BlueCross BlueShield of Tennessee is negotiating with state officials about what conditions they need to return to the individual insurance market in 2018 in Knoxville — an area that lacks an insurer for the next year.
The decision is contingent upon the state agreeing to some conditions. The insurer still has reservations about the risk on the individual market but sees expanding into Knoxville as "an extension of our mission," J.D. Hickey, president and CEO of BCBST, wrote in a letter to the insurance commissioner dated March 9.
A 16-county region around Knoxville was left without an insurer for 2018 when Humana pulled out of the individual exchange.
"Again, I want to stress that our openness to this action is in now way a political decision. Nor is it a reflection of our perspective on the stability of individual Marketplace overall. In fact, we cant justify doing so based solely on current political uncertainty, but instead we believe it is an extension of our mission to serve our fellow Tennesseans, especially those who do not have other options for coverage," wrote Hickey.
The negotiations and willingness to sell is the "first glimmer of hope" about stability in the Tennessee market, said Julie Mix McPeak, insurance commissioner, in an interview with The Tennessean.
The individual insurance market in Tennessee has been in a state of upheaval over the last few years as insurers withdrew — including BCBST from three cities — putting the state under a national microscope as lawmakers in Washington debate a health care overhaul.
The insurer indicated that its premiums will be priced to reflect federal uncertainty regarding the future of the exchange.
In fact, the insurer wrote that "we believe it will be necessary to price-in those downside risks, even at the prospect of a higher-than-average margin for the short term, or until stability can be achieved." It cited uncertainty around the future of cost-sharing reductions and the removal of the individual mandate as well as the health insurer tax.
It also wants flexibility on the state's interpretation of the federal regulation that requires an insurer to cover 51 percent of rating areas in the previous year. The regulation and penalty are in place to stop revolving door type exits and returns.
The insurer wrote that its financial performance in 2017 was improved than years prior on better claims and a "more sustainable rate structure based on the medical needs of the members we're serving." The insurer requested, and received, an average premium rate increase for 2017 above 60 percent.
Tennessee has been a focal point for industry observers and lawmakers watching the future of the individual exchange as the Knoxville region was among the first to be without an insurer for 2018.
BCBST said it reserves the option to not sign with the final agreement with the U.S. Department of Health and Human Services in September, which is when it left Knoxville, Memphis and Nashville in 2016.
BCBST met with the TDCI on May 8, and "that's where the genesis of the decision," started, said McPeak, who called the decision a "late breaking" development.
Filings regarding the intention to sell for 2018 are due in late June.
BlueCross letter to TN Dept. of Commerce & Insurance Director:
"Dear Commissioner McPeak,
We appreciate getting to meet with you and your team yesterday to update you on BlueCross’s position relative to the individual Marketplace for Tennessee as the first deadline for 2018 approaches.
As we discussed, BlueCross’s journey to get and keep people covered under this program has proven challenging, with three consecutive years of volatility and losses totaling more than $400 million. I’m pleased to report that, though still very early, our 2017 performance has improved due to a combination of better claims experience and a more sustainable rate structure based on the medical needs of the members we’re serving.
With this in mind, I want to confirm that BlueCross is willing to serve the Knoxville region in the 2018 individual Marketplace.
Again, I want to stress that our openness to this action is in no way a political decision. Nor is it a reflection of our perspective on the stability of individual Marketplace overall. In fact, we can’t justify doing so based solely on current political uncertainty, but instead we believe it is an extension of our mission to serve our fellow Tennesseans, especially those who do not have other options for coverage. As you know, BlueCross made a similar decision for 2017 when we intentionally elected to stay in five of eight Marketplace regions to ensure every region had at least one coverage option, and none was left uncovered.
Given the potential negative effects of federal legislative and/or regulatory changes, we believe it will be necessary to price-in those downside risks, even at the prospect of a higher-than-average margin for the short term, or until stability can be achieved. These risks include but are not limited to the elimination of Cost Sharing Reduction subsidies (CSRs), the removal of the individual mandate and the collection of the health insurer tax.
As we discussed, we will request flexibility related to the requirement to serve a majority (51%) of the rating areas year over year, specifically with respect to adding Knoxville to our existing five region footprint. And, while we hope this is unnecessary, we reserve the right not to sign our QHP agreement in September in the event of any post-bid changes that destabilize the market and affect our risk exposure.
With our past losses and the continued uncertainties associated with the individual Marketplace, we are not willing to consider expanding our current footprint in 2018 beyond the addition of the Knoxville region, as the other geographies are currently covered by other carriers. We believe this fiscally conservative approach to limit our risk profile in this market continues to be in the best interest of all the members BlueCross serves across all lines of our business.
Finally, I want you to reiterate that BlueCross’s decision is a direct reflection of our confidence in the expertise and judgment of you and your team. We appreciate all of your efforts to help achieve some measure of stability for consumers and carriers alike in a most challenging market.
I’ll ask our team to schedule another visit soon to discuss our thoughts for 2018 in more detail and how best to move forward.
President & CEO"
Reach Holly Fletcher at firstname.lastname@example.org or 615-259-8287 and on Twitter @hollyfletcher.