NASHVILLE — Republican Gov. Bill Haslam says he "probably" leans toward Tennessee creating its own insurance exchange under the federal health care law, but he acknowledges that GOP lawmakers would resist any such move.
Friday is the deadline for Tennessee, Georgia and other states to tell federal officials whether they will set up online markets offering affordable, federally subsidized insurance to low- and moderate-income families and small businesses.
In Georgia, Republican Gov. Nathan Deal has said he probably won't seek to create a state exchange. He said his administration stopped planning one after the Obama administration issued "onerous regulations that prevent us from creating a true Georgia model."
If states don't act, the federal government will run the exchanges created under the Affordable Care Act. That's a concern for Haslam, hospitals and the state's largest health insurer, Chattanooga-based BlueCross BlueShield of Tennessee.
Many states, especially those run by Republicans, had held back from a decision, hoping Republican Mitt Romney would win and the Affordable Care Act would largely be gutted. Instead, President Barack Obama won and his signature first-term achievement stands.
On Friday, the Obama administration said states must decide by Friday, though they now have until Dec. 14 to submit blueprints for exchanges.
A University of Memphis study released in January estimated that 250,000 Tennesseans would be eligible to use the exchange to find affordable insurance.
Haslam told reporters last week he has not decided whether to create a state exchange.
"As someone who has always said closer-to-home government is the better, like I said, that's probably why I lean toward doing it," Haslam said. "That being said, we don't have all the answers, so we haven't made a final decision."
But he acknowledged that getting legislative approval for a state exchange won't be easy.
"I think politically it will be difficult," he said.
House Majority Leader Gerald McCormick, R-Chattanooga, said Friday that "the burden of proof certainly needs to fall" on supporters of a state exchange.
"As far as I know, with the information I have right now, I would be against the state setting up a state exchange because we don't know what the federal government is going to do," McCormick said. "And quite frankly we're going to catch the blame for whatever they do if we're going to set up the exchange."
McCormick said he's "tempted to spend our energies in other areas and let them [Obama administration] clean up whatever mess they are about to make."
Haslam said a state-run exchange would include some tax impacts on businesses, such as deductions they could take under a state exchange that wouldn't be available in a federal exchange.
A Tennessee-run exchange would have more flexibility in determining eligibility, a "big issue in any Medicaid program." Moreover, insurers have "made it clear" they'd rather deal with the state than the federal government, he noted.
The state could say it intends to create its own exchange, then change its mind, Haslam said. But if the state says no on Friday, the Obama administration would implement the exchange, he said.
BlueCross BlueShield spokeswoman Mary Danielson said the insurer prefers a state to a federal exchange.
"We feel that our state leaders best understand the market and can develop a program/product specifically for the citizens as opposed to a one-size-fits-all federal approach," Danielson said.
If the state implements the exchange, an "essential health benefits" plan would be modeled on the state's largest insurer's offerings. That would be BlueCross.
Tennessee Hospital Association President Craig Becker warned that if the state doesn't set up its own exchange, "then you're going to lose control of your TennCare program."
The federal government, not the state, would determine the benefit structure, he said.
"You want to make sure you have control over that."
Medicaid expansion questions
Haslam said he also hasn't decided whether to expand TennCare, the state's Medicaid program for the poor.
Under the Affordable Care Act, states that expand benefits to low-income mothers, children and the elderly would get subsidies to insure those with incomes below 133 percent of the federal poverty level. That figure is $14,856 for an individual and $30,657 for a family of four.
"I have a lot more questions about expanding it than I do with exchanges," Haslam said.
Estimates vary for how many Tennesseans would be newly eligible for TennCare, from 240,000 in the University of Memphis study to 300,000 or so in other studies.
Haslam worries the federal government, which will pick up the whole cost of the expansion in its first three years, "might be covering a lot of things now, but will they be covering them forever?"
After the third year, in 2016, the federal government will pay 90 percent of new enrollees' costs under health reform.
Deal has said that Georgia cannot afford its share of the Medicaid cost, spokesman Brian Robinson said.
"Gov. Deal, and many other governors, have asked the administration to block-grant us the federal share of the cost and we'll use it to expand Medicaid to the extent that allows," Robinson said.
More than 600,000 Georgians would be eligible.
McCormick said he is inclined to oppose the expansion.
"If we do that and we end up having to spend more state money, then that's not money available for higher education and [prekindergarten through grade 12] and some of the other things we'd like to do."
But Becker warned that without the expansion, hospitals will lose special federal payments they now get under the health care overhaul.
"You're going to crater a lot of hospitals," Becker said. "You'll have a lot of hospitals either going out of business or becoming something else."
One Tennessee lawmaker already has laid down a marker on the issue. Sen. Brian Kelsey, R-Germantown, said he is filing legislation to block the state from expanding TennCare.
"Unlike Washington, Tennessee balances its budget every year," he said. "Tennessee taxpayers cannot afford this expansion of spending. The federal government may be promising money today, but with $16 trillion of debt, those funds will not be there tomorrow."
Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...