Thank you for choosing BlueCross BlueShield of Tennessee as your partner in health. We know health care costs have a real impact on your life and want to help you understand why we are charging higher rates, or premiums, for 2017 Individual/Marketplace plans. (If you get covered at work, this doesn’t apply to you.)
How Subsidies May Affect Your Cost
If you receive financial assistance through tax credits, or if you think you may qualify in 2017, learn more about how your premium payments may be lower next year.
See If You May Qualify
Why are we charging higher premiums?
Simply put, we have to charge enough in premiums to cover our costs, which are primarily driven by what we pay out for the medical care our members receive under these health plans.
Your Questions Answered
We know you have questions, and we want to help. Please find answers to your questions below.
Why are rates going up so much next year?
First, these premium increases apply only to members who buy coverage on their own (on or off the Marketplace), not those who get covered through work or the Medicare Advantage program.
Our rates have to cover all the costs of serving all of the members who buy these plans.
Our Individual/Marketplace plans have been among the lowest priced in the country for three years, even though Tennessee has one of the least healthy populations. We’ve learned that members who buy Individual/Marketplace plans are more likely than other Tennesseans to have a chronic condition, and they tend to use more health care services, including emergency room visits and hospital stays.
Since 2014, BlueCross has been paying out more for medical claims than we’ve taken in from Individual/Marketplace members, and that’s before we cover operating costs, fees and taxes. To continue offering coverage on the Marketplace, we have to close the gap between what we charge and what we pay out.
I didn’t have many claims. So why are my rates going up?
We know that’s frustrating and want to help you understand how rates are set.
First, all Tennesseans who buy a health plan on their own – not through their job or the Medicare Advantage program – are grouped together. We set rates for each group as a whole, and we can’t charge more in one group to help lower prices for another group.
Premiums vary among individuals a little bit based on their age and location, but we can’t offer better rates to people who use less health care. The principle of insurance is that all the people in the group pay in to help provide financial protection for one another.
We base our rates on what we expect to pay that year for the medical care of all Individual/Marketplace members, plus related operating costs, fees and taxes. For three straight years, our rates for these members haven’t been high enough to cover all those costs.
What am I getting for my premiums?
First and foremost, your health insurance provides financial security. Knowing we’ll be here to help pay for the medical care you need brings peace of mind.
Your policy includes ten categories of essential health benefits, and many preventive services are covered at no cost to you. And if you have an ongoing health need, we provide added care coordination services to help you get the right care at the right time.
We want to continue offering health plans for individual and Marketplace members like you, but we may not be able to if we aren’t able to charge enough to cover costs.
What’s different about the health care needs of Marketplace members?
Tens of thousands of Tennesseans who weren’t insured before are now better able to get the care they need. We expected them to require more medical services, but underestimated how much their care would cost. Since 2014, medical cost trends for this group have gotten worse, not better, as more people have gotten covered.
We analyzed 2015 claims data for Individual/Marketplace members and compared it against members who get covered at work, and there are some key differences.
- Marketplace members had, on average, 43% higher medical claims costs and 58% higher pharmacy claims costs
- Marketplace members were 68% more likely to have annual claims totaling $50,000
- These members had higher rates of chronic conditions, including diabetes and cardiovascular disease, as well as:
- 42% higher rates of inpatient hospital admissions, with 15% longer average stays
- 14% higher rates of emergency room utilization
- 67% higher rates of behavioral health visits
When will I know for sure what my 2017 plan will cost?
The state of Tennessee reviewed and approved our 2017 rates in August. You should have received a letter from BlueCross by November 1, 2016 with information on:
- Rates and coverage details for 2017 plans
- Changes to your 2017 plan
- How to re-enroll for 2017 coverage
- How to get one-on-one guidance on what to do next
We’ll also help you figure out if you could get a tax credit to help you pay for your premiums. If you are, your costs may not change as much as you think.
How can I learn about different plan options?
During Open Enrollment, you can change your health plan. When you begin shopping, you will see all available plan options.
Typically, plans are organized by metallic levels – Bronze, Sliver and Gold – and have a range of costs, from monthly payments and your percentage of medical costs to yearly out-of-pocket maximums. The Open Enrollment period is from November 1, 2016 to January 31, 2017.
Don’t forget we’ll be here to offer personal guidance.
How will tax credits, or subsidies, affect my rate?
Many Tennesseans qualify for financial assistance that lowers the monthly cost of their health plan and out-of-pocket medical expenses.
For 2016 plans, a family of four with an income between $24,250 and $97,000 qualified for a tax credit. A family of the same size with an income of $60,625 or below got that tax credit and also got help with lowering their deductible and out-of-pocket maximum.
Are you using this as an excuse to earn higher profits?
No. In fact, we lost $311 million on Individual/Marketplace plans in 2014 and 2015, and we expect to lose well over $100 million in 2016.
Premium rates are, and always have been, driven by what we expect to spend on our members’ medical care. In fact, the medical-loss ratio provision of the health care reform law explicitly restricts the percentage of premiums we can spend on all operating costs and profits.
We are a taxpaying not-for-profit company, and our goal is to earn a small net margin – typically 2 to 3 percent each year. Those funds go into a legally required reserve to provide a safety net for our members’ protection. Our target profit margin is lower than average compared to hospital systems and pharmaceutical companies.
Why are you not using your reserves to make premiums lower?
Our mission is to provide peace of mind to our members. To do that, we must remain financially strong – which means keeping a safety net to help us weather economic and market cycles and unexpected events.
More than 75 percent of our reserves are legally required and have to be maintained; we only hold about $59 per member in remaining reserves.
Even if we used those remaining funds from our reserves to offer artificially low premiums this year, it would only be a temporary fix. Medical costs continue rising each year, and premiums would soon have to jump again to catch up with them.
What are you doing to control costs?
BlueCross works every day as an advocate for our more than 3.4 million members. That means helping manage their costs, ensuring they have access to quality care and empowering them to lead healthier lives.
Our priority is to make sure our members get the best possible health care at the lowest price. We negotiate contracts with doctors, hospitals and other facilities on behalf of our members. And because we serve 3.4 million people, we’re able to secure lower prices for medical services than what you would pay on your own.
Are 2017 rates going up to make up for losses from previous years?
No. Our diversified business and overall financial strength, including our reserves, have allowed us to weather the nearly $500 million we anticipate losing on ACA plans by the end of 2016. These 2017 premium rates are only designed to cover our anticipated costs for next year.
What happens if BlueCross keeps losing money on the Marketplace?
We do expect to continue losing money on ACA plans in 2016, and uncertainties with the law have led us to the difficult but necessary decision to scale back what we’re offering for 2017. BlueCross will offer Individual/Marketplace plans in five of the eight Tennessee service areas. We will not be able to offer On-or-Off-Marketplace plans in the Memphis, Nashville and Knoxville regions.
What are you doing to help members get healthier?
We’re committed to helping our members improve their health. Our wellness and quality improvement programs are designed to support our members in getting preventive care, managing health conditions and adopting a healthy lifestyle.
Our member outreach initiatives included 19 separate campaigns personalized around specific health needs. And thousands of our Individual/Marketplace members are now getting personal assistance to improve their health through hands-on care coordination.
How can I get help managing a health condition like diabetes or heart disease?
We understand that managing a health condition like diabetes or heart disease is complicated. We’re here to help. When it comes to taking control of your health, you can start by using our online resource for help making health choices, learning more about the tests and screenings that you need.