Highlights and updates
- Open enrollment for 2020 health plans has ended, although residents with qualifying events can still enroll or make changes to their coverage for 2020. The next open enrollment period, for plans effective in 2021, will begin November 1, 2020.
- Small average decrease in premiums for 2020; BCBSTN, Celtic, and Cigna all expanded their coverage areas.
- Short-term health plans can be sold in Tennessee with initial plan terms up to 364 days.
- 200,723 people enrolled for 2020 — down from a peak of 268,000 enrollees in 2016.
- Average premiums decreased for 2019, so average subsidies also decreased (plus a look back at how rates have changed over the years).
- Bright Health and Celtic (Centene) joined the exchange for 2019, bringing the total number of insurers in Tennessee’s exchange to five.
- Tennessee has allowed Farm Bureau plans to continue to offer non-ACA-compliant medically underwritten plans
Tennessee exchange overview
Tennessee has a federally run exchange, so enrollees use HealthCare.gov to sign up for exchange plans.
Open enrollment for 2020 health plans has ended, although Tennessee residents with qualifying events can still enroll or make changes to their coverage for 2020. The next open enrollment period, for plans effective in 2021, will begin November 1, 2020.
200,723 people enrolled in private plans through the Tennessee exchange during the open enrollment period for 2020 coverage — down from 221,553 people enrolled who had enrolled the year before, for 2019 coverage.
Tennessee continues to refuse federal funding to expand its Medicaid program to cover low-income adults in the state (13 other states have also refused to expand their Medicaid programs). As a result, there are an estimated 113,000 people in the coverage gap in Tennessee — ineligible for Medicaid, but also ineligible for premium subsidies in the exchange because their income is too low.
Premiums in the Tennessee exchange started out as some of the lowest in the country in 2014, but have increased rapidly since then. The premium increases appear to have caught up to claims costs, however, as average rates are lower for 2019 than they were for 2018.
Insurer participation in Tennessee’s exchange has been fairly volatile over the years, but there are five insurers offering plans in 2019, and although their coverage areas don’t all overlap, most Tennessee residents have a choice of insurers for 2019, as the metropolitan areas all have at least two insurers offering plans in the exchange.
Family and Children’s Service is the Tennessee Navigator organization, and brokers certified with the exchange can be found here.
BCBSTN returned to Nashville and Memphis for 2020; Celtic & Cigna expanded coverage area; Average premiums about 1% lower than 2019 rates, but benchmark premiums down 7% so subsidies smaller
Average pre-subsidy premiums in Tennessee’s individual market are about 1.1 percent lower for 2020 than they were 2019.
And after leaving the major metropolitan areas of the state in 2017, Blue Cross Blue Shield of Tennessee is once again offering coverage in the exchange in the Memphis and Nashville areas for 2020 (they rejoined the Knoxville area in 2018). Celtic has also expanded into the Nashville and Knoxville areas, and Cigna expanded into the Chattanooga and Jackson areas.
The coverage expansions are excellent news in terms of overall market stability and consumer options, but enrollees who receive premium needed to pay close attention to whether their after-subsidy premiums were changing for 2020 with the new mix of available plans. Although average premiums in the state only dropped by about 1 percent, average benchmark premiums (on which subsidies are based) dropped by 7 percent.
In 2019, when Bright and Celtic joined the marketplace in Tennessee and Cigna and Oscar expanded their coverage areas, benchmark premiums decreased much more significantly than overall average premiums, resulting in smaller premium subsidies. So 2020 is the second year in a row that subsidy amounts have dropped by more than the average premium amounts in Tennessee’s exchange (which could partially explain the decrease in enrollment since 2018; plans become less affordable when subsidies decrease by more than average premiums).
For 2020, Tennessee’s exchange insurers implemented the following average rate changes:
- Blue Cross Blue Shield of Tennessee: Average premium increase of 1.4 percent
- Cigna: Average premium decrease of 5.7 percent
- Oscar: Average premium decrease of 8.3 percent
- Bright: Average premium increase of 2.93 percent
- Celtic: Average premium decrease of 1.6 percent
Coverage availability for 2020 looks like this:
- Nashville: Oscar, Cigna, Bright, BCBSTN, and Celtic
- Knoxville: BCBSTN, Bright, Cigna, and Celtic
- Memphis: BCBSTN, Bright, Oscar, Cigna, and Celtic
- Tri-City area: BCBSTN and Cigna
- Chattanooga area: Celtic, BCBSTN, and Cigna
The rate decreases and coverage area expansions are a far cry from just a few years ago, when Tennessee residents were facing average rate increase of 56 percent and the potential for some areas of the state to have no insurers offering coverage in the exchange. Coverage did end up being available statewide, but the market was in turmoil and has stabilized significantly since then.
