More than a year since offering coverage, Gov. Phil Bredesen’s health insurance program for small businesses is successful, administration officials maintain, despite likely falling about 20 percent short of enrollment targets.
In 2006, Bredesen proposed and the state legislature passed CoverTN, a bare-bones health insurance program for small businesses. It was the centerpiece of his overall Cover Tennessee program, which was proposed after Bredesen cut about 170,000 people from the TennCare rolls because of its spiraling costs and mismanagement.
The notion for CoverTN was simple; provide low-cost, basic health insurance for employees of small businesses, with the premiums split equally between the state, the employer and the individual. It was designed for working-class Tennesseans earning about $40,000 a year or less.
CoverTN began coverage in April 2007, and 14 months later, more than 15,000 Tennesseans from 6,196 small businesses are enrolled. But the state has not sold out the program as it has money available for 19,000 enrollees through the end of this fiscal year.
Laurie Lee, Cover Tennessee’s executive director, said she was “pretty pleased” with the enrollment despite not hitting the budgeted goal.
“We’re at 80 percent of that target and those dollars will roll over into next year,” Lee said. “And if we continue to grow our program at the rate we’re growing, we’ll reach our target next year.”
More than a year into enrollment, demographics about who is enrolled – and how much an individual is paying - in CoverTN are becoming clearer.
The program was set up to where a $150 monthly premium would be divided three ways among the state, the employer and the individual.
The monthly premium can go up though if the individual is overweight, smokes or is older.
So far, 29 percent of the more than 15,000 CoverTN enrollees are obese or not the target weight.
Smokers also heavily populate the CoverTN ranks as 36 percent light up.
Age variations among enrollees vary. Mostly, they are between 30 and 59 but a covered individual can be more than 65 years old.
Therefore, premiums can range between $112 a month for an under 30, non-smoker, normal weight individual or as much as $327 for a smoking, obese 65-year old, Lee said.
During the legislative session, CoverTN’s benefits came under attack from some lawmakers, with criticism centering on the maximum yearly payout of $25,000.
Rep. Kent Coleman (D-Murfreesboro), the chairman of the House Judiciary Committee, said at the time that the $25,000 maximum payout during a given year was a “Band-aid.”
“I do wish we didn’t call it insurance,” Coleman said.
Tony Garr, the executive director of the Tennessee Health Care Campaign, an advocacy group routinely critical of the Bredesen administration for its TennCare cutbacks, urged calling CoverTN what he says it is: not insurance but a “defined benefit plan that has serious limits.”
“It’s not insurance,” Garr said.
In response, Cover Tennessee’s Lee said CoverTN is in fact “insurance” and said the Bredesen administration has been “very clear” that CoverTN is basic coverage. She notes that just one enrollee has exceeded the $25,000 benefit cap.
And that basic coverage, Lee said, is what was Bredesen’s logic behind the program.
Instead of having enrollees paying for high-deductible, catastrophic insurance for the 1 percent chance a health crisis could occur, Lee said Bredesen wanted to serve the 99 percent “and give them most everything that they need.”
Lee pointed to CoverTN having no deductible, one free physical per year and “modest co-pays.” Those co-pays include $10 for generic prescriptions and $15 for a doctor’s visit.
“We’re providing access to what most people would need in any given year at a very affordable price,” Lee said. “It’s something that most people would not be able to afford otherwise.”
Garr pointed out that besides the $25,000 total benefit cap, there are also caps on prescription drugs at $300 or $1,000 depending on the plan, surgical visits at one per year and a hospitalization-spending limit of $10,000 or $15,000 per year depending on the plan.
“There are a whole bunch of other caps,” Garr said.
To be eligible for CoverTN, a small business must employ 50 or fewer employees, half of which must earn $43,000 a year or less.
Jim Brown, the state director of the small business group National Federation of Independent Business, said he is not hearing much negative feedback from his members using CoverTn.
“They’re glad the option is out there,” Brown said. “They’re still monitoring the program.”
NFIB’s member polling, Brown said, shows that 15 percent are against CoverTN because they feel government shouldn’t be involved in health insurance coverage “in any way,” 60 percent support it and 25 percent were willing to give it a try. NFIB represents 8,500 members in Tennessee.
Besides CoverTN, there are three other programs within the Cover Tennessee umbrella, which include comprehensive coverage for children from lower-income families, a “high-risk” pool for the uninsurable and a pharmacy assistance program.