Filling the need for trusted information on national health issues…

State Exchange Profiles: Tennessee


Final update made on December 10, 2012 (no further updates will be made)

Establishing the Exchange

On December 10, 2012, Governor Bill Haslam (R) announced Tennessee would default to a federally-facilitated health insurance exchange.1

Prior to the announcement that the state would not operate its own exchange, the Tennessee Department of Finance and Administration established the Insurance Exchange Planning Initiative to advise the Governor and Legislature on exchange implementation. The Initiative worked closely with a variety of stakeholders and content experts, including agents, brokers, underwriters, actuaries, providers, and advocates.2,3 Stakeholder feedback was compiled into a white paper released in October 2011; findings indicated overwhelming preference for a state-run, rather than a federally-operated, exchange.4

A measure restricting health plans in the exchange from offering abortion coverage, with no exceptions, became law on May 5, 2010, without former Governor Phil Bredesen’s (D) signature (HB 2681/SB 2686).5

Contracting with Plans:
 In September 2012, the Exchange Planning Initiative released a Request for Information for qualified health plans in the individual exchange market.6 In 2012, the state convened a new Technical Assistance Group (TAG) of actuaries to provide expertise on reinsurance and risk adjustment.7

Small Business Health Options Program (SHOP) Exchange: In March 2012, the state released a Request for Information on information technology services for the Small Employer Health Options Program exchange.8 The Department of Finance and Administration had solicited subcontractors to conduct multiple analyses related to the establishment of an exchange, including an analysis of the merger of the individual and small group markets.9

Information Technology (IT): The state released a Request for Proposals (RFP) soliciting subcontractors to implement a significant Medicaid eligibility system upgrade to seamlessly integrate with the Children’s Health Insurance Program (CHIP) and interface with an exchange. Tennessee also participated in the “Enroll UX 2014” project, which is a public-private partnership creating design standards for exchanges that all states can use.10

Tennessee Bridge Option: Tennessee developed the Bridge Option proposal as is an alternative to the Affordable Care Act’s (ACA) Basic Health Program.11 Both options aim to improve the affordability of coverage for individuals with incomes above the Medicaid eligibility threshold and up to 200% of the poverty level. The Bridge Option would enable individuals moving from Medicaid to subsidized coverage in the Exchange to remain in lower-cost Medicaid managed care plans, or bridge plans. This approach would also allow all members of a nuclear family to hold coverage through a common insurer and provider network regardless of their eligibility status. The Department of Health and Human Services has indicated that states will be allowed to offer bridge plans through their exchanges, though it is not clear whether these plans will be offered in the federal exchange.

Essential Health Benefits (EHB): The ACA requires that all non-grandfathered individual and small-group plans sold in a state, including those offered through the Exchange, cover certain defined health benefits. Since Tennessee has not put forward a recommendation, the state’s benchmark EHB plan will default to the largest small-group plan in the state, Blue Cross Blue Shield of Tennessee PPO.

Exchange Funding

The Tennessee State Department of Finance and Administration received a $1 million federal Exchange Planning grant in September 2010. The Department has since received three federal Level One Establishment grants: $1.5 million in November 2011, $2.2 million in February 2012, and $4.3 million in May 2012. The grants are for continued exchange planning including for the procurement of technical expertise, funding staffing needs, planning for a health plan management system, marketing and outreach, and consumer assistance.12

Next Steps

The federal government will assume responsibility for running a health insurance exchange in Tennessee beginning in 2014.

Additional planning documents for Tennessee’s health insurance exchange can be found at:

1. ‘Haslam Announces State Will Not Run Health-Care Exchange.’ December 10, 2012.
2. Insurance Exchanges: What Makes Sense for Tennesssee? Powerpoint presentation. Tennessee Healthcare Financial Management Association. May 24, 2011.
3. Press Release. State Insurance Exchange Planning Initiative TAG members.
4.Best Alternatives to a Federal Exchange in Tennessee: A Summary of Stakeholder Feedback. October 21, 2011. State of Tennessee Insurance Exchange Planning Initiative.
5. House Bill 2681/ Senate Bill 2686.
6. Request for Information. Insurance Exchange Planning Initiative. State of Tennessee.
7. Tennessee Transitional Reinsurance Program: 3Rs Actuarial TAG. DRAFT. April 10, 2012. Gorman Actuarial, LLC.
8. Request for Information. State of Tennessee- Insurance Exchange Planning Initiative. March 15, 2012.
9. Exchange Planning Grant Second Quarter Report. May 2, 2011.
10. Enroll UX 2014 website.
11. Bridge Option: One Family, One Card Across Time. Tennessee Insurance Exchange Planning Initiative. November 21, 2011.
12. Tennessee Level One Establishment grant. Department of Finance and Administration. September 30, 2011.

The Henry J. Kaiser Family Foundation Headquarters: 2400 Sand Hill Road, Menlo Park, CA 94025 | Phone 650-854-9400
Washington Offices and Barbara Jordan Conference Center: 1330 G Street, NW, Washington, DC 20005 | Phone 202-347-5270 | Email Alerts: | |

Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.