Many of the 2010 law’s key provisions kick in next year, including the requirement for all Americans to have health insurance.
BCBST, the state’s largest insurance provider covering more than 3 million Tennesseans, is projecting that individual policy holders will see average premium increases around 30 percent, while small group customers will pay about 10 percent more. Large employers will see a 3 to 5 percent spike, BCBST officials said.
In an information campaign that includes a website — www.KnowTheCostTN.com — BCBST cites these factors driving the rate increase:
• Guaranteed coverage. ACA requires health insurers to accept all individuals and employer groups who apply for coverage regardless of their health status.
• Pre-existing conditions must be covered. Chronic conditions, according to BCBST, will add costs and impact premiums for individual customers.
• ACA requires insurance companies cover an essential health benefits plan set by the federal government. Before ACA, insurers faced fewer requirements on benefits and less restrictions on coverage benefits, BCBST pointed out.
• New taxes and reinsurance fees to help fund provisions in ACA. BCBST said it will face $200 million in new taxes and fees.
• Age rating restrictions that will lower costs for many older consumers, but raise expenses for younger, healthier members, according to BCBST. A healthy 25-year-old male, for example, will pay 62 percent more in an individual insurance premium, company officials stressed.
“We see (ACA) as an attempt to expand (health care) access and that’s where we have been for a long time,” said Calvin Anderson, BCBST senior vice president of the law’s impact during a swing through Northeast Tennessee. “We embrace that, but recognize that with expanded access and increased benefits, that brings the increased cost.”
BCBST noted the average annual cost to provide individual health care has risen from $1,100 in 1980 to $8,400 today.
Still, BCBST officials defended the increase in premiums amid a time when the health insurance industry is posting record gains. With $5.6 billion in annual revenues, BCBST recently reported it earned record profits of $221.5 million during 2012.
“I can’t speak for the for-profits, but for us, we have taken initiatives to address our own cost structure,” said Roy Vaughn, BCBST’s vice president of corporate communications. “We reduced our administrative cost by 4 percent last year alone. ... We paid more claims last year than the year before. ... We are in a very highly regulated environment.”
BCBST, a Chattanooga-based company, also pointed out that ACA mandates it should spend 80 percent to 85 percent or more of premiums on direct medical care. In 2012, BCBST said it spent 86 percent of total premiums on care, including physician services, inpatient and outpatient care, prescriptions and other medical services.
In addition to group coverage, BCBST also plans to offer individual and family coverage in the health care exchanges set to begin in 2014.
Only 17 states have opted to run a state-based health insurance exchange. Twenty six states, including Tennessee, will have a federally facilitated exchange and seven will partner with the federal government, according to the National Conference of State Legislatures. Tennessee is also seeking to use federal dollars to pay for private health insurance for additional enrollees in its Medicaid program known as TennCare.
Open enrollment for the health care exchanges — which will happen with an online portal — begins Oct. 1.
Exchange enrollees will have to enter income and residency information, plus pick from a variety of health insurance plans, over the Internet.
“What was a 21-page application is going to be condensed to seven pages for families, and what was a 15-page process for individuals is now going to be three pages,” Anderson said of the online portal.
BCBST officials predicted only minor tweaks to ACA could be made by the federal government, and the law most likely won’t be changed by Congress. The law was upheld by the U.S. Supreme Court last summer.
“Over the last three years, people have been saying ‘Oh that (ACA law) will never last. It will never make it,’ ” Vaughn said. “We said ‘We can’t not be ready.’ We will be ready.”
BCBST does business with both Mountain States Health Alliance and Wellmont Health System.