Tennessee insurance companies would be prohibited from participating in the state’s federal health care exchange that will provide federally-subsidized medical insurance under a bill approved Wednesday by a House subcommittee.
Rep. Vance Dennis, R-Savannah, said he had found “the Achilles heel of Obamacare” with his bill (HB476) and, once Tennessee approves it, other states are likely to follow and doom the federal health care program.
“With this bill, I bring you the opportunity for your children and grandchildren and my children and grandchildren to save billions and billions of dollars of money being borrowed against them by the federal government,” said Dennis.
The “Achilles heel,” Dennis said, is that the federal law still allows states to control insurance companies. Thus, by declaring a state’s insurance companies cannot use the health care exchanges set up under Obamacare, the law can be negated, he said.
Dennis also contended that Obamacare would take business away from state insurance agencies writing policies for private insurance that is not subsidized by Obamacare.
But insurance company lobbyists and an attorney with the state Department of Commerce and Insurance said passage of the bill would likely mean that out-of-state insurance companies would wind up serving Tennesseans through the Affordable Care Act (ACA).
“It’s going to be very frustrating for us not to give Tennesseans the option to purchase on the exchange and have the option of the subsidy,” said David Locke, lobbyist for Blue Cross-Blue Shield of Tennessee.
The bill declares that no insurance company licensed to do business in Tennessee can be part of a health care exchange established by the ACA. Gov. Bill Haslam recently declared that Tennessee will not set up its own state-operated exchange under the federal law, leaving the state exchange to be operated by the federal government.
Tony Greer, general counsel for the department, said the bill is “trying to nullify the (health care) exchange provision of the ACA.”
He also disagreed with Dennis’ “Achilles heel” proposition. The ACA does have a provision saying that it will preempt any state law that is in conflict, he said, and Dennis bill would likely be deemed in conflict since it tries to keep the federal law from working in Tennessee.
The upshot, Greer said, could be the federal health exchange authorizing companies not licensed in Tennessee to sell federally-subsidized insurance within the state while companies with a Tennessee license could not. He said some Tennessee-based companies could choose to “become unlicensed companies” so they would be able to sell the subsidized policies.
Other insurance representatives offered a similar assessment of the bill’s impact.
“If Tennessee companies are prohibited from participating, the federal government is simply going to allow out-of-state companies to participate,” said Warren Broemel, lobbyist for the American’s Health Insurance Plans. “That will put Tennessee companies at a real disadvantage.”
After their testimony, Dennis, an attorney, said he still disagreed with the conflicting assessments.
“I don’t believe anything in Obamacare allows an out-of-state company to sell to Tennessee residents,” he said.
The bill was approved 6-2 – the two no votes coming from the only Democrats on the subcommittee. The bill now goes to the full Insurance and Banking Committee next week. The Senate companion bill, sponsored by Sen. Dolores Gresham, R-Somerville, is also scheduled for a committee vote next week.