrator, even declines to call it insurance.

"This Tennessee plan serves as a perfect example of how states should NOT go about providing coverage for the uninsured," Pollack said.

Restrictive coverage, service limits and a lack of protection against high out-of-pocket costs are the most troublesome problems with CoverTN, which offers a choice between two plans. For example, the hospital coverage limits of $10,000 or $15,000 could easily be exceeded as a result of a single illness or accident. The plan's prescription drug benefit limits of $75 or $250 per quarter fall far short of covering drug costs, which averaged $1,234 annually in 2005 for those Tennesseans with prescription expenses. Limited coverage for both durable medical equipment and cancer treatment will likely leave many enrollees with high medical bills.

The consumer health advocacy organization Tennessee Health Care Campaign (THCC) said today it was waving a red flag as a warning about the pitfalls of the CoverTN health plan. THCC is urging residents to take extreme caution when considering the program, and it is cautioning other states that Tennessee's plan is a bad model to adopt.

The people of Tennessee seem to be getting the message: CoverTN offers little more than a false sense of health care security.

"Common-sense would dictate that Tennesseans would be signing up in droves for CoverTN, given that one in six is chronically uninsured and one in three is uninsured for at least part of the year," Tony Garr, THCC Executive Director, said today. "Yet, CoverTN enrollment, which was predicted to reach 100,000 by 2010, is currently covering about 18,000 people.

"CoverTN leaves those most likely to need health care and least able to pay for it with a plan that does not provide real protection," Garr said. "These plans are promoted to families and individuals as a cheap way to gain health care security when in fact they remain financially at risk if they ever need more than a wellness visit.

"Such plans are comparable to owning a house and buying homeowner's insurance that only covers the bathroom in the event of fire, flood, or other disaster," Garr said.

"As the nation looks at health care reform, the reform efforts of individual states can provide guidance or a hint of a path for a national program to follow," Pollack said. "The clear message from Tennessee to the nation is, 'Don't go down this road!'"