Tennessee insurance companies who sell policies on the individual marketplace had some of the country's most profitable plans last year, according to a state-by-state comparison from the Kaiser Family Foundation.
For the first years of the marketplace, Tennessee insurers lost money, often paying out far more on claims than they were charging in premiums. That led to a big run-up in rates — more than 185 percent since the Affordable Care Act marketplace began.
But things really turned a corner in 2017, when only 74 percent of the money collected from patients was put toward medical bills. Only five states had more profitable plans. Tennessee was well below the federal minimum of 80 percent. And yet rates for the next year still increased by more than 50 percent.
Mandy Pellegrin, policy director for the Tennessee-based Sycamore Institute, says insurers may not have been aware how well they were doing when the state's approval process began.
"They were submitting prices for 2018 in the middle of 2017, so they didn't actually know that 2017 was going to pan out that way," she says.
Rates are now going down in Tennessee by an average of 26 percent next year. Under the Affordable Care Act, insurers are required to issue rebates if their profits exceed the federal threshold. But a Kaiser Family Foundation policy expert says that's unlikely in Tennessee since profits are offset by losses in prior years.