Enrollment in Tennessee’s exchange: 2014 through 2019
As has been the case in the majority of states that use HealthCare.gov, enrollment in Tennessee’s exchange peaked in 2016, and has declined each year since then.
- 2014: The first open enrollment period, for 2014 coverage, was six months long and had an additional extension tacked onto the end. By April 19, 2014, total enrollment in the Tennessee exchange stood at 151,352 people.
- 2015: Enrollment grew significantly the next year, with 231,440 people enrolling through the exchange during the open enrollment period for 2015 coverage.
- 2016: Enrollment peaked in the third year, with 268,867 people enrolling through the exchange in Tennessee.
- 2017: President Trump took office just days before the end of the open enrollment period for 2017 coverage, and immediately cut HealthCare.gov’s marketing campaign. 2017 rates were also sharply higher for people who didn’t qualify for premium subsidies. So it wasn’t surprising that enrollment dropped to 234,125 people.
- 2018: The Trump Administration reduced the marketing and outreach budget for HealthCare.gov, rates again increased sharply for people who didn’t qualify for premium subsidies (due mostly to uncertainty over the future of the individual mandate and the Trump Administration’s decision to cut off funding for cost-sharing reductions), and open enrollment was only half as long as it had been the year before (Nov 1 to Dec 15, which is the schedule that’s currently being used). So again, it wasn’t surprising that enrollment decreased, with 228,646 people buying plans during open enrollment.
- 2019: Although rates decreased for 2019, they’re still quite high for people who don’t qualify for premium subsidies. The GOP tax bill ended the individual mandate penalty at the end of 2018, and the Trump Administration has made it easier for people to opt for coverage under short-term health plans instead of ACA-compliant plans. So enrollment dropped again during the open enrollment period for 2019 coverage, with 221,553 people buying plans.
- 2020: Enrollment stood at 200,723 at the end of the open enrollment period for 2020 coverage. As noted above, benchmark premiums decreased more significantly than overall average premiums in Tennessee’s exchange, making after-subsidy premiums less affordable for many enrollees.
Rates decreased in Tennessee’s exchange for 2019 (plus a look back at rate changes since 2014)
In August 2018, the Tennessee Insurance Department announced approved 2019 rate changes, including rate decreases for Blue Cross Blue Shield and Cigna, which had the bulk of the state’s individual market enrollees:
- Blue Cross Blue Shield of Tennessee: Average premium decrease of 14.9 percent (113,000 membes)
- Cigna: Average premium decrease of 12.8 percent (75,568 members)
- Oscar: Average increase of 7.2 percent to 10.84 percent (14,107 members)
- Bright: New to the market
- Celtic: New to the market
Rates for 2019 include the cost of cost-sharing reductions (CSR) added to silver plan rates, as was the case in 2018 (more details below).
The weighted average rate decrease for Tennessee’s individual market was more than 12 percent, which was a welcome relief for enrollees who don’t get premium subsidies (ie, those with income above 400 percent of the poverty level, as well as people caught by the family glitch and those in the Medicaid coverage gap who have a way to afford full-price health insurance). And the additional coverage options from Bright and Celtic added an element of competition to Tennessee’s individual market, and were a welcome change for residents who want to be able to select from among multiple insurers.
But the rate decreases and the additional insurers offering plans could have resulted in some people ending up with a net (after subsidy) increase in their premiums for 2019 if they didn’t actively shop around for their coverage during open enrollment, which ran from November 1, 2018 to December 15, 2018.
That’s because premium subsidies are based on the cost of the benchmark plan (second-lowest-cost silver plan) in each area, and if the cost of the benchmark plan goes down, premium subsidies decline as well (keep in mind that the benchmark plan can be offered by a different insurer from one year to another, so if an insurer enters a market with lower prices than the existing plans, the benchmark price – and thus, premium subsidies – would be lower for everyone in that market, even if existing plans raised their premiums).
In Tennessee, the average benchmark plan premium decreased by 26 percent in 2019, which was the largest percentage decrease in the nation. The average, across all states, was a 1.5 percent decrease. But a state like Tennessee, with significant variation in terms of which insurers are offering plans in each area, and with new entrants in certain areas but not others, there was considerable variation in terms of how much premium subsidies fluctuated from 2018 to 2019.
