- Open enrollment for 2021 health plans ended on December 15, 2020. Only residents with qualifying events can enroll or make changes to their coverage outside of open enrollment.
- Average rate changes for 2021 range from a 6% decrease to a 10% increase (after overall average decreases in 2019 and 2020).
- UnitedHealthcare has rejoined the exchange in western and central Tennessee; Celtic expands into Jackson and Tri-City areas.
- 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.
- 200,445 people enrolled for 2020 — down from a peak of 268,000 enrollees in 2016.
- Bright Health and Celtic (Centene) joined the exchange for 2019, bringing the total number of insurers in Tennessee’s exchange to five; there are six with UnitedHealthcare’s return in 2021.
- 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.
When is open enrollment in Tennessee?
Open enrollment for 2021 health plans in Tennessee ran from November 1 through December 15, 2020. Outside of that window, Tennessee residents with qualifying events, including loss of other minimum essential coverage, can enroll or make changes to their coverage.
During the first five weeks of open enrollment for 2021 coverage (through December 5, 2020), 87,930 people had made plan selections through the Tennessee marketplace. At that point, there were still 10 days remaining in the open enrollment period. Enrollment always increases towards the end of the enrollment window, and HealthCare.gov will process auto-renewals after December 15, for people with existing coverage who don’t return to the exchange to pick a new plan or manually renew their coverage for 2021.
Last year, total enrollment during the open enrollment period for 202 coverage (including auto-renewals) reached 200,445 people. That was down from 221,553 people 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, although some of them will expand coverage, either fully or partially, by mid-2021). As a result, there are an estimated 117,000 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.
Insurer participation in Tennessee’s exchange has been fairly volatile over the years, but there are six insurers offering plans for 2021, up from five in 2020 (UnitedHealthcare joined the exchange for 2021, after previously only offering coverage in 2016; United’s plans are available in much of the central and western parts of the state for 2021). Although their coverage areas don’t all overlap, most Tennessee residents have a choice of insurers for 2021, as much of the state has at least three participating exchange insurers.
Family and Children’s Service is the Tennessee Navigator organization, and brokers certified with the exchange can be found here.
How are insurance premiums in Tennessee changing for 2021?
Insurers had to submit rate filings in Tennessee by July 15, 2020. Some of the rates were approved as-filed, but the Tennessee Department of Commerce and Insurance worked with some of the insurers to reduce their proposed rates for 2021, with revised rate filings submitted by some insurers in August. By the time the rate review process was complete, the following average rate changes were approved for 2021 for the state’s individual market insurers:
- Blue Cross Blue Shield of Tennessee: Average premium increase of 9.8 percent (BCBSTN had initially proposed an average rate increase of 12.9 percent). BCBSTN’s filing cover letter notes that they have about 93,000 members, although another area of the filing indicates 97,222 members. SERFF filing number: BCTN-132455585
- Cigna: Average premium decrease of 6.1 percent (Cigna’s filing notes that they expect the COVID-19 pandemic to increase their costs by about 1 percent in 2021, so the rate increase would be more significant without COVID-19 as a factor). Cigna has 64,230 members. SERFF filing number: CCGH-132359549
- Oscar: Average premium increase of 9.9 percent (Oscar had initially proposed an average rate increase of 12.4 percent). Oscar has 7,704 members. SERFF filing number: OHIN-132442088
- Bright: Average premium increase of 3 percent (Bright’s filing notes that the average rate increase would have been larger — at about 4.2 percent — without the COVID-19 pandemic; other insurers in other states have also predicted reduced overall costs in 2021 due to COVID-19’s reduction in non-emergency medical services) Bright has 26,746 members. SERFF filing number: BRHP-132308159
- Celtic/Ambetter: Average premium decrease of 2.5 percent (Celtic had initially proposed an average premium decrease of 0.3 percent, but the approved decrease ended up being more substantial). Celtic has 10,716 members, and has expanded into the Jackson and Tri-City areas for 2021. SERFF filing number: CELT-132409373
- UnitedHealthcare: New to the market for 2021, so no applicable rate change (UHC previously offered coverage in the Tennessee exchange in 2016; the insurer is also rejoining the exchange in Maryland for 2021). UnitedHealthcare plans to offer coverage in all counties in rating areas 3, 4, 5, 6, and 8 (Figure 13 on this page shows the rating areas in map format; UHC’s plans will be available in southern/central and western Tennessee). UHC’s filing does not include a specific rate adjustment for COVID-19 factors, but notes that they may revise this as the summer continues and more data become available. SERFF filing number: UHLC-132400597
In Tennessee, each insurer filed a separate form to detail the anticipated impact of COVID-19 on 2021 claims costs. Where they had data and projections available, insurers broke it down into cost changes (either an increase or a decrease) associated with pent-up demand for elective services that were postponed this year, the cost of a COVID-19 vaccine, the cost of treating members who are diagnosed with COVID-19, and the cost changes associated with the transition of people from the employer-sponsored market to the individual market (ie, there are expected to be more people purchasing coverage in the individual market for 2021, due to job losses amid the COVID-19 pandemic).
