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"Cover Tennessee" Offers Affordable Insurance to Small Businesses

In June, Governor Phil Bredesen signed into law the Cover Tennessee Act (SB 3895). Its centerpiece is CoverTN, a low-cost insurance plan for uninsured, low-income small business workers and self-employed individuals. An individual policy will cost about $150 per month. Among employers who choose to participate, the plan will function as a variation of the "3-share" model, with the state, the worker, and the employer each contributing one-third of the premium. [1] If an employer declines to participate, an employee can enroll by paying two-thirds of the cost.

CoverTN plans will be portable, following the enrollee from job to job. They will be offered by private carriers and meet state guidelines, and will reward people with healthy lifestyles through premium adjustments tied to smoking, obesity, and age. Plans will provide basic health insurance to individuals who have been uninsured for at least six months, with income up to 2.5 times the FPL. The program is available to employers with 25 or fewer employees if at least half of the employees meet a specified income requirement. Although the governor has expressed intentions that the policies should have no large deductibles and only modest copayments, concerns have been raised by consumer groups about whether plans costing an average of $150 per month could provide adequate coverage.

In addition to the CoverTN 3-share program, the new legislation includes a pharmacy assistance program, an effort to reduce obesity and diabetes, and initiatives that expand health coverage to uninsured children in families with annual income up to $50,000 and chronically ill "uninsurable" adults who can not obtain private insurance due to preexisting conditions.

Together, these provisions are expected to expand health coverage to 100,000 adults, 75,000 children, and 15,000 chronically ill residents, at a cost to the state of about $350 million over three years. [2] The governor is seeking federal participation in the program for future years. He will begin accepting bids from insurance carriers to provide coverage starting this fall and, to ensure competition, plans to sign at least two contracts. State officials expect to start enrolling individuals in October and begin coverage in January 2007.

[1] The "three-share model" was pioneered in the Access Health program in Muskegon County, Michigan, where health coverage costs are shared by employers, employees, and a public contribution.
[2] The CoverTN 3-share program is expected to cost about $100,000 of the total.

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