Subsidies, D.C. uncertainty point to summer of ACA unease in Tennessee

Partisan bickering in Washington and ambiguity about insurer presence on the Obamacare exchange in Tennessee could lead to a 2018 spike in the number of uninsured people around the state after years of coverage gains — placing the Volunteer State on the front lines of the national battle over healthcare.

The outcome holds major implications across the state, from Memphis to Johnson City. In East Tennessee alone, there is a 16-county hole where there is no insurer with plans to sell on-exchange plans next year. The area has lost four insurers in three years, with Humana’s looming departure leaving tens of thousands wondering if they will be able to buy insurance in 2018.

Without assurances about the future of the exchange, at least in the short-term, luring BlueCross Blue Shield of Tennessee or Cigna back into uncovered areas will be challenging, said Julie Mix McPeak, commissioner of the Tennessee Department of Commerce and Insurance.

The number of Tennesseans who were uninsured in 2016 fell to the lowest point in a decade. The decrease — at least in part attributable to the Affordable Care Act, or Obamacare — came even without Medicaid expansion in the state.

But insurers are heading for the exchange’s exits after a rough few years of losses. The ongoing debate over to whether repeal-and-replace or repair the Affordable Care Act, coupled with constant revisions to insurer strategies, leaves people wondering whether they will have insurance options next year.

► Related: 'Timing is critical' for Congress to stabilize individual health insurance, McPeak says

Tennessee was the first state where, barring a change in regulations or insurer plans, some counties will have no health insurance options on the federal exchange. Other states -- including Oklahoma, South Carolina and Iowa – are facing similar prospects.

The coming months will be pivotal. The individual market is a yearly scramble, with insurers have to decide what they need to charge in next year’s premiums before mid-summer.

Even amid rising premiums and congressional gridlock, the young insurance exchange has shown some signs of health. Insurers on the individual exchange were on track to get closer to break-even margins this year, according to an S&P Global Ratings Report. Even BCBST, which posted heavy losses in the early years of the exchange saw some improvement, according to the report.

Some states haven't seen the troubles that Tennessee has.

Yet the gains are thrown into question beyond 2017 by "potential legislative changes to the  U.S. Health insurance market and the pending legal battles over the cost-sharing subsidy," S&P wrote.

BCBST, for instance, has dialed back its commitment to the exchange as losses mounted and federal uncertainty casts a pall over whether the government will choose, or be able to, uphold its obligations.

The debate over the health, and necessity of the ACA, is a political and divisive battle while the impacts are felt in the daily life of people across Tennessee and the country.

While the 2018 individual health insurance landscape is clear as mud for shoppers and insurers, here are a few things to watch for in the coming months:

Cost Sharing Reductions

The use of cost sharing reductions, which subsidize out-of-pocket costs, including deductibles, for people who make 100-250 percent of the federal poverty line are being challenged by a lawsuit brought by Republicans in the U.S. House.

The future of the cost sharing reductions, or CSRs, is important for shoppers and insurers. Without the subsidies, which are meant to be a permanent component of the exchange, people may not be able to afford the costs outside of the premium.

Roughly 7 million Americans — including 55,000 members of BlueCross BlueShield of Tennessee —  are now receiving financial assistance for out-of-pocket costs, such as co-pays and deductibles, said Roy Vaughn, chief communications officer of BCBST.

"This assistance is built into their health benefit, and it would be disruptive to remove it abruptly, as people would be unable to access the care they need," Vaughn said.

Larry Levitt, senior vice president of special initiatives at Kaiser Family Foundation, said the lawsuit brings "tremendous uncertainty" to insurers although the impact depends on how many of the company's enrollees receive reductions and to what level. There are three levels of reductions based on income.

Insurers have to file their intent to sell in 2018 with TDCI in June, with rate increases due on July 1 — potentially before there is a CSR resolution.

There is not a uniform position on the future of CSRs from the U.S. Department of Health and Human Services or the White House, as recently as April 11. Kaiser Family Foundation's Gary Claxton, vice president, expects insurers would leave exchanges as soon as they are legally allowed if CSR payments stopped mid-year.

Insurer strategies

Until the filing season, it’s unclear what — if any — options people in Knoxville, or across the state for that matter, will have. Right now BlueCross BlueShield of Tennessee and Cigna are the only on-exchange insurers in the state, and neither is statewide.

Uncertainty extends months beyond the state's premium review process. BCBST made its decision to leave Knoxville, Memphis and Nashville in late September at the end of an approval process with HHS.

As of right now, BCBST said all options are on the table.

Cigna will assess its participation over the next few months "based on the evolving rules, regulations and design of the marketplace," said Jim Angstadt, spokesman.

"Ultimately, our participation in individual markets is contingent on market conditions and regulatory approval of our plan filings," Angstadt said.

Even if there are insurers in the state, the networks and plan structure are up in the air, said Michelle LaVone Richardson, an analyst with Decision Resources Group. If insurers know they are the only carrier in a region, there could be efforts to increase premiums more, or change payments to physicians and hospitals.

Last summer, Cigna and Humana were able to re-submit their rate requests to the TDCI when it looked like they priced too low to cover their costs.

And Saint Thomas Health scrambled to get in a network with Cigna after BCBST's decision to stop selling individual plans in the greater Nashville area.

“Obviously, none of us really know what is going to happen, and it’s going to affect tons of people” said LaVone Richardson.

Federal (in)action

On the heels of the failed American Health Care Act, Tennessee's Republican senators, Lamar Alexander and Bob Corker, are trying to help people who find themselves without an on-exchange insurer.

Since much of Tennessee — just as other parts of the country — is one health insurance company decision away from having no exchange plans, the proposed legislation would allow people to use tax credits to purchase off-exchange plans, such as from Aetna or Farm Bureau Health Plan in Tennessee. It would also remove the penalty if people had no on-exchange options.

McPeak, who warned of the insurer exits before they happened, is in touch with federal lawmakers and bureaucrats about what the state needs. She supports the Alexander-Corker legislation because it could give people options in the event insurers don't come into Knoxville.

“Whether, again, (federal health agencies) have the ability or interest in doing so, I’m not so sure, but my colleagues and I are in pretty constant communication with them about some things that they could assist with in terms of interpretations or rules,” McPeak said.

But time is growing short for Washington to be of any help to states grappling with withering competition.

"We are keeping both ears and both eyes on Washington,D.C., because there are so many different ideas and different courses of action underway that it’s hard for us, like everyone else, to discern what has a chance of moving and where we might expect some changes to the ACA in the time period that is so critical to us," McPeak said.

McPeak is optimistic about federal regulations and Congressional action, particularly around the Alexander-Corker bill, because she's seen "Congress work very, very quickly when it was motivated to do so."

Reach Holly Fletcher at hfletcher@tennessean.com or 615-259-8287 and on Twitter @hollyfletcher.