But in general, when benchmark premiums decrease by a larger margin than the overall market, it’s particularly important for enrollees to actively shop for their coverage during open enrollment, as opposed to auto-renewing. If the plan that a particular enrollee has doesn’t decline in price by as much as the benchmark plan in that area, their net premium will increase, because the subsidy will no longer cover as much of the total premium. Enrollees can mitigate this by shopping around for coverage during open enrollment, but that’s not always a simple fix, given the varying provider networks and drug formularies that insurers have.
For perspective, here’s a look back at how rates have changed over the years in Tennessee’s exchange:
In 2014 Tennessee had among the lowest overall average rates in the country for individual market health plans. That was the first year that ACA-compliant plans were available, and rates were essentially educated actuarial guesses, since there was no claims experience on which to base them.
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 a 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 were 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.
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.
2016 rates were finalized by the Tennessee Department of Commerce and Insurance in late August, and although the overall average rate increase was substantial, it essentially just brought Tennessee’s lower-than-average rates more in line with rates in the rest of the country:
- Blue Cross Blue Shield of Tennessee: 36.3 percent average rate increase. BCBS had 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 ended up with 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 ranged 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.
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.
For the three carriers that offered coverage in the Tennessee exchange for 2017, approved rate increases were as follows:
- Blue Cross Blue Shield of Tennessee (68.9 percent of the exchange market share in 2016): 62 percent average rate increase
- Cigna (8.6 percent of the exchange market share): 46 percent average rate increase
- Humana (6.7 percent of the exchange market share): 44.3 percent average rate increase
UnitedHealthcare had the remaining 15.7 percent of the exchange market share in Tennessee in 2016, but their enrollees needed to select new plans for 2017 during open enrollment as they exited the individual market in Tennessee at the end of 2016.
Tennessee’s individual market rate increase (an average of 56 percent) was roughly tied with Minnesota’s for 2017, and both states trailed only Oklahoma, which had the highest weighted average increase for 2017.
Cigna and Humana had originally filed average rate increases of 23 percent and 29 percent, respectively. But in early August 2016, regulators in Tennessee agreed to allow the carriers to refile new rates, after both carriers had told the state that the rates they had originally filed wouldn’t be adequate to cover claims costs.
Several carriers across the country made headlines in August and September with announcements that they would exit the exchanges at the end of 2016, but UnitedHealthcare was the only insurer to exit the Tennessee exchange altogether. The fact that regulators in Tennessee allowed new rates to be filed helped to keep the carriers in the market, but it also resulted in more significant premium hikes for 2017. Carriers had asked to refile rates for 2016 during the summer of 2015, but state regulators would not allow them to do so; for 2017, regulators softened their stance in an effort to keep Cigna and Humana in the marketplace.
In September 2017, the following average rate increases were approved by the Tennessee Department of Commerce and Insurance for 2018 individual market coverage:
- Cigna: 36.5 percent (69,366 members)
- Blue Cross Blue Shield of Tennessee: 21.4 percent (78,000 members)
- Oscar Health: New to Tennessee for 2018, so no applicable rate increase
The weighted average rate increase was 28.5 percent. 88 percent of Tennessee exchange enrollees received premium subsidies in 2017, and those subsidies increased to keep pace with the average cost of the second-lowest-cost silver plan in 2018. And silver plans became disproportionately expensive in 2018 in Tennessee (driving a significant chunk of the overall rate increase), as the Trump Administration is no longer funding cost-sharing reductions (CSRs). Although the Trump Administration didn’t eliminate CSR funding until mid-October, TDCI confirmed in September that the additional premiums necessary to cover CSR in 2018 had already been added to silver plan rates for 2018 (pre-emptively, but presciently, since the funding was cut off by the federal government a few weeks later). The higher premiums for silver plans resulted in even larger premium subsidies for 2018. So although the federal government is no longer directly reimbursing insurers for the cost of CSR, they are indirectly continuing to fund CSR, via larger premium subsidies.
TDCI published a document showing average premiums for 35-year-olds and 55-year-olds in each rating area of the state, but most enrollees pay far lower premiums, as their premiums subsidies cover a large portion of the premiums.
Blue Cross Blue Shield of Tennessee issued a press release in June 2017, going into great detail about their proposed rate increase for 2018. Their actuarial memo in their rate filing indicated that their average proposed rate increase was 21.4 percent, but that the majority of that was due to concerns that the Trump Administration wouldn’t continue to enforce the individual mandate, and the uncertainty surrounding ongoing funding for cost-sharing reductions (CSR).
