After years of price spikes, the individual health insurance marketplace in Tennessee is showing signs of stabilizing — even though monthly premiums are expected to take another big jump nationally.
The difference, says Tennessee's largest insurer, is that it already planned for some of the latest changes to the Affordable Care Act.
Nationwide, insurers are preparing for many young and healthy people to drop coverage since starting in 2019 there won't be a penalty. But BlueCross BlueShield of Tennessee had already factored that into this year's rates.
"We were dealing with a lot of uncertainty," says Kelly Paulk, a BCBST vice president who oversees the individual marketplace. "One of those things that we did assume was that maybe they would not enforce the individual mandate in 2018."
BCBST and Cigna were also told by the state's insurance commissioner to assume the White House would cut cost-sharing reduction payments, which it did. That assumption accounted for 14 percent of their respective 21 and 37 percent premium hikes for 2018 rates.
The rate increases were enough to help BCBST turn its first profit on the marketplace plans — more than $100 million. The insurer is now projecting only a small rate increase for next year, or perhaps none at all. Its rates will be submitted for approval by state regulators in July.
Association Health Plans
Another unknown for insurers with individual plans is how many healthy customers will decide to buy cheaper plans from nonprofit associations, which can turn people away for pre-existing conditions. President Trump is now allowing trade groups to provide health plans that don't meet Obamacare standards.
"What's different about Tennessee is we've had these kind of plans here, available through Farm Bureau," says Laura Berlind, executive director of the Sycamore Institute, a public policy think tank. "So we may see the effect of the increased availability of those plans in Tennessee maybe less."
Tennessee Farm Bureau covers about 25,000 residents with these bare-bones health policies — a previously exclusive deal protected by Congress. But until now, people who bought those plans had to also pay the tax penalty for not having health insurance.
Even if Tennessee does dodge a big rate increase, the state still has some of the highest premiums in the nation, even though it started out with some of the lowest.
But the sticker price is also becoming less and less relevant because federal subsidies are growing even faster than the premiums. Most of the 229,000 people covered in Tennessee get a subsidy, which can sometimes cover all of their monthly payments.