Humana exit shakes up 2018 ACA exchange, leaves Knoxville coverage gap

Humana's decision to stop selling insurance on Obamacare exchanges in 2018 will impact Tennesseans who live in the state's three major metro areas.

Humana is currently the only insurer on the exchange in the greater Knoxville area — meaning if another insurance company does not enter the market, there will be no Obamacare exchange in that area. The insurance giant announced the decision on Feb. 14 during an analyst call after its $34 billion deal with Aetna was terminated following a ruling by a federal judge.

The exit means people in the greater Nashville and Memphis areas will have only one insurer, Cigna, unless another enters the market. Plans purchased for 2017 will be valid through Dec. 31.

Humana enrolled about 79,000 people in plans statewide, or roughly one-third of the 234,125 people who enrolled in individual coverage on healthcare.gov.  It insures about 40,000 in the greater Knoxville area, which consists of 16 counties.

The decision corroborates state insurance commissioner Julie Mix McPeak’s numerous warnings over the last year that access to insurance options was paramount in Tennessee — that her department was concerned there would be people left without any option.

The situation, unless remedied by a new entrant or Humana reversing its decision on the greater Knoxville area, will leave a hole in the state’s insurance rating areas.

Shoppers could look to what are called off-exchange plans, those sold by companies including Aetna and Farm Bureau Health Plans. But those are not eligible for tax credits or the subsidies that make monthly premiums more affordable for more than 80 percent of Tennesseans.

Not having an insurer on the exchange is like having a bus ticket in a town with no bus service, McPeak said, referencing an analogy used by U.S. Sen. Lamar Alexander.

“You don’t even get to a question of affordability if there’s no accessibility of insurance,” McPeak said.

Humana’s surprise decision underscored the importance, McPeak said, of Congress and the new Trump administration taking action in the coming weeks to stabilize the individual health insurance market while federal lawmakers come up with a repeal-and-repair plan or a replacement.

Alexander, R-Tenn., made stabilizing the individual market a short-term priority earlier this year during a senate committee hearing at which McPeak testified.

“Yesterday's news from Humana should light a fire under every member of Congress to work together to rescue Americans trapped in the failing Obamacare exchanges before they have no insurance options next year,” Alexander said in a statement.

Humana’s exit raises the specter the state could see more dramatic changes in 2018. Gov. Bill Haslam said at a press conference that he’s concerned about the existing rules and the possibility of having an exchange that doesn’t have insurance carriers.

McPeak is hopeful that Humana will reconsider its decision to leave the Knoxville area, or that another insurer would expand into the region or be an entirely new entrant. She said that the "door is open" at Humana but the company has not made a commitment.

“BlueCross has tried to make the ACA Marketplace model work for Tennessee," said Roy Vaughn, chief communications officer at BlueCross BlueShield of Tennessee. "We’re doing our best to work through the uncertainties at the federal level and still considering whether we will continue to offer coverage in the same regions for 2018. At this point, we do not anticipate a scenario where we would expand into the Memphis, Nashville or Knoxville regions."

The Louisville, Ky.-based insurer enrolled many more people in its coverage areas this year because BlueCross BlueShield of Tennessee pulled out of the three metro areas and UnitedHealthcare left the market entirely.

Humana's CEO Bruce Broussard said its early analysis of data from 2017 signaled to the company that the risk pool remains unbalanced, and that the company would not offer plans in 2018.

McPeak said insurers are factoring in their competitors’ decisions when making plans — comments that are echoed by others around the industry. She is worried about Cigna’s continued presence. Cigna officials did not immediately answer a request for comment.

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The confluence of changes and phasing out of federal funding mechanisms like the risk corridor and risk adjustment payments combined with an expensive set of claims were among the “economic issues” that collectively led to Humana’s decision, McPeak said.

“We’re going to do everything we can to make sure we don’t have Tennesseans without even a single option in our state,” she said.

The prospect of an area with no insurer has worried McPeak. She testified before the U.S. Senate earlier this month about the tenuous state of the individual market in Tennessee. She urged federal lawmakers to take steps soon to stabilize the insurance market before insurers began to leave.

But changes need to stem from the federal government to assuage the growing uncertainty, and even action in the next couple of months might not keep insurers on the exchange.

“I do believe that any relief that we could get from the Trump administration or Congress would be extremely helpful at this point because it is that level of uncertainty that is so problematic for insurers right now, trying to decide whether to continue to participate through 2018 when you don’t know what the regulatory environment was going to look like,” McPeak said.

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Insurers have traditionally filed their intentions to sell with the Tennessee Department of Commerce and Insurance in May, with proposed rates in June and a final filing with federal officials in September. But that timeline could change under a rule proposed by The U.S. Department of Health and Human Services.

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HHS’ proposed rule could impact the individual insurance plans in 2018, which would affect the filing deadlines along with premiums and out-of-pocket costs. The proposal itself said that consumers could see increased out-of-pocket costs.

McPeak said she had not had time to review the proposed change, which is about 70 pages, and, in conversations she had with Humana, wasn’t sure the insurer had had a chance to digest it either.

Michele Johnson, executive director of the Tennessee Justice Center, said the departure should be a wake-up call to Congress, which has been consumed with repeal-and-replace discussion without having a replacement or interim repair plan on the table.

Johnson said “irresponsible talk”  about a repeal without a replacement is threatening coverage to hundreds of thousands of Tennesseans.

“As Tennessee Commissioner McPeak and Senator Alexander warned last week, Congress needs to act quickly to stabilize markets and assure Americans that Congress will put their health and financial security ahead of partisan politics,” Johnson said.

Reach Holly Fletcher at hfletcher@tennessean.com or 615-259-8287 and on Twitter @hollyfletcher.