Chattanooga-based BlueCross BlueShield of Tennessee to expand Obamacare coverage

Other state health insurers cut rates as marketplace stabilizes

The Chattanooga headquarters of BlueCross BlueShield of Tennessee is shown in an aerial view.

Broader coverage, lower rates from most Obamacare plans

Five major insurers submitted applications to participate in the individual marketplace next year in Tennessee under the Affordable Care Act and most are either expanding coverage or cutting rates.› BlueCross BlueShield of Tennessee will expand coverage to Memphis and Nashville and seek an average rate increase of 1.4%.› Cigna will expand into Chattanooga and Jackson and and is proposing a premium decrease of 5.7%.› Celtic/Ambetter Insurance will expand into Nashville and Knoxville and is seeking an average premium reduction of 1.6%.› Bright Health continues in Knoxville, Memphis and Nashville areas and is asking for an average increase in rates of 2.93%.› Oscar Health continues in Nashville and Memphis with a proposed rate cut of 8.3%.Source: Tennessee Department of Commerce and Insurance rate filings for 2020 individual plans

Tennessee's biggest health insurers are expanding their individual coverage plans across the state and holding down or even cutting premiums as the insurance market under the Affordable Care Act stabilizes after years of insurance company losses, cutbacks and rate hikes.

The Chattanooga-based BlueCross BlueShield of Tennessee, the state's biggest health insurer, told state regulators in its filings for 2020 rates that it plans to re-enter the ObamaCare marketplace in and around Nashville and Memphis next year and will raise its rates for individual plans next year by only 1.4%. The modest rate increase next year follows a 14.8% cut in premium charges in 2019 by BlueCross.

Cigna Healthcare also plans to expand its coverage next year into the Chattanooga and Jackson markets for the first time and will cut its average premium for individual plans on the Obamacare exchange by 5.7% in 2020, according to filings with state regulators. Oscar Health, which entered the Tennessee market last year with plans in Nashville and Memphis, is proposing an even bigger 8.3% cut in rates in 2020.

"We are thrilled with the news as rates and competition are coming in favorable across the country," said Bobby Huffaker, CEO of American Health Exchange, an online broker for ObamaCare plans. "The Affordable Care Act or Obamacare and more specifically the individual subsidized and unsubsidized health insurance market has carved it's place in the American healthcare system as can be seen by the rate filings and increase competition among private health insurance companies."

The proposed rate changes show most carriers are pricing their plans relatively close to their rivals and are being more aggressive in their pricing with greater competition and more certainty about the future of Obamacare. Although President Trump once vowed to dismantle Obamacare and the constitutionality of the plan is being challenged in court, the Affordable Care Act has survived more than five years of attacks and is proving to be more popular, especially since the individual insurance mandate was removed by the last Congress.

"This range of around 11% (between the highest and lowest priced plans) is the tightest we have seen," Tennessee Insurance Commissioner Carter Lawrence said in reviewing the company proposals for individual plans in 2020. "This tighter range and the proposed filings showing carriers continuing to grow their business into new markets suggests a stabilizing marketplace."

U.S. Sen. Lamar Alexander, chairman of the Senate committee that oversees the Affordable Care Act, said he welcomed the rate cuts but said costs will be even lower if a bi-partisan measure his committee endorsed to lower health care costs is adopted by Congress.

"This news is a welcome step for Tennesseans who have faced an over 176 percent increase in health insurance premiums since Obamacare took effect, but the news could have been even better," Alexander said. "Since Democrats in Congress have elevated Obamacare to the 67th book of the Bible and have blocked even minor changes to the law that could have lowered rates by up to 40 percent, it is up to the states and the administration to continue to help lower premiums."

The Tennessee BlueCross plan entered the Obamacare individual market six years ago with aggressive pricing, but the company more than doubled its rates after the federal government changed its risk adjustment payments to insurers, eliminated the mandate for individuals to buy health insurance and implemented other changes that proved costly for BlueCross. BlueCross also trimmed its coverage areas in Tennessee two years ago, exiting some of the state's biggest markets with its individual plans, to put the individual market back in the black for the Blues plans.

Kelly Paulk, vice president of product strategy and individual markets at BlueCross, said after five years the company "has found the right balance" for consumers and coverage costs.

BlueCross initially lost more than $400 million in the first three years of the individual exchange market under Obamacare before the company eventually doubled the premiums initially charged to better reflect the costs of its coverage.

In 2019, BlueCross cut its average individual rates by 14.8% - the biggest drop in program history - after some of the worst anticipated changes in Obamacare failed to materialize and the company achieved a major turnaround in the profitability of the individual market.

"When we priced our plans for 2018, we factored in a number of potential risks that didn't end up playing out as they could have," Paulk said. "We made higher margins than intended, which then led us to lower rates for 2019 by an average of 14.8%. Today we've found the right balance - we can cover our members' medical needs and earn a sustainable margin."

BlueCross said it plans to add extra maternity support, enhanced telehealth benefits and a member rewards program in 2020.

Cigna spokeswoman Holly Fussell said the market appears to be stabilizing so the insurer is broadening its coverage and is proposing to reduce its rates next year for the second consecutive year.

"Our rate filings are based on our customers' historical claims experience, expected medical costs trends, product changes, and overall market performance," she said. "Cigna reduced rates for 2019 on-exchange plans in Tennessee. We're working closely with regulators to ensure that our 2020 plans and rates offer local residents a competitive, sustainable combination of quality and affordability with a focus on whole person health."

The Tennessee Department of Commerce and Insurance is reviewing the proposals for a final decision by Aug. 21. Open enrollment on the Federally Facilitated Marketplace for 2020 starts Nov. 1 and will last through Dec. 15.

Contact Dave Flessner at or at 757-6340.