The distinguishing characteristic of Tennessee’s 2019 individual health insurance market may be competition—and geography will matter.

Great Smoky Mountains National Park/ Photo by Ivana Cajina on Unsplash

In a surprising twist, the distinguishing characteristic of Tennessee’s 2019 individual health insurance market may be competition rather than a redux of concern about whether the remaining insurers will leave the market.

Contrary to expectations, two new entrants, Bright Health and Ambetter by Celtic, have applied to sell insurance on the exchange while two existing insurers want to expand their footprint.

It’s a signal that people who buy their own policies don’t have to fret — in 2019 at least — about the possibility of having no options.

“What we’re seeing in the expansion here is insurers that have been successfully getting into other areas and they probably have some security it will translate here — built on the experience they have in other states,” said Melinda Buntin, chair of the Department of Health Policy at Vanderbilt University School of Medicine.

The ACA exchange covers only about 3 percent of Tennesseans, or 228,646 people, in 2018.

Yet since its creation via a contentious federal law, it has held an outsized role in political rhetoric that — depending on how a fight over pre-existing condition protections plays out — could influence some voters in the midterm elections.

Long term, the new entrants could help create a healthier insurance market that was once characterized by the insurance commissioner as “very near collapse” because of the possibility of counties without any insurer.

Mandy Pellegrin, policy director of the Sycamore Institute, wondered if the rush to compete for business could somewhat boost overall enrollment numbers if there’s a marketing blitz that puts open enrollment, which starts on Nov. 1, on more people’s radar.

New insurers will need to try to poach members from existing players so there could be a surge in marketing — which would offset substantial marketing and advertising cuts by the U.S. Department of Health and Human Services, Pellegrin said.

“This new set of plans will hopefully inject some competition and help keep those premiums down. I think it’s a signal that insurers expect the market to be fairly stable,” said Buntin.

A metropolitan divide

Many people who think they live in rural areas actually reside in a greater metro area under the Tennessee Department of Commerce and Insurance’s rating areas. There are eight distinct regions; five of which have a metropolitan core.

The geography matters.

Because in 2019 there will be a starker divide between insurance options for people who live in the rural rating areas versus those who are on the outskirts of a city. 

Competition in metro areas is picking up. The greater Memphis area will, in fact, have four insurers. Nashville could have three.

Meanwhile, BlueCross BlueShield of Tennessee is slated to once again be the only insurer selling in 57 counties.

 

There are fewer people eligible to buy plans in predominantly rural areas, which makes it a more challenging business play for insurers.

Rural areas may always have fewer options than metro areas given the nature of competition, according to a 2017 Urban Institute report that evaluated rural options across the country.

There is both less demand for individual insurance — rural counties tend to have a higher uninsured rate given the income requirements that bound enrollment in both TennCare and the ACA exchange — and there are fewer providers, which can shape contracting power.

Competition signals insurers expect stability

The new entrants could force competition in prices and marketing — a dynamic missing for years in parts of the state where shoppers were lucky if there was an option.

Insurers that offer lower cost plans typically rely on narrow networks to keep premium costs down.

People whose prime motivator is monthly cost is a boon for Bright because it’s reined in costs through a narrow network strategy, said Michelle La Vone Richardson, market analyst for Decision Resources Group.

For instance, in Colorado, Bright’s average silver plan cost $518 for a 30-year-old in 2018, compared to an average of $535 from competitors in those same counties. In Alabama, La Vone Richardson noted, Bright offered plans in three Birmingham-area counties at an average of $485 compared to $505 from competitors.

ACA exchange sellers could also be competing for fewer shoppers depending on how the wider insurance market responds to changes in federal regulation to allow short-term plans and more association plans. Actuaries will be crunching internal calculations on how to price for a potentially smaller pool of buyers.

People who gravitate toward short-term plans will, in all likelihood, be healthier people given the narrow benefits offered in those plans. Short-term plans often do not cover monthly costs the same way as major medical plans do for people who are heavy health care users.

There is a larger question mark around short-term plans in Tennessee because the state, through a legislative loophole, has continued to allow the sale of association plans even though those have all but gone extinct across the country.

There’s a chance that prices stabilize since insurers spent years underpricing policies before finding a balance between claims and premiums, said Pellegrin.

Premiums on the Tennessee market are closer in line with the costs incurred. BlueCross BlueShield of Tennessee, in fact, attributed nearly all of its 2018 price request to federal uncertainty.

Even as premiums surged from exchange inception in 2014 (when the state had some of the lowest monthly rates in the country despite a generally unhealthier population) to a more balanced price, most buyers were insulated by federal tax credits.

La Vone thinks change is on the horizon as costs and convenience permeate how people think about care.

Newcomers like Oscar, Bright and Celtic “are jumping in at the right time, attracting consumers with lower costs and consumer-friendly models,” La Vone said.

But, Oscar tested the Tennessee waters for a year in Nashville before deciding to expand to Memphis and hasn’t yet had to release its proposed prices for 2019. Premium requests are due July 11.

“Health care is falling more and more into the hands of patients via telemedicine, retail clinics and after-hours urgent and primary care, and insurers that can create a seamless, integrated experience for patients will squeeze out competitors,” said La Vone Richardson. “This is especially true as the Trump administration proposes expanding low-cost short-term health plans, which could poach younger and healthier patients from the overall insurance pool.”

Making a Nashville play by partnering with health systems through a multi-touch strategy

Around Nashville, HCA Healthcare’s TriStar Health has been the go-to network for insurers looking to offer a narrow directory. Outcry from consumers over access to Saint Thomas Health and Vanderbilt University Medical Center, however, have broadened Cigna’s network in the last two years as open enrollment approached.

Consumers who had loyalty to a health system either had to assess from year to year whether it would be covered by a participating insurer. The revolving door led to frustration and fatigue as people constantly parsed repeal-and-replace rhetoric and the threat of insurers leaving.

The new era (if insurers stick around) could see companies begin to make a play for loyalty to a provider network, which is really the only way that health care can try to put an emphasis on value and health. Patient data doesn’t transfer very easily so if patients have to move, consistency suffers.

Bright Health, which is planning to sell plans in the greater Nashville, Knoxville and Memphis areas, is an interesting player to watch, particularly in Music City, said La Vone Richardson.

In Birmingham, Bright works with Tenet Healthcare’s Brookwood Baptist on patient care and outcomes. Bright could look to work with Vanderbilt Health Affiliated Network, MissionPoint Health Partners or QLink Physician Network, La Vone Richardson said.

The Nashville market is brimming with potential partners for Bright, which “has a strategy of partnering with health players already integrated in the market to attract and retain patients, especially those loyal to a certain brand,” said La Vone Richardson.

Nashville’s rapid population growth, including that of a younger, healthier population, also appeals to Bright since it bucks the traditional model in favor of a more consumer-driven, personable approach, said La Vone Richardson.

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