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Tennessee health insurance exchange / marketplace

United exiting individual market; BCBS could see steep rate hikes again in 2017

  • By
  • contributor
  • April 26, 2016

UnitedHealthcare exiting individual market

At the end of 2016, UnitedHealthcare will exit the individual market in Tennessee. The Department of Commerce and Insurance confirmed that the exit applies to both the exchange (UnitedHealthcare Insurance Company) and off-exchange (UnitedHealthcare Life Insurance Company).

The state reported that 40,879 people will need to secure new coverage for 2017 as a result of United’s exit. They will have an opportunity to pick a new plan once open enrollment begins on November 1.

According to Kaiser Family Foundation’s analysis, UnitedHeathcare offers at least one of the two lowest-priced silver plans in the exchange in 73 of Tennessee’s 95 counties. If United had not participated in the exchange in 2016, the average benchmark (second-lowest-cost silver) plan would have been up to $25/month more expensive (pre-subsidy) for a 40 year-old in 43 of those counties, and between $25 and $100/month more expensive in the other 30. The vast majority – 85 percent – of Tennessee exchange enrollees qualify for premium subsidies, which will be higher in 2017 if the benchmark plan rates are higher. But people who aren’t eligible for subsidies must bear the brunt of rate increases on their own.

The KFF analysis also indicates that United’s exit – assuming no new carriers enter the exchange – will result in 57 counties going from two exchange carriers to one (BCBSTN) in 2017, and another 24 counties going from three exchange carriers to two. The Memphis and Nashville metro areas would continue to have all three remaining carriers (Cigna, Humana, and BCBSTN), but United and BCBSTN are currently the only two carriers in the exchange that offer coverage state-wide; United’s exit leaves BCBS as the only state-wide carrier.

Nearly 269k enrolled for 2016

During the 2016 open enrollment period, 268,867 people enrolled in private plans through the exchange in Tennessee. That’s about 16 percent more than the total who enrolled during the 2015 open enrollment period (231,440 people).

The increase in enrollment happened despite the fact that HHS began accounting for attrition in real-time during the 2016 open enrollment period, subtracting enrollments for people who don’t pay their initial premiums on time. For 2014 and 2015, that process didn’t happen until after open enrollment had ended.

48 percent of the Tennessee residents who enrolled for 2016 were new to the exchange, and 85 percent are receiving premium subsidies to offset the cost of their coverage. Their average pre-subsidy premium is $400/month (right in line with the $396/month average across all 38 states), while their average after-subsidy premium is $104/month (again, very similar to the $106/month average for states).

Open enrollment ended on January 31. Open enrollment for 2017 coverage will begin on November 1, for coverage effective January 2017. Between now and November, you can enroll in a plan (on or off-exchange) only if you experience a qualifying event (Native Americans can enroll year-round without a qualifying event, as can anyone eligible for Medicaid or CHIP).

Steep rate hikes for BCBS in 2017?

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 have among the lowest premiums in many areas of Tennessee. But because enrollees have been sicker than expected, the carrier lost $300 million during 2014 and 2015; losses of that magnitude are not sustainable.

In order to continue working towards long-term sustainability in the ACA-compliant individual market, BCBSTN is expecting to propose a rate increase somewhere in the region of 30 percent for 2017. It’s unclear at this point whether the proposed rates will be approved, or what rate proposals are likely to come in from the other three carriers in the Tennessee exchange for 2017.

Joe Sullivan of The Knoxville Mercury has tracked down some data that adds perspective to the rate changes for 2017, particularly in the Memphis and Nashville metropolitan areas, where Humana, Cigna, and BCBS all offer plans in the exchange:

  • BCBS has two networks, and offers 10 silver PPO plans in Nashville and in Memphis. The plans include out-of-network coverage.
  • Humana has one silver PPO plan in Nashville and in Memphis.
  • Cigna has three silver EPO plans in Nashville (no out-of-network coverage) and three silver PPO plans in Memphis.
  • In Memphis, all three carriers offer silver PPO plans, and BCBS has the lowest prices.
  • In Nashville, Cigna’s silver prices are lower than BCBS, but the Cigna plans are EPOs, without coverage for out-of-network care.

2016 rates and carriers

Tennessee had among the highest rate average rate increases in the country for 2015, yet still ended up with among the lowest overall rates (see below). And Tennessee once again made headlines with rate filings for 2016.

