BCBST's exit from 3 Obamacare markets sends shock waves
BlueCross BlueShield of Tennessee sent shock waves Monday across Tennessee with the company's decision to exit the Obamacare exchange in Nashville, Memphis and Knoxville, a move that highlights persistent volatility in the young health insurance marketplace.
Three years into the Affordable Care Act exchange, the state’s largest insurer is grappling with hefty losses and ongoing uncertainty on the marketplace. BCBST is open to coming fully back into the market once uncertainties about policies and the membership wane.
The insurer made "an extremely difficult but necessary decision" to leave the state's three largest markets as it tries to manage its number of members to hit a break-even point after three years of losses, said Roy Vaughn, chief communications officer of BCBST. The insurer is projecting losses approaching $500 million by the end of 2016. BCBST is not alone, as many insurers have been saddled with uncertainty and significant losses in the federally run marketplace.
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The Chattanooga-based insurer, which was the only insurer that originally planned to sell statewide, expects to shed nearly 130,000 people from its rolls under the change and keep about 80,000 primarily in rural areas.
"In our rate request we took great care to close the gap between premiums and costs. We feel like we’ve adequately addressed that, but uncertainties at the federal level could still put us in a loss position even if our experience with the group is better and our rates better reflect our medical costs," Vaughn said in an interview with The Tennessean.
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Vaughn said the company's plans were designed to ensure at least one insurer remained in every part of the state next year. The 95 counties are divided among eight regions. In 2016, BCBST and UnitedHealthcare were the only two insurers to sell statewide.
Tennessee’s insurance commissioner, Julie Mix McPeak, allowed insurers to refile 2017 premium requests in August after Cigna and Humana raised the possibility of leaving the market because the first requests proved too low.
Competition, McPeak said, was a priority for the Tennessee Department of Commerce and Insurance to ensure shoppers had the freedom to make a decision on what plan met their health and financial needs.
Before Friday, the state already had 57 counties where there was only one insurer. Now there will be 73.
"While the (TDCI) remains concerned about any carrier ceasing its coverage in any area of Tennessee, every company must make its own decision about providing coverage on the exchange," said Kevin Walters, spokesman for the TDCI. "All counties in Tennessee have at least one option for coverage. All of our efforts have been focused on ensuring at least one option in each rating area, recognizing the difficulties of the marketplace."
'We didn’t see this coming'
BCBST’s move — despite its recent insistence that it was weighing all of its options — caught many people, in the state and Washington, D.C., off guard.
The company formally made the change to its 2017 plans in a Friday filing with the U.S. Department of Health and Human Services, roughly a month after it raised the possibility of scaling back. Earlier this summer, BCBST requested — and was granted — state approval for an average 62 percent premium increase. The rate hike is still pending federal approval.
"It’s not something we want to do, but we believe we must look out for the health care and financial security for all the members that we serve," Vaughn said.
The decision will reshape open enrollment, which begins Nov. 1, for people who buy individual plans in the state's three largest markets — and where Cigna or Humana, or both, are expected to sell plans. About 71,495 people in Nashville, 29,246 in Knoxville and 30,326 in Memphis will have to look to another insurer for coverage in 2017.
The exit surprised Tatum Allsep, executive director of the Music Health Alliance, a nonprofit that helps musicians access health care, although she expects volatility in the marketplace for a couple more years until there is more stability at the federal level.
“We didn’t see this coming,” Allsep said. “Until a new administration is in and this is dealt with, for the next couple of years this is what we’ll be doing: juggling resources.”
Allsep and her team will start to plan how her musician clients can patch together a system of preventative care through a variety of faith-based, publicly owned and federally qualified health centers. She said that Cigna and Humana offer “good coverage” but it’s primarily for emergencies outside the state rather than people traveling and looking to maintain preventative care.
“The bottom line is everyone will still have access,” Allsep said. “We’ll just have to hit reset and put in a new plan of action with the resources, which are great resources. We just have to be creative.”
Eric Jans, an insurance broker in East Nashville, mailed out a letter to 220 clients late last week explaining the expected jumps in premiums. Now, with BCBST's exit he has to figure out a new plan for his clients, nearly 90 percent of whom are BCBST members.
"I’m going to help them like I always have — I just don’t know what that’s going to be," Jans said. "It all changed this morning.”
Despite the seismic changes to the state’s insurance options — UnitedHealthcare, which sold in all counties, already bowed out — Marjorie Connolly, a spokeswoman for the U.S. Department of Health and Human Services, pointed out that all counties will continue to have at least one carrier.
“All Tennesseans will have access to coverage next year, and thanks to financial assistance, most people will be able to select a plan for less than $75 per month,” Connolly said in a statement. “We look forward to Tennesseans coming to shop for plans that include free preventive care and no lifetime limits when Open Enrollment begins on November 1.”
Shoppers in the three metro areas will not be able to buy either on-exchange plans, where tax credits may be used, or off-exchange plans, which are not eligible for tax credits.
But even in counties where BCBST will sell, options will be more limited than last year, when people on average had 10 plans per issuer to peruse.
In the five regions where it remains, BCBST will offer four plans — one bronze, two silver and one gold — all on the statewide network S.
"We intentionally chose to withdraw from regions where there were other insurance options available," Vaughn said. "In doing so we are trying to make sure Tennesseans have options for coverage in every region.”
There are similar scenarios playing out in other states. The BlueCross BlueShield insurers in Arizona and Minnesota are not selling statewide, and the BCBS in Nebraska will sell only off-exchange, which means no one will be eligible for tax credits.
Other insurers, including Aetna, Oscar and Humana, have revised plans for 2017 in other parts of the country.
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Election rhetoric about changes or repeal of the federal law adds to the complexity of forging a future strategy, which is already muddled by changes to transition programs and, in Tennessee, chronically underpriced premiums.
In August, McPeak characterized the exchange as being "very near collapse" because of the potential of losing insurers in some or all parts of the state. Aetna will sell off-exchange plans statewide for the first time, although those will not be eligible for tax credits to offset the monthly premiums.
Spokesmen for Cigna and Humana declined to comment on filings with HHS until early October when final federal approval is expected.
Most workers in Tennessee get insurance through employer-sponsored plans, according to a University of Memphis study, which estimates 82.5 percent of employees in the state work for a company offering coverage. BCBST will still offer commercial, Medicare and Medicaid plans in all areas.
BCBST is not ruling out coming back into all markets — a decision it will assess every year.
The insurer would like to see the market stabilize, perhaps through tighter eligibility rules and additional younger members, as well as more certainty at the federal level, where there is still clamor about changes and repeals.
"The ACA marketplace rules often change in the middle of the game. Beyond closing the gap between the medical costs we need to cover in our premiums, there are changes that could occur next year, midyear that could put us in a loss position yet again," Vaughn said. "The prospect of future losses has us in a place where we believe we need to reduce our risk in hopes that this marketplace will stabilize at some point.”
Close to 130,000 people in the state will need to select a new carrier for insurance in 2017 when BlueCross BlueShield of Tennessee pulls out of the Affordable Care Act exchange in Nashville, Knoxville and Memphis. The company provided an incorrect number for a story.
Reach Holly Fletcher at 615-259-8287 and on Twitter @hollyfletcher.