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Tennessee health insurance exchange / marketplace

Weighted average rate increase in Tennessee exchange roughly 33 percent; UnitedHealthcare joining exchange for 2016

  • By
  • contributor
  • September 15, 2015

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 in the Tennessee exchange, four filed proposed rates for 2016.  The fifth carrier, Assurant, announced they are exiting the individual market nationwide, and will not participate in open enrollment this fall.  But UnitedHealthcare is joining the Tennessee exchange for 2016, so there will still be five carriers from which to choose.  Rates were finalized by the Tennessee Department of Commerce and Insurance in late August:

  • Community Health Alliance: 44.7 percent average rate increase.  Community Health Alliance, an ACA-created CO-OP, had the lowest prices in the exchange for 2015, but proposed an average rate increase of 32.6 percent for 2016. Community Health Alliance stopped selling 2015 plans as of January 15, 2015, noting that they had already met their enrollment goal for the year.  The carrier’s plans are currently frozen and not available for new enrollees, but they plan to begin selling plans again when open enrollment begins in November.  The proposed 32.6 percent rate increase was part of the plan to keep the company sustainable, but the state Insurance Commissioner noted in early July that the requested rate hike might not be enough, and that Community Health Alliance might have to raise its rates even higher in order to “make the company sustainable and to remove the freeze for the upcoming year.”  Ultimately, that was the case, and the final approved average rate increase for Community Health Alliance is 44.7 percent.
  • Blue Cross Blue Shield of Tennessee: 36.3 percent average rate increase. BCBS is the dominant carrier in the state, with 70 percent of the market share. Their proposed 36.3 percent average rate increase was approved as requested.
  • 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 will be UHC’s first year offering plans in the exchange, so there’s no rate increase.

In terms of market share in the exchange, BCBS of Tennessee has 164,896 enrollees in 2015, while Community Health Alliance has 35,761 members.  The other 30,783 exchange enrollees are spread among the three remaining carriers.

Using those figures, and splitting the final 30,783 enrollees across just Cigna and Humana (since all Assurant enrollees will have to pick a new plan during open enrollment), I calculated a weighted average rate increase of about 33 percent for plans sold in the Tennessee exchange in 2016.

There are some caveats though… the market share numbers are based on total enrollment as of February, but some enrollments were never effectuated, and others have been terminated for one reason or another since the end of open enrollment.  As of the end of June, effectuated enrollment in private plans through the Tennessee exchange stood at 177,453.  In addition, my calculations were based on an even distribution of enrollees between Cigna and Humana, which is unlikely to be the case.  But regardless, 87 percent of initial enrollments this year in the Tennessee exchange were through BCBS or the CO-OP, which means that there’s no getting around the fact that the weighted average rate hike is significant for 2016.

These rate changes are for pre-subsidy premiums; subsidies will cushion the impact of rate increases for the majority of the exchange enrollees in Tennessee (84.5 percent of private plan enrollees in the Tennessee exchange are receiving premium subsidies).  Subsidies will 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 note that the proposed rate changes for 2016 are 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 will be 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 will be vitally important that enrollees shop around during open enrollment to make sure they end up with the plan that represents the best value for their needs in 2016.

Off-exchange carriers

The five 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.

King v. Burwell – subsidies are safe

On June 25, the Supreme Court ruled that subsidies are legal in every state, regardless of whether the exchange is run by the state or federal government.  Subsidies will continue to be available in Tennessee when open enrollment begins again this fall.

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 current 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, an estimated 164,000 people in Tennessee would have lost their subsidies – and in most cases, their health insurance – if the subsidies had been struck down.

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 are receiving premium subsidies, and 63 percent are 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.  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.

Lawmakers support banning subsidies

The Supreme Court will issue a ruling in King v. Burwell in late June.  The crux of the issue is whether or not premium subsidies are legal in states like Tennessee where HHS is running the exchange.  In late December, 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.

If the Court does rule that way, subsidies would evaporate in mid-2014 in the 34 states where HHS is running the exchange.  Tennessee Senate Majority leader Mark Norris – who signed the amicus brief – believes that the IRS is over-reaching with the nationwide premium subsidies.  He says he’s open to the possibility of a state-run exchange if SCOTUS strikes down the subsidies in Tennessee’s current exchange, but the logistics – including funding – of that would be complex and have not yet been addressed.

A loss of subsidies in the Tennessee exchange would put health insurance largely out of reach for the residents who are currently enrolled with subsidies (as of December, 83 percent of the enrollees were subsidy-eligible).  But it would also drive up premiums substantially for everyone buying their own health insurance, regardless of whether they qualified for subsidies or not.

Outreach and education

Get Covered Appalachia (TN and VA) has been working to provide outreach and enrollment assistance in Tennessee during open enrollment.  Blue Cross Blue Shield of Tennessee – by far the dominant carrier in the exchange in 2014, is conducting outreach to target Latino and Millennial populations, both of which were under-represented during the first round of enrollments.

Blue Cross Blue Shield of Tennessee is also focusing 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 is working to make sure that people receive help with the renewal and enrollment process.

Get Covered America-Tennessee announced in early June that Jacob Flowers would be their new director.  Flowers’ job is 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.  The Tennessee Health Care Campaign was also busy during the fall, gearing up for the 2015 open enrollment period and working to build on their success in the first round of open enrollment.

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 is 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 late March, 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 is 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 Vanderbilt poll – support Medicaid expansion.

Then in mid-December, 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.  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 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.

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.  

By late March 2014, the bill was still in committee in the senate, and no further action was taken during the 2014 legislative session.

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 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.