Of the five carriers that offered plans in the Tennessee exchange in 2015, four filed proposed rates for 2016. The fifth carrier, Assurant, announced they would exit the health insurance market nationwide, and are no longer offering plans.

Then, just two weeks before the start of open enrollment for 2016 coveragevan, regulators in Tennessee announced that Community Health Alliance would cease operations by the end of 2015, and their plans would not be for sale during open enrollment (more details below).

But UnitedHealthcare joined the Tennessee exchange for 2016, so there are four carriers from which to choose (United’s tenure on the exchange will be just one year, as they’re exiting the individual market in Tennessee at the end of 2016). Rates were finalized by the Tennessee Department of Commerce and Insurance in late August:

  • Blue Cross Blue Shield of Tennessee: 36.3 percent average rate increase. BCBS is the dominant carrier in the state, with 72 percent of the individual market share in 2014, and 70 percent in 2015. Their proposed 36.3 percent average rate increase was approved as requested. They have 62 percent of the exchange enrollees in 2016.
  • Humana: 5.8 percent average rate increase.  Initially, Humana requested a 15.8 percent rate increase, and state regulators approved it. But Humana subsequently decided to stop offering their platinum plans, resulting in an average rate increase of just 5.8 percent for their remaining plans.
  • Cigna: 0.4 percent average rate increase.  State regulators approved Cigna’s proposed 0.4 percent average rate hike.
  • UnitedHealthcare: Monthly premiums range from about $94 to $1,123; 2016 was UHC’s first  – and only – year offering plans in the exchange, so a rate increase was not applicable.

In terms of market share in the exchange, BCBS of Tennessee had 164,896 enrollees in 2015, while Community Health Alliance had 35,761 members in May 2015, but that had dropped to around 27,000 by October. The other 30,783 exchange enrollees were spread among the three remaining carriers.

The exit of Community Health Alliance from the marketplace actually served to reduce the weighted average rate increase, since CHA had the highest rate increases of any of the carriers (44.7 percent). But all of CHA’s enrollees needed to switch to a plan offered by one of the other carriers in order to continue to have coverage in 2016.

The rate changes described above were for pre-subsidy premiums; subsidies cushioned the impact of rate increases for the majority of the exchange enrollees in Tennessee (85 percent of private plan enrollees in the Tennessee exchange are receiving premium subsidies in 2016). Subsidies limit benchmark plan premiums to a set percentage of an enrollee’s income, as long as the enrollee doesn’t earn more than 400 percent of the federal poverty level.

Carriers noted that the proposed rate changes for 2016 were much more fact-based than the rates we saw in 2014 and 2015. For 2014, carriers could do little more than make educated guesses. Even for 2015, the rates were filed in the spring of 2014, within weeks of the end of the first open enrollment period. That meant there was very little in the way of actual claims data for actuaries to use when creating rates for the coming year. But the rates that carriers proposed for 2016 were based on more than a year of claims data (all of 2014 plus the early part of 2015). And industry experts point out that there shouldn’t be as much price variation from one carrier to another as we go forward, since they’re all able to base premiums on actual claims experience now.

Although Tennessee’s rate hikes were considerable in 2016, these changes have to be viewed against the backdrop of Tennessee having lower-than-average rates in 2014 and 2015. And as always, it was vitally important that enrollees shop around during open enrollment to make sure they ended up with the plan that represents the best value for their needs in 2016.

Community Health Alliance shut down

On October 14, 2015, the Tennessee Department of Commerce and Insurance announced that Community Health Alliance, the state’s ACA-created CO-OP, would wind down its operations by the end of the year. Regulators noted that the shut-down at the end of 2015 was based on the fact that “the risk of CHA’s potential failure in 2016 was too great and would have caused substantial detrimental effects on the market as a whole if it were to collapse.

Community Health Alliance was the sixth CO-OP to shut down at that point, and the fifth since July (by the end of 2015, 12 CO-OPs had closed and 11 remained operational). As was the case with Kentucky‘s CO-OP earlier in October, Community Health Alliance’s demise was at least partially triggered by the fact that HHS announced on October 1 that risk corridor payments to insurers in December (based on 2014 losses) would end up being only 12.6 percent of what was owed.