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 2020, the average full-price premium in Tennessee’s exchange is $641/month. That’s higher than the $595/month average across the 38 states that use HealthCare.gov. But 86 percent of Tennessee’s exchange enrollees are receiving premium subsidies in 2020, and their after-subsidy premiums average $145/month — which is exactly the same as the after-subsidy average premium across those 38 states. 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):
- 2014: 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.
- 2015: Average rate increase of 12.5 percent (another analysis indicated a 9 percent increase for a 40-year-old non-smoker). This included an average rate increase of 19 percent for BCBSTN, 7.5 percent for Cigna, and 14.4 percent for Humana. Tennessee was one of just eight states in a PricewaterhouseCooper analysis with double-digit average rate increases for 2015. But 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.
- 2016: Average increase of 28.2 percent. Average premium increases ranged from just 0.4 percent for Cigna to more than 36 percent for Blue Cross Blue Shield of Tennessee (BCBSTN had 70 percent of the market share). The overall increase was substantial, but it essentially just brought Tennessee’s lower-than-average rates more in line with rates in the rest of the country. Community Health Alliance had initially proposed a rate increase of nearly 45 percent, but the CO-OP ended up shutting down at the end of 2015, so that rate increase was not applicable.
- 2017: Average rate increase of 56 percent. The average rate increases ranged from 44.3 percent for Humana, to 62 percent for BCBSTN.Tennessee’s individual market rate increase 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.
- 2018: Average rate increase of 28.5 percent. BCBSTN increased average premiums by 21.4 percent; Cigna increased average premiums by 36.5 percent. Silver plans became disproportionately expensive in 2018 in Tennessee (driving a significant chunk of the overall rate increase), as the Trump administration eliminated funding for cost-sharing reductions (CSRs). Although the official notice of the funding cut didn’t come 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 noted that 14.1 percentage points of their rate increase was due to the fact that the Trump Administration had not committed to funding cost-sharing subsidies.
- 2019: Average rate decrease of 12.4 percent. But 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. Premium subsidies are based on the cost of the benchmark plan, so subsidies decreased by a larger margin than average premiums.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
- 2020: Average rate decrease of about 1.1 percent. But benchmark premiums dropped by 7 percent, leading to some people paying higher after-subsidy premiums for their coverage in 2020. 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 was the second year in a row that subsidy amounts 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).Tennessee’s exchange insurers implemented the following average rate changes for 2020:
- 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
Enrollment in Tennessee’s exchange: 2014 through 2020
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 200,445 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.
Which insurers offer coverage in Tennessee's exchange?
There are six insurers offering coverage in Tennessee’s exchange in 2021, up from just three in 2018. Here’s a summary of how insurer participation in the state’s exchange has changed over the years.
- 2014: 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.
- 2015: Time/Assurant joined the Tennessee exchange statewide in 2015, bringing the total number of participating insurers to five.
- 2016: Four insurers offered plans: BCBSTN, Cigna, Humana, and UnitedHealthcare. UnitedHealthcare was new to the exchange for 2016, and 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. But Assurant and Community Health Alliance both stopped selling plans at the end of 2015. The CO-OP’s demise was due in part to the severe shortfall in federal risk corridor funding, although 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, leaving 27,000 enrollees who needed to select new coverage for 2016 from a different carrier.
- 2017: Plans were available from Humana, Cigna, and BCBSTN. 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). 2017 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.
- 2018: 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. 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:
- 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.”
- 2019: 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 had 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
- 2020: Tennessee continues to have five exchange insurers in 2020, but three have larger coverage areas. Blue Cross Blue Shield of Tennessee came back to the Memphis and Nashville areas for 2020. Celtic expanded into the Nashville and Knoxville areas, and Cigna expanded into the Chattanooga and Jackson areas.
- 2021: UnitedHealthcare rejoined the exchange in Tennessee for 2021, after leaving at the end of 2016. That brings the state to six insurers. UnitedHealthcare’s plans are available in all counties in rating areas 3, 4, 5, 6, and 8 (southern/central and western Tennessee).
Tennessee Insurance Commissioner’s reform proposals
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:
- 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.