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FILE - In this Oct. 6, 2015 file photo, the HealthCare.gov website, where people can buy health insurance, is displayed on a laptop screen in Washington. A new report is confirming that fewer people than expected are taking advantage of subsidies to purchase health insurance under the Affordable Care Act. The Congressional Budget Office study, based on updated enrollment figures up through last month, says that 11 million people are likely to purchase subsidized policies under the health care law, down about 4 million from estimates issued early last year. (AP Photo/Andrew Harnik, File)

Going up

These are the rate increases requested by health insurance companies that operate in Tennessee.

62 percent — BlueCross BlueShield of Tennessee

46.3 percent — Cigna

44.3 percent — Humana

Source: Tennessee Department of Commerce and Insurance

some text Julie Mix McPeak
some text Roy Vaughn

UPDATE: Tennessee has approved major rate hikes from the state's insurers.

Health insurance premiums that rose at double-digit rates in Tennessee during the first two years of President Barack Obama's health care law are likely to jump far more in 2017 as the state's three remaining insurers still in the program respond to higher-than-predicted costs and fewer-than-expected healthy enrollees.

The Tennessee Department of Commerce and Insurance will announce today how much of a premium rate increase insurers will be allowed to charge for health exchange plans next year under the Affordable Care Act.

After losing $311 million on individual plans in the Obamacare exchanges during the first two years — and projections of another $100 million loss this year — the state's largest health insurer is seeking a 62 percent increase in premiums for 2017. BlueCross BlueShield of Tennessee, which captured the biggest share of the new market in Tennessee even after a 36 percent rate hike this year and a 19 percent rate increase in the previous year, is proposing further premium increases next year, anywhere from 36.3 percent to 90.5 percent on differing plans.

"We know that when we ask for these rate increases it has real impact on people's wallets and their family budgets and we don't like to be in this position," said Ray Vaughn, senior vice president and chief communications officer for BlueCross in Tennessee. "But this is truly a new frontier, when you eliminate the high-risk pool and eliminate pre-existing conditions to put everyone into a single risk pool without enough young, healthy people in the pool. It's a market we had no history or experience to go by."

Marketplace enrollees proved to be sicker than expected, and fewer of the young and healthy persons Affordable Care Act backers thought would sign up for the mandatory insurance coverage ended up buying policies. A federal study found that Tennessee also has the third highest risk of diseases and health care needs of any state in the country.

Other insurers have had similar problems with Obamacare exchange programs, leading the biggest health insurers to either cut back or withdraw coverage in many states. The Knoxville-based Community Health Alliance, Tennessee's public cooperative that received federal loans to offer coverage, failed to survive more than three years. United Healthcare, the nation's biggest health insurer, withdrew from the Tennessee market after only one year.

The two other remaining health insurers still offering exchange plans in Tennessee — Cigna and Humana — both asked the state this month to nearly double their original rate increases submitted only two months ago after their financial losses proved worse than originally projected. Cigna raised its original request for a 23 percent increase in premiums next year to a 44.3 percent hike in 2017, while Humana raised its original 29 percent rate increase request up to a 44.3 percent raise in premium charges.

Tennessee Insurance Commissioner Julie Mix McPeak said she agreed to accept the revised higher rate filings in order to prevent the companies from withdrawing from the Tennessee market and giving BlueCross an uncontested monopoly.

BlueCross already is the only exchange market in some rural markets of the state. With only three plans in Tennessee, the Volunteer State has less than a third of the average of 10 plans in most states.

"Tennessee has consistently placed among the highest states in terms of risk scores — meaning that insurance claims costs per enrollee have been higher here than across the nation," said Kevin Walters, communications director for the Tennessee Department of Commerce and Insurance.

The average age of those signing up for the Obamacare exchanges is over 45 years old, according to state figures. Vaughn said 5 percent of the population accounted for 73 percent of the claims, and many of those did not previously have insurance or were in a high-risk pool.

"It's unlike any market we've ever covered," he said.

The BlueCross- proposed rate increase is one of the biggest anywhere in the country for next year. But the Chattanooga-based insurer debuted its exchange plans with some of the lowest rates in the country.

BlueCross has offset its Obamacare losses with profits from other insurance lines, but Vaughn said that is not sustainable, and higher rates are needed to put the exchange plans on solid financial footing.

The increase in premiums is especially difficult for those with individual health insurance plans who don't qualify for federal subsidies.

"We have higher deductibles, worse insurance and higher costs than we did before the passage of the Affordable Care Act, which I refer to as the 'unaffordable care act,'" said Cindy Huth, an independent consultant. "I don't blame the insurance companies, because they have to cover their costs. I just think the law was designed in a way this was bound to happen."

Those with individual health plans were lumped together with those signing up with federal subsidies for the first time, and the latter group tended to need more health care services and raised the costs for everyone in the pool.

Laura Brock, another individual BlueCross subscriber hit with higher rates, said BlueCross "took a gamble and the individual policyholders are paying for it, and have been paying for it for three years."

"Policy holders cannot be held accountable any longer because BlueCross BlueShield underestimated how much care for this population would cost," she said.

But Obama administration officials insist the Affordable Care Act has still helped nearly 20 million more Americans get health insurance, including many with pre-existing conditions who couldn't get coverage in the past, even though they needed it the most. While rates are going up, 85 percent of those in the health care exchanges qualify for some level of federal subsidies.

Marjorie Connolly, press secretary for the Department of Human Services, said "consumers in Tennessee will continue to have affordable coverage options" even after the rate increases in 2017.

"Last year, the average monthly premium for people with Marketplace coverage getting tax credits increased just $2, from $102 to $104 per month, despite headlines suggesting double-digit increases," she said. "People in Tennessee understand how the Marketplace works, and they know that they can shop around and find coverage that fits their needs and budget."

In 2016, more than 43 percent of those on Obamacare exchanges switched plans to save money. Eighty-five percent of Tennesseans qualify to receive tax credits and can buy a plan for less than $75 per month, Connolly said.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.

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