Iowa and Tennessee are, in some ways, very similar states regarding the ACA. They are both mostly rural and their political elite has worked hard to create numerous “outs” for healthier and prospectively low risk individuals from the ACA. They both have very high premiums and comparatively high risk scores.
Yet, in 2018, they were very different. Tennessee had some multi-insurer regions (Nashville and Memphis) while the local Blue Cross affiliate offered plans in most of the state. BCBS-TN aggressively Silver Gapped with some of the biggest premium spreads in the entire country between the least expensive Silver and the Benchmark Silver.
Iowa had a single insurer for the entire state. Wellmark, their BCBS affiliate, exited the market. Medica offered a single Silver plan for every county so there was no cost advantage to buying a less expensive Silver plan.
In 2019, Wellmark is re-entering Iowa’s market. Several insurers are expanding in Tennessee so Nashville, Memphis and Knoxville, and the northeast Tri-city region will have multiple insurers. This will lead to significantly different on the ground realities for subsidized buyers.
Non-subsidized buyers will directly benefit from increased competition. They can elect to stay in their current plans or see if there is a better deal elsewhere.
Subsidized buyers will likely be worse off in most of Tennessee. This is especially true for healthy buyers who are very price sensitive. I am assuming that the new entries think that they can price at or below the current very high Silver Benchmark plans offered by BCBS-TN. If they price at the same point as the benchmark plan, there will be no change in relative post-subsidy premiums paid by the individual. Far more likely the new Silver plans will be significantly less expensive than the very high benchmark plan. This means that subsidized buyers in these regions will see lower subsidies and higher post-subsidy premiums. Currently some families can earn well over 200% Federal Poverty Line and qualify for a $0 net of subsidy premium Silver plan. Those families will see higher costs next year assuming the new entries offer at least one Silver plan lower than the current benchmark.
Iowa is a single insurer state for 2018. Medica covers all 99 counties with a single Silver plan. Next year, Wellmark, the local Blue, is re-entering the market. Medica only offered a single Silver plan. There is no chance for someone to benefit from the spread between the least expensive Silver and the benchmark Silver as they are the same thing as Brad Wright and I explained in the Des Moines Register last winter.
- In all scenarios except the one where Wellmark only offers Silver plan(s) that are priced precisely, to the penny, alike the Medica plans, many subsidized buyers in Iowa will benefit from new competition as there will be some spread between the least expensive Silver plan and the benchmark plan.
Competition always benefits the non-subsidized by at least increasing the possibility space. Competition has specific local impacts depending on the decisions of insurers and their strategies from the previous, low/no competition year. We must be aware of those changes and distinctions.