How Sen. Alexander's Health Insurance Bill Could Benefit One Organization In Tennessee

Apr 17, 2017

Last month, Sen. Lamar Alexander proposed a bill intended to help people who live where health insurance companies are pulling out of the Affordable Care Act marketplace. It would apply nationwide but indirectly references one specific organization in the senator's home state: Tennessee Farm Bureau.

The not-for-profit organization advocates for farmers and rural areas, and it also offers health coverage. Some of its plans are compliant with the Affordable Care Act, although they are not sold on the federal marketplace. Others, called "traditional plans," cover certain health care expenses but legally are not considered insurance.

These traditional plans require Farm Bureau membership, are not regulated by the state and can turn people away for pre-existing conditions. People who buy these plans still have to pay the federal tax penalty for not having health insurance, because technically they don't.

Yet the monthly premiums for traditional plans are low and can still be a good deal, even with a penalty. "People have done the math, and in many cases they're able to pay the premium for one of our traditional coverages and pay the tax penalty — and still come out better, in some cases considerably better," says Ryan Brown, senior vice president of health plans at Tennessee Farm Bureau.

Alexander's bill,  co-sponsored by Sen. Bob Corker, would make the math even more favorable: It would eliminate the penalty altogether for people who live in parts of the country where there are no options for health insurance on the federal marketplace next year. This is something the state says could happen in the Knoxville area, because the last remaining insurer on the marketplace there — Humana — says it will not stay on for 2018.

More: As Humana Plans To End Obamacare Coverage, Tennessee Insurance Commissioner Is 'Very Concerned'

Alexander’s bill also says these people could use their federal subsidies — currently reserved for health insurance on the marketplace — to help pay for independent health insurance off the marketplace.  

That alone would not apply to Farm Bureau's traditional plans, which are not considered insurance. But Alexander's bill has another provision that allows federal subsidies to be used for "health care benefits" at a "not-for-profit membership organization."

In other words, the bill applies to Tennessee Farm Bureau, says Washington and Lee University health affairs professor emeritus Timothy Jost.

"As far as I know, it doesn't work any place else," Jost said. "But I mean, that's what you're supposed to do when you're a senator: take care of your state."

Alexander's office did not respond to questions about whether this provision of the bill would apply to any organization besides Tennessee Farm Bureau. A spokesman for Farm Bureau says the organization was unaware that Alexander would include this provision in his bill, although it has talked to Alexander's office about its unique status in Tennessee.

If the bill passes, it would likely increase the organization’s enrollment numbers, although it's unclear by how much, says Brown.

"I don't know that we necessarily expect a huge boost from that legislation if it passes," he says. "We're just one of the options that are out there."