Tennesseans cannot afford 44 to 62 percent Obamacare price increases that will force them to make difficult decisions about their daily lives and their family budgets. They should not have to pay the price for a terrible health care law and the refusal by Democrats in Washington to see what is plainly obvious - that Obamacare is failing.
Price of health exchange plans poised to rise dramatically in TennesseeTennessee approves costly health exchange price hikes for state's biggest insurersAs rates soar, Tennessee insurers and regulators say Obamacare proving too risky, costlyNew study finds most Tennesseans will still be able to get individual health coverage for under $75 a month
By the numbers
Individual insurance rate hikes under the Affordable Care Act marketplace:› 62 percent for BlueCross BlueShield of Tennessee› 46.3 percent for Cigna› 44.3 percent for HumanaSource: Tennessee Department of Commerce and Insurance
The price of individual health insurance coverage will increase next year by a record amount in Tennessee after state regulators agreed to the full amount of the rate increases requested by the three health insurers still offering exchange plans under Obamacare.
But even with a 62 percent rate hike in 2016, the state's biggest health insurer is still evaluating whether to stay in the program, and Tennessee Insurance Commissioner Julie Mix McPeak said Tuesday she worries about whether the state can maintain a competitive marketplace under Obamacare. U.S. Sen. Lamar Alexander, R-Tenn., the chairman of the Senate Health Committee, said the rate increases are too costly for Tennesseans, and Obamacare, at least in its current version, "cannot be allowed to continue."
BlueCross BlueShield of Tennessee, the state's biggest health insurer, estimates it will have lost nearly $500 million on its individual exchange plans by the end of this year. Even with the state allowing BlueCross to more than double its rates in three years, BlueCross officials said they are still studying whether it makes sense to keep offering Obamacare coverage in 2017 or abandon the program and leave much of Tennessee without any coverage under the marketplace exchanges.
"We continue to have concerns about uncertainties about the Affordable Care Act at the federal level and those concerns are leading us to keep all of our options open as it relates to participation in the 2017 marketplace," BlueCross Senior Vice President Roy Vaughn said Tuesday. "Despite ACA marketplace plans being a fairly small part of our business, they have continued to have out-sized losses and that is no longer sustainable. And from our standpoint, the Affordable Care Act is as risky as ever, if not more so for consumers and health insurers alike."
BlueCross in Tennessee debuted its individual marketplace policies in 2014 with the second lowest rates of any insurer in the country. But after capturing the biggest share of the market, the Chattanooga-based BlueCross lost $311 million in the first two years of Obamacare and raised its rates 19 percent in 2015 and 36 percent this year before requesting another 62 percent hike in premiums for next year.
After other insurers exited the market, state regulators agreed to allow BlueCross and other insurers to get their full requested rate increase for next year.
Cigna and Humana are the only two other health insurers in the marketplace exchange in Tennessee and both got approval Tuesday for rate increases of more than 44 percent for 2017.
"There are significant risks for these companies beyond the rates and premiums that we can control and the companies told us they were worried about their current footprint and they certainly weren't interested in expanding their footprint until the market stabilizes," McPeak said.
Last year, the state's cooperative plan - the Knoxville-based Community Health Alliance - was forced to shut down and America's biggest health insurer, United Healthcare, withdrew from the Tennessee marketplace exchange after only one year.
"That was a major driver in our decision making," McPeak said. "If one other company pulled out of any of the metropolitan areas, that would be disastrous for our marketplace. We're trying to preserve consumers having at least one option for subsidized health care in each of the major markets. That has been a challenge for us this year."
Next year, 57 counties in Tennessee will have only marketplace plans from BlueCross. Another 24 of the state's 95 counties will have only two insurers in the exchange and only 38 counties will have three insurers offering individual plans.
Across the country, the average state has 10 insurers offering exchange plans under Obamacare.
Obamacare has proven costlier than expected for insurers because of higher-than-expected medical claims, especially in Tennessee, where people tend to be less healthy, and a greater share of those signing up for marketplace plans were chronically ill. Tennessee has been among the top three states with the worst risk portfolio of enrollees in each of the first three years since Obamacare became effective, according to the Centers for Medicare and Medicaid Services.
Alex Tobert, founder of Bernard Health, which provides expert advice on health insurance across the country, said the "sticker shock" from the rate hikes approved Tuesday in Tennessee reflects the higher-than-expected costs of care and changes in the Obamacare program that limited some of the originally promised risk payments to insurers.
"When BlueCross first entered this new market, their prices were very low and they gained the biggest market share, but a lot of the federal money that was promised based upon the risks for insuring these new enrollees never was provided," Tobert said. "As a result, hundreds of millions of dollars didn't come through for BlueCross because of the federal interpretation of the law and the marketplace has yet to stabilize in a predictable fashion."
As a result, Tobert said United Healthcare, Aetna, Humana and Cigna have all limited their Obamacare coverage and a number of co-ops created to offer such plans have gone out of business.
Obamacare backers insist it's far too early to panic, saying that the marketplace exchanges are helping nearly 20 million more Americans get health insurance. Many of those were previously denied coverage because of pre-existing health conditions or were unable to buy coverage without the subsidies offered under the Obamacare plan.
"The sky is not falling," said Walter Davis, executive director for the Tennessee Health Care Campaign, which supports Obamacare. "The Affordable Care Act will have coverage in every county of Tennessee and even where there is only one company there will be various plans for people to look at and purchase to meet their needs."
Most of those on the marketplace exchange also will qualify for federal subsidies so most people won't pay as much as the rate hikes suggest.
"It's unfortunate that (state regulators) have allowed such significant increases, but it is not doomsday for the Affordable Care Act," Davis said.
McPeak said the rate requests sought by the three health insurers, although at record high levels, were justified because each of the companies was paying out more in medical claims than they took in from premiums, not even counting their own sales, administrative and tax expenses. Because of such medical loss ratios, no refunds will be provided this year, as was the case in some previous years for some plans.
McPeak said she employed independent actuaries to evaluate the company rate filings and she personally met and discussed the rate requests with top company officials from Cigna and Humana after those companies nearly doubled their original rate increase request given to the state only two months ago.
Alexander, a long-time critic of Obamacare, said the increases prove that Obamacare is not working.
"Tennesseans cannot afford 44 to 62 percent Obamacare price increases that will force them to make difficult decisions about their daily lives and their family budgets," Alexander said in a statement Tuesday. "They should not have to pay the price for a terrible health care law and the refusal by Democrats in Washington to see what is plainly obvious - that Obamacare is failing."
Contact staff writer Dave Flessner at firstname.lastname@example.org or at 423-757-6340.