An insurer just stepped in to save Tennessee's Obamacare market from disaster

After insurer Humana decided to step away from the Knoxville, Tennessee-area individual insurance marketplace, the Affordable Care Act's exchange was left without an insurer for the 2018 plan year.

In a letter on Tuesday, however, Blue Cross Blue Shield of Tennessee (BCBST) said it would step into the area and provide coverage next year.

"With this in mind, I want to confirm that BlueCross is willing to serve the Knoxville region in the 2018 individual Marketplace," JD Hickey, CEO of BCBST, said in the letter.

Part of the reason that BCBST was willing to come back into the market, Hickey said in the letter, was improved financial stability in its existing Obamacare business.

"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," Hickey wrote. "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."

The average benchmark premium in Tennessee increased by 63% in 2017, according to the Department of Health and Human Services. Most health-policy analysts had projected it would be a one-time surge, since many plans had kept their costs artificially low during the early years of the exchanges. Critics pointed to the increases as a sign of collapse.

While Hickey stressed that the decision was "in no way a political decision," the BCBST CEO cited a number of uncertainties for the insurance market that are derived from political decisions. These uncertainties, said the letter, meant the company would have to raise premiums to protect against potential short falls.

From the letter:

"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."

The Trump administration is considering eliminating the three provisions Hickey mentioned, and many insurers have expressed concern about the possibility.

According to Holly Fletcher at the Nashville-based Tennessean, the Tennessee insurance commissioner also spoke to other insurers, including Humana, about returning to the area to avoid having no insurers.

No areas of the country currently have zero insurers, but states like Iowa have faced that possibility. If all insurers backed out of an area, people in those parts of the country could have the penalty for not having insurance waived and be forced to go without coverage.

Read the full letter from Blue Cross Blue Shield of Tennessee here »

An insurer just stepped in to save Tennessee's Obamacare market from disaster

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