In its ongoing commitment to the well-being of Tennesseans, businesses, and employees, the Tennessee Employers Benefits Alliance (TEBA) is shedding light on the repercussions of recent state laws impacting healthcare benefits and costs. This blog post delves into the critical insights presented in recent studies, highlighting the challenges faced by Tennessee businesses and employees due to these laws.

At the heart of TEBA's concerns are the 2021 and 2022 laws that place significant restrictions on health plans and their sponsors. These laws have far-reaching consequences, affecting everything from pharmacy networks to claims processing to employees’ wallets.
TEBA, representing a collective voice of Tennessee business owners and citizens, stands against these laws because they inflate healthcare costs for both employers and their employees. The recent laws are in direct conflict with the federal Employee Retirement Income Security Act (ERISA) of 1974.
Under ERISA, businesses have the flexibility to self-insure, assuming financial risk for providing health benefits to employees. ERISA was enacted to establish a standardized regulatory framework, promoting efficient benefit administration and protecting the interests of both employers and employees. Recent state laws place undue burdens on self-insured businesses operating under ERISA, disrupting the balance and flexibility ERISA provides. In addition to the new laws eroding ERISA, it is an illegal and unconstitutional overreach by our legislature. We need state lawmakers and officials to intervene.
Recent studies highlight the financial burden these laws impose on businesses will be detrimental. One company employing 6,000 Tennessee employees has already incurred substantial costs, including over $70K in increased dispensing fees paid to qualifying low-volume pharmacies, $190K in additional costs for restrictions on specialty pharmacy network design, over $300K in additional costs due to restrictions on incentivizing beneficiary utilization of lower cost dispensing channels, and $116K in additional costs placed directly on employees due to the inability to offer lower cost-sharing. These numbers reflect nearly $700,000 in additional costs—well beyond what the business and its workers would have incurred had the Laws not existed. The law creates an unnecessary state-imposed tax and penalty on Tennessee businesses with downstream impacts to workers in the form of decreased pay and less generous benefits.
Even more concerning are projections of the Laws’ aggregate and longer-term cost impacts. According to analysis, the pharmacy network restrictions included in Pub. Ch. 1070 will cost Tennessee businesses approximately $200 million in the first year following enactment and over $2.3 billion over the next 10 years. Similarly, provisions in the proposed rule mandating disclosure of proprietary information from health plan sponsors would generate over $200 million in excess drug cost in the first year and over $2.4 billion over the next 10 years. These staggering figures underscore the urgency for a re-evaluation of the laws and their potential impact on the state's economic landscape.
The impact extends beyond businesses to insured individuals, affecting health plan options, reducing pharmacy quality standards, and leading to increased out-of-pocket expenses. The laws hinder the ability of employers to provide competitive benefits, potentially disrupting employer-sponsored healthcare.
TEBA calls for a balanced and thoughtful approach by Tennessee lawmakers and government officials. The alliance advocates for a careful examination of the laws' impact, particularly on self-insured ERISA plans. By addressing these concerns, TEBA believes the state can maintain its business-friendly reputation and foster economic development while ensuring the well-being of businesses and employees alike.
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