The press release from Blue Cross Blue Shield of Tennessee noted that of the 21.4 percent rate increase they proposed (which was later approved by TDCI), 14 percentage points were due to the possible lack of funding for cost-sharing subsidies, and 7 percentage points were due to concerns that the individual mandate wouldn’t be well enforced, resulting in a sicker risk pool (healthy people are the ones likely to drop coverage if the mandate isn’t enforced; sick people will maintain their coverage regardless).
So the rate increase for 2018 would apparently have been just 0.4 percent if it weren’t for the Trump Administration’s refusal to commit to funding cost-sharing reductions and enforcing the individual mandate. Instead, BCBSTN proposed an average rate increase of 21.4 percent, and state regulators had no choice but to approve it.
Cigna initially filed an average rate increase of 42.1 percent (with increases that ranged from 12.2 percent to 182.2 percent), and revised it in August to an average of 36.5 percent, after opting to eliminate – rather than renew – some plans. They noted that 14.1 percentage points of this was due to the fact that the Trump Administration had not committed to funding cost-sharing subsidies. Their initial proposed rate increase would have been 28 percent otherwise.
At ACA Signups, Charles Gaba calculated a weighted average proposed rate increase (for Cigna and BCBSTN) of 31.14 percent, based on initial filings. But he noted that without the Trump Administration’s sabotage of the individual health insurance markets, the proposed weighted average rate increase would have been just 13.5 percent.
Insurer participation in Tennessee’s exchange: 5 insurers in 2019, up from 3 in 2018
When the exchanges launched for 2014, plans were available in Tennessee’s exchange from Blue Cross Blue Shield of Tennessee, Community Health Alliance (an ACA-created CO-OP), Cigna, and Humana, although only BCBSTN offered plans statewide.
Time/Assurant joined the Tennessee exchange statewide in 2015, bringing the total number of participating insurers to five.
But Assurant’s foray into the exchange was short-lived. For 2016, four of the five insurers in Tennessee’s exchange filed proposed rates and plans, while Assurant announced they would exit the health insurance market nationwide at the end of 2015.
Then, just two weeks before the start of open enrollment for 2016 coverage began, 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.”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.
The CO-OP had 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 had 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.
But UnitedHealthcare joined the Tennessee exchange for 2016, so plans were still available from four insurers (BCBSTN, Cigna, Humana, and UnitedHealthcare; both BCBSTN and UnitedHealthcare offered plans statewide in 2016). According to Kaiser Family Foundation’s analysis, UnitedHeathcare offered at least one of the two lowest-priced silver plans in the exchange in 73 of Tennessee’s 95 counties in 2016.
Like Assurant’s brief stint in the exchange, UnitedHealthcare’s participation was also short-lived, as they exited the entire individual market in Tennessee at the end of 2016. The Department of Commerce and Insurance confirmed that the exit applied to both the exchange (UnitedHealthcare Insurance Company) and off-exchange (UnitedHealthcare Life Insurance Company). The state reported that 40,879 people needed to secure new coverage for 2017 as a result of United’s exit (the large majority of these enrollees had their United coverage through the exchange).
So for 2017, plans were only available in Tennessee’s exchange from Humana, Cigna, and BCBSTN. And this was also the first year that BCBSTN opted not to offer statewide coverage. As of 2017, BCBSTN stopped offering coverage in the metro areas of Knoxville, Nashville, and Memphis, which are the three largest metropolitan areas in the state.
Blue Cross Blue Shield of Tennessee had the lion’s share of the Tennessee exchange market in 2016, covering almost 69 percent of the enrollees. Because of BCBST’s exit from the three metropolitan areas, approximately 52,000 people in Nashville, 31,000 people in Knoxville, and 29,000 in Memphis had to switch to a different plan for 2017.
So although there were three insurers offering plans in Tennessee’s exchange for 2017, residents in 73 of the state’s 95 counties had only one carrier option in the exchange. Cigna offered coverage in the Memphis and Nashville areas; Humana offered coverage in the Memphis, Nashville, and Knoxville areas, and BCBSTN offered coverage in the rest of the state.
There was quite a bit of upheaval in the Tennessee exchange for 2018, in terms of insurer participation. Humana stopped offering individual market coverage in any states at the end of 2017. Humana’s exit meant that residents in the Knoxville area were facing the possibility of having no exchange insurers at all in 2018. Humana insured about 40,000 people in the Knoxville area, and about 79,000 people across all three metropolitan areas in the state.
For the 40,000 people in Knoxville, state regulators scrambled to reach a solution, and succeeded. In May 2017, Blue Cross Blue Shield of Tennessee agreed to once again offer coverage in 2018 in the Knoxville area in order to ensure that all areas of the state would have insurance plans available in the exchange.