Community Health Alliance had the lowest prices in the exchange for 2015, but proposed an average rate increase of 32.6 percent for 2016 (and regulators had increased the rate hike to 44.7 percent in an effort to keep the carrier sustainable). The CO-OP stopped selling 2015 plans as of January 15, 2015, noting that they had already met their enrollment goal for the year. Community Health Alliance had planned to begin selling plans again during the 2016 open enrollment, but instead they ceased operations altogether at the end of 2015.

No new enrollees joined the CO-OP since January 2015, but there were still 27,000 enrollees who needed to select new coverage for 2016 from a different carrier. They had until the end of February to enroll in a new plan, since they had a 60 day special enrollment period following the loss of coverage.

Humana ending grandfathered individual plans

Grandfathered plans are those that were already in effect when the ACA was signed into law on March 23, 2010. They can remain in force without complying with most of the ACA’s provisions, but carriers can choose to discontinue them instead (just as insureds can choose to drop their grandfathered coverage). Humana has fewer than 3,500 people with grandfathered individual plans in Tennessee, but they will all have to enroll in new coverage as of their renewal date in 2016.

Humana is discontinuing grandfathered individual plans in 11 states, including Tennessee. Insureds will qualify for a special enrollment period that begins 60 days in advance of the loss of coverage, and continues for 60 days afterwards (the same as the special enrollment period that applies to former Community Health Alliance members). People losing coverage under a grandfathered plan from Humana will be able to enroll in a plan through the exchange, or outside the exchange, but subsidies are only available in the exchange.

Off-exchange carriers

The exchange carriers are also selling plans outside the exchange in Tennessee.  In addition, four other carriers sell plans only outside the exchange: Tennessee Rural Health, UnitedHealthcare Life Insurance Company, Aetna, and Freedom Life Insurance Company of America.

For 2017, UnitedHealthcare Insurance Company and UnitedHealthcare Life Insurance Company will not offer plans in the individual market in Tennessee, or or off-exchange.

King v. Burwell – subsidies are safe

In June 2015, the Supreme Court ruled that subsidies are legal in every state, regardless of whether the exchange is run by the state or federal government.

The Tennessee Department of Insurance confirmed that if the Supreme Court had eliminated subsidies in Tennessee (and other states that use, carriers in Tennessee would have been required to submit revised rates for 2016.  There is no doubt those rates would have been considerably higher than the initially-proposed rates, so everyone who purchases individual insurance in Tennessee is certainly better off with the Court’s ruling against the King plaintiffs.

In addition to sharply higher rates market-wide, nearly 150,000 people in Tennessee would have lost their subsidies – and in most cases, their health insurance – if the subsidies had been struck down.

But some lawmakers in Tennessee supported the King plaintiffs, and tried to eliminate subsidies in states like Tennessee that use the federally facilitated marketplace. In December 2014, 19 Tennessee lawmakers (some current, some former) signed an amicus brief that was delivered to the Supreme Court, asking the Court to rule that subsidies are not legal in states with HHS-run exchanges.

2015 enrollment data

231,440 people enrolled in private plans through the exchange during the 2015 open enrollment (November 15 to February 22, including the week-long extension). 53 percent of Tennessee’s enrollees were new to the exchange for 2015, and 83 percent were eligible for premium subsidies.

HHS had projected that Tennessee’s exchange would enroll 195,000 people during the 2015 open enrollment period (up from the 151 thousand who enrolled during the 2014 open enrollment period). Ultimately, the exchange far surpassed that target – unsurprisingly, given that it was already at 99 percent of the projected enrollment in January.

But by the end of June, attrition had resulted in the effectuated (paid-up) enrollment falling to 177,453  people. Nearly 85 percent of them were receiving premium subsidies, and 63 percent were receiving cost-sharing subsidies.

In addition to the private plan enrollees, 40,373 Tennessee exchange enrollees were eligible for Medicaid or CHIP between November 15 and February 22, despite the fact that the state has not yet expanded Medicaid and is continuing to use the old eligibility guidelines.

According to Gallup data, the uninsured rate in Tennessee in 2013 was 16.8 percent, and fell to 12.9 percent by the first half of 2015. It would be considerably lower if Tennessee had expanded Medicaid, but even still, the state is making progress.

2015 rates

In mid-2014, Blue Cross Blue Shield of Tennessee filed rate proposals with an average increase of 19 percent for 2015 (they were approved with very little modification). Cigna was proposing a rate increase of 7.5 percent, while Humana’s came in at 14.4 percent.  Once rates were approved, the average rate increase in Tennessee across all eight carriers in the individual market (including on and off-exchange plans) came in at 12.5 percent, making it one of eight states in the PricewaterhouseCooper analysis with double digit average rate increases.

