Haslam Stiff Arms State Exchange

Governor Bill Haslam tells the Downtown Rotary Club he is disappointed that the state will not run a health insurance exchange. Credit TN Photo Services

Tennessee will not create it’s own health insurance exchange as envisioned under President Obama’s Affordable Care Act. Governor Bill Haslam says he really did want to, telling the White House in a letter he “did not come to this decision lightly.”

Haslam was one of only a handful of Republican governors giving a health exchange a long, hard look. Just before announcing his decision, Haslam said he still thinks Tennessee could run an online marketplace of health plans better than the federal government. But he says the state doesn’t have enough information to fairly weigh the options.

The governor contends the decision is not a political one, and that his drawn out deliberation is proof.

“The politics haven’t changed. I knew what the politics were of this decision seven, eight months ago. I can assure you that while we listen to everybody, we made what we think is the right decision in the end.”

Tennessee will have to pay a 3.5 percent tax to participate in the federal exchange. But Haslam is receiving praise from fellow Republicans. Democrats in the state legislature say he’s “pandering to the far right” of the Republican Party, some of whom rallied outside the capitol last week.

Health insurance companies based in Tennessee wanted a state-based exchange and had told the governor’s office as much. In a statement, BlueCross CEO Bill Gracey says, “we certainly understand and respect the Governor’s decision.”

Twenty-one states have now opted to let the federal government run their exchange.

Haslam spent weeks deliberating on the state-based health insurance exchange. But that’s the easier of two decisions. He says expanding Medicaid is a bigger minefield.

The Obama Administration’s Affordable Care Act asks states to expand their Medicaid programs for the poor – known as TennCare in Tennessee.

A Supreme Court ruling gives the ability to opt out. And Haslam says it’s a more complicated consideration than the health insurance exchange, which he says is largely about the start-up.

“The federal government is really not ready to do this so it would be a bumpy take off with them. But that decision, it’s really more like you’re going to have a bumpy flight because it’s the long term costs consequences that concern you.”

With TennCare, the federal government is supposed to pay the additional cost of expansion for the first few years. Haslam says he’s not confident Washington can afford to. However, the number of TennCare recipients is expected to increase dramatically with or without making more people eligible.

When the requirement that everyone have insurance takes effect in 2014, TennCare expects thousands of people who already qualify will come out of the woodwork.

There’s no hard deadline for the Medicaid expansion, but Governor Haslam says he’d like to decide quickly so health care providers can prepare.