Fresh off a $141 million loss in year one of offering individual health plans through Obamacare, BlueCross BlueShield of Tennessee has received state approval to boost rates by 36.3 percent next year.
The rate increase OK’d by the state Department of Commerce and Insurance matched the request made earlier by the Chattanooga-based health insurer.
Two other health insurers also received rate hikes for plans on the federal exchange, while regulators approved a lower rate for another company.
Roy Vaughn, vice president of corporate communications at BlueCross, said losses from that line of business haven’t moderated since the not-for-profit reported the red ink in the spring.
Even with the rate increase, “it still doesn’t reflect a sustainable pricing model at this point, but it does narrow it significantly,” he said.
Congressional critics of ObamaCare said Friday the increase in health exchange rates shows the program isn’t meeting its cost-containment promise.
“Today’s news is proof positive that Obamacare is built on a grand deception,” said U.S. Rep. Diane Black, R-Tenn., a nurse for more than 40 years and member of the House Ways and Means Health Subcommittee. “The President repeatedly promised Americans that his healthcare law would save families an average of $2,500 per year. Now, Tennesseans are seeing once again that nothing could be further from the truth.”
Vaughn said BlueCross has the financial strength to make a long-term commitment to the market despite its early losses but the company must charge rates to reflect its cost of service.
“We don’t want to charge anyone more than what we have to, but pricing has to reflect medical costs we’ve committed to cover,” he said.
BlueCross enrolled nearly two-thirds of the 231,000 Tennesseans who signed up for the health insurance exchange plans last year. It said the company initially underestimated the number and cost of the medical claims filed by new enrollees.
When the plans debuted last year, BlueCross’ popular Silver option was among the cheapest plans anywhere in the country.
This spring, state Insurance Commissioner Julie Mix McPeak told The Wall Street Journal that she would be “surprised if we settled on 36.3 percent” sought by BlueCross.
On Friday, her office cited U.S. Health and Human Services data showing Tennessee has the highest average risk score nationally for the individual market. It said Tennessee’s individual insured population proved to be less healthy and higher users of medical services than the rest of the country.
“Tennessee consumers deserve straight, honest answers, and we will always strive to provide those answers,” McPeak said in a statement.
Community Health Alliance, a Knoxville-based cooperative, had its original 32.2 percent rate hike increased to 44.7 percent by state regulators.
Cigna sought a 0.4 percent hike and received that figure. But, it’s changing from a preferred provider organization product to an exclusive provider organization plan, according to the state.
Humana sought a 15.8 percent rate increase, but it was awarded a 5.8 percent hike. Humana withdrew its platinum plans after its initial submission, accounting for the changes, the state said.
While BlueCross lost $141 million on its health exchange plans sold under the Affordable Care Act, the company still earned $199.7 million during 2014 on total revenues of $10.8 billion, according to the company. It offset losses with income from its commercial insurance, Medicare and TennCare businesses and the gain from the sale of information technology company TriZetto.
Vaughn said the increases in rates may or may not drive people away from the exchanges.
He said 80 percent of the members who signed up for marketplace plans received some sort of federal premium assistance.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.