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State-run health exchange faces GOP roadblock

Associated Press Modified: November 11, 2012 at 5:31 pm •  Published: November 11, 2012

Frist said in a July column in The Week magazine that the exchanges are "perhaps the most innovative, market-driven, and ultimately constructive part of the law."

Unlike a Medicaid expansion, he said, "the exchanges should facilitate competition among private insurers as they design new benefit packages and cut prices to stay ahead of the game."

Republicans are quick to cite as a cautionary tale the experience of TennCare, the state's expanded Medicaid program that was beset by out-of-control costs until former Democratic Gov. Phil Bredesen in 2005 decided to make deep cuts to both enrollment and benefits.

Haslam said he is still awaiting details about the federal requirement for an exchange before determining his preferred path. The Centers for Medicare and Medicaid Services have been slow to respond to specific questions, he said, though he expected more comprehensive answers now that the presidential election has been decided.

The governor added that "the arguments haven't been made yet" with state lawmakers about which course to pursue.

A state-controlled exchange might allow for stricter controls on eligibility and could have different tax implications for businesses, the governor said.

"And the insurance companies and others have made it clear that (they) would rather deal with the state than with the federal government," he said.

He said one area of confusion is a mistaken impression that creating a state exchange would be linked to an expansion of Medicaid, which is permitted but not required under the new law.

Haslam said that separate decision on whether to boost Medicaid coverage will also be a tough one, given that hospitals — especially those in rural areas — rely heavily on federal reimbursements for care.

House Speaker Beth Harwell, R-Nashville, said her first reaction is that she is not in favor of an expansion of Medicaid, but she also understands the potential impact for hospitals.

"It's going to be a very difficult decision on the part of our state," she said. "But hopefully we will make one that reflects the will of Tennesseans."