NASHVILLE, Tenn. (AP) — Gov. Bill Haslam said Tuesday that part of the delay in deciding whether Tennessee will design its own health insurance exchange required under the new federal health care law is finding out how much flexibility the state would have.
States have until Friday to inform the U.S. Department of Health and Human Services if they plan to set up their own health insurance markets.
Haslam, a Republican who opposes the new health care law, says he's waiting on answers from federal officials on the flexibility issue. He spoke to reporters at the conclusion of budget hearings for state departments.
Haslam stopped short of saying the state would design its own, instead saying in such a case that the state could run it better and more inexpensively than the federal government. He plans to make a decision soon.
"There's going to be an exchange in Tennessee; either the feds are going to run it, or we are," he said. "So it's a choice for us of kind of picking between the lesser of two evils, if you will."
Later Tuesday, Senate Democratic leaders issued a release urging Haslam to set up a state-run exchange, saying it would be fiscally sound.
"It's clear that if we run the exchange, it will be cheaper for taxpayers, and it will allow our state to retain more control," said Democratic Caucus Chairman Lowe Finney of Jackson.
Democratic Senate Minority Leader Jim Kyle of Memphis agreed.
"Government closest to the people governs best, and that should be a guiding principle as we implement the new health care law," he said.
Last week, House Democratic Caucus Chairman Mike Turner of Nashville said his preference would be for the state to run the exchange, but he feared one created by the Republican-dominated Legislature would seek to undermine the Obama plan.
"I think what they'll try to do is skin it down as much as they can," he said, adding that the state mismanaging such a program would be worse than the federal government running it.
TennCare Director Darin Gordon said Tuesday that another issue is that the state still doesn't have "federal regulations or guidance on what the federal exchange will look like."
"It's hard to really assess that fully without having all the facts from the federal government," said Gordon, who made a budget presentation on Tuesday.
Gordon said the net cost of health reform to the state could be as much as $1.4 billion over the first five and half years. And he said the majority of the cost is unavoidable and will be incurred by the state regardless of its decision on the exchange, as well as Medicaid expansion, which is permitted but not required under the new law.
"For this first year, it's about $100 million state dollars," said Gordon, referring to the impact of the reform.
Despite improving state revenues, Haslam has asked state departments to develop plans for a 5 percent spending cut as a fallback. Nevertheless, he said TennCare and the Department of Corrections were two key agencies that he would work hard to meet their funding requests.
The Correction Department was one of the agencies that met before the governor on Tuesday and Correction Commissioner Derrick Schofield told Haslam that admissions were increasing across the state, and that the department needed about $65 million to handle the number of new offenders coming into county jails.
Schofield said he's looking into why admissions are increasing, and said sentencing guidelines should also be reviewed.
"Over the last year, our releases have gone down, compared to our admissions," Schofield said.