At the end of last month, Tennessee Insurance Commissioner Julie McPeak—the state's top insurance regulator—warned that the state's Obamacare exchange was "very near collapse."
At the beginning of the summer, two of the insurance carriers operating in the state exchanges, Cigna and Humana, had filed for rate increases of 23 and 29 percent, respectively. But after those requests were put in, both companies returned to the state and asked to re-file for even higher rates—with Cigna requesting a 46 percent bump, and Humana requesting a 44 percent increase. Those revised requests were eventually granted, with McPeak saying that she feared that the two insurers would pull out of the exchange system set up under the health law.
At the time, the state had only one insurer operating throughout the state: BlueCross BlueShield of Tennessee (BCBST), which had requested and won a 62 percent rate hike.
But even that, apparently, was not enough: This week, Blue Cross Blue Shield of Tennessee announced that it will exit the state's largest markets: For 2017, the insurer will no longer offer exchange coverage for Nashville, Knoxville, and Memphis.
The move means that about 130,000 people in the state will lose their current insurance plans. Although every county will still have at least one insurance option through the exchange system, the move means that instead of 57 counties with just one exchange-based insurer, 72 counties of the state's 95 counties will be served by just one carrier, the Tennessean reports.
BCBST isn't the first insurer to back away from the health law's exchanges. BlueCross BlueShield insurers have scaled back participation in Minnesota, Arizona, and Nebraska. Aetna said last month that it would cease selling on the exchanges in 11 of the 15 states in which it had been operating. UnitedHealth also announced this year that it would be pulling out of exchanges in 26 states, including Tennessee, where it had sold in every county.
In every case, the reason continues to be the same: The insurers are losing money on the exchange business. BCBST, for example, said it was facing a projected $500 million loss. That's just not sustainable.
Obamacare was supposed to create a marketplace where insurers would want to compete for business. But in a lot of states and counties, it turns out there won't be any competition, and lots of insurers won't be doing any business at all.