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Tennessee uses the federally run health insurance exchange – HealthCare.gov. Six insurers offer plans through the exchange for 2023 – up from three just a few years ago. There were six participating insurers in 2022 as well, but there are some changes for 2023: Bright health is exiting the individual/family market at the end of 2022, while Ascension Personalized Care/US Health and Life has joined the Tennessee exchange for 2023.
For 2022, the overall average marketplace rate increase amounted to 4.4%, before any subsidies were applied. For 2023, the five existing insurers are implementing rate changes that amount to about an 8.5% increase. But most enrollees receive premium subsidies that greatly offset the cost of their coverage. And the American Rescue Plan’s subsidy enhancements will continue to be available in 2023, thanks to the Inflation Reduction Act.
Tennessee has a federally run exchange, so enrollees use HealthCare.gov to sign up for exchange plans.
In December 2012, then-Gov. Bill Haslam announced Tennessee would not develop its own health insurance exchange, citing a lack of information from the federal government.
Prior to his 2012 announcement, Haslam had leaned toward a state-run exchange. He believed local state control was preferable and that the state could run the exchange more cost-effectively that the federal government.
However, Republican legislators opposed the exchange, Tea Party supporters staged repeated protests, and Tennessee eventually ended up with an exchange run by HHS.
For 2023 coverage, six insurers will offer exchange plans in Tennessee, including one newcomer:
Bright Health, which offered coverage in the Tennessee exchange in 2022, announced that they would exit the individual market nationwide at the end of 2022, so their plans are not available for 2023. Tennessee enrollees who have Bright coverage in 2022 will need to select a plan from another insurer during open enrollment.
There are six insurers offering coverage in Tennessee’s exchange in 2022, up from just three in 2018. Here’s a summary of how insurer participation in the state’s exchange has changed over the years.
Tennessee Insurance Commissioner, Julie Mix McPeak, expressed satisfaction that all areas of the state would have at least one insurer offering coverage in the exchange in 2018, but she reiterated how the uncertainty caused by the Trump Administration and Congress was damaging the individual health insurance market, noting that “the uncertainty about the future of the exchange, cost-sharing reduction payments, and enforcement of the individual mandate will likely increase carrier rate requests by 15 to 20 percent above what they would have otherwise filed. I share consumers’ frustrations about federal uncertainty and how that is impacting their ability to afford insurance.”
Open enrollment for individual/family health coverage in Tennessee runs from November 1 to January 15. Outside of open enrollment, a qualifying event is necessary to enroll or make changes to your coverage.
Tennessee will have seven insurers offering marketplace/exchange plans for 2023, including one new insurer (Ascension/US Health & Life). The six existing insurers proposed the following average rate changes, according to the federal rate review site:
The weighted average proposed rate change amounts to an increase of about 9%. As is always the case, however, weighted average rate increases don’t tell the whole story:
Premiums in the Tennessee exchange started out as some of the lowest in the country in 2014, but increased rapidly in the subsequent years.
As of 2022, the average full-price premium in Tennessee’s exchange was $619/month. That’s higher than the $594/month average across all 33 states that use HealthCare.gov. But 90% of Tennessee’s exchange enrollees were receiving premium subsidies that averaged $543/month. The average premium subsidy across those 33 states was about $524/month, so Tennessee’s larger premiums were offset by larger subsidies. (The subsidies are especially large in 2022, thanks to the American Rescue Plan).
Here’s a summary of how full-price rates have changed in Tennessee’s exchange over the years (keeping in mind that premium subsidies are designed to keep pace with full-price premiums, so they have grown over time as well):
2022: Overall average rate increase of 4.4%. Filing details for Tennessee’s six marketplace insurers are available in SERFF, and the Tennessee Department of Commerce and Insurance published the marketing presentations that each insurer made for 2022. According to SERFF, the rate proposals for 2022 were approved as-filed, including some increases and some decreases. The weighted average rate change amounted to an increase of 4.4% for 2022.
A record-high 273,680 people enrolled in private individual market plans through Tennessee’s exchange during the open enrollment period for 2022 coverage. Enrollment reached record highs in many states, pushing total exchange enrollment higher than it had ever been, with more than 14.5 million Americans enrolled in the exchange nationwide. This was due in large part to the American Rescue Plan‘s subsidy enhancements, which made subsidies larger and more widely available.
