Tennessee Health Benefits: Not a Business-Friendly State Anymore

Tennessee is known as a business-friendly state, where companies large and small can thrive, creating jobs that support employees and their families, and adding to the tax base to help pay for needed public services. 

Unfortunately, while the state legislature has protected this business-friendly environment for years, it has recently pursued policies that are detrimental to this pro-business atmosphere. 

For example, the legislature has taken action to regulate health benefit plans, limiting employers’ ability to keep costs down for themselves and their employees. Laws that limit employers’ ability to design a benefits package that works for them drive up costs and limit employers’ freedom. 

One manufacturer in East Tennessee has incurred $68,000 so far this year because of regulative legislation passed in recent years. That includes a $70,000 increase in dispensing fees for low-volume pharmacies, $190,000 in expenses for restrictions on specialty pharmacy network design and more than $300,000 in restrictions on incentivizing utilization of lower cost dispensing channels. 

The Tennessee Employer Benefits Alliance (TEBA) advocates for policies that ensure healthcare is both affordable and accessible to families and businesses across the state. In the 2024 legislative session, we successfully opposed efforts to limit the choices of patients receiving IV-administered medications, pushed back on attempts to limit employers’ flexibility, and voiced concerns about new regulations from the Department of Commerce and Insurance.  

A recent study by the Society for Human Resource Management found that 88% of employees ranked health-related benefits as “extremely important,” prioritizing it ahead of other concerns such as retirement savings, family care, and leave policies. Health benefits are also consistently ranked by employers as the most valuable benefit they offer to employers. A study done by Avalere Health showed a significant return on investment for businesses that offer employer-sponsored insurance (ESI). 

Unnecessary regulatory overreach will force employers to either raise premiums or cut back on benefits for all employees. At TEBA, we are pushing hard to make sure legislators carefully examine all the consequences of these bills, and the impact they could have on our “business-friendly” reputation.