NPR's Robert Siegel talks with Tennessee Insurance Commissioner Julie McPeak about what the collapse of the Better Care Reconciliation Act means for Tennessee.
ROBERT SIEGEL, HOST:
What does the failure of Congress to pass a health care bill likely mean for people's health insurance? Well, for a reality check, we're going to turn to one state, Tennessee, and to that state's insurance commissioner, Julie Mix McPeak. Thanks for joining us today.
JULIE MIX MCPEAK: Thank you for having me.
SIEGEL: And at the moment, it appears there will be no bill replacing the Affordable Care Act, also known as Obamacare, and no repeal of that law. What does that mean for the health insurance market in Tennessee?
MCPEAK: Unfortunately the lack of a bill passing in Congress to repeal or replace or revise the Affordable Care Act does very little to address the lack of stability in the individual market for the consumers purchasing insurance on the insurance exchanges.
SIEGEL: You said the lack of stability. Critics of Obamacare use the phrase death spiral in the insurance marketplaces to describe what's going on, premiums rising out of control. What's happening in Tennessee?
MCPEAK: Well, in Tennessee, we have an extremely fragile individual market. We do have coverage available in all counties of our state. But for the clear majority of our state, we only have one insurer willing to offer policies on the exchange to the individual market. So there's really a lack of competition, increase in premiums that we're experiencing and really not so much today from the medical trend as much as it is from the uncertain regulatory environment.
SIEGEL: I've seen some increase numbers reported in the Memphis region, Cigna increasing premiums for some plans by 34 percent, by some as much as 84 percent. Those sound astronomical.
MCPEAK: Well, they are certainly substantial. And it's very unfortunate for our Tennessee consumers that were looking at making financial decisions about whether to purchase insurance or pay for electricity or car insurance or pay for groceries at the store. The insurance premium rates are increasing at a rate that is really not sustainable for our consumers but also for the federal government that is picking up a tremendous amount of these premium increases in terms of premium tax credits and subsidies.
SIEGEL: If so many counties have - I believe it's two-thirds of Tennessee's counties have only one insurer who is offering individual insurance plans there in the exchange. Why aren't other companies there? What do you hear from companies that are leaving these exchanges?
MCPEAK: You know, we have had a pretty routine withdrawal of insurers from our state. I think prior to the Affordable Care Act, we had 12 to 14 insurers in our state and in various areas. And now, as we mentioned, the clear majority of our state only has one insurer willing to offer coverage. And what we're hearing from them is that the cost to cover the exchange population with the essential health benefits, with the administrative costs and the regulatory uncertainty make it really untenable for the companies to stay and write policies in Tennessee and in many other states.
SIEGEL: You mean because people won't buy them because they're too expensive? What's the logic there?
MCPEAK: Well, the coverage in essential health benefits and on the exchange plans as required under the ACA are richer than what we were seeing on the individual market prior to the ACA. And so the cost to cover those individuals is higher than the insurers had predicted. And then unfortunately because of some, you know, first coverage of previously uninsured individuals, some of the claims experience hasn't been as positive as the insurers would have predicted as well. So...
SIEGEL: People that weren't taking care of themselves before now are once they get insurance, is what you're saying.
MCPEAK: That's exactly right.
SIEGEL: Very briefly, if in fact Obamacare were now be repealed with no new law in place, would that just increase uncertainty in Tennessee and be even worse news for the insurance markets?
MCPEAK: Yes. I think that we are facing a very delicate situation with considerations of total repeal. There is a somewhat better forecast I think if we are giving a transitional timeframe, which I think is also being discussed. But I think we also need to be very aware that the administration can cause the markets to constrict even further through the lack of the CSR funding...
SIEGEL: These are the...
MCPEAK: ...The - yes, the cost-sharing reduction payments that are so critical to the insurers both in terms of premium rate amounts and then also participation in the market. You know, those payments haven't been made for July yet.
SIEGEL: These are the federal payments to insurers that encourage them to provide insurance at subsidized rates.
MCPEAK: Yes, that's exactly right. And you know, without those payments, the insurers may decide not to participate in exchange markets nationwide. And you know, that uncertainty is certainly not something that we are looking forward to with the lack of congressional action and the talk of total repeal. I think our markets might be in even a more fragile state as a result.
SIEGEL: Commissioner McPeak, thanks for talking with us today.
MCPEAK: Thank you very much for having me.
SIEGEL: That's Julie Mix McPeak, who is insurance commissioner for the state of Tennessee.