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Obamacare Inflating Health Coverage Costs, says TN Insurance Commissioner

McPeak defends office against charge of rubber-stamping premium hikes

The woman in charge of overseeing and regulating Tennessee’s insurance industry took umbrage at some of President Barack Obama’s remarks in Nashville recently.

The president was speaking at a Davidson County grade school where he delivered a glowing appraisal of his signature health care law Wednesday on the heels of the King v. Burwell decision in his administration’s favor last week. Obama encouraged the Tennessee public to keep a close eye on Insurance and Commerce Commissioner Julie Mix McPeak and her subordinates to make sure they dutifully impose health-coverage price controls on insurance companies operating in the state under the federal health insurance exchange.

“I think the key for Tennessee is just making sure that the insurance commissioner does their job in not just passively reviewing the rates, but really asking, ‘OK, what is it that you are looking for here? Why would you need very high premiums?’,” said the president. “And my expectation is that they’ll come in significantly lower than what’s being requested.”

President Obama instructed the audience to “stay on your insurance commissioner — pay attention to what they’re doing.”

In a statement issued Thursday, McPeak defended her office’s process for reviewing requests from companies to raise premiums on consumers in wake of passage of the Affordable Care Act.

A press release from McPeak’s office declared that “our seasoned team of insurance regulators are not passively reviewing insurance rates for the coming year as the President suggested.”

“The Commissioner and our team have always taken the job of protecting Tennessee consumers seriously and are unafraid to ask hard questions of the companies we regulate in order to better protect consumers,” the release stated.

All requests for premium hikes are analyzed “in accordance with statutes, regulations and accepted actuarial guidelines for completeness and actuarial justification,” the statement continued.

President Obama’s comments at the ACA promotional event came in response to a question from an audience member about managing the rising cost of premiums in Tennessee.

Obama offered that if state commissioners perform their due diligence when requiring companies to justify premium-increase requests, then oftentimes a company’s plea to raise rates on policyholders will be refused.

“Last year there were a number of states where the insurance companies came in requesting significant spikes in premiums,” said President Obama. “And there were a lot stories in the newspaper, just like there are this year, about (how) premiums are skyrocketing and this is going to be terrible and all that. When all the dust settled and the commissioners who were empowered to review these rates forced insurance companies to justify what they were seeking, what you discovered was, is that the rates actually didn’t go up as much as people thought.”

Just a week ago, on the eve of the Suprme Court’s  King v. Burwell decision, Commissioner McPeak testified before a subcommittee of the U.S. House Ways and Means Committee about upward pressures on monthly premiums.

“The ACA and its implementation by HHS has challenged state regulators and carriers by creating and continuing consistent uncertainty,” McPeak said in a prepared statement on June 24. “Uncertainty in the business of risk nearly always drives up costs and/or lessens competition. In the case of the ACA, I think it has done both.”

McPeak told members of Congress that insurance providers in Tennessee are requesting permission to inflate premiums in 2016 by anywhere from less than one percent to more than 36 percent. Her office has until August to make determinations as to what the state will allow.

“Tennessee had a competitive marketplace before the ACA and that marketplace remains competitive today,” McPeak told the subcommittee. “Market competition, in part, gave Tennessee some of the lowest priced (federally facilitated marketplace) products in the country.”

“Having a competitive market, however, does not isolate Tennesseans from seeing significant rate increases over the next few years,” she added.

McPeak, who Gov. Bill Haslam appointed to her current post in 2011, said insurance companies are having to pay out more in claims as more people access medical care. Blue Cross Blue Shield of Tennessee, the state’s largest insurance carrier on the federal exchange, claimed “a medical-loss ratio of well over 100 percent” in 2014, she said.

“To put that in perspective, for every $1 in premium received, the company paid out over $1 in claims, operating at a net loss – not including administrative costs of the company,” said McPeak.

“The ACA’s strict underwriting and business requirements have left carriers with few options to consider to maintain or reduce costs,” she said.

In summing up her remarks, McPeak said, “We continue to review policy forms and rates for next year but we anticipate that Tennessee consumers will see increased insurance costs in 2016.”

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