NASHVILLE -- After finally saying no to a state-run health insurance exchange, Gov. Bill Haslam now has an even bigger decision to make when it comes to the federal Affordable Care Act.
That would be whether to extend the state's TennCare program to as many as 330,000 low-income Tennesseans under President Barack Obama's health care overhaul. He said he has not made up his mind on the issue, and a decision may not be made until next year or later.
Earlier Monday, Haslam said he had rejected creating a state-run, online marketplace where as many as 558,000 Tennesseans who have no health coverage easily could find federally subsidized insurance. Those affected would have incomes ranging from 100 percent to 400 percent of the federal poverty line.
Instead, Haslam, who has faced a storm of protest from fellow Republicans in the Legislature and tea party opposition, has decided to let the federal government create and run the exchange.
Haslam said he remains convinced his administration can create a better, less expensive exchange envisioned under the 2010 law. But he said that more than two years after it became law, the Obama administration still hasn't provided enough information to let the state understand exactly what it would be getting into by operating its own exchange.
That's "scary, quite frankly," Haslam told Nashville Rotary Club members as he announced his decision. "More and more I'm convinced they [Obama administration officials] are making this up as they go."
"A BUSINESS DECISION"
Haslam, who has been studying the issue for months, called the move "a business decision. If it was a political decision, I'd have made it months ago," he said.
But he again acknowledged winning approval in the GOP-led General Assembly would be tough with lawmakers such as House Majority Leader Gerald McCormick, R-Chattanooga, opposed.
McCormick applauded the governor's rejection of the exchange, calling it the "right decision."
Those comments were echoed by U.S. Rep. Scott DesJarlais, R-Tenn., and two state legislators, state Rep. Kevin Brooks, R-Cleveland, and Sen. Jim Tracy, R-Shelbyville.
Both men are looking at running in the 2014 GOP primary against DesJarlais, who is trying to overcome damaging personal revelations.
DesJarlais said he thinks Haslam's "decision will help protect patients all across Tennessee, as well as our state's budget and the United States Constitution."
But Democrats pounced, accusing the governor of caving in to hard-right members of his party as well as tea party activists.
"I'm disappointed to see the governor pandering to the far right of his party rather than doing what is best for the people of Tennessee," said House Democratic Leader Craig Fitzhugh, of Ripley. "I would hate to know that I had a 70 percent approval rating statewide and couldn't get my own party to support my initiatives."
U.S. Rep. Steve Cohen, D-Tenn., called it "obvious [that] politics played a substantial part in the governor's decision."
All but two of the states rejecting a state-run exchange have Republican governors, Cohen said.
Chattanooga-based BlueCross BlueShield of Tennessee has supported a state-run exchange, but the nonprofit insurer's CEO, Bill Gracey, said in a statement that "we certainly understand and respect the governor's decision" on the exchange.
At one point, federal guidelines would have made BlueCross' health plan for individual coverage the standard under a federally run plan because it is the state's largest. It was unclear Monday whether those guidelines have changed.
Haslam becomes one of at least 18 governors nationwide to reject a state-run exchange. Others include Georgia Gov. Nathan Deal and Alabama Gov. Robert Bentley, both Republicans.
States have to make a decision by Friday. Haslam said the state could decide later to do an exchange. But it might miss out on as much as $70 million in federal funds to help it do so.
Meanwhile, Haslam said he is keeping his options open on whether to expand TennCare to as many as 330,000 low-income Tennesseans under the federal health care law.
He called the expansion decision a "lot bigger and, to be honest with you, a lot more difficult decision."
The law originally mandated states expand their Medicaid programs, but the provision was struck down by the U.S. Supreme Court even as justices narrowly upheld the central premise of the law itself. Now states must make the decision themselves.
Haslam said reasons for agreeing to the expansion include a provision that the federal government will pick up 100 percent of the costs of the expanded enrollee population from 2014 to 2016. After that the federal share decreases in phases to 90 percent after 2019.
The state pays 35 percent for TennCare enrollees in the existing program while the federal government covers 65 percent.
"More people are covered; they're paying most of it, that's one reason," Haslam said.
The other is the state's hospitals are clamoring for the expansion, he said, because they will lose special indigent care payments under the new law. Industry officials warn that a number of rural hospitals face going under without the influx of new, paying patients.
That said, the governor noted, "ultimately we have to have a different way to address" TennCare. He recalled how then-Gov. Phil Bredesen wound up cutting more than 150,000 people from TennCare rolls to control costs.
Haslam said he worries federal officials could later decide to cut the generous match now promised to states for covering more people. That happened with federal homeland security money, he said.
For Tracy, the decision is clear cut. He urged Haslam to "reject the Obamacare Medicaid expansion, as well. Tennesseans know firsthand what the devastating consequences will be based on the TennCare debacle."
Contact staff writer Andy Sher at asher@timesfree press.com or 615-255-0550.