VOL. 131 | NO. 174 | Wednesday, August 31, 2016
Tennessee Exchange Insurance Rates Soar Higher
By MICHAEL WADDELL
People with health care insurance through the Tennessee Health Insurance Marketplace can expect significant rate hikes starting next year. The Tennessee Department of Insurance recently approved and released final rates for Individual ACA health policies for the calendar year 2017, and the increases were higher than anticipated.
Individual plans from BlueCross BlueShield of TN, the only provider that offers coverage on the exchange throughout Tennessee, will spike a whopping 62 percent. Cigna’s plans will increase 46.5 percent, Humana’s will jump 44 percent, and Aetna’s will rise 14 percent. UnitedHealthcare will not sell on the marketplace in 2017.
The changes, which go into effect on Jan. 1, are due in part to the fact that insurance companies are losing money on individual health care policies as a result of underestimating claims. The proposed increases apply to individual policies only, not to group policies.
“Everybody knew that all of the insurance companies were losing money and that there were going to be substantial increases, but I don’t think anyone would ‘ve projected this type (of large jumps),” said certified health care reform specialist Tim Finnell, owner of Group Benefits LLC.
BlueCross BlueShield of TN estimates 2016 losses of $100 million on individual policies through the exchange and losses of nearly $500 million on individual policies since the exchange first opened for enrollment on Oct. 1, 2013 for coverage that started in January 2014.
Julie Mix McPeak, commissioner of the Tennessee Department of Commerce and Insurance, classified the current state of the exchange in Tennessee as “near collapse.”
“I think it was a really tough decision for the commissioner,” said Justin Owen, CEO of the Beacon Center of Tennessee. “On the one hand, you don’t want to allow the providers to just continue jacking up rates on consumers, but if you don’t allow that and don’t recognize the harsh realities they are facing, then they are going to back out of the exchanges altogether.”
Asked about the exchange during an August visit to Memphis, Tennessee Gov. Bill Haslam said the state’s approach will be to review the rate hike requests on a case-by-case basis.
“What we have to do is to make certain they are justified,” he said. “But we also have to balance that with making certain that there is at least coverage and that there is accessibility for people. We’re trying to play that role of making certain that insurance companies can make enough to stay on the exchange. I think we’ve done that for now.”
Owen thinks it potentially spells disaster for Obamacare in general, and it will force Congress to come back and address the issue. The situation is not unique to Tennessee, as exchanges are struggling around the country.
“The people who bought insurance on the exchange are using it at a much higher rate than anticipated – having surgeries, taking drugs, getting tests,” Finnell said. “And they did not get as many younger, healthier people signing up as they expected. There are still a lot of people in younger-age brackets with (tax) penalties so low that they are doing without insurance.”
People who are priced out of the exchange next year will have three options: join a group insurance policy, consider reducing benefits or changing plans at open enrollment, or drop their coverage on the exchange and look elsewhere.
“People not getting subsidies from the government are going to be hit hardest by this premium increase,” Finnell said. “The typical profile is someone who works at a company with less than 50 employees that does not offer group coverage, so he or she has an individual policy.”
That includes early retirees and dependents of people in situations where individual insurance is cheaper than getting onto a group plan, Finnell said.
Owen sees the cycle continuing and that it will get more and more expensive to the point where people can’t afford insurance regardless of how much the plans are subsidized.
“Unfortunately, Obamacare and the issues we are seeing now only revolve around insurance – trying to get more people on insurance,” he said. “Any time that is your end goal, you are ultimately forcing other people to pay a lot more than they ever would have.”
The Beacon Center of Tennessee, a nonprofit that provides nonpartisan research and free-market solutions to public policy issues in the state, is pushing for health care reforms that expand access to quality care. One option is direct primary care, which was approved as part of the Health Empowerment Act that the Beacon helped to get passed earlier this year.
“You can now, in Tennessee, go enter into an agreement with your doctor for health care services, essentially forgoing insurance altogether at least for those routine visits,” Owen said. “It’s like a gym membership for your health care.”
He said people could then buy a high-deductible, low monthly premium insurance plan in case of more serious injury or illness.
“The notion that people should be using insurance for bloody noses or headaches or other little things … is obviously not working out, and here we are facing a very dire situation in our state,” Owen said.
Open enrollment dates for 2017 health care plans on the Tennessee Health Insurance Marketplace run from Nov. 1 through Jan. 31 of next year.
Daily News Senior Reporter Bill Dries contributed to this report.