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Another State Reform Example

By August 18, 2009November 2nd, 2009Commentary

An article in the Wall Street Journal reminds us that Massachusetts is not the only state which has attempted comprehensive health care reform with the primary goal of expanding coverage.  (WSJ Article)  In the mid-1990’s Tennessee enacted the TennCare program to expand its Medicaid program to cover all uninsured persons in the state.  The program made coverage available to anyone who could not otherwise secure it for as little as $2.74 a month.  It was a success in achieving near universal coverage.  Although the research is not completely clear, it also appears that the program may have decreased the availability of employment-based and other private insurance and exacerbated cost-shifting by providers who raised their prices to private payers to compensate for low TennCare reimbursement rates.  Most importantly, in a seemingly never-learned lesson for politicians, the large increase in coverage was accompanied by an “unexpected” large increase in costs, significantly above projections.  The program had to be cut back.  The primary lesson for policymakers once again should be that it would be wise to address cost control before expanding coverage.

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