By Jordan Rau
Thu, Jul 31 2014
CHATTANOOGA, Tenn. — The dominion of Tennessee’s largest health insurer is reflected in its headquarters’ lofty perch above the city, atop a hill that during the Civil War was lined with Union cannons to repel Confederate troops.
BlueCross BlueShield of Tennessee has used its position to establish a similarly firm foothold in the first year of the marketplaces created by the health law. The company sold 88 percent of the plans for Tennessee individuals and families. Only one other insurer, Cigna, bothered to offer policies in Chattanooga, and the premiums were substantially higher than those offered by BlueCross.
Though insurers have been regularly vilified in debates over health care prices, BlueCross’ near monopoly here has been unusually good financially for consumers. Its cut-rate exclusive deal with one of three area health systems turned Chattanooga into one of the 10 least expensive insurance markets in the country, as judged by the lowest price mid-level, or silver, plan. The premium for a 40-year-old for that plan is $181 a month, 30 percent less than for the median cheapest silver plan nationally.
BlueCross has employed a similar narrow-network strategy elsewhere in Tennessee. Its lowest premium silver plan in Knoxville, built around the University of Tennessee Medical Center, costs the same as in Chattanooga. BlueCross’s least expensive silver plan in Nashville is cheaper than the cheapest parallel plan in the biggest city in every state except Minnesota and Hawaii.
“Providers are concerned about getting shut out of narrow networks,” said John Graves, a professor at Vanderbilt University School of Medicine in Nashville.
Premiums are not low in Chattanooga because people do not require much medical care. Obesity, smoking and hypertension are more prevalent in Hamilton County, where Chattanooga is located, than they are nationwide, according to the Institute for Health Metrics and Evaluation, a Seattle-based research center. Yet insurance prices are in line with some of the nation’s healthiest places: Minneapolis, Salt Lake City and Honolulu.
Chattanooga’s lowest cost silver plan gives people access to Erlanger Health System, a public authority with a network of hospitals affiliated with the University of Tennessee’s College of Medicine. In exchange for lower premiums, consumers choosing the narrow network, labeled the “E” network, have access to 1,257 doctors and medical providers who work with Erlanger, according to the latest figures from BlueCross.
David Yoder, CEO of American Exchange, a Chattanooga insurance brokerage, said the average client on that network has premiums of about $40 a month, with the government subsidizing the rest. “For most people, unless they are really tied to a doctor, the E network is fine,” he said.
BlueCross offers another set of policies that include both Erlanger and the Catholic Health Initiatives, which runs Memorial Hospital, for 11 percent more than the Erlanger-only network, which still puts the costs well below the national median. That wider network has 3,502 providers—nearly three times the number in the Erlanger-only network.