Some insurance companies in Tennessee are having to break bad news to their customers: Their rates are about to jump yet again.
Companies that offer insurance on the federally-run exchange recently filed requests with the state to increase how much they charge for monthly premiums. The largest insurer in the state — BlueCross BlueShield of Tennessee — is also proposing the largest rate hike.
If the state approves BlueCross's request this summer, the monthly rate for its customers who buy insurance out-of-pocket would go up anywhere from 36 to 90 percent, or an average of 62 percent, according to the Tennessee Department of Commerce and Insurance.
"We're not happy having to deliver this news to our members," says Mary Danielson, head of communications at BlueCross BlueShield of Tennessee. "But we want to be as up front and notify them as far in advance as possible about the potential impact to them, because we realize it impacts their wallets and it impacts their lives."
This year, for the first time, the company sent out a long letter to all of the policyholders who would be affected — more than 200,000 people — before the rates have even been finalized. The letter doesn't specify how much the rates will go up but says, in an apologetic tone, that they will be "significantly higher."
"We don't want to raise rates, and we know this may be difficult for you," the letter reads, signed by the company's chief operating officer. "But we were forced with the tough decision of either increasing prices to cover costs or ending coverage in this market altogether."
The company's justification is this: Since 2014, under Obamacare, federal law has mandated that insurance companies accept everyone, even people with pre-existing conditions. So BlueCross says it got an influx of new customers but underestimated just how unhealthy Tennesseans are. It didn't charge enough to make up for their high medical costs, and it's been losing money and raising monthly premiums each year since.
"If we'd gotten individual market pricing right from the start, our rates for 2017 would've ultimately been in the same range as we're now proposing. The difference is consumers have benefited for three years from prices that didn't align with costs," BlueCross CEO J.D. Hickey wrote in an op-ed in the Tennessean last week.
This increase in cost only affects policyholders who buy coverage out-of-pocket or on the federally-run exchanges, as opposed to those who get health insurance through work or Medicare.
But this explanation doesn't appease Beth Downey, a web designer who got the letter in the mail last weekend. Her rate already went up almost $100 a month last year, she says, and she expects it will continue to rise at least that much.
"I just thought, what a colossal waste of time to even read this, because it's just a carefully worded marketing ploy," she says. "There's got to be a better way to stop the price-gouging by insurance companies."
Justin Mundie, a Nashville realtor, also saw his family's premiums increase last year. Still, he says he appreciates getting the early notification.
"It shows that they're at least being considerate to their customers and recognizing that their customers are going to be angry instead of just springing it on them."
But he'll be using the extra time to shop around for something cheaper — if that even exists.