Sunday, April 20, 2014 · 4:57 p.m.
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Gov. Bill Haslam. (Photo: Staff)

Tennessee will have a health care exchange, but it won't be run by the state. 

That was the line delivered by Gov. Bill Haslam Monday afternoon, as he announced his decision to defer responsibilities for creating and implementing a key component of President Barack Obama's Affordable Care Act to the federal government. 

Facing a Friday deadline, Haslam said he spent the last several months wrestling with the decision. The governor had held off on making his intentions known to the Department of Health and Human Services before November's election with the hope that the victory of Republican presidential candidate Mitt Romney would herald the beginning of a new chapter in working to repeal the president's signature policy. 

But Haslam didn't get his preference in the presidential election, and to boot, the outcome of Nov 6. presented the governor with a catchy dilemma in his home state.

Despite saying he personally considered the option of a state-run exchange "the lesser of two evils," the ushering in of GOP supermajorities in both chambers of the General Assembly would have left Haslam at odds with several Republican law makers who had no desire to be attached to the law now stigmatized as "Obamacare."

But on Monday, Haslam said his decision was driven by a growing concern that the federal government was not clearly providing guidelines for what the implementation of a costly state-run system would look like. Under the law, the government would have paid for the first three years of a state-run exchange, with annual state costs of running the program afterward estimated to be between $20 and $40 million a year. 

"What has concerned me more and more is that they seem to be making this up as they go," Haslam said. "In weighing all of the information we currently have, I informed the federal government today that Tennessee will not run a state-based exchange. If conditions warrant in the future and it makes sense at a later date for Tennessee to run the exchange, we would consider that as an option at the appropriate time."

The governor also defended his decision, saying it was not politically motivated. 

"This decision comes after months of consideration and analysis," he said. "It is a business decision based on what is best for Tennesseans with the information we have now that we've pressed hard to receive from Washington. If this were a political decision, it would've been easy, and I would have made it a long time ago."

Tennessee Democrats, who had called on Haslam to embrace a state-run exchange, weren't convinced. Issuing a statement on the heels of the governor's announcement, party leaders said they were "disappointed" with the decision and suggested his decision to leave exchanges to the feds was the product of partisan allegiance rather than doing what could have been a more efficient system for Tennesseans. 

House Minority Craig Fitzhugh said the governor was "pandering" to his base.

"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," he said. "I would hate to know I had a 70 percent approval rating statewide and couldn't get my own party to support my initiatives."

Along with Haslam, at least 20 other states so far have opted to forgo creating their own online marketplace for health insurance options, placing responsibility in the hands of federal administrators.

To date, 17 states have opted to operate their own exchanges.

In a recent briefing from Darin Gordon, deputy commissioner for the state Health Care Finance and Administration, Haslam was told that although a state-run exchange would allow Tennessee to potentially offer a more efficient and coordinated system, a federally run exchange would offer little risk in the area of implementation. Gordon also warned the governor that should the state decide later to operate its own exchange, the cost of setting up a system not subsidized by the government would cost between $70 and $90 million.

House Majority Leader and District 26 Rep. Gerald McCormick, who was opposed to the possibility of a state-run exchange, said Monday that the governor was only "leaving his options open" by not completely placing a state-run system off the table for the future. McCormick said that in numerous discussions with the governor regarding the issue, he had never favored one option over the other and considered both sides equally. 

"I think it's a personally reasonable policy," McCormick said. "The smart thing to do is to keep all your options open, and I think that's what the governor will do. If we decide a few years down the road that this is best for all Tennesseans, then we'll take a look at it."

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