No Quick Fix in State Health Insurance Issue


Memphis Daily News, Sept. 15, 2016

By: Sam Stockard

State Rep. Ron Travis is perplexed.

On one hand, the Republican from Dayton is concerned with escalating premiums for Tennesseans participating in the insurance marketplace, worried costs are increasing to the point people simply can’t afford health insurance.

“I’m from a rural town. My people need to be insured,” says Travis, who as an insurance agent has a little better understanding of the market than most. 

“But then on the other side of it, too, I see this 60 percent rate increase that we’re taking in health care for just that population of the Affordable Care Act. And that kind of scares me where we’re going as a country. It’s crazy.”

BlueCross BlueShield, one of Tennessee’s providers on the federal exchange, got that rate hike after telling state leaders it lost $311 million on Individual/Marketplace plans in 2014 and 2015 and expects to lose another $100 million in 2016.

The main problem, it says, is the pool of uninsured has too many sick people and not enough healthy ones whose premiums can offset their high costs. Consequently, they’re paying more than they’re taking in for this program.

At the same time, Travis has questions about the 3-Star Healthy Task Force’s tentative TennCare expansion, one likely to require a 65-35 split between the federal government and Tennessee for coverage compared to a 90-10 split for Gov. Bill Haslam’s Insure Tennessee proposal, with hospitals willing to foot the 10 percent.

Appointed by House Speaker Beth Harwell, the committee is considering a two-year pilot project to expand Medicaid to cover veterans and those with mental health problems. If that works, in year two it will try to catch everyone in a coverage gap between TennCare and Affordable Care, roughly 280,000 people.

And that’s where Travis gets stuck. He admits needing more information about 3-Star Healthy before trashing it, but ultimately he’s looking at the cost.

“I just don’t know where we’re gonna come up with that 35 percent,” he says.

Gov. Haslam was banking on more than $1 billion annually from the federal government to fund Insure Tennessee, a market-based plan with health savings accounts as one part and some incentives for people to improve their health. He couldn’t move his bill out of committees in 2015’s special or regular sessions.

If the federal Centers for Medicaid and Medicare approves 3-Star Healthy with the usual 65-35 split for TennCare expansion, the Legislature might have to come up with $350 million. 

“We don’t need to put another burden on the taxpayers, and that’s what worries me … where’s this burden gonna fall?” Travis asks. “But there’s a lot of good people out there who need insurance.”

Holding out hope

Travis’ words came after a recent House Insurance & Banking Subcommittee summer study in which Democratic state Rep. Craig Fitzhugh discussed his bill to put Insure Tennessee up for a statewide referendum on the Nov. 8 ballot.

At this point, the chances are slim to none. But Fitzhugh, like the other 30 Democrats in the Legislature keeps throwing it out there.

The Legislature was to enter a special session this week at the request of Gov. Haslam to hold on to $60 million in federal highway funds jeopardized by a new underage DUI law conflicting with federal “no-tolerance” standards. The feds say anyone under 21 with more than .02 percent blood-alcohol content while driving should be charged with DUI, but the new state law pushed the level to .08 percent for those 18 to 20.

It was expected to be a quick fix. But this health insurance stuff isn’t quite so easy, no matter how overwhelming the numbers appear to be – and partly because no Republican is going to back it in an election year.

Democrats contend the $60 million is a pittance compared to the money lost by not approving Insure Tennessee, which Haslam was asked to propose after the state opted against joining the Affordable Care Act.

“In 24 days we will have forfeited that much from the federal government, money that is rightly ours,” Fitzhugh says, pointing out state polls show overwhelming support for Insure Tennessee. “Add it on to $2.4 billion our state has forfeited.”

Yet the summer study committee chaired by Rep. Kelly Keisling, a Byrdstown Republican, didn’t vote because he had declared all matters for discussion only. And Fitzhugh wouldn’t commit to raising the matter during this week’s special session, though some sort of vote would have to pass in order to put it on the November ballot.

Oh well, at least legislators could pick up a few dollars for per diem for their trip to Nashville.

Politicians or prophets?

Tennessee Commissioner of Commerce & Insurance Julie McPeak recently authorized sizable premium rate increases for BlueCross BlueShield Tennessee, 62 percent, Cigna, a revised 46.3 percent, and Humana, a revised 44.3 percent, for coverage on Tennessee’s Individual/Marketplace exchange.

McPeak also mentioned the possibility the program could be on the verge of “collapse.”

Not long afterward, state Sen. Jeff Yarbro and Rep. John Ray Clemmons did what Democrats do, held a press conference to take shots at the Republican administration.

“We’ve got a population larger than the city of Knoxville that’s found insurance for the first time through this exchange program, and if the insurance commissioner’s diagnosis is more than just the ‘sky is falling’ rhetoric, we absolutely have to find out why Tennessee is failing more than other states and do something about it,” Yarbro points out.

Yarbro and Clemmons contend McPeak allowed “unprecedented” rate hikes in premiums without “sufficient justification.”

Clemmons raised the question: How is BlueCross BlueShield of Tennessee going to leave Tennessee if it doesn’t get its way.

