...The TennCare concept was for the state to operate like an HMO, providing health insurance to those who needed it and paying the premiums for those who couldn't afford it. The idea was even sold as a cost savings because it would provide "managed care" (volume discounts, preventative care, etc.). TennCare opened enrollment to hundreds of thousands of people who did not qualify for Medicaid, even to some six-figure earners. Costs quickly exploded, and despite attempts to tighten eligibility rules the program still covers 1.3 million of the state's 5.8 million people.

The skyrocketing costs led previous Governor Don Sundquist, the Republican who had inherited the program, to try to impose a state income tax. His efforts failed, fortunately, but in 2002 Mr. Bredesen was elected promising to cut TennCare's costs.

That, too, has been impossible. Left-wing legal activists have sued the state with impunity to underwrite the cost of nearly unlimited care. A Nashville non-profit called the Tennessee Justice Center has hamstrung reforms for years by suing to enforce a series of consent decrees, some of which predate TennCare.

Prescription drug costs alone increased 23% last year, as there are effectively no limits on the number or types of drugs the system will pay for. If a doctor prescribes aspirin, TennCare pays for it. Ditto for antacids for heartburn and other over-the-counter products. If TennCare denies a claim for a drug or any other type of care, an appeal can be filed for next to nothing. Fighting each appeal costs the state as much as $1,600 in legal fees. With 10,000 appeals filed every month, it's often easier and cheaper to pay a claim, regardless of the merits.

TennCare is now in worse shape than it was a decade ago. Three of the 11 privately run Managed Care Organizations that insured TennCare patients and administered the program have fallen into receivership. Amid the legal wrangling, Blue Cross Blue Shield all but pulled out of the program. Today the state has assumed all the insurance risk and pays most of the premiums...