Haslam Decides Against State-Run Health Care Exchange

Gov, Bill Haslam said today he has decided against the establishment of a state-operated health care exchange and will allow the federal government to oversee the clearing house for insuring Tennesseans.
Haslam said he would have preferred for several reasons to set up a state-run exchange but, “I’m sad to say and sorry to say, we won’t.” He said the federal government has been so unclear about the rules that it is not practical.
“More and more I’m convinced they are making this up as they go,” Haslam told a Nashville Rotary Club audience. “It’s scary, quite frankly.”
Haslam said 800 pages of proposed regulations — as part of the Affordable Care Act — have been received from the federal government since the Nov. 6 election and those are draft proposals subject to change.
While he knows some would say he is making a politically based decision, but that isn’t the case, he said.
“If it was a political decision, we would have made it months ago,” he said. “The politics have always been pretty clear on this.”
Several Republican legislators have declared they would oppose Haslam if he tried to set up such a state-run exchange in Tennessee. The governor acknowledged that getting legislative approval for a state exchange “would have been an uphill battle,” but said that was not the deciding factor.
Haslam said it’s possible that the state could revisit the issue in another year or two.
“When we’re convinced they have their ducks in a row, then we’ll take a look at it,” he said, adding that federal officials as recently as Friday had declined to answer state questions about how things would function with a state-run exchange.
“The face they couldn’t or wouldn’t was really bothersome,” Haslam said.

Note: Text of the letter Haslam sent Health and Human Services Secretary Kathleen Sebelius announcing his decision is below.

The Honorable Kathleen Sebelius
Secretary, U.S. Department of Health and Human Services
200 Independence Avenue, S.W.
Washington, D.C. 20201
Dear Secretary Sebelius:
The purpose of this letter is to respond to your approaching deadline of December 14, 2012, and inform you that Tennessee will not be pursuing a state-based insurance exchange in 2014.
As you know, I firmly believe the Patient Protection and Affordable Care Act (PPACA) was the wrong approach to addressing our nation’s healthcare challenges, and I remain very concerned about its impact on Tennesseans and our healthcare marketplace. However, given the PPACA requirement that an insurance exchange be operational in every state by 2014, my administration has taken a thoughtful approach to considering each of the options presented to us, and I have strived to put Tennesseans in the best possible position in light of the sweeping changes imposed by this law. At this point in time I do not believe we have been given the information or control necessary for the state to assume the responsibility of operating an exchange.
I did not come to this decision lightly. My intention has always been to minimize federal intrusion and retain as much control as possible at the state level, and I know if given the proper latitude Tennessee could operate an exchange in a more efficient and cost effective manner than the federal government. However, after studying all of the guidance we have received to date – including the more than 800 pages of draft rules that have been issued since the November election – it has become apparent that the federal government is calling all the shots and has important decisions still pending. There would be significant risk involved with taking on an exchange while your department is still developing the rules of the game or if the federal government is ultimately going to control the most important levers.
I cannot say for certain that we would retain enough control over the elements needed to run the exchange efficiently or be permitted to customize it in ways that will make a meaningful difference to Tennesseans. Moreover, we still do not have enough information about each of the three options – state, federal, and partnership models – to weigh them against each other and make a truly informed decision.
Although we are declining to set up a state-based exchange, my administration intends to continue to be just as aggressive in pushing for changes to ensure that Medicaid eligibility determinations remain tight and to minimize the impact to our individual and small group markets. States have been put in an incredibly difficult position by this law, but on every issue and decision that comes with it I will continue to work hard to find the best answer for the people of Tennessee.
Bill Haslam

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