While it initially appeared that there would only be two insurers in the Tennessee exchange for 2019, Oscar Health’s entry to the market meant that three insurers offered plans. So for 2018:
- Cigna’s plans were available in a total of 22 counties in Memphis, Nashville, and the Tri-City area (the eight eastern-most counties in the state), just as they were in 2017.
- BCBS of Tennessee had plans available everywhere except Memphis and Nashville. They continued to offer coverage in the non-metro areas of the state where they offered plans in 2017, and expanded back into the Knoxville area.
- Oscar Health has plans available in nine counties in the Nashville area.
- Nashville and the Tri-City areas were the only parts of the state where enrollees had a choice between two insurers, with both BCBSTN and Cigna offering plans in the Tri-City area, and Oscar and Cigna offering plans in the Nashville area.
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.”
Bright Health joined the Tennessee exchange for 2019, offering coverage in 16 counties in the Knoxville area, nine counties in the Nashville area, and five counties in the Memphis area.
Celtic (Centene) also joined the Tennessee exchange for 2019, with plans available in Memphis and Chattanooga. Much of the state has multiple carrier options for 2019 coverage:
- Nashville: Oscar, Cigna, Bright
- Knoxville: BCBSTN, Bright, and Cigna
- Memphis: Bright, Oscar, Cigna, and Celtic
- Tri-City area: BCBSTN and Cigna
- Chattanooga area: Celtic and BCBSTN
Tennessee Insurance Commissioner’s reform proposals
Julie Mix McPeak is the Insurance Commissioner for Tennessee, and also serves 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:
- Allowing states to define essential health benefits, rather than requiring all plans sold in every state to conform to the ACA’s essential health benefits (this has been part of most of the GOP proposals to repeal or change the ACA, although it has not been implemented. As of 2019, essential health benefits are still defined at the federal level).
- Relaxing the age band ratio from the 3:1 level set by the ACA, to a 5:1 or 6:1 cap. The ACA limits premiums for older enrollees to no more than three times those of younger enrollees. Mix McPeak suggested that insurers should be able to charge older enrollees five or six times as much as younger enrollees, in an effort to reduce premiums for younger enrollees and incentivize them to enroll (this is another provision that was included in most of the GOP efforts to repeal or change the ACA in 2017, but none of those efforts were successful. It’s worth noting that adjusting the age rating bands would result in lower premiums for younger people, but markedly higher premiums for older people. For those who receive premium subsidies, the subsidies would grow to offset the increase. But for those who don’t get subsidies, coverage could become unaffordable).
- Tighter restrictions and increased verification of eligibility for special enrollment periods (HHS finalized a market stabilization rule in April 2017 that included increased eligibility verification, and restrictions such as limiting enrollees’ ability to use a special enrollment period to switch to a plan at a different metal level).
- Reducing the current 90-day grace period for people with premium subsidies down to a 30-day grace period (the market stabilization rule kept the 90-day grace period, but allows insurers to apply new enrollment premiums to past-due balances from the previous 12 months if the person seeks to re-enroll after losing coverage for non-payment of premium).
Senator Alexander: 2017 legislation to protect bare counties, and a plea for CSR funding
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 percent of Tennessee exchange enrollees have plans that include 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 Insurance Commissioner, Julie Mix McPeak estimated that premiums in Tennessee would be 15 to 20 percent 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.”
Farm Bureau plans aren’t compliance with the ACA, but they’re still allowed to be sold in Tennessee
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 “traditional” 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.
Iowa has decided to follow Tennessee’s lead, enacting legislation in 2018 that allows Farm Bureau to partner with Wellmark to offer non-ACA-compliant plans in Iowa.
BCBSTN losses pre-2017 and rate hike request – some background
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:
- BCBS had two networks, and offered 10 silver PPO plans in Nashville and in Memphis in 2016. The plans included out-of-network coverage. BCBST did not offer plans in either area in 2017.
- Humana had one silver PPO plan in Nashville and in Memphis.
- Cigna had three silver EPO plans in Nashville (no out-of-network coverage) and three silver PPO plans in Memphis.
- In Memphis, all three carriers offered silver PPO plans, and BCBS had the lowest prices (BCBST stopped offering coverage in Memphis in 2017).
- In Nashville, Cigna’s silver prices were lower than BCBS, but the Cigna plans were EPOs, without coverage for out-of-network care (BCBST stopped offering plans in Nashville in 2017).
Grandmothered/Transitional health plans
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.
History of the Tennessee exchange
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.
Tennessee health insurance exchange links
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.