Tennessee on the front lines of Obamacare meltdown

Tennessee isn't the only state looking to salvage its Obamacare insurance exchange, but its problems are illustrative of how Obamacare's meltdown is proceeding.

The state director and the president of Club for Growth in Tennessee penned an op ed in the Wall Street Journal that lists the ways that state government is trying to save what they can of a collapsing system.

Seventy-three out of Tennessee’s 95 counties will have only one insurer on the exchange, meaning no meaningful competition whatsoever. In regions where BlueCross BlueShield is pulling out, there will be two remaining major carriers, Cigna and Humana. The only large metro area with more options will be Chattanooga.

Then there are the premiums. State regulators have already approved the highest annual rise in the nation, a weighted average of nearly 56%, according to data at ACASignups.net. The rate increases authorized in late August include an average of 62% for BlueCross BlueShield, 46% for Cigna and 44% for Humana. The latter two companies could ask to revise their rates upward depending on how many former BlueCross consumers they pick up.

The bottom line is that Tennesseans on ObamaCare must choose from fewer, and increasingly unaffordable, options. Some exchange buyers, those covered by subsidies, will bear only part of this additional cost. For the roughly 30,000 Tennesseans who are ineligible for subsidies, the higher price will come completely out of their own pockets. Not to mention that all ObamaCare consumers face rising deductibles, which aren’t covered by subsidies and can range up to $6,850 for the most “affordable” family plans.

It’s easy to imagine Commissioner McPeak’s fear of an outright exchange collapse coming true in the near future. The more unaffordable plans become, the angrier consumers will get. BlueCross BlueShield’s $500 million losses won’t disappear when the company leaves the market. Instead, the red ink will flow toward the remaining insurers as they pick up those customers. Cigna and Humana have not publicly said whether their exchange plans have turned a profit.

Naturally, this chain of events has Tennessee lawmakers clamoring for change. One of the loudest demands—coming from Democrats like Nashville’s U.S. Rep. Jim Cooper—is that the state double down on ObamaCare by expanding Medicaid. But this is a cure worse than the disease, since it would force many Tennesseans into a second-class health-care system while jeopardizing state finances for years to come.

More important, ObamaCare’s unraveling shows the danger of a one-size-fits-all federal program. What’s happening in Tennessee is only a nationwide harbinger. Every single neighboring state will have less competition on its ObamaCare exchanges next year. The entire state of Alabama will have only one insurer. Almost all are facing double-digit premium increases: in Mississippi a weighted average of 16%; in Kentucky 25%; in Georgia 33%.

By this time next year, more than a third of counties nationwide will have no insurance carrier or only one. This will happen even if Obama is able to use a Treasury Department slush fund to make up some of the massive losses by insurance companies.

The Hill:

Republicans in Congress are plotting ways to block the Obama administration from paying insurance companies hundreds of millions of dollars as part of an ObamaCare program. 

GOP lawmakers say they are looking at “a dozen” options — including a possible provision in the year-end spending bill — to prevent the administration from using an obscure fund within the Treasury Department to pay out massive settlements to insurers.

The insurance companies are suing over a shortfall in an ObamaCare program that they say is damaging their businesses. 

Settling the cases could help insurers deal with losses on the ObamaCare marketplaces, but Republicans argue the move would be a “bailout” that would circumvent the will of Congress. 

Whether federal officials will actually pursue the settlements is an open question.

Any settlement between the Justice Department and health insurers would likely come out of the so-called judgment fund, a pool within the Treasury that is typically used in federal legal disputes.

Lawyers for the House Energy and Commerce Committee are exploring whether the insurer settlements would comply with the law and if so, what kind of legislation could be passed to block it, said Rep. Morgan Griffith (R-Va.).  

“We’re looking at ways to deal with that issue — mechanisms, either legislatively or judicially,” Griffith said. He said he has already reviewed some drafts of legislation that could go before the committee. “Eventually I think there’s going to be a piece of legislation, but we want to get it right.”

It is doubtful that if the companies are able to get the money, any of them who have exited the state exchanges will return. This means that it isn't likely that the bailout will slow the collapse of Obamacare.

