Jessica M. Karmasek Mar. 21, 2013, 5:00pm

NASHVILLE, Tenn. (Legal Newsline) -- Tennessee Attorney General Bob Cooper said in a legal opinion this week that a bill seeking to bar insurers from participating in a federally-operated health care exchange is "constitutionally suspect."

State Rep. JoAnne Favors, D-Chattanooga, requested Cooper's opinion on Senate Bill 666/House Bill 476. A retired nurse and health care administrator, Favors supports President Barack Obama's federal health care law.

The legislation at issue -- sponsored by state Sen. Dolores Gresham, R-Somerville, and state Rep. Vance Dennis, R-Savannah -- proposes to amend the Tennessee Insurance Law by adding a new section to Chapter 7, Part 10 of Title 56.

In particular, HB 476 provides that "[n]o insurance company doing business in this state shall be authorized or permitted to sell or offer health insurance coverage, as such term is defined in § 56-7-2802, under this chapter through any American Health Benefit Exchange or any other health insurance exchange operated in this state under the Patient Protection and Affordable Care Act (Public Law 111-148), as amended."

Cooper, in his four-page opinion Monday, explained that the legislative intent of Obama's health care law was to reform the nation's health insurance and health care delivery markets, in hopes of improving access to those markets and reducing health care costs and uncompensated care.

"In order to accomplish these goals, Title I of the (ACA) provides for the establishment of state-based health insurance exchanges, which are insurance marketplaces where individuals, families and small employers can compare prices and buy coverage from one of the exchange's issuers," the attorney general wrote to Favors.

"The health benefit exchanges are intended to allow individuals and small businesses to leverage their collective buying power to obtain prices competitive with group plans."

More specifically, the exchanges are to offer a choice of plans that must include a package of "essential health benefits," Cooper explained.

"These plans, referred to as 'qualified health plans,' must be offered by a 'health insurance issuer' that is licensed and in good standing to offer health insurance coverage in each state in which such issuer offers health insurance coverage," the attorney general wrote.

Cooper, a Democrat, said HB 476 "runs afoul" of the doctrine of conflict preemption.

Conflict preemption arises when state law presents an obstacle to the accomplishment of the full purposes and objectives of Congress.

"A core purpose of ACA is to enable individuals and small businesses to obtain affordable health insurance through state-based exchanges," the attorney general wrote. "Congress has designed the exchanges to facilitate the purchase of qualified health plans and to create a more organized and competitive market for buying health insurance.

"Preventing insurance companies licensed in Tennessee from selling or offering health insurance coverage through an exchange established for Tennesseans under ACA stands as an obstacle to the accomplishment of Congress' objectives."

In December, Republican Gov. Bill Haslam said he would not create a state-based exchange.

He said at the time the federal government did not provide enough information on the costs of the program, and what information was provided appeared subject to change.

The health care law requires states either set up their own exchanges or the federal government will create them.

Since Haslam has refused to create an exchange, the federal government will run one instead.

From Legal Newsline: Reach Jessica Karmasek by email at

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