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Tennessee joins list of states opting out of local health insurance exchange

2:23 pm by | 1 Comments

NASHVILLE -- Gov. Bill Haslam announced Monday that Tennessee will not create its own state-run health insurance exchange -- a marketplace for consumer information and purchase of health insurance plans, deferring to the federal government to run an exchange for the state's consumers in whatever way it wants.

"To me, it's a business decision," he said. "There will be people who say it's a political decision. If it was, we would have made it months ago."

The governor's decision is likely to be cheered by tea party conservatives, who rallied last week outside the State Capitol in opposition to any state participation in federal health reform.

The decision is the first of two major questions states face under the Affordable Care Act, the federal health reform law also known as "Obamacare." The other, which has no deadline for action, is whether to expand the TennCare/Medicaid program to people with incomes up to 138 percent of poverty level.

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But states are required to notify the federal government by Friday of their intention to create and run their own insurance exchanges, partner with the U.S. Department of Health and Human Services on a jointly operated exchange, or totally defer to a federally run exchange.

Both issues are politically charged, with many conservatives opposing any state participation in the federal health reform law. Last week, between 200 and 300 tea party activities rallied outside the State Capitol in opposition to a state-run exchange, and some protesters derided the governor for even analyzing costs and other issues surrounding the decision.

On ther other side, most of the state's insurance companies, health care advocates and some business leaders encouraged Haslam to establish a state-run exchange to retain state control and keep down costs.

The state's analysis, by the state's top TennCare administrators, detailed pros and cons of each option for the exchange -- primarily centering around more state control and likely cost savings for consumers with a state-run exchange.

The federal government will pay the estimated $70 million to $80 million cost of setting up a Tennessee exchange if the state opts into it prior to Jan. 1, 2014. But if the state elects to let the federal government run the exchange and then later decides to set up its own, the implementation costs would be borne fully by the state.

Haslam had sounded as if he was leaning toward a state-run exchange in the month since the state's analysis was completed. "I've always said from the very beginning that anything we can run instead of the federal government, we're going to run it better and cheaper," he said last month. "But I have to make certain that it really is a state run exchange portion of the state exchange, that there are things we could do that we couldn't do if they were running it." ___

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By Locker, Richard

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