Here’s a look at how enrollment has changed over the years in Tennessee’s exchange:
Tennessee has a coverage gap because the state has refused to expand Medicaid under the Affordable Care Act. The federal government would pay nearly all of the cost to expand Medicaid, but the state would have to agree to allow this, and they have not done so.
As a result, Medicaid eligibility is still very strict in Tennessee, and childless adults without disabilities are ineligible for Medicaid regardless of how low their income is. Because the ACA’s premium tax credits (subsidies) aren’t available to applicants with income below the poverty level (because the law called for them to have expanded Medicaid instead), these applicants fall into what’s come to be known as a coverage gap. They are ineligible for Medicaid and also ineligible for premium tax credits to make private coverage more affordable.
There are an estimated 118,000 Tennessee residents in the coverage gap. As of 2022, there are only 11 states that still have coverage gaps; Tennessee is among them. The state could solve this problem at any time by accepting federal funding to expand Medicaid, but state lawmakers have thus-far refused to do so.
Julie Mix McPeak was the Insurance Commissioner for Tennessee from 2011 through mid-2019, and also served as the President of the National Association of Insurance Commissioners. In February 2017, Mix McPeak spoke before the Senate Committee on Health, Education, Labor, & Pensions, presenting her recommendations for health care reform. Among her proposals were:
In 2017, the U.S. Senators from Tennessee, Lamar Alexander and Bob Corker, both Republicans, introduced legislation (S.761, the Health Care Options Act of 2017) that would allow people in counties without any participating exchange insurers to use ACA subsidies for off-exchange plans. That scenario has never come to pass, but there were concerns at that point that some areas of the country, including the Knoxville, Tennessee area, might not have had any ACA-compliant plans available.
Senator Alexander also, notably, stated in early 2017 that Congress or the Trump administration should commit to funding cost-sharing reductions (CSRs) through 2019, in an effort to stabilize the individual health insurance market. CSRs lower out-of-pocket costs for low-income exchange enrollees who pick silver plans, and 57% of Tennessee exchange enrollees had plans that included CSRs in 2017.
CSR funding was ultimately eliminated by the Trump administration in October 2017, but the uncertainty (during the rate filing season of spring/summer 2017) around whether or not the funding would continue resulted in premium proposals for 2018 that were higher than they would otherwise have been. Without a federal commitment to fund CSR, Tennessee’s then-Insurance Commissioner, Julie Mix McPeak, estimated that premiums in Tennessee would be 15% to 20% higher than they would otherwise have been in 2018.
Senator Alexander joined forces with Senator Patty Murray (D, Washington) in an effort to pass bipartisan legislation aimed at stabilizing the individual insurance markets nationwide, with a proposal that included CSR funding. However, Republican leadership in the Senate opted to push forward on their efforts to repeal the ACA (via the Graham-Cassidy legislation) and pulled the plug on Alexander and Murray’s bipartisan approach in September 2017.
In the announcement about the approved rates for 2018, Mix McPeak said “I’m disappointed by yesterday’s announcement out of Washington (about Alexander and Murray’s bipartisan approach being abandoned by Senate leadership). While Tennessee is supportive of long-term strategies such as the Graham-Cassidy Amendment introduced in Congress, I appreciate the diligent efforts of Senators Lamar Alexander and Patty Murray to find common ground in providing more immediate stabilization in the marketplace. Instead, it appears more likely that Tennesseans must prepare themselves for a round of actuarially justified rates for 2018 that are far higher than could be necessary as a result of uncertainty in Washington.“
Although there was considerable upheaval and uncertainty in the insurance market in 2017 due to uncertainty about federal CSR funding, it’s important to note that most consumers ultimately ended up being better off after the federal government stopped funding CSR.
This is because most states and insurers opted to add the cost of CSR to silver-plan premiums, resulting in larger premium subsidies (premium subsidies are based on the cost of the second-lowest-cost silver plan; if it gets more expensive, subsidies grow as well). These larger premium subsidies are utilized by the vast majority of marketplace enrollees; 90% of Tennessee marketplace enrollees were eligible for premium subsidies in 2022, and those subsidies are larger than they would have been if federal CSR funding had continued.
