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VOL. 39 | NO. 42 | Friday, October 16, 2015

Why are Tennessee’s ACA rate hikes among nation’s largest?

Officials: We're less healthy, use more services than other states

By Ellen Margulies

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Can you imagine your car payment going up by 44 percent next year? Or that the cost of your cable was going up another 36 percent per month?

That’s what it will feel like for hundreds of thousands of Tennesseans in 2016 as the nation gets ready for its third year of the Affordable Care Act, a.k.a. Obamacare, which provides health care insurance to more than 231,440 people in the state who couldn’t otherwise obtain insurance.

Meanwhile, insurers have watched their costs spiral, and while Tennessee was one of the five least expensive states in terms of premiums, the affordability portion of the Affordable Care Act seems to be ebbing away.

In August, the Tennessee Department of Insurance and Commerce approved price hikes for the four pre-existing health insurance providers in Tennessee. For the 70 percent of Obamacare enrollees in this state who get insurance from BlueCross BlueShield of Tennessee, that means a jump of over 36 percent in monthly premiums. Community Health Alliance’s plans jump 44 percent; Humana’s clients will face a 5 percent increases, while Cigna plans go up .4 percent.

One reason for the large increase in Tennessee is the state’s overall unhealthy population, but that’s hardly the only factor. Insurers nationwide say medical bills were higher than anticipated in 2014, more people (and sicker people) are using the services than anticipated, healthier individuals have not signed up as the industry had hoped and drug prices have risen.

A comprehensive survey of rate proposals, published in The Wall Street Journal and elsewhere, states that the BlueCross BlueShield of Tennessee proposal is among the highest, but not as high, as the average increase being requested by Health Care Service Corporation in New Mexico, at 51.6 percent.

In Texas, insurer Scott & White is requesting a 32 percent increase. BlueCross BlueShield in New Mexico and Minnesota are suggesting increases of 50 percent or more. Blue Cross and Blue Shield of North Carolina is asking for a 26 percent hike, citing the cost of hospital in-patient care for cancer and heart conditions.

Insurors in many states are requesting increases in the single digits.

“The 2016 rates are set as low as feasibly possible in order to maintain a viable individual marketplace,” says Kevin Walters, spokesperson for the TDIC. “Tennessee’s individual insured population proved to be less healthy and/or to be higher users of medical services than the rest of the country.”

Increased costs in 2016

It’s hard to predict what costs and enrollment numbers will be like, but based on the first two years under the program, it’s almost a certainty that both will go up.

Insurance companies find themselves grappling with the challenge of paying the medical expenses for enrollees that, pre-ACA, they refused to insure. Enrollees who may be enjoying insurance for the first time in a long time are aghast at the soaring cost of premiums. And the state of Tennessee is trying to find a way to ease the untested road ahead for both sides of the equation.

TDIC “cannot approve inadequate rates that could lead to financial hardship for the carrier,” Walters says. “We understand the challenges faced by Tennessee consumers and minimized the rate increases to the extent possible. We expect that some carriers may still lose money on these blocks of business.”

BlueCross BlueShield of Tennessee says part of the reason for the large rate increase is that companies just didn’t have enough data in the first year or even this year to determine how the expenses would compare to revenues.

“Rates for 2014 and 2015 were filed with little to no claims history on this new line of business,” says Michael Eiselstein, director of insured products and exchanges for BlueCross BlueShield of Tennessee.

“Overall, fewer younger and healthier people signed up in Tennessee than what was projected to balance the risk pool for Marketplace plans.”

“Those who did enroll with BlueCross were much less healthy, and claims experience indicates the amount of medical care for this group was considerably more than projected. Now with a year of claims data, carriers are able to more accurately price plans for 2016.”

It seems hard to swallow when an individual who started out at, say, $312 per month for coverage (this year’s state average premium payment) in 2014 then saw their plan increase to nearly 19 percent to $371 for 2015 and in 2016 will now have to pony up over $500 a month.

“As we get the rates, we’ll look at it and try to give them alternatives which make sense to the individual,” explains Jim Carroll, a Nashville health insurance broker whose firm helps guide clients toward the right coverage. “Thirty-six percent is going to be very, very difficult for a lot of people.”

Still, the big rate hikes may not be all bad news for consumers, Carroll says. With BlueCross commanding such a large share of the market, the double-digit rate hike may lead consumers to consider choices they might not have looked at otherwise, such as UnitedHealthCare, a new Marketplace provider this year in Tennessee.

“I think it’s going to create more of a level playing field,” he says.

Carroll has been an insurance broker for more than 50 years, and despite the numerous efforts of Congress to overturn the ACA, he believes it’s here to stay. And as long as that’s the case, he’ll continue working to help people navigate the government website, the Marketplace and all the options.

“The costs are absurd to a lot of people,” Carroll says.

Help is available

The good news is, enlisting an insurance broker or an insurance company for help won’t cost consumers anything.

Brokers like Carroll get paid by insurance companies, and consumers can also seek help from the companies themselves.

“A broker is the way to go,” he says. “To simply go to Healthcare dot gov is a real mistake because they won’t get the same level of advice.”

The state, too, will try to help, Walters adds.

“TDCI is always happy to help consumers confused by insurance policies or practices,” he says.

“In addition, licensed agents are brokers available across the state. These individuals can assist consumers in selecting the best plan for themselves and their families, given the circumstances of the consumer.

“Consumers can also turn to registered Navigators and Certified Application Counselors. These entities were created by the ACA to assist consumers in navigating the new health insurance marketplace.”

The information is out there if the consumer is willing to do some sleuthing.

For people like Joe Smith, who does contract work in advertising and marketing, there are some advantages to that.

“I am totally going to Healthcare dot gov” to research options, Smith says.

“I’m able to drill down, back out and drill back in again and the lowest price is at the top. It tells me who is providing it. If I have some reason to not trust that provider, then I can decide not to pay that little and pay a little more to get a trusted name.

“To me, that puts it in a much better light.”

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