Tennessee’s top insurance official warns that the Affordable Care Act exchange is in danger of “collapsing” after approving major rate hikes for ACA plans in the state.
“I would characterize the exchange market in Tennessee as very near collapse … and that all of our efforts are really focused on making sure we have as many writers in the areas as possible, knowing that might be one,” Insurance Commissioner Julie Mix McPeak told The Tennessean. “I’m doing everything I can to prevent a situation where that turns to zero.”
McPeak was appointed by Republican Gov. Bill Haslam to the position, so her stated skepticism of Obamacare is not surprising. But the premium increases demanded by insurers, which McPeak said she was forced to accept, suggest that the ACA market in the state is indeed far from profitable for participating health plans.
Blue Cross Blue Shield is the only insurer that remains statewide in the ACA marketplace, and premiums for its plans will rise an average of 62 percent in 2017. And that follows a 32 percent increase in 2016.
Cigna, which increased its premiums less than 1 percent this year, will raise rates by 46 percent next year. Humana will increase its rates by 44 percent, after only raising them 16 percent last year.
Both Cigna and Humana are in the midst of proposed mergers that the Obama administration is trying to block in court. Although Cigna has signaled it is losing interest in being acquired by Anthem, Humana appears committed to being acquired by Aetna.
The administration announced earlier this year that it would be sending states additional funding to bolster their scrutiny of rate hikes requested by insurers. States needed to put greater pressure on insurers to justify the proposed increases, according to the administration.
In recent weeks, critics have suggested that Aetna and Anthem have retaliated against the administration’s decision to block the merger by withdrawing from ACA markets.
Humana, however, had indicated months earlier that it was planning to pare down its Obamacare business, and Cigna appears unlikely to engage in retaliation after signaling that it was considering dropping the merger plans.