 

Tennessee isn't the only state looking to salvage its Obamacare insurance exchange, but its problems are illustrative of how Obamacare's meltdown is proceeding.

The state director and the president of Club for Growth in Tennessee penned an op ed in the Wall Street Journal that lists the ways that state government is trying to save what they can of a collapsing system.

Seventy-three out of Tennessee’s 95 counties will have only one insurer on the exchange, meaning no meaningful competition whatsoever. In regions where BlueCross BlueShield is pulling out, there will be two remaining major carriers, Cigna and Humana. The only large metro area with more options will be Chattanooga.

Then there are the premiums. State regulators have already approved the highest annual rise in the nation, a weighted average of nearly 56%, according to data at ACASignups.net. The rate increases authorized in late August include an average of 62% for BlueCross BlueShield, 46% for Cigna and 44% for Humana. The latter two companies could ask to revise their rates upward depending on how many former BlueCross consumers they pick up.

The bottom line is that Tennesseans on ObamaCare must choose from fewer, and increasingly unaffordable, options. Some exchange buyers, those covered by subsidies, will bear only part of this additional cost. For the roughly 30,000 Tennesseans who are ineligible for subsidies, the higher price will come completely out of their own pockets. Not to mention that all ObamaCare consumers face rising deductibles, which aren’t covered by subsidies and can range up to $6,850 for the most “affordable” family plans.

It’s easy to imagine Commissioner McPeak’s fear of an outright exchange collapse coming true in the near future. The more unaffordable plans become, the angrier consumers will get. BlueCross BlueShield’s $500 million losses won’t disappear when the company leaves the market. Instead, the red ink will flow toward the remaining insurers as they pick up those customers. Cigna and Humana have not publicly said whether their exchange plans have turned a profit.

Naturally, this chain of events has Tennessee lawmakers clamoring for change. One of the loudest demands—coming from Democrats like Nashville’s U.S. Rep. Jim Cooper—is that the state double down on ObamaCare by expanding Medicaid. But this is a cure worse than the disease, since it would force many Tennesseans into a second-class health-care system while jeopardizing state finances for years to come.

More important, ObamaCare’s unraveling shows the danger of a one-size-fits-all federal program. What’s happening in Tennessee is only a nationwide harbinger. Every single neighboring state will have less competition on its ObamaCare exchanges next year. The entire state of Alabama will have only one insurer. Almost all are facing double-digit premium increases: in Mississippi a weighted average of 16%; in Kentucky 25%; in Georgia 33%.

By this time next year, more than a third of counties nationwide will have no insurance carrier or only one. This will happen even if Obama is able to use a Treasury Department slush fund to make up some of the massive losses by insurance companies.

The Hill:

Republicans in Congress are plotting ways to block the Obama administration from paying insurance companies hundreds of millions of dollars as part of an ObamaCare program. 

GOP lawmakers say they are looking at “a dozen” options — including a possible provision in the year-end spending bill — to prevent the administration from using an obscure fund within the Treasury Department to pay out massive settlements to insurers.

The insurance companies are suing over a shortfall in an ObamaCare program that they say is damaging their businesses. 

Settling the cases could help insurers deal with losses on the ObamaCare marketplaces, but Republicans argue the move would be a “bailout” that would circumvent the will of Congress. 

Whether federal officials will actually pursue the settlements is an open question.

Any settlement between the Justice Department and health insurers would likely come out of the so-called judgment fund, a pool within the Treasury that is typically used in federal legal disputes.

Lawyers for the House Energy and Commerce Committee are exploring whether the insurer settlements would comply with the law and if so, what kind of legislation could be passed to block it, said Rep. Morgan Griffith (R-Va.).  

“We’re looking at ways to deal with that issue — mechanisms, either legislatively or judicially,” Griffith said. He said he has already reviewed some drafts of legislation that could go before the committee. “Eventually I think there’s going to be a piece of legislation, but we want to get it right.”

It is doubtful that if the companies are able to get the money, any of them who have exited the state exchanges will return. This means that it isn't likely that the bailout will slow the collapse of Obamacare.