Holly Fletcher

USA TODAY NETWORK – Tennessee

Health insurers are asking state officials for hefty premium increases for the federally run exchange in 2017, with BlueCross BlueShield of Tennessee topping the requests with an average 62 percent increase.

Cigna is asking state officials for an average 23 percent rate increase for its plans; Humana is seeking an average 29 percent increase.

The average rate requests, if approved, may come as a shock to some policyholders, but the double digit requests are in line with both expectations and rate requests from around the country.

For comparison, Humana of Georgia is asking for an average 65.2 percent increase. Highmark in Pennsylvania is requesting 34.4 percent.

The insurers’ filings with the Tennessee Department of Commerce and Insurance show that the volatility of the exchange – and the questions about the health of consumers – has not settled.

“We understand this has an impact on people’s wallets and their lives and so we don’t want to be at this place to have to make this request. We regret having to do that,” said Roy Vaughn, vice president of corporate communications at BCBST in Chattanooga. “At the same time we know we have to cover the costs for the medical services that our members need. That’s a promise we make to them when they get coverage and we need to be able to cover that.”

Comments from all three insurers about the future of the exchange used the word “sustainable.” Finding the right balance – where premiums are not wildly outpaced by medical claims – is proving challenging.

Insurance Commissioner Julie Mix McPeak told state senators in January that she expected 2017 requests to be high. BCBST has lost about $300 million in two years and is on track to post a loss of more than $100 million for 2016.

BCBST data shows that exchange members averaged 31 claims in 2015 versus a 24 claim average from people who have employer-sponsored coverage.

Cigna wrote in the filing its "2015 financial results in Tennessee are worse than the level required for long-term sustainability in the market."

"In the months to come, we look forward to working constructively with regulators to deliver a healthy and sustainable individual health plan marketplace in that benefits the health, well-being and sense of security of our customers," said Katie Sulkowski, spokeswoman for Cigna in Nashville, in a statement.

Some 21,047 people enrolled in Cigna plans can expect changes ranging from negative 2 percent to 34 percent, according to the rate request document. Cigna increased its market share by 8 percent from 2015 to 2016, according to Decision Resources Group.

Humana insures 19,554 people on the exchange.

Humana's proposed rates are "primarily driven by changes in expected claims costs that reflect the rising cost of medical services" in addition to changes to provider contracts and increased use of services, said Kate Marx, spokeswoman.

Humana and Cigna both referenced the expiration of federal reinsurance and risk corridor programs as variables.

"This program was intended to help health plans meet the needs of high-cost enrollees while making individual market premiums more affordable for consumers," said Sulkowski. "With the phase out of this program the true cost of health plans will be more evident in the marketplace."

It’s important to remember that many people buying insurance haven’t had coverage in years, sometimes never in their lives, said Jackie Shrago, a special project coordinator with the Tennessee Health Care Campaign.

There will continue to be affordable coverage options because “the vast majority of consumers” qualify for tax credits, said Jonathan Gold, spokesman for the U.S. Department of Health and Human Services. The average monthly premium increased, after tax credits, $2 in 2016, per HHS data.

Gold and Shrago expect consumers to shop around for the best price. However, people in 60 percent of Tennessee’s counties will only have one insurer on the marketplace.

“People in Tennessee understand how the Marketplace works, and they know that they can shop around and find coverage that fits their needs and budget," said Gold. "Today’s announcement is just the beginning of the rates process, and consumers will have the final word when they vote with their feet during open enrollment."

The number of people utilizing services is taking its toll. Community Health Alliance, the now-defunct co-op, saw medical claims overwhelm its collected premiums. Its 2016 request was increased by state officials before it entered into voluntary runoff.

“We haven’t had an indication that it’s going down at all at this point,” said Vaughn. “We’re hopeful that we will understand the rate of medical services our members will need in this group.

The insurers will communicate with state officials about the requests, and how they arrived at the figures, over the summer. Approved requests are expected in a few months.

Tough financial environment

Tennessee boasted some of the second lowest premiums in the country in 2014 and 2015 despite having the highest risk score from the U.S. Department of Health and Human Services. The risk score versus the average premiums is still unbalanced — even with the approved 2016 rate increases. BCBST asked for, and received, 36.3 percent.

The approved rates for 2016 led to some outrage when renewal letters came in the mail but, Shrago said, many people who came to enrollment events saw the increases absorbed by tax credits, which are calculated on the second lowest cost silver plan.

So far, the data coming in from insurers is not heartening to McPeak.

"They were losing money on every dollar they collected," McPeak said. "I hate, hate approving rate increases but we have to have companies that are solvent."

The challenging environment of high claims, too few premiums, and the phasing out of federal stabilization mechanisms is impacting which companies are willing to stick with the exchange.

The number of insurers selling on-exchange plans — there are plans available off-exchange but they aren't eligible for tax credits — continues to fall.

UnitedHealthcare's exit to reshape Tennessee exchange in 2017

In 2015, there were five insurers. In 2016, there were four. In 2017, there will be three. BCBST is the only insurer with the intent to sell plans in all 95 counties. With the loss of UnitedHealthcare, there are 57 counties where BCBST will be the only choice.

State officials reached out to other insurers about expanding their territorial footprint, but the companies declined, McPeak said.

“That scares me because we don’t want to end up with areas in our state where there is no one willing to write on the exchange," she said.

Reach Holly Fletcher at 615-259-8287 or on Twitter @hollyfletcher.

Insurers’ 2016 Market Share

BlueCross BlueShield of Tennessee: 68.9 percent

Cigna: 8.59 percent

Humana: 6.74 percent

UnitedHealthcare: 15.7 percent

Source: Decision Resources Group

2016 rate request approvals

BlueCross BlueShield of Tennessee: 36.3 percent average increase.

Cigna: 0.4 percent average increase.

Humana: 15.8 percent average increase.

UnitedHealthcare: First year on the exchange; no increase.

2017 rate requests