More than two million people nationwide, including about 234,000 in Tennessee, are enrolled in health insurance through the individual marketplace.
After Republicans failed to pass a bill to repeal Obamacare, which would have thrown some 23 million Americans off health insurance, President Donald Trump threatened to bring down the marketplace by eliminating payments to insurers to cover some seven million lower-income Americans.
Without the payments, insurers will be forced to make up the difference.
That uncertainty has thrown a wrench into the individual market as Tennessee gears up to nail down final premium rates with health insurers in September and open up its online exchange for enrollment on Nov. 1.
Insurance companies are hesitant to finalize their coverage plans until policy is stabilized, and it’s causing many to raise premiums sharply for 2018. Others have simply left the marketplace.
BlueCross BlueShield of Tennessee, the state’s largest insurer with 3.4 million members, did not sell health plans to individuals in the Knoxville, Nashville and Memphis markets last year. The insurer plans to re-enter the Knoxville market for 2018 coverage in response to Humana leaving Tennessee. That would have left 40,000 Knoxville area residents without an insurance option next year.
But that could change in September. The insurer has reserved the right to pull out if it feels the marketplace is too unstable.
“While we remain willing to serve the Knoxville region in 2018, our participation remains contingent on the stability of the individual market and our risk exposure,” says Alison Counts Sexter, BCBS Tennessee spokeswoman.
“We’ll continue to closely monitor legal and regulatory changes at the federal and state level before we finalize our plans in late September.”
The insurer has no plans to re-enter Nashville or Memphis, saying those markets have adequate coverage without BCBS.
Cigna plans to continue offering plans in Memphis and Nashville, as well as the Tri-Cities area. Cigna premiums will average 42 percent across the state, which are based on the assumption that Trump will cut insurer subsidies.
“At this point, no one knows whether the cost-sharing subsidies will be extended for 2018,” says Paula Wade, national health care analyst for Decision Resources Group, a Nashville-based consulting firm.
“Trump has threatened to eliminate them, but GOP leaders – even Lamar Alexander – are now seeing that they can’t afford to let that happen. Even if the subsidies are extended, the ACA individual plans will be fewer and more expensive.”
Average premium increases next year are likely to total around 29 percent nationally, and every county in the U.S. has one insurer serving the market. But about 30 percent of the nation’s population lives in an area that will have only one insurance company offering health plans.
BlueCross BlueShield of Tennessee says after losing more than $400 million on individual policies over the past three years, its financial performance is improving in 2017 due to fewer claims and “a more sustainable rate structure” – which included a 60 percent increase in premiums for 2017.
The insurer had a relatively good year in 2016, with after-tax net income of $118 million. It paid out 87 cents for medical care – more than the 85 cents required by the Affordable Care Act – for every dollar it took in from premiums and fees.
BCBSTN also had $216 million more than the $1.7 billion the state requires it to hold in reserves to cover member claims. Those reserves equal roughly 65 days of claims and other business expenses that could be paid out if the insurer suddenly stopped taking in any more money. (For more information on the BCBSTN 2016 Financial Performance Overview, visit: www.bcbstnews.com/mediaresources/bluecross-by-the-numbers/)
But for 2018, BCBS is “pricing in” the potential negative effects of federal legislative or regulatory changes, including the elimination of cost-sharing-reduction subsidies, the removal of the individual mandate and the collection of the health insurer tax.
BCBS has asked the state insurance commissioner to approve an average 21 percent increase in premiums.
Wade says Tennessee’s rural areas, which are already underserved by insurers, will be hurt worst by a sharp rise in premiums.
“If individual rates rise as expected, and the Trump administration cuts back on ACA outreach and assistance services, it’s more and more likely that the only people buying into the individual market will be the very sickest ones – and the market will collapse,” Wade points out.
“That’s true nationwide. But in a state like Tennessee that didn’t expand Medicaid, it only adds to the problems faced by rural hospitals, whose areas already have a much higher rate of uninsurance.
“Rural hospitals are some of the largest and best employers in their communities, and when they close, it can really wound that area’s economy and health care access. They are especially vulnerable to the disruptions coming in the individual market for 2018.”