“It has nowhere to go. Now this is a direct attack on Medicaid expansion. This is a direct attack by those who wish to see Obamacare fail. Let’s make no mistake about it,” Clemmons says. “States that have expanded Medicaid have not seen rate increases anywhere near these levels.”

Yarbro and Clemmons wanted Republican chairmen of the Legislature’s insurance committees to hold hearings immediately to find out why Tennessee is sucking hind tit.

But they both answer their question in a way, arguing Tennessee’s rate of the premium increase is higher than the national average because of the failure to expand Medicaid here.

These rate increases, though, will really only hit about 15 percent of the people participating in the individual marketplace. The poorest folks covered by subsidies will see theirs go up a few dollars a month, but middle-class folks and small businesses could see premiums increase several hundred dollars a month.

This endangers the marketplace even more because it drives healthier people out of the program and leaves the risk pool even riskier than it is already.

Oddly enough, conservative Republican Sen. Mark Green sent out a statement knocking the premium increases but continuing the lambasting of Obamacare, saying it’s time to recognize the health insurance program “has failed.”

Green notes he sent a letter to McPeak in January 2016 pointing out healthy people were leaving the pool because of premium increases, causing costs per patient to rise even more, leading to her pronunciation of doom and rate hikes to prop up a “failed” federal program.

“It may be time for ALL of Tennessee’s insurers to leave the program,” he explains.

His letter points out the average monthly premium for federally facilitated marketplace products was $321 in 2015 with an average subsidy of $211, leaving other health insurance customers to cover the $110.

In other words, middle-class people can’t cover the costs of the poor. At the same time, smaller companies can’t buy insurance in bulk to compete with larger firms, his letter says.

“I am asking Commissioner McPeak to cap the increases until the federal government can find the means to pay the entire subsidy,” Green’s letter states. “This is an inherent failure of Obamacare and the federal government should bear the burden, not Tennessee families.”

Lest he forgets, though, those federal dollars have to come from somewhere. That “giant sucking sound” isn’t jobs going south but dollars out of wallets.

Clemmons and Yarbro pretty much scoff at Green’s comments, saying it’s counterproductive for customers to flee the marketplace.

Yet, predictably, Republican Sen. Jack Johnson, chairman of the Senate Commerce & Labor Committee, would have none of their proposal for hearings – at least not in mid-summer.

“The commissioner has statutory authority to approve those rate hikes,” Johnson adds. 

“I’m not saying we won’t take it up in January when we reconvene, but I don’t see the need to hold a public hearing when the commissioner has more than made herself available to any member who wants to discuss these individually. She’s made her justification in the press, and so other than just trying to create some type of political spectacle, I don’t see any need to bring members in at a cost to taxpayers.”

Johnson calls the premium increases a clear indication of what he suspected all along, “that is Obamacare is a disaster.”

He points out what others do: Young, healthy people aren’t signing up for the exchange because they can’t afford the premiums, so most of those in the program are older, sicker and more expensive to cover.

In fact, BlueCross BlueShield acknowledges it underestimated how much it would cost to cover those who’ve never had insurance, in addition to paying for more expensive drugs. 

“And that’s an actuarial scenario that’s unsustainable,” Johnson says.

The only leverage the government has is to fine those who don’t sign up for coverage, but the fine is less, about $800 a year, than the total cost of insurance premiums, he points out. So they’ll take the fine instead. 

The Franklin Republican says he sees no correlation, either, between the premium increases and the lack of Medicaid expansion here because the people in those programs are in separate pools. He doesn’t like the idea of a single-payer system such as Medicare as a “viable alternative” either and would adamantly oppose it.

Johnson contends he takes Yarbro’s request seriously and isn’t “dismissing it” out of hand. McPeak, though, can hardly deny the premium increases because the insurance companies might drop out, which some have done already, he says.

In other words, prepare for hearings this winter when McPeak will be able to reiterate Tennessee isn’t the only state to allow insurers to refile. The state has had some of the lowest rates in the nation, but costs are going up because of more frequent use of health care, greater percentages of people with chronic diseases and rising pharmacy costs, she contends.

“We want Tennesseans to have coverage but solvent insurance companies should provide that coverage,” the commissioner’s office says, adding the state doesn’t want to run insurers out of the market and leave people with only one option.

Final analysis

Before they report back to Nashville for the 2017 session, legislators might want to read a recent study by the U.S. Department of Health and Human Services showing Medicaid expansion can lead to lower insurance prices for those in the middle class. The study found marketplace premiums are about 7 percent lower in states that expanded Medicaid than in those that didn’t. 

The Center on Budget and Policy Priorities also compiled a helpful report in 2012 predicting exactly what is happening now: States that don’t expand Medicaid leave millions of people in a “coverage gap.”

“First, failing to expand Medicaid would likely destabilize the private insurance market and drive up premiums. Second, insurers would benefit financially from the expansion, whether they only offer Medicaid managed care plans, private individual and small-group market plans, or both,” it states.

Forgive me for not giving any more statistics.

But someday, we’re just going to have to admit it’s expensive to pay for poor people’s hospital bills, whether the money is funneled through hospitals, state government or the feds. The poor will always be with us, but the healthier they become, the less it should cost eventually – whenever that might be. It’s got to start somewhere.

Rep. Travis might take some comfort in that.