But that’s only part of the story. Because Tennessee had rates so much lower than the national average in 2014, their rates are still much lower than most states in 2015, even after the rate hikes. A Kaiser Family Foundation analysis of benchmark plan (second lowest-cost silver plan) premium changes in major metropolitan areas in all 50 states found that the Nashville area still has the fifth lowest average benchmark premium in the country in 2015, even after an increase of nearly 8 percent.

Tennessee’s rate changes are a perfect example of why it’s so important for enrollees to go back to the marketplace and double check their options for the coming year, rather than simply letting their plan auto-renew. In virtually every area of Tennessee, people who enrolled in the benchmark plan in 2014 and opted to renew that plan for 2015 were subject to rate increases that averaged at least 15 percent.  But people who shopped around and switched to the new benchmark saw much more modest rate changes in most areas – even a decrease in the western part of the state.

Across all metal levels and plans sold in the exchange, a Commonwealth Fund analysis found an average 2015 rate increase of 9 percent in the Tennessee exchange, for a 40 year-old non-smoker.

Outreach and education

Blue Cross Blue Shield of Tennessee – by far the dominant carrier in the exchange in 2014, began conducting outreach to target Latino and Millennial populations during the second open enrollment period, as both demographics were under-represented during the first round of enrollments.

Blue Cross Blue Shield of Tennessee has also focused on general education and enrollment assistance state-wide, after a survey found that 80 percent of the 2014 enrollees signed up without any help, just using on their own. Many of them didn’t understand all of the details of their coverage as a result, and BCBSTN has been working to make sure that people receive help with the renewal and enrollment process.

The Tennessee Health Care Campaign is also working to provide education and enrollment outreach in Tennessee.

Get Covered America-Tennessee announced in June 2014 that Jacob Flowers would be their new director.  Flowers’ job initially was to educate and enroll as many people as possible during the 2015 Obamacare open enrollment period, utilizing resources that have already been allocated to Tennessee. In September 2015, Flowers announced that Get Covered Tennessee had been awarded $1.65 million to fund outreach activities for 2015. In announcing the award, CMS noted that Get Covered Tennessee “is a statewide network of agencies that will provide a physical ACA presence in all 95 TN counties—a first for TN.”

During the 2016 open enrollment period, the mayors of Tennessee’s four largest cities have reached out to their constituents to urge them to visit or to seek assistance with the enrollment process. Chattanooga Mayor Andy Berke, Knoxville Mayor Madeline Rogero, Memphis Mayor AC Wharton, and Nashville/Davidson County Mayor Megan Barry joined together with Get Covered Tennessee and Enroll America “to make it as easy as possible for every resident of our great cities to get access to the information they need to get covered.

2014 enrollment stats

151,352 Tennessee residents had completed their Obamacare enrollment in private plans through the exchange by April 19, 2014. The final total was 23% more than the original projected target for Tennessee.

Although Tennessee had a strong 2014 open enrollment period, there was still a long way to go. Prior to the first open enrollment period, the Kaiser Family Foundation estimated that 645,000 Tennessee residents would be eligible to purchase policies in the exchange, and 387,000 of them would qualify for subsidies to do so.

But as in all states, the realities of getting people enrolled – especially people who have never had insurance before and are entirely unfamiliar with the system – have proved challenging in Tennessee.

Governor pursued Medicaid expansion

Although the state’s Medicaid enrollment system has been plagued with difficulties, an additional 83,591 exchange enrollees were eligible for Medicaid under the state’s existing rules, despite the fact that Tennessee has not expanded Medicaid. In November 2013, TennCare requested an additional $180 million for its budget as a result of the influx of new applications.

In March 2014, Tennessee Democrats called on their state and their governor to move forward with Medicaid expansion, or at the very least, Governor Bill Haslam’s “Tennessee Plan,” noting that anything would be better than nothing for the 161,000 residents who are currently in the “coverage gap” – not eligible for Medicaid, and not eligible for exchange subsidies.  

Haslam spent much of 2014 discussing options with the federal government and TennCare. Although public approval for the ACA overall is relatively low in Tennessee, the majority of the state’s voters – 56 percent according to a November 2014 Vanderbilt poll – support Medicaid expansion.

