The Wall Street Journal reports today on Tennessee’s experiment with health care reform:

In 1994, Tennessee launched an ambitious public insurance program to cover its uninsured. The plan, TennCare, fulfilled that mission but nearly bankrupted the state in the process.

As originally envisioned, the Tennessee plan expanded Medicaid, the government health-care program for the poor, to cover people who couldn’t afford insurance or who had been denied coverage by an insurance company.

With an initial budget of $2.6 billion, TennCare quickly extended coverage to an additional 500,000 people by making access to its plans easy and affordable. But the program became so expensive that Tennessee was forced to scale it back in 2005.

The lessons from TennCare are clear:

  • Don’t rush to “do something” for health care without considering the inherent limits of state policymaking and the damaging impact of higher health care costs, which would result from their changes, on individuals and families and on the numbers of uninsured.
  • Recognize that managed care is not some sort of panacea for saving money and that one cannot cut reimbursement of doctors or hospitals without compromising the quality of care.
  • Acknowledge that “comprehensive” health benefit packages will not also be “affordable.” In any case, if the legislature wants to provide government assistance, efforts should focus on those who most need the help.
  • Realize that the only way to achieve high-quality care at a lower cost is to assure consumer choice so that patients will have a reason to become prudent health care shoppers.