BlueCross eliminates Obamacare coverage in Tennessee's biggest markets

Health insurer drops plans in Nashville, Memphis, Knoxville but keeps coverage in Chattanooga

The BlueCross BlueShield building stays well lit at night in Chattanooga, Tenn., on Monday, November 3, 2014.

Tennessee's biggest health insurer is dropping its participation in the Affordable Care Act health exchange next year in the state's three biggest markets, cutting coverage of the 214,000 persons now enrolled in one of the so-called ObamaCare exchange plans by more than half.

BlueCross BlueShield of Tennessee announced today that it will be withdrawing its ACA exchange plans in 2017 in the Memphis, Nashville and Knoxville markets to help limit its exposure to what has cost the Chattanooga-based health insurer nearly $500 million in losses in the past three years.

BlueCross will continue to offer individual health plans under ObamaCare in five of the Tennessee's eight regions, including the Chattanooga area, and will maintain coverage in the 57 counties of the state where BlueCross is the only provider of ACA individual plans.

"This is a difficult, but necessary decision," BlueCross Senior Vice President Roy Vaughn said today. "We've intentionally made our decision about the markets where we ending coverage to ensure that there will still be other carriers in those markets. But even with the increases that were approved for us next year, we felt there was too much risk...of the federal government changing the rules."

BlueCross estimates it is owed about $300 million from the federal government for risk adjustments and other provisions of the Affordable Care Act that were in the original law but which were later changed by administrators. Although several health insurers are suing the federal government for such payments, BlueCross in Tennessee has yet to file a lawsuit over what it claims it is due under the law.

BlueCross decided to scale back where it offers plans despite a record 62 percent increase in premium rates planned for is individual plans in 2017. The Tennessee Department of Commerce and Insurance last month granted the requested rate increase to help encourage BlueCross to continue offering individual plans. The state granted a 46 percent rate increase for Cigna and a 44 percent increase to Humana.

Vaughn said the cutbacks is where ACA individual plans will be offered will likely require about 115,000 individuals to pick from new health insurers next year.

ObamaCare plans comprise about 7 percent of BlueCross plans and the changes will not affect BlueCross's statewide coverage offered for employer, Tenncare and Medicare Advantage plans.

U.S. Sen. Lamar Alexander, chairman of the Senate health committee and a critic of Obamacare, said the BlueCross decision will force thousands of Tennesseans "to scramble to find another policy," next year.

"This is more evidence that Obamacare is falling apart," Alexander said in a statement today. "Short term, we need to give families the opportunity to use their Obamacare subsidies to buy a policy for 2017 outside of the exchange. Longer term, regardless of who the new president is, we need to replace Obamacare with insurance choices that allow Tennesseans to select low-cost insurance that fits their budget and their health care needs."

Read more in tomorrow's Times Free Press