Then in December 2014, Haslam unveiled his Insure Tennessee plan that would include two options: one would involve privatized TennCare participation, and the other would involve vouchers that would allow workers access to previously-unaffordable employer-sponsored coverage. Enrollees with incomes between 100 percent and 138 percent of poverty level would be required to pay modest premiums for their coverage.

A study conducted by the University of Tennessee’s Center for Business and Economic Research determined that Haslam’s Insure Tennessee plan would bring about 50,000 jobs to the state, along with $1.14 billion in new spending to drive the economy.  But the legislature still had to agree to Haslam’s plan…

but Senate committee rejected expansion

A special legislative session to address Governor Haslam’s Insure Tennessee plan convened on February 2, 2015.  But ultimately, just two days later, the Senate Committee for Health and Welfare rejected the proposal by a 7 to 4 vote. That means it will not proceed to the Senate floor for debate, and Medicaid expansion is likely off the table in Tennessee for this year.

But there is certainly some support within the legislative body for Medicaid expansion. In fact, US Rep. Steve Cohen has called out Gov. Haslam on his opposition to straight Medicaid expansion (Haslam’s plan involves private insurance for the Medicaid-eligible population), and wants Tennessee to move forward with Medicaid expansion – including accepting $1 billion in federal funds – as outlined under Obamacare.

And after the Supreme Court’s King v. Burwell ruling kept subsidies available in the Tennessee exchange, supporters of Medicaid expansion renewed their push for expanded access to healthcare, rallying in Nashville on June 29, 2015 for a news conference to call attention to the fact that millions of Americans – including 161,000 in Tennessee – are essentially locked out of health coverage altogether, since they have incomes below the poverty level and they’re in states that haven’t expanded Medicaid.

Supporters of Insure Tennessee continue to advocate for the expansion of Medicaid, and are touring the state raising awareness of the need to accept federal funds to expand the state’s Medicaid program.

Heading into the 2016 legislative session that began on January 12, Insure Tennessee supporters were pushing for the issue to be resurrected, but Lt. Gov. Ron Ramsey (R – Blountville) said that there was no way the legislature would pass the Insure Tennessee proposal in 2016. He noted instead that a new president would be elected in November, and his plan appears to hinge on getting a block grant for Medicaid, assuming a Republican wins the Presidency and congress approves a major overhaul of the ACA.

As the legislative session wore on, Citizens for Insure TN paid for billboards urging House Speaker Beth Harwell to take action to bring Insure TN to the floor of the House for a full vote before the legislative session ends on April 15. Haslam continues to support Insure TN, but reminded constituents that “The thought that somehow the speaker is going to reach down there and pull that bill to the floor, that’s not how that works.

Legislation was also introduced in January 2016 to have the issue of Medicaid expansion placed on the November 2016 ballot in Tennessee, but the bill did not make it out of committee.

Tennessee ACA legislation and regulations

Although the ACA is obviously popular with the hundreds of thousands of Tennessee residents who have new coverage in place, GOP lawmakers in the state moved forward in mid-January 2014 with a bill that would prevent state and local government entities – and state contractors – from participating in the HHS-run exchange. Ultimately, SB1888 did not advance out of committee.

The Tennessee Department of Commerce and Insurance drew attention for emergency rules issued shortly before the Oct. 2013 launch of the new marketplace. The emergency rules require individuals who will help others use the new health insurance marketplace be fingerprinted and undergo background checks, and would have forbidden lay people from assisting their friends and neighbors with health insurance applications.

Religious and community groups questioned the motivation behind the rules and sued to block the rules. A judge didn’t block the emergency rules, but did agree they were too broad and could be interpreted to apply to those giving informal advice, and a temporary restraining order against the rules was issued. Two lawsuits were brought against the emergency rules, and by mid-October 2013, the state government had backed off of the rules, making it easier for people to assist others in Tennessee, both formally and informally.

History of the Tennessee exchange

In December 2012, Gov. 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.

Tennessee health insurance exchange links

Tennessee Insurance Exchange Planning Initiative

Health Assist Tennessee
Helps connect Tennesseans with public and private programs to meet health care needs and assists TennCare members with access to medical care.

State Exchange Profile: Tennessee
The Henry J. Kaiser Family Foundation overview of Tennessee’s progress toward creating a state health insurance exchange.