As of 2017, there were about 73,000 people in Tennessee who were covered under Farm Bureau plans that aren’t ACA-compliant. About 50,000 of those were grandfathered plans, but the rest are medically underwritten plans that are still available for purchase. Medical underwriting means that the insurer uses the applicant’s medical history to determine whether to offer coverage and at what price. That practice is no longer allowed under the ACA – on or off-exchange – for any plans that are considered individual major medical health insurance.
But in Tennessee, the state doesn’t consider Farm Bureau to be a licensed health insurer. That’s been the case for more than two decades – Farm Bureau plans operate outside of the regulatory structure imposed by the state (and the ACA) on health insurers. As a result, Farm Bureau’s “traditional” plans, which are less expensive than regular health insurance but only available to healthy people, are being sold to healthy people in Tennessee, effectively removing them from the ACA-compliant risk pool.
People who enroll in Farm Bureau’s “traditional” plans are not in compliance with the ACA’s individual mandate, so from 2014 through 2018, they were assessed a penalty for being uninsured unless they were exempt from the individual mandate (this is the same as the rule that required people with short-term health insurance to pay the individual mandate penalty; just like the Tennessee Farm Bureau “traditional” plans, short-term health insurance is not regulated by the ACA). But the individual mandate penalty no longer applies in 2019 and future years, so there is no longer a penalty for relying on a Farm Bureau plan.
Farm Bureau’s plans are not as robust as regular health insurance, and aren’t helpful for people with pre-existing conditions. But the fact that Tennessee has allowed them to continue to be sold outside the scope of the state’s insurance regulations could be part of the reason the state has a risk pool in the ACA-compliant market that’s sicker than most states.
Several other states have decided to follow Tennessee’s lead, enacting legislation that allows Farm Bureau plans to be sold without the regulatory oversight that applies to health insurance plans (ie, the Farm Bureau plans are not considered insurance, so they don’t have to comply with insurance regulations).
During open enrollment for 2016 coverage, 166,425 exchange enrollees (62 percent of the total) signed up with Blue Cross Blue Shield of Tennessee for 2016. This was an increase of 16 percent over BCBSTN’s exchange enrollment in 2015, despite the fact that the carrier raised its premiums by an average of 36 percent for 2016. The remaining 38 percent of the exchange enrollees selected plans from Humana, Cigna, and United Healthcare.
Blue Cross Blue Shield of Tennessee had the lowest priced plans in the Tennessee exchange — and the nation — in 2014. Although BCBSTN’s average rate increase was 19 percent for 2015 and 36 percent for 2016 (and their competitors had significantly smaller rate hikes), they still had among the lowest premiums in many areas of Tennessee in 2016. In the Memphis area, a search on Healthcare.gov indicated that the five least expensive bronze plans and the four least expensive silver plans were all offered by BCBSTN in 2016. Their lower premiums and brand-name recognition likely played a role in their outsized market share. But because enrollees have been sicker than expected, the carrier lost $300 million during 2014 and 2015, and projected total losses to reach $500 million by the end of 2016; losses of that magnitude are not sustainable.
In order to continue working towards long-term sustainability in the ACA-compliant individual market, BCBSTN had indicated earlier in 2016 that they were expecting to propose significant rate increases for 2017, although the expectation in early 2016 was that the proposed rate increases for 2017 would be comparable to the 36 percent average increase that the carrier implemented for 2016. Ultimately, BCBSTN requested a much higher average increase – 62 percent – for 2017, and regulators approved it in order to keep the insurer in the marketplace.
Joe Sullivan of The Knoxville Mercury tracked down some 2016 data that adds perspective to the rate changes for 2017, particularly in the Memphis and Nashville metropolitan areas, where Humana, Cigna, and BCBS all offered plans in the exchange in 2016:
Tennessee has allowed transitional (grandmothered) plans to remain in force, but the Tennessee Department of Commerce and Insurance confirmed in 2017 that they no longer had any grandmothered plans remaining in the individual market, as insurers had opted to end those plans and replace them with ACA-compliant plans instead.
State Exchange Profile: Tennessee
The Henry J. Kaiser Family Foundation overview of Tennessee’s progress toward creating a state health insurance exchange.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
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