Health insurers to cut individual rates in Tennessee for first time

Obamacare plans to get cheaper after four years of rising rates

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Where insurers are offering individual plans* BlueCross will be in 81 counties and all markets except Memphis and Nashville area* Ambetter by Celtic is a new entrant to the Tennessee market next year with plans in Memphis and Chattanooga* Cigna is expanding into Knoxville and continuing plans in Nashville, Memphis and Tri-Cities* Oscar Health is expanding into Memphis and keeping its coverage in Nashville* Bright Health is a new entrant next year with coverage in the Knoxville, Memphis and Nashville marketsSource: Tennessee Department of Commerce and Insurance

After four years of consecutive double-digit annual rate hikes, Tennessee's biggest health insurers are cutting the premiums they charge for individual plans under the health care exchange market of the Affordable Care Act market for the first time.

In filings with state regulators Wednesday, BlueCross BlueShield of Tennessee said it plans to reduce its average rate next year in the individual market by 10.9 percent next year, while Cigna is offering to reduce its premiums by an average 4.8 percent in 2019 compared with current rates.

The rate cut proposals, which must still be approved by state regulators, come as two new insurers plan to enter the Tennessee market next year and others are expanding their coverage within the Volunteer State.

"The additional entries into Tennessee next year and these initial rate filings are pointing to a period a stability in the market," said Dr. Melina Buntin, chair of the Department of Health Policy at Vanderbilt University in Nashville. "The market is maturing and insurers are better able to anticipate the type and costs of those who are signing up for these plans, plus there is more competition coming into the market so if you are an existing player you have to keep that in mind when setting your rates."

Although President Trump has denounced the so-called Obamacare program and has cut some risk payments to insurers and consumer assistance to sign up participants, the market in Tennessee for Obamacare plans appears to be improving.

Over the weekend, the Centers for Medicare and Medicaid Services froze more than $10 billion of risk adjustment payments to insurers in the Obamacare program and on Tuesday CMS said it would cut assistance for navigator programs that aid people in signing up for individual health plans.

But health insurers like BlueCross that nearly tripled their initial Obamacare premium rates over the past five years of Obamacare said the market has stabilized enough to be able to reduce rates next year.

"We're pleased to be able to propose lower rates for 2019 and our rate reduction would have been larger but we had to account for the added uncertainty due to indefinite suspension of CMS payments for risk adjustment transfers," BlueCross spokeswoman Mary Danielson said Wednesday night.

Cigna spokeswoman Holly Fussell said the proposed rates for 2019 reflect more favorable experience and cost trends after higher-than-projected costs during some of the first years of Obamacare.

"While every population is different, in Tennessee we designed unique local solutions that allowed Cigna to reduce medical cost trends that create savings for our customers while still providing the best combination of access to quality care and overall value," she said. "The long-term success of the individual health insurance market starts with rational, competitive pricing, as reflected in our recent filing."

BlueCross in Tennessee initially offered some of the lowest individual insurance rates in the country when the health care exchanges began five years ago. But after suffering more than $400 million in losses in the first three years of Obamacare, BlueCross continued to raise its premiums for individual plans, on average, by 19 percent in 2015, 36.3 percent more in 2016, 62 percent more in 2017 and another 21 percent this year.

Danielson said some of the recent hikes were due to uncertainty about the political and regulatory environment surrounding Obamacare and whether the program would survive under a president and Republican-controlled Congress that had threatened to end the program.

But BlueCross earned a record $427 million last year from all of its plans for over 3.5 million Tennesseans, including a $113 million profit earned for the first time in the individual market revamped by the Affordable Care Act.

BlueCross expects the individual market to remain profitable in 2018, although the amount of such profits will be impacted by whether the Trump administration continues to freeze the risk adjustment payments designed to aid insurers like BlueCross that historically have taken a bigger share of higher risk participants in their plans.

"Our members were significantly less healthy than we expected and we had fewer people enroll (in the individual health exchange market begun in 2014)," Danielson said. "That led to an imbalance and loss that required us to adjust our rates upward."

Tennessee, which initially had some of the lowest Obamacare rates, has had some of the biggest increases among the states and had a number of insurers, including Humana, United Healthcare and the nonprofit cooperative formed for Obamacare, exit the market.

BlueCross is currently the only insurer offering individual plans under the health exchange market in Chattanooga, but next year a new player - Ambetter by Celtic, a Centene Corp., - plans to offer Obamacare plans in both Chattanooga and Memphis.

Bright Health also is entering the Tennessee market next year with policies in the Knoxville, Memphis, and Nashville areas.

Oscar Health Insurance, a subsidiary of Mulberry Health Inc., expanded into Tennessee last year in the Nashville market and is adding the Memphis area to its coverage in 2019.

But unlike BlueCross and Cigna, Oscar is requesting an average 10.84 percent premium increase for 2019.

The Tennessee Department of Commerce and Insurance is due to approve the carriers and their rates for different areas of Tennessee by Sept. 25.

Kevin Walters, a spokesman for the insurance department, said last month Tennessee had 199,144 covered lives on the health exchange programs under the Affordable Care Act.

Open enrollment for consumers to sign up for one of the individual plans under the health care marketplace for 2019 will be from Nov. 1 to Dec. 15, Walters said.

Contact Dave Flessner at or at 757-6340

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